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Unit Guide
AFC3440
ON-CAMPUS
Workload:
This is a six credit point unit with three hours class contact per week over
12 teaching weeks. It is expected that you will spend, on average, nine
hours in self-directed study each week, in addition to the three hours of
class contact. Self-directed study for a particular unit may exceed nine
hours during weeks preceding an in-semester test, submission of a major
assignment or final examination.
Prerequisites:
AFC2240
Prohibitions:
AFF3111
Chief examiner:
Campus:
Clayton
Lecturer:
Tony Cusack
Email:
tony.cusack@monash.edu
Co-ordinating Tutor:
Elizabeth Ooi
Campus:
Clayton
Email:
elizabeth.ooi@monash.edu
Phone:
SEMESTER 2 2013
HANDBOOK ENTRY: http://www.monash.edu.au/pubs/handbooks/units/AFC3440.html
Australia
ACADEMIC OVERVIEW
Learning objectives
The learning goals associated with this unit are to:
1. describe financial planning activities, and legal compliance requirements for financial planners
2. demonstrate specialist skills required for interaction with financial planning clients
3. demonstrate generic knowledge of the Australian and global investment environments, together
with specialist knowledge in the areas of superannuation, financial planning, securities and
managed investments
4. prepare financial plans for clients with different financial objectives
5. apply critical thinking, problem solving and presentation skills to individual and/or group
activities dealing with pension and financial planning and demonstrate in an individual
summative assessment task the acquisition of a comprehensive understanding of the topics
covered by AFC3440.
Graduate attributes
Monash prepares its graduates to be:
1. responsible and effective global citizens who:
a) engage in an internationalised world
b) exhibit cross-cultural competence
c) demonstrate ethical values
2. critical and creative scholars who:
a) produce innovative solutions to problems
b) apply research skills to a range of challenges
c) communicate perceptively and effectively
Assessment summary
ASSESSMENT TASK
DUE DATE
VALUE
Mid-semester test
Week 6
5%
25%
70%
TOTAL
100%
Hurdle requirement
There is a hurdle requirement for this unit.
The learning outcomes of this unit require you to demonstrate a comprehensive understanding of
the topics covered in the unit. Hence the hurdle requirement for this unit requires that you must
attain a mark of at least 50% in the final examination. If you fail the unit solely because of failure to
satisfy the hurdle requirement, a mark of 48N will be determined by the faculty's Board of Examiners
on the recommendation of the unit's Chief Examiner.
Copyright Monash University 2013
The outcome from application of the hurdle requirement is often misunderstood by students who are
awarded 48N. For example, some students mistakenly believe that 48N means they failed the final
examination by two marks and that a second re-mark of their examination paper might find two
extra marks. Whereas 48N does not provide any indication of the mark attained in the final
examination other than a mark less than 50% was awarded.
The following example should make the application of the hurdle requirement clear. In this unit 30%
of the assessment regime is allocated to in-semester assessment and 70% to the final 3-hour
examination. A student enrolled in this unit might achieve 24 out of 30 for their in-semester
assessment and 30 out of 70 for the final examination. While the overall total of these marks is 54P
the final examination mark is five marks below the required 50%. Consequently a mark of 48N will
be determined by the faculty's Board of Examiners on the recommendation of the unit's Chief
Examiner.
Second marking
Where an assessment task is given a fail grade by an examiner, that piece of work will be marked
again by a second examiner who will independently evaluate the work, and consult with the first
examiner. You will not be awarded a fail grade for an assessment task or unit without a second
examiner confirming the result.
Note: Exceptions to this are individual pieces of assessment contributing 10% or less of the final
mark, unless the total of such pieces exceeds 30% of the final mark.
Return of final marks for the unit
Faculty policy states that the final mark that a student receives for a unit will be determined by the
Board of Examiners on the recommendation of the Chief Examiner taking into account all aspects of
assessment.
The final mark for this unit will be released on the date nominated in the University's Principal Dates
Calendar found at: http://www.adm.monash.edu.au/execserv/about/principal-dates/
In Semester 2, 2012 your results will be accessible through my.monash portal at URL:
https://my.monash.edu.au/ on Monday, 9 December 2013.
Exam viewing
Feedback on student performance in examinations and other end-of-semester assessment is
required, in accordance with the University procedures on Unit Assessment. For more information,
please see the following URL: http://www.buseco.monash.edu.au/aaf/student/exam-view/index.html.
readings are listed in this guide and on the unit's Moodle website. The Moodle website provides
access to material including past examination papers and model answers. These resources will
enable you to develop a mastery of the topics covered by the unit.
