The Black family
The Australian Securities and Investments Commission (ASIC) was prompted to create an example statement of advice (SOA) in response to the Federal Government paper Refinements to Financial Services Regulation, which identified a number of areas where further guidance for financial advisers was needed.
The scenario used for the example is based on Joe and Sue Black — a married couple in their 40s with two dependant children aged seven and 10. As Sue is a full-time parent, the family are dependant on Joe’s income of $70,000 and the Government’s family tax benefit.
The family’s assets currentlyconsist of:
n Joe’s investment-linked industry super-fund: $50,000;
n Sue’s super fund (type unknown): $12,000;
n home: valued at $350,000 ($50,000 mortgage remaining);
n other assets: $85,000;
n savings: $102,000; and
n health insurance: standard private cover.
In particular, they are looking for information on how to invest their savings, after recently receiving an inheritance of $100,000. In normal circumstances, the family has no savings, spending Joe’s entire salary on maintaining the family.
Both Joe and Sally have a low risk tolerance, although they do wish to double their money within 10 years if possible. In addition, the couple is currently uninsured, and wishes to make arrangements so that the family is protected should either person die or suffer from ill health. However, they have stated that they do not wish to take out trauma insurance, nor are they interested in any information on general insurance products.
Their chosen financial adviser is Sally Strong — an authorised representative of Planforit Pty Ltd. Sally is authorised to give advice on superannuation, general and life insurance products, managed funds, and deposit products.
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