Tuesday, August 20, 2019

Edward Snowden: The Most Famous Whistleblower

Edward Snowden: The Most Famous Whistleblower Whistleblowers are some of the most important people to have in a democracy. They provide information that the government doesnt want to get out, while this could be dangerous in the case of Edward Snowden he released information that was valuable to the citizens of the united states. Snowden is not the first person to do something like this and has previously stated he was inspired by Daniel Ellsberg who leaked pentagon papers in the 1970s. Even though hes wanted by the government to some people Snowden is a hero. Edward Snowden who was born in North Carolina but later mover to Massachusetts had dropped out of of high school but was no degenerate. A bad case of mononucleosis kept him out of school for 9 months so instead of falling behind he decided that he would drop out. After dropping out he began studying computers at Anne Arundel Community College which was located in Maryland. His father was quoted saying We always considered Ed the smartest one in the family. and this was clear when Edward scored a 145 on two different IQ tests. He later enlisted into the special forces because he wanted to learn new languages, but never made it out of basic because he either broke both legs or washed out because of shin splints, it depends on who you ask. After this he was a security guard at a college in maryland that had ties to the NSA. After this he landed a job with the C.I.A.(Central Intelligence Agency) but quit after being suspected of attempting to break into classified files. While still with the C.I.A. he was on a mission in Switzerland where he first discovered corruption in the Government. This is where he first wanted to become a whistleblower but with Obama being soon elected he was optimistic about the changes he was going to make. After working for the C.I.A. for some time he moved to a private IT company where he worked as a contractor and would later work in a few offices for the N.S.A. this is where he notices a breach in security and got his hands on the classified information that he would leak. The definition of a hero is someone who is admired or idealized for courage, outstanding achievements, or noble qualities. When he was younger, saw sergeant Frank Ford reveal the information about the war in Iraq he thought of him as a hero for being honest, and letting the people know what was really going on in Iraq. Even though Ford was once Snowdens hero Snowden would make a bigger impact than Ford. Sowden and Ford are not the only whistleblowers who have made themselves public. Manning had leaked hundreds of documents that had to do with the wars in Iraq and Afghanistan. Before any of them Ellsberg had leaked a ton of information in the early seventies. Nixons administration alienated Ellsberg much like Obamas administration has done to Snowden but now Ellsberg is considered a hero. Now Snowden is considered the hero to some people but a lot of people within the government or who listen to the government would disagree. He has inspired many other anonymous leaks from within the U.S. Government. Snowden receives credit for most of these but he has said that many leaks come from another source or other sources. The U.S. government has made it clear that they know about the the copycats when a representative, Adam Schiff who is a member of the House Intelligence Committee claiming that it is a big concern of theirs. Schiff also said The degree that people have been lionizing Snowden, it encourages people to make a name for themselves by leaking which is true. Even Some Government officials have publicly claimed that they went too far. Though many people think the Government was in the wrong for so intensely tracking suspected terrorist it makes sense for the Government to do that because some 9/11 hijackers were tracked but then nothing was done about them. Officials say that this could have put the country in more danger by showing potential terrorist how the government tracks them it allows them to b ypass those methods. Schiff also claimed that the Government should be more careful with who gets access to what by saying Snowden should have never had access in the first place. The Pentagon has approved as many as 3.2 million people access to highly classified information from 2006 to 2011 (CNN). After fleeing the country Snowden got ahold of journalists and offered them an unprecedented scoop(PBS). Even though the two journalists had received the documents it was not until they were on a plane and out of the country when they felt safe to open them and look at the things Snowden had shared. Greenwald, one of the journalists was quoted saying I didnt sleep one second for the next 16 hours because the adrenaline made that impossible. He said that he understood that this would be a story like hed never written before and one that people would talk about for decades. The journalists were given thousands of documents that showed what the Obama administration had been doing to regular citizens who had no criminal records and were not suspected terrorists. They were simply eavesdropping on regular citizens who had not done anything wrong. Some of the eavesdropping was justified but a surprising amount was not. Snowdens leaks shed a serious amount of light on this problem and it le d to a two part series on Frontline that dove into the topic from after 9/11 all the way to when things were leaked by Snowden. This series went even further than Snowden when they had revealed the extent that the government went to to keep these secrets hidden. It was during this time where Snowden had revealed that the worst of the wiretapping and eavesdropping had come from when Bush was president. Snowden still cares about America though saying that he would like to return one day and I told the government Id volunteer for prison, as long as it served the right purpose, he says I care more about the country than what happens to me. But we cant allow the law to become a political weapon or agree to scare people away from standing up for their rights, no matter how good the deal. Im not going to be part of that. (Wired). These statements show his true character and that he really does care about America. Snowden claimed that he had tried to leave clues for the N.S.A. to show him what documents were actually copied and which ones were just looked at. Despite these efforts the N.S.A. had missed the clues and reported that he took over a million documents when in reality he on took a few thousand. Snowden sounded disappointed when speaking on the fact that the government had missed his clues because he had thought that they were obvious. Sponsors from both major political parties c an agree that this has shown that the U.S. government needs to stop their mass surveillance for clear reasons. This was such a big deal that President Obama himself as well as congress have both publicly talked about the issue and the Supreme Court has hinted at making a decision about the governments use of unwarranted surveillance. This was never Snowdens intention he had just wanted to share what the government was doing because he felt that it was unjust. Despite the efforts by the government to make Snowden out to be the bad guy more than half the population agrees with what he did. Many government officials have spoken on this but not in the favor of snowden, N.S.A. director Keith Alexander claimed that the russian government had manipulated him while the secretary of state called him a coward and a traitor.

Expert Systems In Health Care :: essays research papers

A case referring to the beneficial use of the expert systems in the health sector was the attempt of the LDS Hospital in Salt Lake city,Utah to build “ the most complex artificial intelligence system ever created'; according to the words of DR David Classen.Its name was AIC or “Antibiotic Computer Consultant'; and it was part of HELP(Health Evaluation through Logical Processing), which was LDS’s hospital information system. The latter was existed, before the implementation of the Expert System. The role of AIC was to help doctors determine proper antibiotic treatment for specific patients.Achieving the specific purpose,the Expert System followed the above stages: 1) The doctor turned to the system with information on the infection type and site, and also identified the patient to the computer. 2) The system determined the pathogens, which are likely to have caused the infection. 3) The software examined the patient’s medical records( through the HELP information system) and searched for similar cases nationwide. 4) Finally, it displayed the five most likely antibiotic regimens to be effective and the cost of the prescription for each one. Altough,the system was extremely rewarding and expanded to include other cases involving antibiotics, some criticisms were made against it. It was stated that the system was unwieldy and that physicians had to enter much information, which was useless. Of course, the best answer came straightly from the physicians, who highlighted many important benefits of the AIC. The 88% of them believed that the use of AIC was very simple and they would recommend it to other colleagues. Another 85% stated that the program improved their selection of antibiotics, and 81% agreed that it enhanced patient care. Concerning its usability, doctors access into the system 3 times a day.

Monday, August 19, 2019

The Theory and Implementations of The Balance of Payments (BOP) :: Economics

The Theory and Implementations of The Balance of Payments (BOP) To develop country’s economic strength under the tendency of globalization, governments always seek to achieve two macroeconomic objectives, i.e. stable growth of internal economy and balanced development of external economic activities. The former can be realized by effectively adjusting Economic Growth, Unemployment and Inflation. However, how to realize the latter? An external macroeconomic variable is needed. In practice, the Balance of Payments fulfills this responsibility. (A). Balance of Payments (BOP used in following text), in principle, is a record of the country’s transactions with the rest of the world. It shows the country’s payment s to or deposits in other countries (debits) and its receipts or deposits from other countries (credits)[1]. The BOP account[2] also shows the balance between these debits and credits under various headings, which are categorized into the Current Account, the Capital Account and the Financial Account, which compose the main elements of balance of payments. The Current Account largely measures flow of real resources including exports and imports of goods and services, income receivable and payable abroad, and current transfers from and to abroad. It is normally divided into three subdivisions (Figure 1). Trade in goods account (often as the trade balance) The total value of exports of goods, subtracting the total value of imports of goods. Trade in services account Imports and exports of services, such as banking and insurance, transport services, law, accountancy, management consultancy and tourism. Investment incomes Interest, profit and dividends flowing into and out of the country. Transfers of money Two sectors: government transfers and transfers made by other sectors. Government transfers include contributions to international organisations (e.g. UK to EU budget) and foreign aid. The ‘other sectors’ section many highlights the transfer of assets by individuals to foreign bank accounts. The Capital Account measures external transactions in capital transfers, and in acquisition or disposal of non-produced, non-financial assets, which include land and subsoil assets, patents and copyrights etc. Capital transfers are transfers of ownership of a fixed asset or the forgiveness of a liability. The Financial Account records transactions in financial assets and liabilities between residents and non-residents. It shows how an economy's external transactions are financed. Transactions in the financial account are classified into direct investment, portfolio investment, other investment, and reserve assets[3] (Figure 2). Direct investment Money flows across national boundaries for the purpose of investing and it is thus either a credit or a debit item. Portfolio investment Changes in the holding of paper assets, such as company shares and bonds. Other investment It comprises loans, currency, deposits, and short and long-term trade credits, financial derivatives and other accounts receivable and payable. Reserve assets This refers to the reserves of gold, special drawing rights (SDRs) and