To ensure a high probability of successfully completing this unit, you need to manage your time and
studies in a systematic way. At a minimum this should involve:
reading prescribed and selected recommended material prior to attending lectures;
completing week-by-week tutorial activities tasks prior to attending tutorials;
attempting relevant questions from past final examination papers and in-semester tests;
discussions with past and present students; and
revision of the semester's work during the SWOT-Vac and prior to the final examination.
Feedback
Our feedback to you
Students will be provided with feedback in the following manner:
written comments on the group financial plan
individual and class feedback in tutorials
Your feedback to us
Monash University's statement of purpose endorses its commitment to excellence in research and
scholarship, education and management. The University regularly seeks feedback from students,
employers and staff. One of the key formal ways students have to provide feedback is through
Student Evaluation of Teacher and Unit (SETU). The Universitys student evaluation policy requires
that every unit is evaluated each year. You are encouraged to complete the surveys. The feedback
is anonymous and provides the department and faculty with evidence which underlies and enables
continuous improvement.
For Monash Universitys statement of purpose go to URL:
http://www.monash.edu.au/about/monash-directions/directions.html
and for the University's Student Evaluation Policy go to URL:
http://www.policy.monash.edu/policy-bank/academic/education/quality/student-evaluationpolicy.html.
Required resources
Prescribed text available from the University Bookshop
CCH. (2012). The Australian master financial planning guide 2012/13 (15th ed.). CCH.
Superannuation legislation changed very significantly during 2007 with consequential changes in
superannuation and financial planning strategies in subsequent years. Earlier editions of the CCH
text are not acceptable. Note that only this edition can be taken into the examination.
Virtual learning environment (VLE): Moodle
Material used in class together with other information of importance to you will be published online
via the units site on Moodle. In order to access information about this unit in Moodle you must be
enrolled in the unit and have a valid student account with authorised username and password.
Moodle is accessed through my monash portal at URL: https://my.monash.edu.au/.
When you log in to my.monash portal you access Moodle in the home page by clicking on the
Moodle 2 link under "Online systems".
Q Manual
Work submitted for assessment must be consistent with the guidelines set down in the Q Manual,
which is the faculty's student guide for producing quality work on time. Copies of this manual can be
purchased at the bookshop or accessed online at URL:
http://www.buseco.monash.edu.au/publications/qmanual/qmanual.pdf.
Calculators
Electronic devices (including calculators) are not permitted in tests and examinations in this unit
unless identified with an approved for use label.
These labels are available from:
Caulfield Campus: Accounting and Finance Reception Desk (Building H, Level 3)
Clayton Campus: Accounting and Finance General Office (Building 11, Level 10)
Recommended resources
Recommended texts and readings
Additional references will be provided in lectures. However, any serious student of business should
read The Australian Financial Review daily. It is available at Clayton campus bookshop at halfprice.
UNIT SCHEDULE
WEEK BEGIN
SYLLABUS
WEEKLY ACTIVITIES
29 JUL
6 AUG
12 AUG Topic 3: Financial plans, compliance issues Read Topic 3 and references therein;
super
1. Social security, the age pension and
super, taxation
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2 SEP
9 SEP
Topic 6: continued
Read Topic 6 and references therein;
4. Characteristics and comparative costs of tutes 5 and 6
the different RIS options; use of an
actuarial basis to price life annuities
10
7 OCT
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A. Life Insurance
1. ASIC requirements for specialist knowledge in
life insurance
2. Asset protection by protecting/affirming
ownership
3. Life insurance markets
4. Features of life insurance products, standard
and impaired lives
5. Aspects of policy ownership, making a claim
6. Life underwriting
7. Changing demand for products
8. With profits policies
B. General Insurance
1. ASIC requirements for specialist knowledge in
general insurance
2. Types of general insurance product
3. Its all about contracts!
4. Standard / qualified premiums
5. Taxation
6. Making a claim
7. Underwriting fat and thin tailed risk
8. Evolution of new products
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21 OCT
REVISION
REVISION
The third task involves Role Playing designed to focus on Planners interaction with clients,
and is conducted in tutes. You will be assigned to groups in tutes for this purpose.
Task 1: 8 marks
Document 1: Answering finance questions, outlining main features of different strategies.
A retiree couple both aged 65 have $650,000 super assets in a SMSF. The assets are invested with
approximately 50% in dividend producing shares (three banks, Telstra) and 50% in Comsecs Cash
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account (paying 5% p.a.). However, these holdings change frequently as they actively trade the day
volatility on the ASX.
They own their home, have $100,000 in lifestyle assets, and their married children, son and
daughter, are financially independent of them. They are just embarking on retirement, and consult
you for assistance in determining a suitable retirement income stream strategy.
Questions:
1. What might you conclude about this couples attitude to risk?
2. What total net annual income (approximately) does their current portfolio provide if their equity
holding benchmarks are as follows?
