Case study: Graham and Anna Sutton

You are Jess Craig, senior financial planner and principal of All Out Financial Planning, a boutique financial planning practice licensed by ABC Financial Solutions Pty Ltd (AFSL 222222).

You first met Graham and Anna Sutton two months ago, when they were referred to you by an existing client. At that meeting you completed a data collection form and the clients provided you with copies of the following:

(1) current superannuation statement for both partners

(2) tax return for the previous financial year (2016/17) for each of them

(3)bank statement of loans and savings.

The clients have requested that you prepare a statement of advice (SOA) which addresses their goals and objectives and each of the questions they have raised as outlined in the following ‘Scope of advice’.

They have confirmed that the following information collected through a comprehensive fact find is accurate and still relevant.

Personal details

Family name




Given name




Marital status




Home address



1 White Ave, Wollongong NSW 2550

Contact number

0416 000 001

0416 000 002


Current age









Stopped smoking 18 months ago



Expected retirement age


When Graham retires


Dependant details










Still at school

Still at school

Once the children have completed their schooling Graham and Anna will support them, if needed, up to $10,000 per year each, up to age 24 

Employment details


Current position as a senior mining engineer at BlueScope Steel, Wollongong, NSW, finishing in two weeks time.

Commences new position as site engineer at Pilbara Port Corporation, WA in two months time.


Home duties at the moment but has accepted a position as a personal assistant to the training and development manager at All Brains Inc., Perth, commencing in three months time


Graham and Anna have been married for over 25 years. Graham has always been the main income earner as Anna willingly left her secretarial job many years ago to be the primary carer for their children.

Graham has been working as an engineer at BlueScope Steel for the last 26 years and has recently been offered a voluntary redundancy as part of a major restructure. His total redundancy benefit will be $175,000 after tax.

Fortunately, he was offered an ongoing contract as site engineer for Pilbara Port Corporation in Western Australia, with the same total package that he is on now ($195,000 plus superannuation of 9.5%), which he has accepted. The family will soon move to Perth and Graham will start his new role in about two months time.

Anna is looking forward to returning to the workforce and has found a part-time role in Perth as personal assistant to the training and development manager at All Brains Inc. She confirmed she will start her new job in about three months time and will earn $52,000 p.a. plus superannuation of 9.5%.

Graham and Anna plan to rent initially, at an estimated cost of $650 per week. They have approached an agent to purchase a property in Perth as they would prefer to own a property rather than rent.

Graham will fly-in fly-out (FIFO) to the Pilbara region. He is required to work for 10 days and then have six days off. The company will bear all his flying and living expenses in the Pilbara region.

The family home in Wollongong will be rented out at an expected gross rental of $600 per week.

Attitude to investing — risk profile

Following the completion of a comprehensive risk tolerance questionnaire and subsequent discussions with you, Graham and Anna have agreed with your conclusion that Graham is a ‘growth’ profile investor and Anna a ‘balanced’ profile investor.

Assets and liabilities






St. George Bank online a/c





St. George savings a/c





Colonial First State Index Australian Share fund





BlueScope Steel superannuation fund (balanced profile)





CareSuper Industry Fund – conservative balanced option





Industrial property — Brisbane





Investment property — Gold coast: Unit 1





Investment property — Gold coast: Unit 2





Wollongong — family home










Home contents (insured value)





Estimated annual gross income details




Gross salary income



Gross rental income**



Interest income^



Managed fund income##






**    Rental income of 4 × properties including Wollongong home.

^       Interest income from online savings account.

##      5% income excluding fully franked credits.

Annual expenses — joint

Annual rent


Expected rent in Perth (annualised)

Annual living






Deductible outgoings (i.e. interest)


4 ´ rental properties including family home to be rented (interest-only repayments)

Children’s education



Life insurance (held outside super)



Motor vehicle costs






Graham’s redundancy

Graham has advised that the after-tax $175,000 redundancy payment will be added to the joint online savings account as above when he finishes.

Graham’s superannuation

Graham’s superannuation is with the BlueScope Steel Employer Fund. Its current value is $370,000 (tax‑free component is $22,000 and taxed component is $348,000).

Anna’s superannuation

Anna has a smaller superannuation balance of $43,000 in CareSuper Industry Fund — conservative balanced option (all taxed component). These benefits were rolled over to CareSuper when she gave up work. She has not made any further contributions.

Investment properties

The investment properties were purchased over an 18-month period in 2011/12. Both residential investment units on the Gold Coast are now valued below their original purchase price including costs. Original purchase price plus costs of the properties are as follows:

•    Gold Coast: Unit 1                            $159,000

•    Gold Coast: Unit 2                            $268,000

•    Brisbane industrial property:       $385,000

•    Wollongong family home:            $310,000.

Graham has read many books on building wealth through property investments and has attended a few investment seminars which have recommended negative gearing into property. He was told his property investments could double in 10–15 years, but he is very concerned now that both his Gold Coast units are valued below their purchase price. He is uncertain about what to do with these properties, though he finds that overall, after negative gearing is calculated, he gets a tax advantage.

Graham said he is interested in exploring the establishment of a self-managed superannuation fund (SMSF) as he has read you can borrow through an SMSF to buy property.

Graham’s and Anna’s insurances

Graham and Anna have clearly said that although they will require a review of their life insurance requirements, they do not want you to address this area in your SOA. They want you to address this separately at a later time.

However, they do want you to address some preliminary questions they have relating to the ownership and workings of life insurance policies.

Their respective superannuation statements show that Graham and Anna have basic life and total and permanent disability (TPD) cover. They have said they both hold other life insurance policies outside of the policies in their superannuation funds.

Estate planning

Both Graham and Anna have simple wills which were drawn up when they bought the family home in Wollongong 15 years ago. In it, they leave everything in individual names to each other. They do not have powers of attorney, nor have they completed beneficiary nomination elections with their respective superannuation funds.

Graham and Anna’s retirement plans

Graham plans to work for at least nine years and hopefully build enough wealth to retire at the end of that time. Anna plans to retire at the same time as Graham.

When they retire they have estimated, given no debt, they will need $65,000 per year in today’s dollars, excluding major holidays, which they plan to take every second year at a cost of $15,000 in today’s dollars. Their wish at this stage is to retire in Wollongong or near the south coast of New South Wales.

Anna’s mother Marie — aged care considerations

Graham and Anna also mentioned that Anna’s mother, Marie Francis, age 78, who is living in their granny flat (non‑homeowner) in Wollongong has, as a result of illness, been recently assessed by an aged care team who has granted approval for her to move into an aged care facility.

Marie’s only investment is $380,000 in cash and term deposits with her bank. She receives a part age pension. Graham, Anna and Marie have selected a church-operated facility in Wollongong which Marie feels comfortable with. It has a published price for a refundable accommodation deposit of $240,000 (which she will pay in full upon entry using her cash/term deposit funds). They believe that she can live comfortably on an income of $22,000 per year.

Anna’s sister, who lives near Wollongong, will be able to provide support while Graham and Anna move to Perth.

Assignment tasks (95 marks)

Scope of advice

Your task is to:

1.   Examine the clients’ stated goals and objectives for each of the following questions and issues they have raised and, after analysis, consider appropriate responses.

      The questions and issues raised by the clients are important in the development of appropriate strategies you believe the clients should be considering. Those questions to which the clients require a specific response should be addressed in your SOA. All goals, issues and directions raised by the clients form the agreed scope of your advice to the Suttons.

2.   Complete an SOA that incorporates, in a coordinated and communicative way, the strategies the clients should be adopting and suitable responses to each of the questions the clients want you to address. Your SOA should also conform to the content and structure of an SOA and its component parts as described in Topic 8 and the sample SOA.

The following questions and issues raised by Graham and Anna are designed as prompts to help you consider the key issues. A number of assumptions are required to be determined. These assumptions should be incorporated into your responses and the SOA.

Key issue

•    When they retire when Graham reaches age 62, they have estimated they will require $65,000 per year in today’s dollars, excluding the cost of holidays every second year estimated at $15,000. They want your advice as to whether this is realistic and achievable, and what strategies they should be undertaking now to achieve this important financial goal, and why.

      They have noticed that their superannuation funds offer retirement income streams in the form of account-based pensions. They would like to know how they work and whether they are something to consider in retirement.

In addressing these key retirement issues, the Suttons have also raised the following related questions and issues which they want you to address in your written advice:

•    Should they be looking to establish an SMSF and what are the pros and cons of doing so? How could an SMSF assist them in accumulating wealth for their retirement, particularly if they wanted to purchase more property? What can an SMSF do that their current funds cannot?

•    What is your view of them continuing to invest in residential property, coupled with negative gearing, to build wealth for retirement? Additionally, what options should they be considering with their residential investment properties given their poor performance?

      What are the pros and cons of purchasing a Perth property to live in compared to renting? Do you have a view as to what they should do?

      Graham has heard that there would be no capital gains tax if he rents his family home for a short period and he would like you to explain the current rules about this.

•    Graham and Anna have never heard of superannuation beneficiary nominations and have not nominated any beneficiaries to their superannuation. What are they and what should they do about them, if anything?

•    Graham has requested you to advise him on a suitable superannuation fund which can accept his rollover benefits, employer and voluntary contributions. He also wants to know what he should do with his redundancy package.

•    Anna wishes to build her superannuation for retirement after hearing about the importance of saving for retirement on the local radio. When she starts her new job, she would like to invest more in superannuation and would like you to advise her on how much she should contribute. Should she continue to use CareSuper as her principal superannuation fund?

•    In regard to Graham’s and Anna’s life insurance arrangements, although they wish to address precise strategies in this area separately, as they have policies both inside and outside superannuation, what are the issues they need to be aware of with each option? Is it more advantageous to incorporate all the policies they need through their superannuation funds?

Marie’s aged care requirements

•    Graham and Anna also want your advice on aged care and Marie’s cash flow when she moves to the aged care facility. They would like to know how the fee would be calculated, the implications for her age pension and how she should fund the refundable accommodation deposit. They also want to know approximately how much age pension Marie will get once she enters the facility.

Note: You are required to address all the questions and issues described above. Clarity and conciseness in the articulation of your responses are important, with any explanations required to be sufficient for the clients to understand. Marks are awarded for assignment research and referencing.

Assignment research and referencing (5 marks)

You are required to research beyond the subject notes in answering the questions in this assignment. Reference and cite all your sources when quoting or using material from external sources. Include a reference list at the end of your assignment.

You are required to:

•    use an appropriate presentation and format for your assignment

•    demonstrate independent research and analysis

•    demonstrate appropriate use of relevant references

•    follow the Harvard referencing style as recommended in the ‘Referencing and Citations Guide’ available from the ‘Library Learning Hub’ in KapLearn

•    include a reference list at the end of your assignment following the recommended referencing style

•    adhere to the assignment word limit

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