Sunday, August 18, 2019

Powerful Theme and Allusions to Sex in Andersons Womanhood :: Anderson Womanhood Essays

Powerful Theme and Allusions to Sex in Anderson's Womanhood    Catherine Anderson's poem "Womanhood" tells about a young girl and her transition to womanhood.   In this intricately woven poem the reader will learn very little about the girl.   Neither she nor her mother are ever named, and no information is given about them or their family life.   What the reader does discover is what lies ahead for her as she begins her first day sewing rugs.   The poem begins a few moments before she enters the gates of the sweatshop that symbolizes her entry into womanhood.   Anderson uses metaphor within this poem to dramatize the difference in what lies ahead for her.   She should be looking forward to a bright and cheerful future, instead, she is faced with the drudgery of a life working in a sweatshop sewing rugs.   Anderson has woven this poem together so there is a link created between the first and second stanzas of the poem.   Each line in the first stanza, describing the carefree attitude of the young girl correlates with a line in th e second stanza illustrating how her life will be far different after she enters the gates of the factory and womanhood.     Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   Within this poem there are many references or allusions to sex.   Most women are considered to have entered womanhood when they have their first sexual experience with a man.   Anderson plays up this aspect of becoming a woman in the poem to symbolize the girl's losing her innocence and youth to work in the sweatshop.   In essence, she is losing her virginity to that same sweatshop.   The first of these allusions to sex is in the opening lines of the poem; "she slides over/the hot upholstery" (1,2).   The young girl is described as sliding over hot upholstery, like girls sometimes do to snuggle up next to their boyfriends when driving a car.   This verse can also be seen as a metaphor for the hot young skin of a beautiful young girl.   Another example of these references is when Anderson describes the girl   as "loves humming & swaying to the music" (5).   This can be seen as the act of sexual intercourse itself.   The rhythmic swaying of bodies can be seen as little else especially when paired with line 25, "rocking back and forth"(25).   This is further emphasized by Anderson by her use of the ampersand signs (&) which she only uses in these two lines.

Saturday, August 17, 2019

Regression Analysis

REGRESSION ANALYSIS Correlation only indicates the degree and direction of relationship between two variables. It does not, necessarily connote a cause-effect relationship. Even when there are grounds to believe the causal relationship exits, correlation does not tell us which variable is the cause and which, the effect. For example, the demand for a commodity and its price will generally be found to be correlated, but the question whether demand depends on price or vice-versa; will not be answered by correlation. The dictionary meaning of the ‘regression’ is the act of the returning or going back. The term ‘regression’ was first used by Francis Galton in 1877 while studying the relationship between the heights of fathers and sons. â€Å"Regression is the measure of the average relationship between two or more variables in terms of the original units of data. † The line of regression is the line, which gives the best estimate to the values of one variable for any specific values of other variables. For two variables on regression analysis, there are two regression lines. One line as the regression of x on y and other is for regression of y on x. These two regression line show the average relationship between the two variables. The regression line of y on x gives the most probable value of y for given value of x and the regression line of x and y gives the most probable values of x for the given value of y. For perfect correlation, positive or negative i. e. for r=  ±, the two lines coincide i. e. we will find only one straight line. If r=0, i. e. both the variance are independent then the two lines will cut each other at a right angle. In this case the two lines will be  ¦to x and y axis. The Graph is given below:- We restrict our discussion to linear relationships only that is the equations to be considered are 1- y=a+bx – x=a+by In equation first x is called the independent variable and y the dependent variable. Conditional on the x value, the equations gives the variation of y. In other words ,it means that corresponding to each value of x ,there is whole conditional probability distribution of y. Similar discussion holds for the equation second, where y acts as independent variable and x as dependent variable. What purpose does regression line serve? 1- The first object is to estimate the dependent variable from known values of independent variable. This is possible from regression line. – The next objective is to obtain a measure of the error involved in using regression line for estimation. 3- With the help of regression coefficients we can calculate the correlation coefficient. The square of correlation coefficient (r), is called coefficient of determination, measure the degree of association of correlation that exits between two variables. What is the difference between correlation and linear regression? Correlation and linear regression are not the same. Consider these differences: †¢ Correlation quantifies the degree to which two variables are related. Correlation does not find  a best-fit line (that is regression). You simply are computing a correlation coefficient (r) that tells you how much one variable tends to change when the other one does. †¢ With correlation you don't have to think about cause and effect. You simply quantify how well two variables relate to each other. With regression, you do have to think about cause and effect as the regression line is determined as the best way to predict Y from X. †¢ With correlation,  it doesn't matter which of the two variables you call â€Å"X† and which you call â€Å"Y†. You'll get the same correlation coefficient if you swap the two. With linear regression, the decision of which variable you call â€Å"X† and which you call â€Å"Y† matters a lot, as you'll get a different best-fit line if you swap the two. The line that best predicts Y from X is not the same as the line that predicts X from Y. †¢ Correlation is almost always used when you measure both variables. It rarely is appropriate when one variable is something you experimentally manipulate. With linear regression, the X variable is often something you experimental manipulate (time, concentration†¦ and the Y variable is something you measure. Regression analysis is widely used for  prediction  (including  forecasting  of  time-series  data). Use of regression analysis for prediction has substantial overlap with the field of  machine learning. Regression analysis is also used to understand which among the independent variables are related to the dependent variable, and to explore the forms of these relationships. In restricted circumstances, regression analysis can be used to infer  causal relationships  between the independent and dependent variables. A large body of techniques for carrying out regression analysis has been developed. Familiar methods such as  linear regression  and  ordinary least squares  regression are  parametric, in that the regression function is defined in terms of a finite number of unknown  parameters  that are estimated from the  data. Nonparametric regression  refers to techniques that allow the regression function to lie in a specified set of  functions, which may beinfinite-dimensional. The performance of regression analysis methods in practice depends on the form of the data-generating process, and how it relates to the regression approach being used. Since the true form of the data-generating process is not known, regression analysis depends to some extent on making assumptions about this process. These assumptions are sometimes (but not always) testable if a large amount of data is available. Regression models for prediction are often useful even when the assumptions are moderately violated, although they may not perform optimally. However when carrying out  inference  using regression models, especially involving small  effects  or questions of  causality  based on  observational data, regression methods must be used cautiously as they can easily give misleading results. Underlying assumptions Classical assumptions for regression analysis include: ? The sample must be representative of the population for the inference prediction. ? The error is assumed to be a  random variable  with a mean of zero conditional on the explanatory variables. ? The variables are error-free. If this is not so, modeling may be done using  errors-in-variables model  techniques. ? The predictors must be  linearly independent, i. e. it must not be possible to express any predictor as a linear combination of the others. SeeMulticollinearity. The errors are  uncorrelated, that is, the  variance-covariance matrix  of the errors is  diagonal  and each non-zero element is the variance of the error. ? The variance of the error is constant across observations (homoscedasticity). If not,  weighted least squares  or other methods might be used. These are sufficient (but not all necessary) conditions for the least-squares estimator to possess desirable propertie s, in particular, these assumptions imply that the parameter estimates will be  unbiased,  consistent, and  efficient  in the class of linear unbiased estimators. Many of these assumptions may be relaxed in more advanced treatments. Basic Formula of Regression Analysis:- X=a+by (Regression line x on y) Y=a+bx (Regression line y on x) 1st – Regression equation of x on y:- 2nd – Regression equation of y on x:- Regression Coefficient:- Case 1st – when x on y means regression coefficient is ‘bxy’ Case 2nd – when y on x means regression coefficient is ‘byx’ Least Square Estimation:- The main object of constructing statistical relationship is to predict or explain the effects on one dependent variable resulting from changes in one or more explanatory variables. Under the least square criteria, the line of best fit is said to be that which minimizes the sum of the squared residuals between the points of the graph and the points of straight line. The least squares method is the most widely used procedure for developing estimates of the model parameters. The graph of the estimated regression equation for simple linear regression is a straight line approximation to the relationship between y and x. When regression equations obtained directly that is without taking deviation from actual or assumed mean then the two Normal equations are to be solved simultaneously as follows; For Regression Equation of x on y i. e. x=a+by The two Normal Equations are:- For Regression Equation of y on x i. e. y=a+bx The two Normal Equations are:- Remarks:- 1- It may be noted that both the regression coefficient ( x on y means bxy and y on x means byx ) cannot exceed 1. 