Note that all these shares pay fully franked dividends. Find the value of 2011/2012 FY
dividends for each company. Give consideration to the notion that this retirement income
portfolio (taking the cash holding into account) may be difficult to improve upon!
3. The couple frequently trade the daily volatility with their bank shares.
What does this mean? Give an example of such a trade. Why not trade the day-to-day volatility on
their Telstra shares?
4. Provide details (cost, amount of starting annual annuity) for the following strategy:
Spend $600,000 on a Challenger Financial Services indexed guaranteed annuity of 30 years. The
annuity is indexed at 3% p.a. and payable monthly in arrears. It has zero residual value. The
remaining $50,000 is invested in an All Ordinaries Accumulation Index Fund over the guaranteed
income years to provide emergency capital or capital in the event the retiree outlives the 30-year
annuity. You will need to:
(i)
find the yield on annuity purchase price currently being offered by Challenger to provide
accurate information about this option, and
(ii)
provide evidence for the long-term expected investment yield on the All Ordinaries
Accumulation index in order to provide accurate information about this strategy.
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NOTE: Since the interaction of superannuation assets and retirement income with Age Pension
entitlements is an important component of the course, it is in your own interests to include its
determination in your clients plan. It will help you to familiarise yourself with the issues involved.
Essentially this means being able to work out Age Pension entitlements by applying Centrelinks
Assets Test and Income Test. You can find current information on the governments means testing
of Age Pension on www.centrelink.gov.au
Task 2: 22 marks
Document 2: construction of a financial plan.
Construct a financial plan to accommodate the retiree couple in Task 1. You will need to provide
them with financial objectives to construct an SoA for them.
The plan (of no more than 15 pages) must contain:
(i)
on the cover, the names and contact details of financial planner(s), their professional
qualifications, the company ABN, and the Australian Financial Services Licence number
under which the principal(s) operate. A statement to the effect that the financial planner is
specifically qualified to provide advice to trustees of SMSFs.
(ii)
within, a statement confirming that a Financial Services Guide (FSG) was given to clients at
the earliest opportunity (and your financial plan contains a copy of the FSG as an appendix).
(iii)
a section containing client objectives as elicited from the clients (this should be an agreed
document, signed and dated by both clients and planners).
(iv)
an outline of client financial circumstances (another agreed document, signed and dated).
(v)
a section outlining the financial planners assessment of the clients attitude to risk, and how
it was determined.
(vi)
the plan/advice.
be predicated on clients current and projected financial position, preferences and risk
profiles.
be capable of explanation in plain language to the clients (and contain this explanation in
summary form).
outline the nature of strategy and products recommended and point out possible risks.
Taxation issues should be clearly explained.
have a definite initial timeframe in mind, and provide projections as to how the financial
prospects of the clients might be expected to evolve over that period. (If you advise your
clients to invest in an ASX index fund (for instance as a part of a drawdown strategy, or an
MVE strategy) you may find it useful to use the ASX data for 109 years of annual returns
provided on the link (provided by AXA Australia):
http://www.crcfs.com.au/uploads/file/109%20years%20of%20All%20Ords%20returns.pdf
contain a summary of how the plan is expected to achieve the clients objectives.
contain a declaration of any associations, commissions, etc. which any person associated
with the provision of the plan might receive, which might influence the objectivity of the
advice.
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contain a clear statement of fees charged for each phase of service. If specialist advice (e.g.
actuarial, taxation or legal) is required, information as to how this can be obtained and at
what cost, should be provided.
NOTE: When constructing an SoA, you must supply clients with a Financial Services Guide at the
earliest convenient time. This would usually be at the initial client interview.
In order to pass the assignment your bound copy of the financial plan must state that you
have supplied clients with an FSG.
Planners are encouraged to consult closely with clients on details of the plan throughout its
construction. The plan would then be scrutinized by the clients who may identify any shortcomings.
Referencing requirements
Work submitted for assessment must be consistent with the guidelines set down in the Q Manual,
which is the faculty's student guide for producing quality work on time. Copies of this manual can
be purchased at the bookshop or accessed online at URL:
http://www.buseco.monash.edu.au/publications/qmanual/qmanual.pdf.
Marks may be deducted where in-text citations and/or the reference list is not consistent with the
American Psychological Association (APA) style, which is illustrated in the Q Manual.
Plagiarism
In order to ensure the academic integrity of your submission and to deter others from copying your
work, your submission may be processed by a plagiarism checker such as Turnitin. The University's
plagiarism policy can be found at URL:
http://www.policy.monash.edu/policy-bank/academic/education/conduct/plagiarism-policy.html.
