2. 3. #ReachingMyGoals · The below analysis applies to your home loan only. = Scenario 1: Current situation Scenario 2: Increase loan repayments by $4,338 p/m* Scenario 3: Increase

Financial Health Assessment

Report prepared for: John & Anne Sample

Date: 20 May 2016

Report prepared by: Good Adviser

Representative of: HSBC Bank Australia

AFSL 238098, ABN 88 004 325 080

Address: 300 Queen Street,

Brisbane Qld 4000

Phone: 61 7 3333 1111

#ReachingMyGoals#StartsToday

Financial Health Assessment Report prepared for Jane Sample dated 25 May 2015 Page 2

About this report The purpose of this report is to provide you a framework for assessing your financial health and, where relevant, trigger further action on your part. We also include insights and practical tips which you could utilise to enhance your overall financial well being.

This report is for your information only and is not intended as a recommendation for the purchase of any financial product. Any advice is general advice only as we have not taken into account your personal objectives, financial situation or needs. You should consider if it’s appropriate for your circumstances.

Please note the results in this report are estimates only. The actual amounts may be higher or lower depending on your actual circumstances and other factors that we cannot predict.

This report is not intended to be your sole source of information when making a financial decision. You should consider whether you should get advice from a licensed financial adviser.

Overview of contents

1. Cash flow analysis .................................................................................... 3

2. Debt management ..................................................................................... 5

3. Risk analysis .............................................................................................. 7

4. Retirement readiness .............................................................................. 11

5. Action plan & next steps ........................................................................ 12

Financial Health Assessment Report prepared for Jane Sample dated 25 May 2016


Level of savings

Savings Ratio = Income Surplus/Net Income

= 32.75%

How is your income surplus used?

Accumulate in bank account Invest via regular savings plan

Spend on lifestyle goods and services Fund investment debts

Pay off debts Other

Practical tips

• To increase your income surplus, consider strategies to reduce your expenses. A useful way to achievingthis is to put together a budget so that you know where your money is going as well keeping a lid on howmuch you spend on each item. While keeping track of your expenses can be difficult, there are a numberof tools available which may make this process simpler.

• Consider setting up a regular savings plan via direct debit from your bank account to ensure the processis automatic without you needing to remember each time.

• To work out whether you are making the best use of your income surplus to build wealth, compare theequivalent after tax return under each scenario.

Tax efficiency Average tax rate = Tax Paid/Total Income

= 26.07%

Practical tips

• To reduce your tax liabilities, consider the use of expenses that are allowable tax deductions. This caninclude such things as income protection insurance premiums, concessional superannuation contributionsand interest expenses on investment loans.

• Check to see if you are entitled to any tax offsets or whether you should alter your investment strategy totake advantage of any tax offsets such as spouse superannuation contributions or imputation credits.

• If you have any investments, review the ownership structure so that you hold it in the name of the entitythat is on a lower tax rate.


Cash flow analysis

The table below shows the main sources of income and expenses.

Description Jane ($)

Employment income 170,000

Investment income 45,000

Total income 215,000

Estimated income tax* 56,043

Net income after tax 158,957

Home loan repayments 48,504

Investment loan repayments 40,392

Living expenses 18,000

Income surplus/deficit 52,061 *Estimated figure only. Please consult with your accountant or tax adviser for more details.

Insight Average weekly earnings Each quarter the ABS collects information from approximately 5,000 employers to determine estimates of average weekly earnings. Employers are asked to provide details of the total gross weekly payments to employees (including weekly overtime payments) split into full-time adults and all other employees.

As at November 2014, the full-time adult average weekly ordinary time earnings is $1,476.30 which translates to an average annual income of $76,767.60.

Average weekly spend by life stage

Lone person aged under 35

Couple only (reference person

aged under 35)

Couple with kids

(eldest child under 5)

Couple with kids (eldest child

between 5-14)

Couple with kids (eldest child

between 14-24)

Housing $278 $360 $364 $325 $242 Fuel & power $20 $26 $28 $43 $48 Food & drink $104 $207 $224 $279 $314 Clothing & footware $23 $52 $54 $64 $82 Medical & health expenses

$24 $58 $67 $77 $104

Alcohol $24 $41 $26 $31 $35 Transport $142 $224 $220 $254 $332 Recreation $106 $182 $132 $208 $253 TOTAL $869 $1,429 $1,484 $1,670 $1,900 ANNUALISED $45,188 $74,308 $77,168 $86,840 $98,800

Sources: www.ibisworld.com.au; Australian Bureau of Statistics Household Expenditure Survey, 2009-10.

Based on information supplied by you, we provide a snapshot of your cash flow position including the level of savings and tax efficiency.

How much surplus income do you have?

How much tax do you pay for every dollar you earn?

How does your weekly spend

compare to the average Australian?

How much income do you save?

Financial Health Assessment Report prepared for Jane Sample dated 25 May 2016 Financial Health Assessment Report prepared for Jane Sample dated 25 May 2016


Average Interest to Income ratio over time

Source: ABS, December Quarter 2013

Scenario analysis The below analysis applies to your home loan only. Scenario 1: Current situation Scenario 2: Increase loan repayments by $4,338 p/m* Scenario 3: Increase loan repayment frequency to fortnightly Note: The results from these calculations should be used as an indication only. You loan providers might have different methods of crediting payments. The differences in savings depend on when each lender calculated interest and how they charge the repayments. * This is based on your annual surplus of $52,061

Loan repayment $4,042.00

Payment frequency Monthly

Loan term Indefinite

Total interest N/A


Payment frequency Monthly

Loan term 8.94 years

Total interest $233,106


Payment frequency Fortnightly

Loan term reduction 0.58 years

Total interest saved $17,026


Debt management

Your current debt position is as follows:

Liabilities Balance ($) Interest rate (%)

Interest payment ($)

Total Repayments

($)

Repayment Frequency

Home loan* $1,100,000 4.41% $48,510 $48,504 Monthly

Investment loan* $916,000 4.41% $40,396 $40,392 Monthly

Personal loan $0 0 $0 $0 N/A

Others $0 0 $0 $0 N/A

Total $2,016,000 $88,906 $88,896 * Based on the figures supplied by you, you are paying interest only on these loans.

Level of Debts Debt to Assets Ratio = Total Debts/Total Assets = 54.86% Debt Coverage Interest to Income Ratio = Interest repayments/Total Income = 32.60%

Insight Average Debt to Assets ratio over time

Source: ABS, December Quarter 2013

Based on information supplied by you, we provide a snapshot of your debt position and the impact on your loan term and interest repayments in various scenarios.

How much interest are you paying on

your loans?

How much of your income is going to repaying interest?

How much interest can you save by changing your

mortgage repayment?



Calculation methodology • Funerals can cost from $4,000 for a basic cremation to around $14,000 for a more elaborate casket, burial

and flowers according to ASIC’s research report (2012). We have used $9,000 in the calculation since it is the mid-point of the range.

• Living expenses for financial dependants are assumed to be 60% of current living expenses until the youngest child turns 18. Beyond this point, the remaining partner or spouse will be self-funding their cost of living.

• Please note the calculations do not take into account the effects of inflation or time value of money. This may overestimate the amount required if investment returns are above inflation and underestimate if the returns are below inflation.

• Children’s average lifetime education costs per child for low income, middle income and high income families are $11,038, $22,322 and $95,804 respectively (source AMP.NATSEM – The cost of raising children in Australia – May 2013). In this calculation we divide the cost by 13 for each year of schooling to arrive at an annual figure. This translates to $849, $1,717 and $7,370 for low, middle and high income families respectively.

• Childcare costs assumed to be $100 per day. We have used an annual figure of $22,000 to cover a period of 44 weeks at 5 days per week.

• For domestic assistance we have included the cost of a nanny or au pair. Based on advertised services this can range from $170 to $340 per week. In this calculation, we have assumed a rate of $250 per week for 40 weeks which will continue until the youngest child turns 13.

Practical tips • Have an estate plan with up-to-date wills and powers of attorney • Confirm who your beneficiaries are in the event you pass away • Have an open discussion with family on these matters to ensure your intentions are clear • Consider any guardianships for young children

Financial exposure in the event of disability and inability to work How much do you need?

Initial expenses Lump sum amount

Debts 2,016,000

Medical expenses 50,000

Home alterations 50,000 Total amount for lump sum needs 2,116,000

Ongoing items Annual Amount No. of Years Lump sum equivalent

Living expenses for dependants 18,000 15 270,000

Medical expenses 5,000 15 75,000

Children’s education costs 0 0 0 Childcare costs 0 0 0

Domestic assistance 10,000 15 150,000

Less continuing income 45,000 15 (675,000) Total required for ongoing needs 0

Total amount needed 2,116,000


Practical tips • Consider having your salary directly credited into your home loan or mortgage offset account. Use a credit

card to pay for living expenses and pay off the credit card debt within the interest free period. This effectively reduces the loan balance used to calculate your interest, thereby reducing the amount of interest payable.

• If you have more than one loan, consider consolidating all inefficient debt into the loan that has the lowest interest rate such as your home mortgage.

• If you have any cash, consider depositing this into the mortgage offset account or home loan. You can always redraw or drawdown the offset account if you need the funds.

Risk analysis

Financial exposure in the event of death

How much do you need?

Initial expenses Amount

Pay off debts 2,016,000 Funeral expenses 9,000

Estate administration 10,000

Total initial required 2,035,000

Ongoing expenses Annual Amount No. of Years Lump sum equivalent

Living expenses for dependants 0 N/A 0 Children’s education costs 0 N/A 0

Childcare costs 0 N/A 0

Domestic assistance 0 N/A 0 Total amount for ongoing needs 0

Total amount needed 2,035,000

What resources can you draw on?

Lump sum items Lump sum amount

Cash 970,000

Investments 1,160,000 Superannuation 63,000

Life insurance 660,000

Total lump sum resources available 2,853,000

Financial exposure -818,000

Based on information supplied by you, we provide a snapshot of your financial exposure in the event of death, disability and critical illness.

Have you thought about all the expenses that might be incurred

if you pass away?

How will your family pay for medical expenses if you suffer an illness or injury that stops you

from working?



Financial exposure in the event of critical illness or trauma

How much do you need?


Debts $2,016,000

Medical expenses $100,000 1 year living expenses $18,000

Total amount for lump sum needs $2,134,000



Cash $970,000

Investments $1,160,000 Critical illness/trauma insurance $82,500

Total lump sum resources available $2,212,500

Financial exposure -$78,500 Insight • Statistics from the Australian Institute of Health and Welfare show that 1 in 3 men and 1 in 4 women will

be diagnosed with a malignant cancer before the age of 75. Calculation methodology • Paying off debts reduces pressure on the family’s budget in times of trauma or critical illness.

• Medical expenses are assumed to be $100,000 initially.

• One year of living expenses provides means for 12 months off work to recuperate or provide support to partner/spouse.

How much is your earning capacity worth?

Jane’s lifetime earnings Amount Current annual salary $170,000

Number of years to age 65 15

Total salary income accumulated until age 65* $3,075,256

* Assumes your salary will increase by 3% per annum.

How much of your earning capacity is protected? Current income protection cover (per annum) $120,000

Benefit period 2

Value of income protection cover (cumulative) $240,000

Current disability, critical illness and trauma cover $742,500

Total cover provided $982,500

Percentage of earning capacity protected 31.95%




Cash $970,000

Investments $1,160,000 Superannuation $63,000

TPD insurance $660,000

Total lump sum resources available $2,853,000

Financial exposure $229,210

Insight • Permanent disability doesn’t have to be physical, 45% of Australians aged 16 – 85 have experienced a

mental disorder in their lifetime.

Source: Australia’s Health 2010 – Australian Institute of Health and Welfare, June 2012.

• Most primary carers in Australia are between age 30 and 64 and they are usually a partner or a spouse. The cost of care can have an impact on the lifestyle of the whole family.

Source: Impact of home based long term care on informal carers – Ranmuthugala G. August 2009.

Calculation methodology • Living expenses are assumed to be the same as current living expenses until the disabled turns 65.

Beyond this point, other financial resources such as superannuation and Age Pension will fund the cost of living.

• Medical expenses are assumed to be $50,000 initially and $5,000 ongoing until the disabled turns 65.

• Home and motor vehicle alterations to facilitate greater mobility assumed to be $50,000.

• Please note the calculations do not take into account the effects of inflation or time value of money. This may overestimate the amount required if investment returns are above inflation and underestimate if the returns are below inflation.

• Children’s average lifetime education costs per child for low income, middle income and high income families are $11,038, $22,322 and $95,804 respectively (source AMP.NATSEM – The cost of raising children in Australia – May 2013). In this calculation we divide the cost by 13 to arrive at an annual figure. This translate to $849, $1,717 and $7,370 for low, middle and high income families respectively.

• Childcare costs assumed to be $100 per day. We have used an annual figure of $22,000 to cover a period of 44 weeks at 5 days per week.

• For domestic assistance we have included the cost of a nanny or au pair. Based on advertised services this can range from $170 to $340 per week. In this calculation, we have assumed a rate of $250 per week for 40 weeks which will continue until the disabled turns 65.

Did you know? Most primary carers in Australia are usually a

partner or spouse.How will the cost of care

impact your family’s lifestyle?

How much of your income is protected in the event of a critical illness or disability?



Action plan & next steps

Cash flow management Yes No

Are you satisfied with the level of savings you are currently making?

Next steps Yes No

Complete a detailed budget to identify cost saving opportunities

Review tax effectiveness of current cash flow

Devise a regular investment plan

Debt management Yes No

Would you like to implement a strategy to pay off your loan quicker?

Next steps Yes No

Review current loan arrangements and implement new debt management strategy

Risk management Yes No

Do you have any financial exposures in the event of death, disability or critical illness?

Next steps Yes No

Conduct a more detailed analysis to confirm the extent of the financial exposure

Obtain up to date information on any existing insurance policies (complete Authority form)

Obtain insurance quotes for the nominated financial exposure

Implement risk protection plan

Retirement readiness Yes No

Are you on track to achieve your desired standard of living in retirement?

Next steps Yes No

Review your existing superannuation arrangements (complete Authority form)

Devise a retirement plan

Client Acknowledgements

I would like our HSBC Financial Planner to assist me with the Action Plan and Next Steps as part of this Financial Health Assessment.

Client 1 name Signature Date

Client 2 name Signature Date

Based on the Financial Health Assessment, are there any further actions required?


Retirement readiness

Jane’s retirement readiness Amount ($)

Existing balance in superannuation 63,000

Current annual superannuation contributions (net) 14,280 Number of years to age 65 15

Projected lump sum at age 65* 492,245

Estimated income at age 65** 24,612 Cost of living (indexed)*** 27,768

Percentage of expected retirement income over current cost of living 88.63%

* Assumed investment return of 6.5% p.a. ** We have assumed that you commence an account based pension at age 65 and drew the minimum pension allowable (which is 5%). *** Cost of living is indexed at 2.5% p.a. Insight The ASFA Retirement Standard benchmarks the annual budget needed by Australians to fund either a comfortable or modest standard of living in the post-work years. It is updated quarterly to reflect inflation, and provides detailed budgets of what singles and couples would need to spend to support their chosen lifestyle. Budgets for various households and living standards (September quarter, 2014)

Modest lifestyle– single

Modest lifestyle– couple

Comfortable lifestyle – single

Comfortable lifestyle – couple

Housing – ongoing only

$68.30 $65.56 $79.16 $91.77

Energy $41.07 $54.55 $41.68 $56.53 Food $77.05 $159.61 $110.07 $198.13 Clothing $17.67 $28.68 $38.25 $57.37 Household goods and services

$26.57 $36.03 $74.75 $87.57

Health $40.64 $78.43 $80.63 $142.30 Transport $96.05 $98.78 $143.14 $145.86 Leisure $73.78 $109.93 $223.60 $306.41 Communications $9.33 $16.33 $25.64 $32.64 Total per week $450.48 $647.91 $816.92 $1,118.58 Total per year $23,489 $33,784 $42,597 $58,326

Practical tips • If you have more than one superannuation fund, consider consolidating them to save costs. • Regularly review how your superannuation is invested to make sure you’re on track to achieve your

retirement goals.

In this section, we estimate your likely income at age 65 based on what you are doing now.

Will you have sufficient income at retirement to

meet your cost of living?

What steps can you take to address any gaps?


Documents

2. 3. #ReachingMyGoals · The below analysis applies to your home loan only. = Scenario 1: Current situation Scenario 2: Increase loan repayments by $4,338 p/m* Scenario 3: Increase