2- Both the regression coefficient shall either be positive + or negative -. 3- Correlation coefficient (r) will have same sign as that of regression coefficient. Regression Analysis REGRESSION ANALYSIS Correlation only indicates the degree and direction of relationship between two variables. It does not, necessarily connote a cause-effect relationship. Even when there are grounds to believe the causal relationship exits, correlation does not tell us which variable is the cause and which, the effect. For example, the demand for a commodity and its price will generally be found to be correlated, but the question whether demand depends on price or vice-versa; will not be answered by correlation. The dictionary meaning of the ‘regression’ is the act of the returning or going back. The term ‘regression’ was first used by Francis Galton in 1877 while studying the relationship between the heights of fathers and sons. â€Å"Regression is the measure of the average relationship between two or more variables in terms of the original units of data. † The line of regression is the line, which gives the best estimate to the values of one variable for any specific values of other variables. For two variables on regression analysis, there are two regression lines. One line as the regression of x on y and other is for regression of y on x. These two regression line show the average relationship between the two variables. The regression line of y on x gives the most probable value of y for given value of x and the regression line of x and y gives the most probable values of x for the given value of y. For perfect correlation, positive or negative i. e. for r=  ±, the two lines coincide i. e. we will find only one straight line. If r=0, i. e. both the variance are independent then the two lines will cut each other at a right angle. In this case the two lines will be  ¦to x and y axis. The Graph is given below:- We restrict our discussion to linear relationships only that is the equations to be considered are 1- y=a+bx – x=a+by In equation first x is called the independent variable and y the dependent variable. Conditional on the x value, the equations gives the variation of y. In other words ,it means that corresponding to each value of x ,there is whole conditional probability distribution of y. Similar discussion holds for the equation second, where y acts as independent variable and x as dependent variable. What purpose does regression line serve? 1- The first object is to estimate the dependent variable from known values of independent variable. This is possible from regression line. – The next objective is to obtain a measure of the error involved in using regression line for estimation. 3- With the help of regression coefficients we can calculate the correlation coefficient. The square of correlation coefficient (r), is called coefficient of determination, measure the degree of association of correlation that exits between two variables. What is the difference between correlation and linear regression? Correlation and linear regression are not the same. Consider these differences: †¢ Correlation quantifies the degree to which two variables are related. Correlation does not find  a best-fit line (that is regression). You simply are computing a correlation coefficient (r) that tells you how much one variable tends to change when the other one does. †¢ With correlation you don't have to think about cause and effect. You simply quantify how well two variables relate to each other. With regression, you do have to think about cause and effect as the regression line is determined as the best way to predict Y from X. †¢ With correlation,  it doesn't matter which of the two variables you call â€Å"X† and which you call â€Å"Y†. You'll get the same correlation coefficient if you swap the two. With linear regression, the decision of which variable you call â€Å"X† and which you call â€Å"Y† matters a lot, as you'll get a different best-fit line if you swap the two. The line that best predicts Y from X is not the same as the line that predicts X from Y. †¢ Correlation is almost always used when you measure both variables. It rarely is appropriate when one variable is something you experimentally manipulate. With linear regression, the X variable is often something you experimental manipulate (time, concentration†¦ and the Y variable is something you measure. Regression analysis is widely used for  prediction  (including  forecasting  of  time-series  data). Use of regression analysis for prediction has substantial overlap with the field of  machine learning. Regression analysis is also used to understand which among the independent variables are related to the dependent variable, and to explore the forms of these relationships. In restricted circumstances, regression analysis can be used to infer  causal relationships  between the independent and dependent variables. A large body of techniques for carrying out regression analysis has been developed. Familiar methods such as  linear regression  and  ordinary least squares  regression are  parametric, in that the regression function is defined in terms of a finite number of unknown  parameters  that are estimated from the  data. Nonparametric regression  refers to techniques that allow the regression function to lie in a specified set of  functions, which may beinfinite-dimensional. The performance of regression analysis methods in practice depends on the form of the data-generating process, and how it relates to the regression approach being used. Since the true form of the data-generating process is not known, regression analysis depends to some extent on making assumptions about this process. These assumptions are sometimes (but not always) testable if a large amount of data is available. Regression models for prediction are often useful even when the assumptions are moderately violated, although they may not perform optimally. However when carrying out  inference  using regression models, especially involving small  effects  or questions of  causality  based on  observational data, regression methods must be used cautiously as they can easily give misleading results. Underlying assumptions Classical assumptions for regression analysis include: ? The sample must be representative of the population for the inference prediction. ? The error is assumed to be a  random variable  with a mean of zero conditional on the explanatory variables. ? The variables are error-free. If this is not so, modeling may be done using  errors-in-variables model  techniques. ? The predictors must be  linearly independent, i. e. it must not be possible to express any predictor as a linear combination of the others. SeeMulticollinearity. The errors are  uncorrelated, that is, the  variance-covariance matrix  of the errors is  diagonal  and each non-zero element is the variance of the error. ? The variance of the error is constant across observations (homoscedasticity). If not,  weighted least squares  or other methods might be used. These are sufficient (but not all necessary) conditions for the least-squares estimator to possess desirable propertie s, in particular, these assumptions imply that the parameter estimates will be  unbiased,  consistent, and  efficient  in the class of linear unbiased estimators. Many of these assumptions may be relaxed in more advanced treatments. Basic Formula of Regression Analysis:- X=a+by (Regression line x on y) Y=a+bx (Regression line y on x) 1st – Regression equation of x on y:- 2nd – Regression equation of y on x:- Regression Coefficient:- Case 1st – when x on y means regression coefficient is ‘bxy’ Case 2nd – when y on x means regression coefficient is ‘byx’ Least Square Estimation:- The main object of constructing statistical relationship is to predict or explain the effects on one dependent variable resulting from changes in one or more explanatory variables. Under the least square criteria, the line of best fit is said to be that which minimizes the sum of the squared residuals between the points of the graph and the points of straight line. The least squares method is the most widely used procedure for developing estimates of the model parameters. The graph of the estimated regression equation for simple linear regression is a straight line approximation to the relationship between y and x. When regression equations obtained directly that is without taking deviation from actual or assumed mean then the two Normal equations are to be solved simultaneously as follows; For Regression Equation of x on y i. e. x=a+by The two Normal Equations are:- For Regression Equation of y on x i. e. y=a+bx The two Normal Equations are:- Remarks:- 1- It may be noted that both the regression coefficient ( x on y means bxy and y on x means byx ) cannot exceed 1. 2- Both the regression coefficient shall either be positive + or negative -. 3- Correlation coefficient (r) will have same sign as that of regression coefficient.