Submission details:
Assignments should be submitted via the department assignment box on the tenth floor of the
Menzies building (Building 11) at Clayton campus.
Work submitted for assessment must be accompanied by a completed and signed assignment
coversheet, available at URL:
http://www.buseco.monash.edu.au/student/forms/assessment-coversheet.doc.
Return of marks:
Marked assignments will be returned to you during tutorials in week 12. If you do not attend the
tutorial in week 12 you may collect your assignment from your tutor during consultation times. You
should retain the marked copy of your submission until the final results for the unit are released.
Criteria for assessment:
Overall, the work submitted for assessment will be graded in accord with the table showing
examples of grades and corresponding achievement levels published in the Q Manual (2012, p.6).
Task Three (Role Playing)
In tutes, all role-playing groups will be asked to enact (one of)
an initial interview
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similar topics as might arise in the course of the unit (e.g. explanation of the MySuper
product during accumulation or retirement).
In AFC3440 you cannot obtain Specialist Skills accreditation without these enactments i.e. without
the role playing component, Specialist Skills accreditation would be available to no one!
For example, in respect of an initial interview role playing might include:
(i) The parties introduce themselves to each other
(ii) The clients explain their initial requirements, and sketch their financial (and as far as relevant,
social) circumstances in broad outline. In an initial interview, only the essentials can be elicited.
(iii) The financial planners reveal their qualifications, explain the basis on which a financial plan can
be constructed (know your client, know your product), in particular, the need for agreed objectives,
and agreed assessment of financial position.
(iv) Given that the parties approve of each other, an agenda for detailing information, construction
of the financial plan and its presentation to clients can be outlined. If the financial planner is to have
a continuing role in implementation of the plan, the nature of the continuing relationship including
fees must be documented.
Summary of activities in the development of the financial plan
By Week 3:
Role-playing group memberships to be completed.
By Week 5:
By the end of week five you should have submitted an outline (no more than one page) of the
clients financial scenario to me tony.cusack@monash.edu as a Word Document attached to an
email. This scenario should be the basis of the financial plan. While some departure from this
outline is permissible, you should try to adhere to it as far as practicable.
By the end of Week 9 RECAP:
For assessment purposes, a bound and signed copy of both:
Document 1 (answers to questions); and
Document 2 (the financial plan)
is required by the end of week 9
Throughout Semester:
In this unit there is ongoing role-playing in which client interviews are enacted. For instance initial
interviews are simulated, finalised statements of advice are presented, explained and criticised, and
client questions are fielded.
The notion of RG 146 compliance will be discussed in Topics 1 and 3, The Superannuation
Guarantee Scheme in Topic 2, and Social Security in Topic 4. Mean-Variance Efficient retirement
income portfolios are treated in Topics 5 and 6. Challenger Financial Services term annuity unit
costs are available from their website (www.challenger.com.au).
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Final examination
Weighting: 70%
Learning objectives assessed:
This assessment task is designed to test your achievement of learning objectives 1, 2, 3, 4 and 5.
Duration: 3-hour examination
Task details:
The final examination will be a closed book examination (notes may not be used, however The
Australian master financial planning guide 2012/13 15th Edition may be used) and approved
calculators will be permitted.
Date and location:
The final examination will be held during the official examination period.
examination schedule can be accessed through my.monash portal at URL:
https://my.monash.edu.au/.
Information about
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OTHER INFORMATION
Policies
Monash has educational policies, procedures and guidelines, which are designed to ensure that
staff and students are aware of the Universitys academic standards, and to provide advice on how
they might uphold them. You can find Monashs Education Policies at:
http://policy.monash.edu.au/policy-bank/academic/education/index.html.
Key educational policies include:
Plagiarism;
Assessment in Coursework Programs;
Special Consideration;
Grading Scale;
Discipline: Student Policy;
Academic Calendar and Semesters;
Orientation and Transition; and
Academic and Administrative Complaints and Grievances Policy.
Student services
The University provides many different kinds of support services for you. Contact your tutor if you
need advice and see the range of services available at www.monash.edu.au/students
The Monash University Library provides a range of services and resources that enable you to save
time and be more effective in your learning and research. Go to http://www.lib.monash.edu.au or the
library tab in my.monash portal for more information.
Students who have a disability or medical condition are welcome to contact the Disability Liaison
Unit to discuss academic support services. Disability Liaison Officers (DLOs) visit all Victorian
campuses on a regular basis
Website: http://adm.monash.edu/sss/equity-diversity/disability-liaison/index.html
Telephone: 03 9905 5704 to book an appointment with a DLO
Email: dlu@monash.edu
Drop In: Equity and Diversity Centre, Level 1 Gallery Building (Building 55), Monash University,
Clayton Campus.
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