Securities & Managed Investments: James Macready- Case Study Analysis Assignment

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Case Study Analysis Assignment:

Task:

Case study background

James Macready
You work for the financial planning company, Frontiers Pty Ltd, which is a licensed dealer in securities and a registered life insurance broker. Your company specialises in investment advice, but does not provide insurance, real estate evaluations and advice, income tax preparation, superannuation fund accounting or administration, or legal document (such as wills or trusts) preparation.
You have organised a meeting with a new client, James Macready, who is seeking some advice regarding his current investment strategy. James has actively invested in shares since he was young. He has always enjoyed researching companies before deciding whether to invest in their shares. He has purchased shares he considered were good value
at the time he bought them or that had a high dividend yield. He has not bought or sold any shares in the last 12 months. In the past, he has used an online trading account to buy and sell shares. Over the past year, James has found two new time-consuming hobbies, sailing and hiking, both of which he enjoys very much. Since taking up these hobbies, he has neglected his share portfolio somewhat, so he has not carried out any trading on the portfolio during that time.

Planning issues, goals and objectives
• James is seeking to maximise his savings and is prepared to take an aggressive approach to achieve this. He has built up funds in the cash account that he would like to put to better use. He is not sure if he should buy more shares, particularly as he now has less time to commit to his portfolio, or do something different.
• James would like a review of his current share portfolio to ensure it is adequately diversified. He thinks he may be underweight in resources, but is not certain about this.
• James is interested in gaining some exposure to other asset classes outside his super but is not convinced that he should do this directly. He would definitely consider a managed investment for any asset class except Australian equities.
• James is happy owning Australian shares directly, even though he knows he is not spending as much time on his portfolio as he should be. He wishes to continue holding Australian equities directly.
• James is particularly averse to any kind of borrowing, including against his home, for the purposes of investment. He has only ever borrowed for his residential property in the past. He has had a number of friends who geared heavily in the past and then had trouble with margin calls during the global financial crisis. He has clearly stated he does not want to consider any type of borrowing.
• James wants to continue to take annual holidays at a cost of approximately $15,000 per year.
• James cannot foresee any major expenses coming up in the next five years or so, and believes that his current expenses are realistic and unlikely to change. His general living expenses include a buffer for home maintenance and repairs, and have recently increased due to the cost of his new hobbies.
• James has not considered his retirement situation as he thinks retirement is too far away, but he would like to have the option to retire as early as possible. He would consider 55 to 60 to be a suitable age.
• He is currently more interested in investments outside of super because he wants to retain control and have access to the funds if needed.
• He is confident that he won’t dip into his investments for at least seven to ten years unless something totally unexpected happens.
• James is confident that the current asset allocation in his super is appropriate, and he is happy with his choice of fund. He does not wish to change funds because he has been happy with its relative performance and the good-value insurance. The fund has a wide range of investment options and James chose to invest in the high-growth option. He is not interested in making additional contributions to superannuation at this stage.

Your task, as his financial adviser, is to prepare a statement of advice that will include strategies to meet James’s goals.

Section 1: Part A
It is a legal requirement that you give your client a financial services guide (FSG).
(a) Outline the timing requirements for providing an FSG.
(b) Identify the two (2) ways that an FSG can be presented.
(c) Identify six (6) pieces of information that must be included in an FSG. (300 words)

Section 1: Part B
Provide a series of questions you could use to find out more about James’s share portfolio and his goals and attitudes relating to the portfolio. You must include at least one (1) open-ended, one (1) reflective and one (1) closed question. Clearly specify which type of question each is. (200 words)

Section 1: Part C
Before giving advice to a client, it is essential to gather all the relevant information. What techniques will you use to gather sufficient information about James to determine his needs and objectives?
How do you make certain he has provided you with sufficient information to formulate advice? Include discussion of both administration and soft skills. (250 words)

Section 1: Part D
James has told you he wants to maximise his savings. What are two (2) questions that you would ask James to help you quantify (or calculate) this goal? Include responses from James that will assist you to formulate an appropriate strategy for him. (200 words)

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Posted on : February 06th, 2018
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