Friday, August 16, 2019

Brazilian culture Essay

Culture refers to the norms, values and conceptions which influences an individual’s behavior. They are usually not tangible things though they greatly affect or influence the reactions or response of an individual to certain circumstances. Different communities have different cultures which are usually expressed through the various artifacts and symbols as well as ceremonies and traditions. The national culture of a place is usually expressed through the language spoken, the religion practiced, the etiquette and attitudes of the people, body language as well a literature, arts and music in such a country. The national culture of a country influences the way things and business are carried out and as such the performance of different entities within the country. Brazilian culture Brazil is located in the southern America and it is characterized by different and diverse culture which is as a result of cultural and ethnic mixing between the Africans, the native Americans and the Portuguese which occurred during the colonial era which. Other groups of people which have greatly influenced the culture of Brazil are the Spanish, Arabs, the Germans and the Italian immigrants who settled in Brazil between the 19th and the 20th century. This diverse nature of Brazilian people has given rise to a national culture which is so diverse. Portugal however was the major country which greatly influences the culture of Brazil since it was its colonizer. During the colonization period, the Brazilian people were having close contact with the Brazilians especially because Portuguese colonizers inhabited Brazil in large numbers. The slaves who were mostly black Africans also influenced greatly the formation of the Brazilian culture (Nava & Lauerhass, 2006). During the colonial period, the Portuguese wanted the Brazilians to be civilized and thus introduced Portuguese language as well as Catholicism. Portuguese is the most widely spoken language in Brazil although Spanish is also spoken in some parts. English is the second language which is spoken after Portuguese. However, the Brazilian Portuguese is different from Portuguese which is spoken in Portugal and other Portuguese speaking countries. The Brazilian Portuguese contains additional words which are coined from their native language. Most of the Brazilians can speak English though not frequently while a good number of them can hear and understand Spanish though they may not speak it. As mentioned above, Catholicism is widely practiced with most of the individuals thus being Christians. Brazil is one of the countries which have the largest number of catholic population although other beliefs like Hinduism, ayahuasca, spiritism, Judaism and Buddhism have evolved overtime. Other groups of Christianity like the Mormon Church, Methodism and Pentecostalism are also gaining root in Brazil. An annual religious celebration known as carnaval is held in Brazil for forty days and it is celebrated before Easter which marks the lent period (Thomas, 2007). The Brazilian music is composed mostly of traditional styles for example samba, frevo and forro among others. Brazil also has classical music which dates back to the 18th century. The music industry in Brazil is marked by diversity especially after Brazil become democratic in 1985 whereby hip hop music was largely adopted. Music in the past was largely influenced by social classes which existed between the rich, the middle class and the poor people. However, most of the traditional songs were neutral and did not favor any class thus unifying the country music industry. Another important feature of Brazilian culture is their literature which can be traced back to the 16th century. Portuguese explores during the colonial period wrote different poems, plays and chronicles describing Brazil. Brazilian writers started writing soon after independence in 1822 which marked the beginning of natives’ prominence in literature. They also have a folk literature tradition although little of is known internationally. This folk literature is usually done by displaying verses in a booklet format which are hanged on the wall using strings in rhymed verses. This is common in the northeast region where illiteracy level is still high (Nava & Lauerhass, 2006). As mentioned above, carnival is one of the most celebrated events and acts as symbol of the Brazilian people. During this celebration, costumed dancers as well as musicians form parades both formal and even in the streets for a period of four days. This event is celebrated nationally with carnival symbolizing national ethos especially because it depicts the dualities of life of the Brazilians which is divided among the poverty and wealth, female and males and Europeans and Africans. Football is also another highly celebrated activity in Brazil. During major soccer matches like the world cup, all national attention is diverted to soccer with most of the people wearing clothes decorated with colors of their national flag (Garibaldi de Hilal, 2006). Brazilians unlike people in the North America have little sense especially of personal space when it comes to their etiquette. The Brazilians may be found in large and also crowded areas which do not bother them. Respect is usually accorded according to the dressing code of a person. To command respect, one thus has to wear appropriately to fit his or her class as dressing is used as a symbol of class. Also, these people tend to physically expressive and they convey some of their emotional information via touching. Touching in Brazil is translated to mean friendship or concern about the welfare of the other person. Women are more inclined to touching and kissing their fellow women as a sign of greetings while men usually pat or bear hug their male counterparts. People like doctors, professors and priests among other are addressed using their titles which is them followed by their first names. Body language is also used in Brazil and is usually varied depending on the social class or standing of an individual. Domestic or house servants greet their masters usually by a limp handshake while slightly bowing the head and lowering the eyes. They address their masters with respectful you (senhora) while masters address servants as voce. Graduates and other educated persons are addressed as doctor. The Brazilians are not bothered by nudity and this is verifiable through scanty dressing that is worn during carnival (Nava & Lauerhass, 2006). In Brazil, personal relationships are valued with body language being highly used while expressing emotions. Touching is one way of expressing concern, friendship and even interest on the other people’s point of view. People who tend to keep their distance while talking to their counterparts are usually considered to be cold and uninterested. Also the national language that is Portuguese is highly valued and even those who can speak English prefer speaking in their native Portuguese language. The Brazilians also value or regard highly their symbols which include the carnival and soccer (Garibaldi de Hilal, 2006). The national culture of a country affects in a great manner the running of the national affairs as well as the businesses. While carrying out business activities in an area, it is vital to understand the culture which the community holds as this would influence workers motivation and commitment to the business as well as the community’s perception of the business. Apart from the expertise or experience of the workers and the managers, national culture contributes in largely to the growth or stagnation of a business and as such it should be treated carefully. Knowledge of the Brazilian culture would influence greatly how a business is to be carried out in this region. As mentioned above, personal relationship is very important to the Brazilians and as such, this would impact greatly to the way a business operates. While carrying out business in this region, it is vital for the managers to ensure that they create personal relationships with their workers as this would act as a motivation factor. Managers who keep their distance may be viewed as being cold or rude in Brazil and as such, understanding the culture of the Brazilians would help in managing and running a business successfully (Ferreira, et al, n. d). Brazilians also respect and adore their symbols which are mainly soccer and carnival celebrations. During this period, most of the Brazilians are committed to the celebrations and as such may not be willing to work as usual or for long hours. Understanding the value the Brazilians attach to these functions would influence how activities of a business are carried out. This is more so because these celebrations are nationally accepted as part of their culture. During the festive period, the business may be run fewer hours be closed till the festive seasons is over. Learning to value what the native Brazilians value would help in establishing an entity in this region and also earning the commitment of the workers to the business (Ferreira, et al, n. d). Conclusion For any business to be successful, it is vital to ensure that it observes and values the national culture in existence in a particular area. The culture of a community or a country determines the attitudes, behavior and response of the workers in an organization and as such, managers should ensure that they fully understand the national culture existing in a country as this is bound to influence not only the workers performance of tasks but also the running of the business. A company deemed to esteem the national culture is more likely to be successful that a company comprising of good management team but which does not respect or observe the national culture. Reference: Ferreira, M. C. et al (n. d): Organizational culture in Brazilian public and private companies. Retrieved on 2nd April 2009 from, http://ebooks. iaccp. org/ongoing_themes/chapters/ferreira/ferreira. php? file=ferreira&output=screen. Garibaldi de Hilal, A. V. (2006): Brazilian National Culture, Organizational Culture and Cultural Agreement. International Journal of Cross Cultural Management, Vol. 6 Nava, C. & Lauerhass, L. (2006): Brazil in the making: facets of national identity. ISBN 0742537579, Published by Rowman & Littlefield Thomas, V. (2007): Culture of BRAZIL. Retrieved on 2nd April 2009 from, http://www. everyculture. com/Bo-Co/Brazil. html.

