CLIENT WORKBOOK

CLIENT NAME: Ms Rich

FINANCIAL ADVISOR NAME: Vaioleti. T

YOUR TASK:

Scenario

You are a new financial advisor for Moneybags Wealth Management. You have been assigned a client, 20-year-old
Ms Ivana B Rich, who is seeking advice about strategies to manage her personal finances and accumulate future
savings.
Moneybags Wealth Management (MWM) provides high-quality financial advice. It is a reputable financial
planning association that takes a client’s personal circumstances as well as their goals and objectives into
consideration when providing advice. Whether it is advice about managing inheritance or superannuation or
planning for retirement, MWM proposes a course of action that will help clients achieve their goals over time.

Objective
Your objective is to gain some basic knowledge that will help you to understand the role you have as a financial
advisor. This workbook is divided into three parts:

 Part A – Financial Advisor Knowledge

 Part B – Client Details and Risk Profile

 Part C – Investments and Risks

Before we can provide financial advice to Ms Rich, we need some basic knowledge that will help us understand
the role we have as a financial advisor. Using your class notes, OneNote resources and the websites below,
answer the following questions in the space provided (next page). Use your own words (do not simply copy and
paste).

IMPORTANT!
This information you gather will be used in the assignment for this unit where you will conduct an inquiry and
propose a course of action for Ms Rich about strategies to manage finances and accumulate future savings in a
written Statement of Advice report. While this workbook is not assessable, it is vital that you complete this
workbook to allow you to have the knowledge and understanding you need to complete the assignment.
 Part A – Financial Advisor Knowledge

Websites:
MoneySmart: https://www.moneysmart.gov.au/investing/financial-advice
Financial Advisor Job Description: https://www.allaboutcareers.com/careers/job-profile/ financial-advisor
Investopedia: https://www.investopedia.com/terms/i/investmentstrategy.asp
Financial Dictionary: https://financial-dictionary.thefreedictionary.com/Investment+strategy
https://financial-dictionary.thefreedictionary.com/Risk+management
Purely Finance: https://www.purelyfinance.com.au/risk-return-financial-planning-advice-risk-management/

1. Identify the role and responsibilities of a financial advisor?

- Manage the portfolios of high-net-worth individuals and offer financial advise or offer expert advices on
taxes

2. Explain what an investment strategy is?

- An investment strategy is a specifically designed strategy designed to help a person achieve his/her
financial and investment goals.

3. Explain what risk management strategies are?

- Risk management strategy

4. Describe how this information will assist you in your new role as a financial advisor?
- Helps to assist in my new role as a financial advisor as it tells me what to do, by managing
 Part B – Client Details & Risk Profile
Below is a transcript of a conversation you have had with your client, Ms Rich. Read through the transcript carefully which provides valuable personal information and
how much risk she is willing to take (her risk profile). This will help you choose the right investment strategy (or plan) for Ms Rich.
Client Interview Transcript. Date of interview – 23 rd April 2022.
ADVISER: Good morning, Ms Rich. Welcome to Moneybags Wealth
Management. What do you hope to accomplish by visiting me today?
MS RICH: I recently inherited $400 000 and I really need help deciding what
to do with it. It’s just sitting in my savings account at the moment. I know I
should be sensible and invest it for my future, but I don’t know much about
shares or other options. Besides, I’ve been studying hard for years and
really need a holiday.
I have a few options. My brother also received the same amount of money
and wants me to buy into an investment property with him. And then I have
a friend who said I should buy into her business. I can’t remember much
about it… it’s called ML Marketing or something. She said I just need to
invest some money into like she did, and now she claims she is making lots
of money – just as long as she attends the monthly workshops the company
runs and buys the right amount of product from her supervisor then she will
keep earning profits from it.
ADVISER: OK, Ms Rich. I will try to help you make informed investment
choices, but first I need to know more about your personal and financial
situation. Are you working at the moment and do you have any debts?
MS RICH: I have a casual waitressing job and bring home about $250 per
week. I am currently paying $50 board to my parents per week as well.
They are very supportive of me as I’m almost finished studying my Bachelor
of Business degree which I am doing full-time and I should finish next year.
My goal is to be a Human Resources Manager when I graduate.
Other than my HELP debt, which is about $38 000, I just owe $10 000 for my
car. I think I’m paying around 10.5% interest on the car loan.
ADVISER: Do you own any other assets?
MS RICH: Not really. I have a little bit of furniture, my laptop and a great shoe
collection. That might be worth a bit on eBay.
ADVISER: What would you like to achieve with your money in the short and
long term?
MS RICH: Well, I would really like to use about $15 000 for a holiday after I
graduate from uni next year. I’d like to do a trip around the world after my
hard work studying! Other than that, I guess I just want to make as much
money as I can so I can use it when I’m ready to buy a house. I don’t think
that will happen for at least ten years though; I want to work on my career first.
ADVISER: How would you feel if you woke up tomorrow and found your bank
balance had dropped 20%?
MS RICH: I wouldn’t lose sleep over it because I know that I am young and I
have plenty of time to make it back before I need it. I would be very upset
though, if I hadn’t make any money in 10 years.
ADVISER: Have you thought about ways to protect your finances?
MS RICH: Uh. No? I’m not sure what you mean… like insurance? I’m pretty
healthy right now. I don’t think I need it. I am also very lucky and a really
good driver, and I know my parents will help me out if I get into any financial
trouble.
ADVISER: Thank you Ms Rich. That is it for now with my questions. I’ll
assess the information that you have given me and will formulate a financial
plan and get back to you with my recommendations.
 Part B – Client Details & Risk Profile
1. Use the transcript above to identify relevant data and information from the interview transcript to complete
the tables below:

Personal and financial information

Client name

Age

Employment

Annual income

Assets

Liabilities

Consumer
protections needed

Attitude to risk (high

medium or low)

Financial goals

Short-term goals
(0-5 years)

Long-term goals
(5 years +)
2. Interpret the data and information represented in the graph below to answer the questions below.

Investment options and average annual rate of return (2001-2021)

9

6
Percentage (%)

0
Shares Fixed Term Deposits Property Savings
Investment options

Note: Indicative data only

a) Explain what this graph communicates about investment options.

b) Identify which investment option(s) would have made a moderate (4% - 8%) return on investment over
the long term. Use data and information from the graph to justify your response.
 Part C Investments and Risks
Investment
Benefits Costs
options

• You earn income from interest • Interest rates change regularly so income not
consistent
• You can access your money anytime with a
debit card • Interest earned from savings is taxable
Savings account
• There's virtually no risk of losing your money • Account–keeping and transaction fees are often
charged
• Very safe — deposits < $250,000 guaranteed by
the government.

• Can calculate exactly what your return will be
as the interest rate does not change for the
term of investment.
• Rates of return are often slightly higher than a
Fixed term deposit regular savings account.
• There's virtually no risk of losing your money
• Very safe — deposits < $250,000 guaranteed by
the Government
• Penalties are incurred if you wish to access your
money before the term deposit matures
• Less flexible than regular bank online savings
accounts
• Honeymoon rates can drop if the investment
automatically rolls over to a new term at maturity

• You are investing in a tangible asset
• Property can be less price volatile than shares
or other investments
• Potential to make a capital gain from growth in
the value of the property
Property
investment • Potential to earn a regular income from rent
• Tax benefits through negative gearing
• There are very high entry and exit costs (legal fees,
stamp duty, agent commissions, etc.)
• Rental income often won’t cover your mortgage
payments or other expenses
• A jump in interest rates will decrease your returns
• You may have to cover maintenance costs and
periods of time without a tenant
• Takes many months to sell property assets so you
won’t be able to access investment quickly
• Run risk of negative equity where the property
market declined and investors owe more than the
market value of the property

• Potential capital gains from owning an asset • Prices highly volatile

that increases in value over time
• Dividends may vary
Share funds • Potential income from dividends
• If company goes bankrupt, money could be lost
• Lower tax rates on long-term capital gains
• Small brokerage fees paid for transactions
• Can sell and liquefy assets within a few days
To help you make the right choices for Ms Rich read and analyse the information contained in the table above,
about the benefits and costs of different investment portfolio options.

Use the investment information above to answer Question 1-6 questions:

1. Identify one investment option that has a high chance of guaranteeing a return

Investment option:

2. Recommend whether you would include this investment in Ms Rich’s portfolio and justify your decision:

3. Identify one higher risk investment option

Investment option:

4. Recommend whether you would include this investment in Ms Rich’s portfolio and justify your decision:

5. Identify one investment option that provides quick and easy access to funds

Investment option:

6. Recommend whether you would include this investment in Ms Rich’s portfolio and justify your decision:
7. To assist Ms Rich to manage financial risk you need to gather relevant and reliable information about different strategies for managing financial risks from a
variety of online and print sources. Use your own words, do not just copy and paste.

There are a variety of sources that provide reliable and relevant data and information about financial risk management strategies, for example,

MoneySmart by ASIC and the Australian Competition and Consumer Commission (ACCC). Don’t forget to record the source of your data! Your class
notes, PowerPoint and other resources can be used as well.
Strategies for Provide a definition and examples Sources (more than one source might
managing Explain how each strategy manages financial risks be needed)
financial risks
Managing debt Definition:
and/or over-
indebtedness
Examples:

How this strategy manages financial risks:

Diversifying Definition:
investments

Examples:

How this strategy manages financial risks:

Strategies for Provide a definition and examples Sources
managing Explain how each strategy manages financial risks Sources (more than one source might
financial risks be needed)
Consumer Definition:
protection

Examples:

How this strategy manages financial risks:

Scam avoidance Definition:

Examples:

How this strategy manages financial risks: