31856 Assessment

Introduction

This assessment contains the information you need to determine competency for Core Knowledge:

Unit Standard 31856 – Demonstrate and apply knowledge of the financial services sector to provide financial advice solutions

This document contains:

• Assessment Guidance
• Assessment Tasks 1-6
• Student Declaration Form
• Assessment Decision and Schedule Form

Assessment Guidance

The Assessment Process

To achieve the unit standard, you must complete and return to Professional IQ the following documents:

• Assessment answers for all questions or tasks
• Student declaration form completed and signed

The assessment is competency based and focuses on the application of learning in your future role as a financial advisor. The study guide provided for this unit standard contains the information necessary to develop your knowledge and understanding of the Core Knowledge module.

The qualified assessor will use their professional judgement and subject-matter expertise to evaluate your assessment ensuring that it is:

• Valid: Meets the outcomes and evidence requirements of the unit standard being assessed
• Fair: A fair representation of what you can do/and or know against the outcomes of the unit standard
• Authentic: It must be your own work and must not be copied from any course materials or other sources
• Sufficient: Answers must be full and complete enough for the assessor to judge competency
• Consistent: Answers are consistent with the assessor guidelines and national consistency requirements.

The evidence you submit must comply with any policies and procedures of your organisation, codes of practice of relevant professional bodies or any relevant legislative and regulatory requirements.

Students with Specific Needs

If you have specific learning needs, you should have informed Professional IQ of these at the time of enrolment. This enables the Academic Manager to discuss with you what appropriate support is required to complete your study and assessments.

The Assessor Role

The assessor will consider all written evidence provided by you and decide if it is competent or not yet competent.

The assessor may require you to provide more evidence on one or more questions or tasks, if in their judgement they feel the answer is insufficient or incorrect.

Where there is not enough evidence to make a decision on competency, your assessor will send you a Further Evidence Required request (FER) which means you will need to supply further information. They may contact you to have a professional conversation or to clarify a point in your answer.

The assessor will complete the Assessment Decision Form, including any feedback and return the result to you within 10 working days from receipt.

Please retain a copy of your assessment and assessment result.

The Appeals Process

An explanation of the appeals process can be found in the Student Handbook located on Professional IQ under Student Resources.

If you disagree with an assessment decision, please follow the guide and complete an Assessment Appeal Form and send it to Student Support at Professional IQ. An independent assessor will be asked to investigate the appeal.

Resources

A copy of the unit standard can be downloaded from NZQA.

It is important you fully understand the outcomes and evidence requirements of the unit standard including any special notes, references and definitions applicable. The study guide is your main resource for this assessment.

You should read the study guide for this unit standard (as part of your course work) to enable you to answer the tasks listed in this assessment document.

References

This list is provided as a guide for students who are seeking further sources of information on this module

• Code of Professional Conduct for Financial Advice Services;
• Financial Markets Authority Act 2011;
• Financial Markets Conduct Act 2013;
• Financial Service Providers (Registration and Dispute Resolution) Act 2008;
• Financial Services Legislation Amendment Act 2019
• Reserve Bank of New Zealand Act 2021;

and all subsequent amendments and replacements.

Definitions

• AML/CFT Act – Anti-Money Laundering and Countering Financing of Terrorism Act 2009.
• Financial Advice Provider – a person that provides a financial advice service
• Financial Adviser – an individual who is registered under the Financial Service Providers (Registration and Dispute Resolution) Act 2008 in relation to a financial advice service; but does not include a financial advice provider
• FMA – Financial Markets Authority
• FMCA – Financial Markets Conduct Act
• GST – Goods and Services Tax
• PAYE – Pay As You Earn
• RBNZ – Reserve Bank of New Zealand
• Nominated Representative – an individual who is nominated by a financial advice provider under section 431T of the Financial Markets Conduct Act 2013.

Student Declaration Form

Complete and attach to your assessment answers before submitting for assessment

The Tasks you submit for assessment must be your own work and cannot be completed by another person.  Initial each item on the list below to show you have read and understood the requirements of the assessment and that the submitted work is your own work, then sign the declaration.

‘Your own work’ means it cannot be copied from course materials or other text. Your answers must be in your own words.

Assessment Tasks

Answer all the following questions in the blue shaded cells and save your assessment document with a new name with the unit standard number, your name and the date e.g. 31856 John Smith 17 August.

Task 1 (US 31856 PC 1.1)

In approximately 150 words in the Answer Box below, explain the role of each of the following financial market participants: 

• Share market
• Bond market
• Tax system
• Insurance market
• Lending services

Task 2 (US 31856 PC 1.2)

In this task you are required to demonstrate understanding of the operation of financial markets.  For each market participant listed below, describe in approximately 100 words in the Answer Box, their purpose and role.

Institutional market participants:

• FMCA licensed participants
• Insurance companies
• Reinsurance companies
• Trustee corporations
• Licensed supervisors
• Reserve Bank of New Zealand
• Financial Markets Authority
• AML/CFT supervisors
• Licensed and unlicensed participants
• Financial Advice Providers

Individual market participants:

• Financial Advisers
• Nominated Representatives

Task 3 (US 31856 PC 2.1)

In this task, you are required to describe each financial services product used by retail and wholesale clients.

Please complete your answers in the Answer Box below.

Task 4 (US 31856 PC 2.2)

This task requires you to identify key aspects of the creation, operation and uses of common estate planning tools.

Relate your answer to the scenarios provided for each of the estate planning tools. Please assume for all scenarios you are able to give basic advice.

a) Wills

In relation to the following scenario, outline the key aspects of the:

• creation of a will (explain the key points to putting in place a valid will)
• operation of a will (explain the key legislation that affects the operation of a will)
• use of a will (contrast the situation of not having a will in place with having a will in place).

You will need to refer to the four relevant Estate Planning and Property Relationship laws in your answer.

Your answer should be 400-500 words.

Scenario

Carol and George come to you for some advice. They are married with two young children and have a new home with a mortgage. They have no wills, enduring powers of attorney or trusts in place.

Carol’s mother has just died and left Carol $150,000. Carol is unsure what to do with the cash so has put it into a separate bank account for a while. Her first thought is to use it for the two children and their education but she is wondering if it should go against the mortgage as well.

Carol’s youngest sister has been left out of the will and is angry, saying she is going to contest it. She had a falling out with her mother six months prior to her death and her mother consequently changed the will. Carol wants to know if her sister can contest the will or not, in case she has to give back some of the money.

Carol’s mother also had a housekeeper who looked after her full time in the last two months of her life. Carol’s mother promised to leave her the Llardro porcelain collection in recognition of her help. The will did not reflect this.

b) Enduring Power of Attorney

In relation to the following scenario, outline the key aspects of the: creation, operation and use of an enduring power of attorney.

Your answer should be 400-500 words long.

Scenario

Sam comes to you for advice on his situation. He is widowed, with one son aged 30 who is married and has two children of his own, Sam’s grandson (7) and granddaughter (9).

Sam is not in the best of health physically and is also forgetting things more and more. He is considering his future ability to remain living on his own in his home and maybe moving to a rest home in the next 12 months.

Sam is unsure how to allow for his daughter-in-law in his affairs. He does not get on with her and would prefer to leave any decisions to his son. He is not sure if his son’s marriage will last so doesn’t want his daughter-in-law involved.

c) Asset Ownership

In relation to the following scenario, outline the key aspects of the creation, operation and use of asset ownership (referencing individual, company and trust ownerships and how assets of each of these are distributed).

In your answer you should discuss:

• The creation, operation and use of a trust, including how assets are distributed.
• How individual assets (Mingyu’s classic car) would be distributed after her death.
• How Zhao and Mingyu could ensure that Mingyu’s brother could take over the business if anything were to happen to them.

Your answer should be 400-500 words.

Scenario

Zhao and Mingyu have many investments, including a share portfolio, rental properties and term deposits owned under the name of their family trust. In addition, Mingyu has a classic car that her father bought for her when she was younger.

Zhao and Mingyu are the only directors and shareholders of their limited liability business.  Both Zhao and Mingyu have other brothers and sisters, nephews and nieces but no children of their own.

They want to make sure they equalise any distributions on death fairly across family members. They want their family business to go to Mingyu’s younger brother, who has been employed in the business for ten years.

Task 5 (US 31856 PC 2.3)

In this task, you are required to demonstrate your understanding of taxation measures by completing the following table.

Task 6 (US 31856 PC 3.1 and 3.2)

In this task you are required to demonstrate an understanding of how to match financial services and products to a client’s needs.

Based on the scenario provided, answer the following questions:

1. Identify the main financial products or services and issues that you consider the clients will need or should be considering.
2. Identify two markets and two market participants the clients will most likely use to meet their product and service needs.
3. Using the financial products and services in tasks 3 and 4, identify the three financial products most suited to their current needs/risks and explain why this product is most suited.

In 3-4 sentences for each of the three products you recommend, explain why your recommended solution is appropriate.

Scenario

Steve and Sangita are a young couple with no dependents. Steve is in his last year of an architecture degree, while Sangita is working as a physiotherapist. As a full-time student, Steve has no income and they are relying on Sangita’s salary until Steve graduates. Both have student loans, but no other debt.

They have just moved into their first rental property together. They have relied on public transport until now but to afford the rental, they need to move out of the central city. They have $5000 in savings but don’t want to use all of this for a car, as they would rather have some back-up funds. They think they will buy a house one day but are more interested in travelling in the short term.

Assessment Decision Form

Assessment Decision Form

The Assessment Decision Form is completed by the assessor and the results will be returned to you within 10 working days of receipt by the assessor of your assessment. explore more nz assessments.

31856 Unit Standard Title

Apply knowledge of financial, markets, systems, participants and products/services to provide financial advice solutions

Outcome 1: Demonstrate knowledge of financial markets, systems, and market participants.

1.1 Describe financial markets and systems and explain their roles.

Range: Financial markets and systems may include but are not limited to – share market, bond market, tax system, insurance market, lending services, blockchain.

1.2 Describe the roles of participants in financial markets and systems.

Range: Institutional participants may include but are not limited to – FMCA Licensed market participants, insurance companies, reinsurance companies, trustee corporations, licensed supervisors, RBNZ licensed and unlicensed participants, FMA, AML/CFT Supervisors, financial advice providers; individual participants may include but are not limited to – Financial Advisers, Nominated Representatives.

Outcome 2: Demonstrate knowledge of financial products and services.

2.1 Describe common types of financial products and services used by retail and wholesale customers.

Range: may include but is not limited to – general insurance; life, disability and health insurance; direct investments; managed investments; banking (cash, deposit, and transaction products); residential property lending; personal consumer lending; personal trustee services.

2.2 Outline key aspects of the creation, operation, and uses of common estate planning tools and applicable law.

Range: may include but is not limited to – Wills, asset ownerships (Individual, Company, Trust), Enduring Powers of Attorney.

2.3 Outline key aspects of the applicability of taxation relevant to financial services.

Range: may include but is not limited to – PAYE, withholding tax, GST, personal tax rates, company tax, Prescribed Investor Rate, Fringe Benefit Tax.

Outcome 3: Apply knowledge of financial markets, systems, participants, and services and products to provide financial advice solutions in a general financial services context.

3.1 Select appropriate financial advice solutions using broad knowledge of financial markets and systems, market participants, and common types of financial services and products.

3.2 Justify selected financial advice solutions.