Thursday, August 15, 2019

Financial Planning (Insurance) Case Study Essay

Allison has recently been promoted by her employer, Best Marketing, and now earns $135,000 p. a. working full time. She has commenced salary sacrificing 30% of this amount into superannuation, and her employer contributes Superannuation Guarantee Contributions of 9% of her remaining cash salary. The fund is a balanced growth retail superannuation fund, MM Superannuation. Her current balance is $160,000 and earns on average 7% p. a. after fees and taxes. She also has $100,000 in term life and TPD insurance cover within her superannuation fund. She drives a 4-year old Land Cruiser that is fully paid for. It has low kilometres and she expects to keep it until she retires. She will then need $30,000 to purchase a new car on top of the trade in she expects to receive from the Land Cruiser. Simon works for Newbold’s Pty Ltd, a company which makes custom furniture. He earns around $45,000 p. a. and intends doing this work for the foreseeable future. He is supplied with a work vehicle and his employer pays his SGC based on his $45,000 salary. Simon has $47,000 in superannuation savings, held within the PP Superannuation Fund. The funds are invested in a balanced/ conservative portfolio with a low allocation to growth assets that earns around 4% p. a. after fees and taxes. They are living on a semi-rural property which is valued at around $750,000, but they currently have a mortgage of $150,000 as a line of credit. They are paying approximately $1,000 per month as interest-only payments. Their other personal expenses are around $40,000 p. a. and they spend an additional $15,000 p. a. on holidays. Aside from private health cover, car, and house and contents insurance, the only personal insurance they have is the coverage provided in Allison’s superannuation fund. They do not have a will or any powers of attorney but they want to ensure they have sufficient money for their grandchildren (now aged 6 and 4 years) to attend university. They estimate they will need to accumulate approximately $120,000 (in today’s dollars) over the next 12 years to pay for this. Allison wants to work for five or six more years and they wish to pay off the remainder of the mortgage over that time. She also wants to increase the amount of money in both her and Simon’s superannuation. When she retires she believes they will need $40,000 (in today’s dollars) for their living expenses in retirement, but Simon intends to continue working part time and estimates he will earn $20,000 p. a. They intend to use Simon’s income to fund any holidays. Aside from their superannuation assets, they have $9,000 in a bank account for emergencies earning 4% p. a. , $15,000 in a term deposit earning 5% p. a. and $12,000 in a cash management account earning 5. 5% p. . They are not happy with the taxation implications of these accounts, as any interest earned on the term deposit and cash management accounts seems to go in tax. You ascertain that they both have balanced risk profiles. Required: You are required to provide written responses to the following scenarios and questions, either in short answer form or using bullet points (or both). The following attachments are included : †¢ Sample Financial Services Guide (Personal Advice) †¢ Sample Fact Finder and Risk Profile Questionnaire †¢ Sample Ongoing Service Options – Establish Relationship with Client You are preparing for an initial interview with Simon and Allison Callahan. a) Give some thought to the sort of things you would cover. Include any legal requirements and other documentation which may be helpful in the interview. For the initial interview with the clients I would cover what Azza financial services stands for, their commitment to the customer and any legal implications, go over the financial services guide (send out with letter before hand) and privacy policy and compliance. I would also make the customers aware that the information they are providing is to be used solely for the purposes of assessing their situation to help them get to a better financial position. I would allow the customers to do most of the talking, recording their responses in a fact finder, and ask the client to complete a risk profile questionnaire to get a feel for what their financial position is at the present, what kind of expectations they have on Azza financial services, how much risk they are willing to take on and if there is anything about their situation that might prevent Azza financial from providing advice to the client. )How might you ask the client to prepare for the first meeting? By sending a confirmation letter indicating how long the interview will likely be, the purpose of the interview and what is the outcome intended, advising the client if there are to be any fees paid, providing the client with a list of documents to bring (eg current insurance policies, sup er statements, current investment schemes, income and expenses, latest tax returns, valuations of assets such as property, bank and credit card statements. ) To establish a relationship with Simon and Allison, what strategies might you use to build rapport during the interview process? †¢ offer food or drink (eg coffee, biscuits, tea, water) †¢ monitor client body language and engage in similar movements to make them feel more comfortable †¢ ask open ended questions to show clients you are interested in the personally and want to hear what they have to say. d)What are the four points you must cover when presenting a Financial Services Guide? Fees and charges = explain what fees might be applicable, including benefits and commissions that could be received by 3rd parties/referrers or product providers as a result of the plan being implemented †¢ Products = outline the features of the products and services being recommended †¢ Complaints Policies and Procedure s = make sure to completely explain the procedures for handling customer complaints †¢ Relationships = explain any relationships which might influence which products are recommended or provided e)List the type of fees you could charge the clients. What are the benefits of explaining these fees to the Callahans? Types of fees which could be charged to the clients if they choose to implement the prepared plan are: plan fees (often charged regardless if plan is accepted), commissions, entry fees, management fees, account keeping fees. The benefits of explaining these fees to the clients are that there will be no nasty surprises and they will know what they are getting themselves into from the start. It also provides protection for the advisor in the event that the client deems something unreasonable. In other words, there will be no misunderstandings about the possible cost of advice. )Nominate the range of financial products and services you will be providing advice in. Name the benefits of explaining these to your clients. The financial services and products which I could be providing advice on range from simplistic things such as bank deposit accounts to general and life insurance, complex and simple investment schemes, general and specialized superannuation schemes, estate planning issues (although a lot will be directed to a solicitor if I am not qualified to provide advice on that particular area, the same goes with taxation). The benefit of explaining these to the client is that they will be more aware of what it is Azza financial services can help them with, and if they will need to be involving any third parties to complete their requirements (eg accountant or solicitor). It also takes away any misconceptions as to the outcome of the advice provided and puts everyone on the same level expectation wise. The clients also may not have been aware of particular products and services offered which once explained may change their needs and requirements which might have not previously been considered by the client. )Outline the three steps your clients should take if they have a complaint or dispute prior to contacting the ASIC. †¢ Clients should first contact their advisor to make sure that their disatisfaction is not due to a misunderstanding or something which can be ammended to their satisfaction. I would endeavour to solve their complaint within 3 working days. †¢ If the clients are still unhappy , they should lodge a formal complaint with the liscensees internal complaints process and allow appropriate time for this to be acted upon. If the clients are still unsatisfied with the outcome they may then contact the Finance Industry Ombudsman Service (FOS) for complaints involving losses of less than $500,000. FOS first trys to negociate and outcome between the involved parties, if this is not possible the matter is passed for formal assesemnt by a panel. FOS is free to clients and the decisions it makes are law to the liscensee. 2-Identify Client Objectives and Financial Situation a) What techniques or tools could you use to gather further information about your client’s goals, objectives and financial situation? Fact finder †¢ Financial documentation – tax returns, statements, scheme overviews etc †¢ Use of open ended questions †¢ Diagnostic questionnaires †¢ Risk profiling b)Using your case study, complete the attached Fact Finder with as mu ch information as you can. Remember that this document is used to collect current information as well as identify any issues, problems or constraints that may be relevant in developing your advice. See Fact Finder i)From the scenario in your case study, write down one or more specific financial goals for the generic needs provided. Wealth creation for a specific purpose |Start increasing Allison and Simons Super balances ($160K and $47K) | | |Pay for grandchildren’s university in 12 years – estimated needed | | |$120K in today’s dollars | |Wealth protection |Take out Personal insurances to avoid eroding savings if something | | |unforeseen happens – income protection, trauma, evaluation of current | | life and TPD | |Debt reduction |Pay off IO mortgage of $150K in 5 years | |Tax minimization |Save on tax on bank accounts/term deposits | | |Possibly downsize family home and move mortgage to investment property| | |to save on tax | |Superannuation |Start in creasing Allison and Simons Super balances ($160K and $47K) | | |and evaluate suitability of current funds | |Investment Planning |Possibly purchase Investment property to produce another income stream| | |and save on current tax | | |Look into other investment options to diversify current wealth | |Estate Planning |Establish will and power of attorney with solicitor | c)Write down a line of questioning that you would use in the initial interview to increase your understanding and obtain further clarification of the client’s goals and objectives. Use open-ended questions starting with What, How, When, Why and Where. †¢ Apart from what we have already discussed, tell me about any other goals, long or short term that you might have. †¢ What do you plan to do when you retire? †¢ What is your current state of health? Eg do you smoke, are you aware of any issues that could affect your ability to work? †¢ Simon, what sort of duties do you perform at work? (- for insurance purposes we need to ascertain what type of work Simon is doing in order to now which category he fits, A/B/C? ) †¢ What are the contact details of your accountant? (- Financials) †¢ If you have a solicitor, what are their details? power of attorney, will) †¢ What are your plans/goals in relation to the planning of your estate? †¢ Tell me what other possible financial details you could have overlooked in filling out the fact finder? (- no credit cards? No shares or any investments outside of super and regular bank accounts? ) †¢ What level of cash reserve do you feel comfortable keeping liquid for emergencies, and are you expecting to receive a lump sum of money in the future? †¢ What are the premium details of your current life and general insurance policies? †¢ When are you considering downsizing the family home, if at all? d) What action would you take immediately after the first meeting? Immediately after the first interview I would Clearly write down everything which needs to be investigated or researched, in relation to what types of products, tax issues, possible strategies, the sources of information and a timeline for completion. This is so that I can prove I have been compliant with the corporations Acts requirement of investigating the ‘subject matter of the advice’. I would ask the clients to sign an authority accepting the preparation and research of drawing up a financial plan and agreeing to pay any fee which may be incurred as a result of this advice. e) Simon and Allison have a ‘balanced’ risk profile. Complete the sample Risk Profile Questionnaire to reflect this. See risk profile 3- Analyse Client Objectives & Financial Situation Will Simon and Allison’s current financial circumstances and other concerns meet their