2011 Case Study and Challenge Guidelines

2011 AMP University Challenge Case study and challenge guidelines

This case study provides a high level overview of your clients situation. It should be read in conjunction with the supplied populated fact find document which is the primary source of truth for client details. It is compulsory for all university challenge responses to use the discussion paper template provided by AMP.
Case study introduction:
Bruno and Felisa are both 25 years of age and recently married. They have just moved into a property which is owned by Felisas parents and are paying rent of $400 per week. Bruno works at a large telecommunications company earning $75,000 pa plus 9% Super Guarantee (SG) contribution. Felisa is a school teacher earning $78,000 plus 9% SG. They have come to you for advice on how they can achieve their dream of buying their first home. You have had a comprehensive meeting and discussion with them and completed the relevant sections of the fact find document (refer attached). The budget discussion you had with them reveals that prior to their wedding they were saving approximately $1,000 per month. This surplus cashflow was previously used to help finance their wedding and honeymoon. Now they have moved into their new accommodation they estimate this surplus can increase to $2,000 per month. However, this does not take into account the new credit card debt they have accumulated from their honeymoon. They have each completed a risk profile with you which included a detailed discussion about the differences in their risk profile.

Primary goal:
Bruno and Felisa want to buy a property to live in, in a 5 - 7 year timeframe. They do not have a set location, purchase price or type of property in mind (i.e. home or strata) and are very flexible in this regard.

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However, Felisa is very disciplined with her budgeting and has calculated the most they are prepared to pay in monthly mortgage repayments (principal & interest) is $3,200 per month. They want to have a 20% deposit for the property. They are both very firm in these beliefs and are prepared to wait longer to buy a property which meets this criteria. They want to know: how to best to use their cash flow to save for this deposit what size deposit is possible in 5 years time and how much they could buy a property for.

The challenge:
Your challenge is to help Bruno and Felisa meet their goal of buying a property in 5-7 years time along with any other lifestyle goals detailed in the fact find. Your advice will take the form of a strategic discussion paper. There is a significant difference in their risk profile which you need to address and base your recommendation around. The template discussion paper provided must be used to present the advice (refer attached). It will also provide the recommended structure you are to follow and outlines the minimum requirements for the content of your advice. You should write your discussion paper with the intention it would be presented to a client. Appropriate style and tone should be used as well as writing a clear, concise, easy to understand and customised recommendation to the clients. Finalists will be presenting their discussion paper to the fictitious clients in Sydney on 19th October. The length of your final discussion paper (including any appendices) should not exceed 20 pages (in Arial 12 font, single spacing and 2cm margins). Please note, the appendices will only support your strategic advice and will not be separately assessed. An appendix could for example include details of any financial projections you have used. A set of standard economic and investment assumptions have also been provided and should be used.

Scope of advice:
Your clients have limited the scope of your advice to include the following: Saving a 20% deposit to buy a property to live in. Maintaining current lifestyle goals e.g. replacing motor vehicles every 5 years. Debt management Recommendations of appropriate levels of personal insurance.

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You will not recommend any specific investments, investment products or insurance products. You will recommend generic product groups e.g. managed funds, insurance bonds, income protection etc. These recommendations can only include generic product features available across this group of products. The following specific advice areas are also not in the scope of your advice: Any type of agricultural schemes or exotic investments. Self managed superannuation funds. Direct shares, derivatives (including structured products) of any kind or discretionary accounts.

Your licensing conditions:

You are a fully qualified and accredited financial planner. You are an employee and Representative of The Practice which is licensed by AMP Financial Planning. You receive a salary and bonus based on achieving agreed key performance measures. You have agreed on a flat fee for service to provide this advice to Bruno and Felisa. That fee is $3,300, including GST. Your Financial Services Guide (FSG) was provided to your clients at your first meeting. This enabled you to cover all legislative and compliance requirements.

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Guide to completing the challenge

Introduction
The AMP University Challenge is designed to test your knowledge of financial planning principles and strategies applied to a typical limited advice case study. It is also designed to test your ability to communicate this advice to your clients. It is not designed to test the many detailed compliance aspects of financial planning, although of course the broad principles must be displayed in your submission.

Key points in developing your strategic discussion paper

The key to the challenge is to provide advice which meets your clients goals. The strategic discussion paper is written for your clients. Use plain English and write in a manner that will maximise the understanding for your clients. The most important part of the challenge and the strategic discussion paper is the strategy itself. What strategies have you considered, what have you recommended and why? How do they meet your clients goals and what are the risks of implementing (or not implementing) the advice? You must use the basic format of the template provided. However you may choose to add additional sections or change the order of various sections if you feel this makes the document easier to understand. Your advice should not exceed 20 pages. Please use Arial 12 font, single spacing and 2cm margins. The appendix should not exceed 8 pages. Explanations should be clear and concise and in terms that your client will understand. Appropriate tone and style should be used for the client document. The asset allocation you recommend needs only to distinguish the split between defensive and growth assets as per the risk profile summary as detailed in the fact find document. Do not refer to any specific products. Do not include or attach any product information, research profiles, product brochures or prospectuses or any other advertising material.

Assumptions
Your advice should be based on the information contained in the fact find. You may need further information to develop your strategy and in practice you would have sought this additional information from the client(s). However for the purpose of the AMP University Challenge you may need to make assumptions to clarify a number of issues relating to the clients personal information which could affect your advice. These should be clearly documented in your submission.

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Any assumptions used MUST NOT change or be in conflict with the existing information contained in the fact find. You should not introduce any new information that significantly alters their current financial situation eg promotional salary increases or inheritances. A set of standard economic and legislative assumptions have been provided as Appendix 2: Economic Assumptions in the populated fact find and should be used in your submission.

Projections
The timeframe for the clients goals is 5 - 7 years. You do not need to make financial projections beyond this period. Summaries of cash flows should be contained in the body of the strategic discussion paper and can take the form of tables and/or charts. Any detail supporting these results should be contained in the appendix. Note: these projections will not be separately assessed. You are not permitted to use any commercially available financial planning modelling software. You are permitted to use spreadsheets (e.g. Excel) or publicly available tools and calculators which are available from public websites e.g. University Challenge website, financial institutions or industry websites. You are not required to include specific premium quotations for insurance costs. These premiums can be assumed or based on market research.

Key Dates

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Submission Checklist
Before submitting your discussion paper to AMP, please ensure the below checklist action items have been completed. All team members have confirmed they are eligible to enter the 2011 AMP University Challenge. Terms and conditions are available at www.universitychallenge.com.au. All team members have confirmed they will be available to participate in the finals day on 19th October 2011 in Sydney, if required. Discussion paper template provided was used for the team submission and is less than 20 pages in length, uses single spacing and has 2cm margins. All content has been supplied in the submission to AMP. Addendums are not accepted post submission. Economic and investment assumptions have been adhered to in the team submission and any additional assumptions made have been clearly documented. A photocopy of each team members university student ID card has been attached to the team submission. This will be used to confirm current student status as well as to identify finalist team members on finals day. An electronic copy of the teams case study discussion paper response has been kept by at least one team member. Final discussion paper submission has been emailed to plannercapability@amp.com.au by 5:00pm (AEST) on 9th September 2011. Our team name and contact details are clearly contained within our submission.

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