Nelson Mandela Metropolitan University Module Details

PURPOSE
The overall module objective is to equip students with a broad perspective of the fundamentals of personal financial planning with specific reference to the following key areas of personal financial planning:

• the financial services environment and related legislation;
• the Financial Services Board and other regulatory bodies;
• asset types;
• short-term insurance;
• long-term insurance;
• retirement fund types and the six-step financial planning process.

LEARNING OUTCOMES
Introduction to Financial Planning

• Understand and explain the fundamentals of financial planning.
• Identify the main role-players in the financial planning environment.
• Discuss the other role-players in the financial services industry.
• Understand and discuss the main consumer protection bodies in the industry.
• Demonstrate an understanding of the factors influencing the financial planning environment.
• Demonstrate an understanding of the role of the Financial Services Board.
• Identify and discuss the main acts administered by the FSB.

Asset Types

• Understand money market instruments.
• Compare and demonstrate an understanding of the various money market products.
• Discuss the advantages and disadvantages of investing in money market instruments.
• Understand capital market investments.
• Demonstrate an understanding of the difference between interest-bearing and discounted investments.
• Calculate the purchase price of a bond in the secondary market.
• Explain what is meant by equities.
• Discuss the requirements for listing on the various boards of the JSE.
• Recognise the difference between various types of shares available in the market.
• Explain how to read the prices in the newspapers.
• Understand how to value an equity investment.
• Understand risk and return in relation to equity investments.
• Understand the basic tax implications of investing in equity instruments.
• Recognise the different property portfolios available to the investor.
• Identify the advantages and disadvantages of investing in property.
• Understand the tax implications of investing in property.
• Discuss the types of hard assets.
• Demonstrate an understanding of liquidity, risk and return.
• Demonstrate an understanding of derivatives, futures and options.
• Compare the advantages and disadvantages of using the various instruments.
• Demonstrate an understanding of the principles of trading futures and options.

Investment Products

• Demonstrate an understanding of the operation and types of collective investment schemes.
• Understand unit trusts and the use of them.
• Understand the various retirement fund options.
• Explain the difference between insurance and assurance.
• Understand life assurance and the various life assurance and ancillary products in the market.
• Demonstrate an understanding of offshore investments and the reasons for investing offshore.

Short-term Insurance

• Understand the basics of insurance.
• Differentiate between personal accident insurance and sickness insurance.
• Understand and discuss the different classes of motor insurance.
• Explain fire insurance and other property insurance.
• Understand and discuss theft and all risks insurance.
• Describe the different types of liability insurance and indemnity insurance.
• Explain multi-peril insurance.

Long term Insurance

• Understand the main provisions of the Long Term Insurance Act.
• Explain the technical aspects of long-term insurance policies.
• Explain the taxation of life insurance companies and funds.
• Discuss the provision of disability benefits.

Retirement Funds

• Demonstrate an understanding of the differences between pension and provident funds.
• Explain the different types of pension and provident funds.
• Explain the difference between defined benefit and defined contribution funds.
• Understand preservation funds.

Six Steps of Financial Planning

• Understand and discuss the compliance requirements when establishing a professional relationship.
• Discuss the information and data gathering process.
• Explain information and data analysis.
• Describe the process of preparing and presenting recommendations.
• Discuss the implementation stage of the planning process.
• Explain the process of review and monitoring.

CORE CONTENT

• The Financial Services Environment and related legislation:
  • Rudiments of the SA Financial System.
  • Financial Intermediation.
  • Financial Intermediaries in SA.
  • Other financial bodies.
• The Financial Services Board and Regulatory bodies:
  • Focusing on legislation related to the financial services industry.
• Asset types:
  • Introduction to the different asset types.
  • Risk inherent in these assets.
  • Taxation issues relating to the various asset types.
  • Long-term and short-term products which could be formed by combining different asset classes.
• Short-Term Insurance.
• Long-Term Insurance.
• Retirement Fund Types.
• Six Steps of Financial Planning.

1 x 3-hour examination, 50% class mark + 50% examination mark.
*Class mark = 60% (average of two semester tests) + 40% (assignment).

MODERATION
Internal.