2011

Case Study and

Challenge Guidelines

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2011 AMP University Challenge

Case study and challenge guidelines

This case study provides a high level overview of your client’s

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 Felisa’s 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 client’s 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 client’s 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 client’s 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 client’s 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 member’s 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 team’s 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.