objectives without your assistance? a) Why/why not? No, Simon and Allison’s current financial set up is not adequate to allow them to meet their goals and objectives. This is because they are note contributing enough in their superannuation to achieve their desired balances, they do not have any estate plans in place, their current bank accounts are leaving them paying excess tax, they are not sure how to structure their expenses in order to reach a comfortable position upon retirement in 5 years time, and their personal insurance are grossly insufficient to keep them in their current lifestyle and meet expenses should something happen to one of them. ) List the assumptions you made. †¢ Allison and Simon do not have current solicitor whom they have talked about creating a will or power of attorney with †¢ Allison and Simon are of average intelligence and have not had much to do with Financial planning services in the past. †¢ Allison and Simon do not know much about investment schemes, Superannuation regulations, Life insurance or Taxation †¢ Allison and Simon have used an Accountant in the past to prepare their yearly tax returns †¢ The average expected rate of return is 6% †¢ Expected CPI is 3% and current tax rates have been used. c) Reference information sources that you have relied on in forming your view. RG146 training Australia DFS course material and scenario †¢ Australian Taxation Office website (www. ato. gov. au) †¢ Financial Planning association website (www. fpa. asn. au) †¢ Westpac and BT Financial group case studies (internal) 4 – Develop Appropriate Strategies & Solutions a) Describe two research processes you can use to gather information about products and services you recommend to your clients. †¢ Independent research houses (eg Standard and Poors and Morning Star) †¢ Internet sear ches eg ASX, AFPA, ATO etc †¢ Product disclosures, rankings, past performance of companies, Financial review newspaper etc Refer to your case study, Fact Finder and Risk Profile Develop a strategy for each of the following points for Simon and Allison. Describe each of your strategies in terms of key characteristics, advantages and disadvantages. b) Please address Allison’s insurance requirements. Your response should include a brief description of each type of cover and actual amounts recommended. Include calculations and explanations of amounts. †¢ Term Life: – term life insurance provides a bulk payment to the beneificiaries of a person upon their death, or in some cases when disgnosed with a terminal illness the person insured can also received the payment. – offered to people from 16-75 and can renewed until age 99. Can be paid via stepped premiums (where premium increases with age, you pay more in the long run) or level premiums (same amount througout policy, 30% cheaper than stepped in long run, and indexed to CPI) – Advantages of having life insurance are that it gives the insured peace of mind knowing that they are n ot leaving their loved ones in poor financial positions upon their death and ensures they are looked after – Disadvatanges are that there are a few exclusions to the policy such as suicide within first 13 months, War, pre-existing conditions, aids, and terminal illness/disease where it is a direct result from an action which was self-inflicited. – Currenlty Allison has $100,000 worth of life and TPD insurance within her superannuation. In regards to life insurance this is unfortunately inadequate as the estimated living costs for Allison and Simon are $67,000 per anum. In order for Simon to continue meeting these expenses (whilst still working) if allison were to becomed deceased, the insured amount would need to be close to $475,000. This is because if invested at an average fixed deposit rate of 6% it would provide an income stream of $28,500 per anum to Simon. [(475000/100) x 6 = 28,500] – this along with his current net salary of $38490 come to a per anum income strem of $66,990 to meet expenses. An additional $270K should also be added to cover their existing mortgage debt and to have money left over in order to pay for the grandchildrens university education, bringing the total life benefit to $745,000. †¢ Income protection: – A fortnightly or monthly payment paid to the insured in the event that they suffer and injury or illness which leaves them unable to work – Maximum of 75% of income can be insured and person must be employed at least 25 hours per week. Waiting periods of 14-720 dys apply and benefits periods can be 1-65 years (longer the beenfit period the higher the premium) – 2 types of policies are agreed value (specified value to be paid regardless of difference bet ween insureds current and former incomes) indemnity (benefit based on insured income at time of claim. – Advantages are that the insurance provides peace of mind knowing that if the insured was to suffer from an injury or illness and are unable to generate an income that the benfit will be paid as if it were their regular income, giving them peace of mind that they could stay on top of all their financial commitments and goals whilst healing. Disadvantges are that as income protection is linked to employment, those who are unemployed or even those with occupations which are considered too risky are not able to obtain income proteciton insurance. Also, as the benefit is only 75% of income, the insured will be 25% worse off and will need to make sure this will not affect any financial commitments or goals they may have. – Allison currently does not have income protection insurance in place which could end diasterously as she earns 75% of the couples gross income. [(180,0 00/100) x 75 = 135,000)]. Allison should take out an income protection policy with a $101,250 benefit (135,000-25%) which would then provide both her and Simon peace of mind knowing that if anything was to happen they could continue paying their expenses †¢ Total and Permanent Disability: TPD insurance provides a lump sum payment to the insured after a qualifying period (usually six months) when certain criteria is met. – Criteria can be inability to perform own occupation, any occupation, home duties or all duties; these are based on the type of work the insured is in (rated AAA-E) – Immediate qualification for TPD payout if insured looses sight or a limb – Advantages of having TPD is that if the insured suffers a debiltating injury that sees them unable to return to work that they can still meet their expenses – Disadvantages are that it is not available to everyone; a new policy cannot be taken out after 60 and policies already in place automatica lly cease when insured reaches 65. Also unless rated category E, the standard level of cover criteria is ‘any occupation’, meaning that the insured may be able to perform in a role significantly less stimulating, challenging and financilally rewarding which would make them ineglibly to receive a payout even if they suffer a total and permanent diability. – As Allison and Simons expenses are $67,00 p/a and Allisons income protection benefit is $101,250, whilst Allisons still working a stand alone TPD policy would be beneficial for having a lump sum to pay off the exisiting mortgage debt of $150K, have enough money to pay for the grandchildrens university ($120K) and possible medical expenses (another $150K) – totalling a $420K TPD. Another amount for Living expenses should also be considered for the 6 years until retirement ($67,000 x 6 years = $402,000). This brings the total recommended TPD benefit to $822K which could also be bundled as a rider on Allisons life insurance to avoid overinsurrance. †¢ Trauma: – Trauma insurance provides the insured with a bulk payment when they suffer from an illness specified in the policy – Can be bundled with life insurance and a payout will decrease the life policy by the same amount – Available to people aged 16-55, or trauma for children aged 1-12 years ( waiting periods and age limit criteria apply) – Advantages are that as trauma insurance is not related to employment, people with uninsurable occuppations can still generally take out trauma insurance. Also the insurance provides peace of mind knowing that if the isured was to suffer from a specified illness and are unable to generate an income that the sum paid will cover their expenses and ease the financial pressure – Disadvanages are that there are exclusions such as death within 3 to 30 days of trauma event, trauma caused by an ntentional self inflicted injury or attempted suicide and acts of war. – In order to avoid overinsurance Allison should take out around $250K trauma insurance to cover $150K exisiting mortage debt and any medical expenses associated with the event. Allisons Income protection will also most likely be able to contribute towards the benefit amount should a defined event occur. c)Does Simon require personal insurance? If so, what types and how much? Please include reasons and calculations Simon could take out the following polices to provide stability and peace of mind for Allison in the event something should happen to him. †¢ Term Life, Trauma, TPD: As Allisons income (or insurance benefit if something were to happen to her simultaneously) alone can support the couples expenses of $67,000, I would recommend a combined life insurance, TPD and Trauma policy, of $690K for Simon [(salary of $45,000 x 6 years = $27,000) + $150K mortgage debt + $150K possible medical espenses + $120K grandchildrens education = $690,000), so that the mortgage can be paid out, the grandchildrens education can be paid for, any medical expenses which might be incurred can be paid, and a replacement income stream for simon is created leaving allison debt free if something were to happen to Simon. †¢ Income protection: It is my view that Income protection is not necessary for simon as allisons income is more than adequate to support the couple with money left over, however if they did not want to draw on this, an income protection policy could be put in place for 75% of his income. [$45,000 x 75% = $33750 ($33750 / 12 = $2812. 5]. this w ould mean Simons monthly benefit woul be $2812. 5 (75% of his monthly income). D) What is the most efficient way for Simon to contribute to superannuation and why? How much should Simon contribute? As Simon is on the lower end of the income tax scale, it is beneficial for him to make non-concessional contributions into his superannuation as he is eligible for government co-contributions for every $1 he puts in up to $1000. As Allison is on a higher MRT than Simon, if she were to salary sacrifice a larger portion of her income into both their superannuation accounts (shes currently Sacrificing $40,000 into her own, however this could be brought up to $70,000 and then she could sacrifice another $20,000 per anum into Simons in line with their goals of increasing their super balances) they would be paying less tax (as Allison in on the highest MRT and super contributions are at 15%) and they can use Simons income (on lower MRT) to put towards their expenses, thus Simon should not contribute too from his salary above the SG of 9% and non-concessional contributions past $1000 (as his super will be paid in by Allison to achieve the above stated tax advantages). Simon should also switch his investment strategy to a balanced mix as it is too conservative to his risk profile at the present. e)Is Allison contributing sufficient funds to superannuation at this time to meet their retirement objectives? Please explain. To meet their objectives of having $40,000 per anum to live off in retirement, Allison is not contributing enough to her superannuation at this point in time. Allowing for the effects of compounding interest, after 5 years Allison’s superannuation balance would have accumulated to $224,400 (at 7%). In order to provide an income stream of $40,000 Allison will need to bring her balance up to $580,000 by the time she retires in 5 years. This means Allison will need to make up the difference ($580,000 – $224,400 = $355,600) in the next five years. Allison will need to contribute another $30,000 p/a [($355,600/5 = $71,120) – her current Salary Sacrifice of $40,500 = $30,000] to her superannuation to achieve this balance and their retirement objectives. Allisons current total superannuation contributions per anum are $40,500 in salary sacrifice (30% of salary of $135,000) along with a Superannuation guarantee of 9% of her remaining salary ($135,000 – $40,500 = $94,500, $94,500 x 9% = $8505) bringing her total contribution to $49,005. f) Are their additional benefits available to Simon or Allison as a result of your strategies above? By Allison salary sacrificing more of her income she is saving astronomical amounts on tax as the contributions tax is only 15% as opposed to her MRT. As stated previously, Simon will also be eligible for the government co-contributions with his non-concessional contributions. Allison’s income protection policy (and Simons if taken