Strategy tips
Students should note that there may be more than one strategy or group of strategies that could be appropriate in Sharon’s circumstances. In fact it would be unusual in developing strategies for any clients where one specific strategy or set of strategies could be classified as ‘the best’ or ‘perfect’.
The ultimate test is that the strategies selected can be justified and explained in terms of the client’s stated goals, financial situation and profile.
In Sharon’s case, there are certain variables to consider, such as:
1.In dollar terms, what appropriate house deposit is she aiming to accumulate and over what time period?
2.What would be the ramifications if the car loan was paid off using her maturing term deposit savings? In this case, how should she invest her remaining capital and future savings to reach her house deposit goal over a maximum five-year period?
3.What would be the ramifications if the car loan was not paid off (or only paid off in part)? In this case, what could be an appropriate investment strategy for Sharon’s maturing term deposit and future savings to reach her house deposit goal?
4.How does her risk profile fit into the time horizon she has selected to purchase her first home and for point 2 and 3 above?
5.Could a valid strategy potentially have Sharon in a position to purchase her first home within five years? How much risk would she need to accept to achieve her declared savings goal?
A number of strategy options may appear available to Sharon to achieve her primary goal. Whatever strategy you select however, must be seen to be appropriate, including being within Sharon’s tolerance to risk, and satisfy minimum requirements under the best interests test.
It is important that you discuss the reason, risks, advantages and disadvantages of each recommendation.

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