out) are also tax deductible. Simon is also eligible for the low income tax offset of $804 from a maximum of $1350 for income earners of under $30,000. For Simon his amount is worked out with the following calculations: 1. [$1350 – ($45,000 taxable income -$30,000 threshold) x 4% = 546] and then 2. $1350 – 546 = $804) g)What is your recommendation regarding an investment for the grandchildren’s university education? What are the benefits of this investment? For the grandchildren’s education I would recommend investing in a balanced education savings plan (they would need to contribute $7000 p/a (at approx 7%, and with the effects of compounding interest) to reach their goal of $120,000 in 12 years) as the amount invested in taxed at a flat internal company rate of 30% however after 10 years the amounts can be withdrawn for non education purposes tax free, and as the investment is to be over 12 years Allison and Simon could take advantage of this. If it was to be withdrawn earlier, they are still in a good position as the money would be invested with a bit more risk than that of an everyday savings account and the taxation benefits still outweigh other methods, especially with the low income offset which is still said to be increasing. h) Are their bank/cash investments (total $36,000) meeting their requirements? Why/why not? What do you recommend? No, currently these investments are not meeting Allison and Simons requirements as they are held in both names and are therefore subject to Allison’s higher MRT. If Allison and Simon decided to use the advantages provided by income splitting (that is, transferring term deposits and interest bearing accounts into Simons name) then they would save on tax as Simon has a lower MRT. Allison and Simon could also think of putting this money in their Superannuation to capitalize on the 15% contributions tax or putting it into the mortgage as then they are paying less interest, however this would depend on whether or not they would be needing to keep this money liquid for everyday use and emergencies. i) How would you address their goals of paying out their home loan and purchasing the new car upon retirement? In order to pay out their home loan in 5 years time, Allison and Simon would eed to put around $40,000 P/A towards due to interest payable. After Allison’s extra salary sacrificing for both their Super accounts, the couple have around $45,000 surplus disposable income per anum. $40,000 can be used to make these extra payments on the home loan and the other $5000 can be put into a high interest savings account for the 5 years (which if invested at the average deposit rate of 6% will leave them with $29576. 10 after 5 years with the effects of compounding interest) which will leave them with enough money to purchase the new car. j) Are their estate planning preparations adequate? Why/why not? Currently Allison and Simon have no estate plan, therefore it being inadequate. I would recommend to Allison and Simon to contact their solicitor to discuss a will/power of attorney using their information we have uncovered through analyzing their financial situation here today. k)What alternative strategies did you consider? Why did you reject them? Insurance – providing insurances for Simon as well; This would be over insuring and wasting money for Allison and Simon as Simons income in relatively small in comparison to Allison’s, and she is able to cover all costs if something we to happen to Simon. Superannuation – Simon contributing more to his superannuation; the tax benefits of Allison’s salary sacrifice through decreasing her MRT far outweigh that of Simons and it was therefore better to prioritise with Allison’s SS and utilize Simon’s income for expenses. Investments – For the grandchildren’s university education, possibly investing in something more risky (eg shares) or less risky (eg Term deposits) however the tax advantages and return on the educations savings plan in comparison would leave them in a better position. 5 – Present Strategies and Negotiate Solutions Prior to Presentation a)Describe what preparations you would undertake to present your strategies in step 4 to Simon and Allison. After thorough research enabling me to form my recommendations, I would prepare a Statement of Advice with my findings, make sure to gather all product disclosure statements which are relevant, and information to back up my advice. I would also make sure there was a financial services guide within the information I would be taking to the interview. I would then call the clients to arrange a time which suits. b) What back-up information or documentation might you need? I might need to back up the performance of particular products/services I recommend (this could be provided in the form of company reports, asx reports, PDS, articles, academic studies etc) also easy to follow breakdowns of any calculations made so the client can see exactly how the strategy will benfit them. FSG and Privacy policy to assure the client of the companies principles and policies in the event of a dispute. During the Presentation c) Describe the disclosure principles and presentation requirements you must adhere to for the following documents: ? Statement of Advice The statement of advice must have â€Å"statement of advice† written across the front of it, it must be in non complex wording (â€Å"clear, concise and effective manner†), must have a â€Å"generic description of the range of financial products or strategies considered and investigated†¦Ã¢â‚¬ . The customer must receive a copy, along with PDS and FSG and must have signed and had the SOA presented to them BEFORE any implementation of strategies can be put in place. A disclaimer is also usually placed at the bottom of the SOA to protect the financial planner and affiliated companies against the working of case law – althogh this is not required by the corporations act. ? Product Disclosure Statement – The PDS needs to accompany the SOA so the clients have all the information in relation to possible products they are signing up to. Other things which need to be in the PDS include: Fees and charges = explain what fees might be applicable, including ben efits and commissions that could be received by 3rd parties/referrers or product providers as a result of the plan being implemented ? Products = outline the features of the products and services being recommended ? Complaints Policies and Procedures = make sure to completely explain the procedures for handling customer complaints ? Relationships = explain any relationships which might influence which products are recommended or provided d)List 2 objections or concerns your client might raise. How would you address these in order to gain agreement? 1. How do I know that what you recommend will work out for me in the long run? – We have based these recommendations on previous performance of these products and services, all of which you have sighted with your eyes. We cannot 100% guarantee that these potential outcomes listed will occur, however financial planning is what we specialise in and we make it our duty to look after your financial health. If we notice that the course which we have mapped out for you is not heading in the direction we have anticipated, you will be the first to know, and we will review your situation in order to alter your plan to best fit your needs, provided you would like us to provide you with this ongoing service. 2. This plan fee seems overly expensive – why do I have to pay it? – It takes a considerable amount of time, research, investigation and preparation for us to put together a plan that is tailored entirely according to your personal needs. There are no generics or assumptions made with what we are presenting you and the savings and earnings you will make as a result of our guidance will far outweigh the cost of this information. 6 – Implement Agreed Plan Simon and Allison have agreed to your plan. a) What transactional documents/authorities need to be signed by Simon and Allison? †¢ Authority to proceed / SOA and disclaimer †¢ Application forms along with PDS attached †¢ A cheque to be written to accompany application form b) Complete an Implementation Plan, in order, that details your planned actions now that Callahan’s have decided to proceed with your recommendations in step 4, providing an indication of when each must be completed. A – Adviser C – Client | No. Action |Who |When | | |Sign Authority to Proceed |C |Now | | |Provide 3rd parties with adequate notification of actions needed to be taken eg solicitor, accountant |A |ASAP | | |Complete application forms ready for c lient to sign |A |ASAP | | |Present application forms to client with PDS attached to be signed. |A + C |When ready | | |Photocopy, keep one and give other with PDS to client. | | | |Obtain Cheque from Client and attach to application form to be sent to dealer group |A |With step 4 | | |Welcome letter from dealer is issued |A /Dealer |- | | |Secure client file established (maintained for 7 years) |A |- | | |Confirm with clients that they have received welcome letter and they have heard from any 3rd parties. |A |- | | |Speak to clients about Review Service |A |When everything| | | | |is settled | 7 – Provide ongoing service You now have to address the issue of providing ongoing advice to Allison and Simon. )What environmental (economic, market, regulatory) changes, or changes to their personal or financial situation would cause a review of their plan? †¢ Interest rate changed may affect tax advantages, investment earnings †¢ New regulatory changes may grandfather or c ompletely remove current strategies in place †¢ Market booms and busts may cause portfolio mix to be outdated / underperforming †¢ Clients may have suffered a loss, or injury causing them to claim and or need to reassess the financial commitments they can keep up with †¢ Clients may have come into a considerable amount of money unexpectedly allowing for more room to move in current strategy (e. g. inheritance, lotto) Change of advisor may bring upon new light on their situation, may have a better strategy in mind. b)Describe 2 activities you regularly undertake to keep up-to-date with current legal, ethical and regulatory requirements of the finance sector. †¢ Read financial review/finance news, current company legal updates †¢ Read the AFPA reports issued and newsletter from BT financial and liaise with current financial planners c)What level of ongoing service would you propose for these clients? ( â€Å"No service† ( â€Å"Portfolio valuation† ( â€Å"Portfolio review† ( â€Å"Financial Plan review† ( â€Å"Other† – Describe d)Describe the option recommended for your client, and why you have recommended this option. Describe the level of service you will provide and the associated fees. I would recommend an annual portfolio review for Allison and Simon to ensure that they are on track to achieving their goals. This would involve checking balances and fund mixes to ensure adequate returns have been made and that products are performing as anticipated. I would prepare a letter to send out based on my finding advising whether or not a change could benefit them. As the strategies recommended for Allison and Simone are fairly basic a separate fee would not be necessary as this service would be considered to be paid for under the trail commissions. Sample Fact Finder & Risk Questionnaire 1. PERSONAL DETAILS |CLIENT 1 |CLIENT 2 | |Title: |Mrs |Mr | |Given Name: |Allison |Simon | |Preferred Name: |Allison |Simon | |Surname: |Callahan |Callahan | |Date of Birth: |1956 |1958 | |Marital Status: |M |M | | | | | Home Address: |Address: Lot 3 Wattle Road | | | | | |Suburb/Town: Hurstbridge | | |State: VIC Pos tcode: | |Home Telephone No. | | |Preferred Contact No. | | | | | | | | CHILD / DEPENDENT DETAILS Name: |Megan | | | | |Relationship: |Daughter | | | | |Date of Birth: |1981 | | | | |Current Age: |29 | | | | |Financially Dependent: |NO | | | | HEALTH DETAILS Do you Smoke: |Yes / No |Yes / No | |State of Health: |Poor / Good / Excellent |Poor / Good / Excellent | |Are you aware of any health issues that may| | | |impact your ability to earn an income? | | | |(please provide details) | | | |Notes: | 2. EMPLOYMENT DETAILS |CLIENT 1 |CLIENT 2 | |Employment Status: |( Unemployed |( Unemployed | | |( Full Time Employed |( Full Time Employed | | |( Self Employed |( Self Employed | | |( Part-time |( Part-time | | |( Retired |( Retired | | |( Other |( Other | |Employer Name: |Best Marketing |Newbolds Pty Ltd | |Position Title: |Marketing |Employee | |Primary Duties: |Marketing |Custom Furniture | |Work Address: | | | |Current Work Phone No. : | | | |Employment Security: |Secure – just promoted |Secure – intention to stay long term | |Are you Contemplating leaving your employer? |In 5-6 years |Not in the foreseeable future | |Do you foresee any substantial change in |Planned retirement in 5-6 years, possible |In 5-6 years will reduce hours to part time | |your income in the next 2-5 years? reduction in take home pay in the lead up to|– income will be approx $20K p/a | | |this | | |Notes: | | | OTHER ADVISER DETAILS Accountant |Name: | | |Company: | | |Contact Detail: | | Do we have authority to contact? ( Yes ( No Solicitor Name: | | |Company: | | |Contact Detail: | | Do we have authority to contact? ( Yes( No ESTATE PLANNING DETAILS | |CLIENT 1 |CLIENT 2 | |Do you have a current Will? |No |No | |Date of Will / Last Reviewed: | | | |Power of attorney |No |No | |Type / Name of Attorney? | | |Do you have Funeral Plans? |No |No | |Do you have any specific intentions |Intention to pay for grandchildren’s |Intention to pay for grandchildrenâ€℠¢s | |regarding your estate distribution? |university in the approx 12 years (approx |university in the approx 12 years (approx | | |$120K in today’s dollars) |$120K in today’s dollars) | 3. FUTURE NEEDS OBJECTIVE AND GOALS |E. g. Current income needs, retirement income needs, diversification, tax minimisation, capital growth, investment security, wealth creation, | |eliminate mortgage etc | |Reasons for seeking financial advice | |Gain assistance with making the transition to retirement and planning the next five years | | | | | |Short Term (1 to 3 years) | |Save on tax on bank accounts/term deposits through possibly restructure | |Start increasing Allison and Simons Super balances ($160K and $47K) | |Look into other investment options to diversify current wealth | |Medium Term (4 to 7 years) | |Pay off IO mortgage of $150K in 5 years | |Buy new car (through trade in 9 year old land cruiser) worth $30K In 5 years | |Have a $40K (today’s dollars) p/a retirement income stream in 5 years | |Long Term (7 year plus) | |Pay for grandchildren’s university in 12 years – estimated needed $120K in | |today’s dollars | | | | | RETIREMENT PLANNING Retirement Details |CLIENT 1 |CLIENT 2 | |Plan ned Retirement Age: |59/60 |undetermined | |Retirement Income required: |$40K (today’s dollar) |$40K (today’s dollar) | |After retirement, do you intend to work |NO |Expected Income= | |again either on a full-time or part-time | |$20K | |basis? |Till age: undetermined | |What capital expenses will you have in |$ |$ | |retirement? (Please state expense and | | | |value) | | | |Would you like some assets left to your |$ |$ | |estate? Please detail) | | | |Notes: | | | | | 4. FINANCIAL DETAILS PERSONAL BALANCE SHEET Lifestyle Assets | |Owner |Date Acquired |Value |Associated Debt | |Principal Residence: |Allison and Simon | |$750,000 |$150,000 | Contents: | | | | | |Motor Vehicle/s : |Allison |2006 |Land Cruiser |No debt | |Caravan / Boat / Trailer: | | | | | |Investment Property: | | | | | |Other: | | | | | | | | | | | | | | | | | | | | | | | |Total | | | | | Investment Assets Investment | | | | | | | | | | | INCOME DETAILS | |CLIENT 1 |CLIENT 2 | |Income: |$135,000 |$45 ,000 | |Investment Income: |$1770 p/a interest (bank accounts) |$1770 p/a interest (bank accounts) | |Centrelink Income: | | |Pension/Annuity Income | | | |Other Income: | | | | Less Income Tax |$38554 |$7580 | | Less Medicare Levy |$2050 |$700 | |Total Net Income |$94426 |$38490 | |Combined Net Income |$132,916 | EXPENSE DETAILS |COMBINED | | |Food: | | | |Entertainment: |$15,000 | | |Transport/Vehicle: | | | |Council Rates: | | | |Amenities: | | | |Rent: | | | |Mortgage Repayments: |$12,000 | | |Other |$40,000 | | |Total |$67,000 | | SURPLUS DISPOSABLE INCOME | |COMBINED | | |Annual: |$65,916 | | |Monthly: |$5,493 | | PLANNED MAJOR EXPENSES |Nature of Expense |Approx. Expense Amount |Expected Date | |Grandchildren’s university |$120,000 in today’s dollars |12 years | |Purchase new car |$30,000 |5/6 years | | | | | | | | | |What cash reserve do you require for | | | |emergencies or unforeseen expenses? | | | |Are you expecting a future lump sum or | | | |inheritance? | | | |If so, how much? | | |Notes | | | 5. SUPERANNUATION & INSURANCE SUPERANNUATION |Company |Policy No. |Employer/ Personal | |Are any of the above policies preserved? | |No | |Has a tax deduction been claimed for part/all? |Yes |No | |Are there any exit fees applicable? |Yes |No | LEAVE PAYMENTS Type |Expected Receipt Date |Anticipated Amount | |Annual: | | | |Long Service: | | | |Other: | | | |Have you recently received a redundancy package? |Yes |No | |If you have recently received a redundancy package, please provide notice of payments. | GENERAL INSURANCE Insurance Description |Policy Number |Owner |Date Commenced |Sum Insured |Premium Payable | |Term Life and TPD |Allison |$100,000 | | | | | | | | | | | | | | | | | | | | | | | | | |Notes: | | | 6. INVESTOR RISK PROFILE Your attitude to risk is probably the most important factor to consider before investing. To achieve higher returns, you will have to be prepared to accept a higher risk of capital loss. This is because the funds and assets that offer high returns are generally more volatile than those producing lower returns. It is what we call ‘risk/return trade off’. We will recommend investment strategies to match your investments to your risk profile. Investing across the various investment sectors according to your risk profile is called diversification. For example, instead of investing only in property, or only in shares, you might invest a proportion in both, or even include cash or fixed interest to create a balanced portfolio. You are a balanced investor who wants a diversified portfolio to work towards medium to long-term financial goals. You require an investment strategy that will cope with the effects of tax and inflation. Calculated risks will be accepted to help you achieve good returns. 17 – 23 Moderately Conservative – A Low Risk Taker You are a moderately conservative investor seeking better than basic returns, but risk must be low. Typically an older investor seeking to protect wealth that you have accumulated, you may be prepared to consider less aggressive growth investments. 9 – 16 Conservative – A Very Low Risk Taker You are a conservative investor. Risk must be very low and you are prepared to accept lower returns to protect capital. The negative effects of tax and inflation will not concern you, provided your initial investment is protected. 7. CLIENT STATEMENT / AUTHORISATION |I/We herby declare that the information set out in this form is true and correct to the best of my/our knowledge. | |I/We are not aware of any other information and have not disclosed to the person to whom this form is given any other information | |which would be relevant to the making of a recommendation by a Mentor Financial Planning Representative. | |I/We give permission for this information to be used for the preparation of my/our financial plan and I/we understand that the | |investment recommendations will be based solely on the information supplied in this form. | | |I/We also acknowledge that: | |( |I/we have received, read and understood the Financial Services Guide before any advisory services were provided; | |( |I/we permit this document to be passed in confidence to any member of Mentor Financial Planning Pty Ltd; | |( |Lim ited Information Provided | | |I/We have provided limited financial information. I/We have limited the product(s) or objective(s) that can be advised on | | |to: | | |If you are seeking limited advice of a particular nature you must make this known at the time of the interview and you | | |should recognise that the recommendations will only relate to that limited advice being sought and may not be appropriate | | |considering your overall situation and objectives. | |( |Tax File Number Permission | | |I/We give permission for my/our tax file number(s) as provided, to be held only by Mentor Financial Planning and be | | |forwarded to financial institutions as requested or as necessary. |( |Engagement Application | | |I/We request that Mentor Financial Planning investigate research and provide suitable options to the financial objectives | | |outlined in this questionnaire. | | | | | |I/We understand that the preparation fee of $500 is payable for the work to be undertaken. This fee may be credited | | |against my establishment fee should I/We proceed to implement any of the recommendations provided by Mentor Financial | | |Planning. | | |Client 1 | |Client 2 | | | | | |Signature: | | | | | | | | | |Date: | | | | |8. Adviser’s Declaration | I declare that: a) the information contained in the Fact Finder is an accurate and complete record of the information obtained from the client(s); b) The client(s) was provided with a copy of the Financial Services Guides before any advisory services were provided. |Adviser’s Signature | |Date | | | |Additional Important Information for the Client(s) | |If incomplete or limited financial information has been provided: | | | |I, as your Adviser, will not be able to undertake a full needs analysis of your individual investment objectives, financial situation | |and particular needs; | |There is a possibility that any recommendation given to you may not be fully appropriate to your individual objectives and needs, | |especially those which I, as the Adviser, do not know; and | |You as the client must carefully ssess the appropriateness of the recommendations to your own individual investment objectives, | |financial situation and particular needs before acting on them. | To Whom It May Concern Please accept this letter as my/our authority to provide any information requested and documentation if required to Azza Financial Planning (or their representative). Please accept a photocopy or facsimile of this letter, as the original will remain on file at the offices of Mentor Financial Planning. Correspondence should be sent to Level 2, 349 Collins Street Melbourne VIC 3000 This authority should remain in force until withdrawn in writing by me/us. Thankyou. |Allison Callahan | | | |Client 1 Name | |Signature | | | |Simon Callahan | | | | | |Signature | | |Client 2 Name | | | | | | | | | |Client 1 D. O. B. | |Client 2 D. O. B. | | | |___/___/___ | |___/___/___ | | | | | |Lot 3, wattle road, Hurstbridge, VIC | |Address | | | | | On Going Service Options 1. The â€Å"No serviceâ €  option This generally relates to a one off investment placement based on the agreed investment strategy in the financial plan. In choosing this option, no ongoing service or review of the financial plan and the investment portfolio is provided to the client unless specifically requested by the client or upon the recommendation of the planner. 2. The â€Å"Portfolio valuation† option This service provides reports on the value of your investment portfolio only. The fee charged will depend on the frequency of the reports. In choosing this option, no ongoing service or review of the financial plan is provided to the client unless specifically requested by the client or upon the recommendation of the planner. 3. The â€Å"Portfolio review† option This service provides reports on the value of your investment portfolio. The fee to be charged will depend on the frequency of the reviews and will be agreed at the time. The minimum fee is $N/A but this may be higher depending on the complexity of the review. This service includes: An annual/half yearly/quarterly review of your existing investment portfolio and its performance looking at further investment opportunities, if appropriate establishing if there have been any changes in legislation, the economic environment and state of the financial markets that may impact on your recommended investment portfolio In choosing this option, o ongoing service or review of the financial plan is provided to the client unless specifically requested by the client or upon the recommendation of the planner. 4. The â€Å"Financial Plan review† option This service provides for an annual/half yearly/quarterly review of the overall financial plan strategy and the investment portfolio recommend ed. Each review will be presented in the manner of a written report and recommendations. The fee to be charged will depend on the frequency of the reviews and will be agreed at the time. The minimum fee is $__500________, but this may be higher depending on the complexity of the review. This service includes: roviding reports on the value of your investment portfolio; an annual/half yearly/quarterly review (including comments) of your existing investment portfolio and its performance; looking at further investment opportunities, if appropriate; establishing if there have been any changes in legislation, the economic environment and state of the financial markets that may impact on your recommended investment portfolio and the overall financial plan strategy; establish if there have been any changes to your personal circumstances or financial goals and objectives; ascertain if the overall financial plan and the investment portfolio is continuing to meet your financial goals and objec tives (including an insurance review); and making any new recommendations (if necessary).