Requirements:
Read the following case scenario and:
Prepare a 2,000 word financial report for the clients addressing their stated concerns and needs. The report should set out your recommendations and the expected outcomes, along with the actions required to achieve these outcomes. You should use up to date product, regulatory and market information wherever possible. You may use appendices, for example to show calculations, tables and product information. You may also submit an Excel spreadsheet that shows your calculations, including long term financial projections and expected outcomes of the plan. You need to refer to these calculations throughout the report. Appendices do not count toward the word limit. You may need to make some assumptions, in which case you should state clearly what these assumptions are, and how they have been applied. The assumptions should be reasonable and realistic.
You should submit the report on Blackboard. Furthermore, if you choose to submit your calculations you may also attach an excel spreadsheet.
ASSIGNMENT SCENARIO:
Paul and Nadine are in their late 50’s and considered themselves financially secure and comfortable with their lifestyle and future plans. Paul is a Senior Engineer in the Aerospace industry while Nadine works part time (0.6 Full Time Equivalent – FTE) as an Architect. They have three children: Mia, Tom and Jess. Mia and Tom are twins (age 19), and in September 2021 started university (assume 3 years course). Jess is 24 and is currently working towards her ACCA, hoping to finish in in 2024. Their financial goal was for both of them to retire when Paul turns 65 and enjoy their time together. They wanted to purchase a holiday home in Spain with a planned budget of 200,000 Euros, support Mia and Tom during their studies at university, and help Jess with a house deposit of about £15,000 to £20,000. Unfortunately, recent events have made them rethink their plans. In September 2021, Paul fell ill and was hospitalised. He had a minor stroke (Transient ischaemic attack – TIA). He has recovered, and is back at work 3 days a week (0.6 FTE). However, due to the loss of income the family had to tap into their savings to pay for the family Christmas holiday in Maldives. Paul is now considering retiring earlier than planned and is wondering whether the family savings are sufficient to meet their plan and support everyday expenses. He has serious concerns about his health and believes that working in high stress environment contributed towards his health problems. Paul wants to retire by the end of this calendar year (2022). Nadine is planning to carry on working for another couple of years but she would like to retire sooner rather than later.
Paul and Nadine have always enjoyed their incomes and are used to go out to dinners at least twice a week and having at least 2 overseas holidays a year, plus regular city breaks with their friends and children. Paul enjoys golf and is a member of a local golf club for an annual subscription of £900. Nadine likes shopping and decorating their home. They both spend about £400 per month in total on treats and treatments and Nadine’s personal trainer. In February 2020 they bought Audi Q7 on a personal contract hire. The monthly payments are £500pm for the next two years. They have another car, BMW 1 series that is used for short trips. This car was bough outright five years ago.
About three years ago Paul invested £85,000 in Polar Capital Global Technology Fund (https://www.trustnet.com/factsheets/o/g5v6/polar-capital-global-technology-i-gbp). The investment has generated substantial returns but Paul does not understand how it works as the fund was recommended by his work friend who is a technology enthusiast. Paul is worried that the fund is too risky and is considering selling it. He does not have good understanding of finance and investment, and given the change in his personal circumstances, he considers himself to be more risk averse than in the past.
The recent events has made both Paul and Nadine think about their future in a different light, and they are now focussed on securing their financial future in the short to medium term, as well as being concerned about what would happen to their assets and income in the event of either of them dying prematurely. They have come to you for advice on the following matters:
- They realise that the earlier retirement date will reduce Paul’s pension expectations. You have been asked to consider the options Paul has for retiring by the end of this calendar year, quantify the impact, and recommend the best course of action. He wishes to secure an appropriate income a) up to state pension age and b) thereafter.
- You are also asked to consider how Paul’s changed circumstance impact on Nadine’s pension planning – what recommendations can you make in relation to her early retirement and to ensure she is financially secure for the future should Paul die prematurely?
- They have also asked whether there are any other steps they should take to help their children with the university courses and the house deposit, as well as their ambition of purchasing a holiday home, and ensuring their family’s future financial security. The family expects a clear plan that outlines whether they can meet those objectives.
You will need to consider
- what an ‘appropriate income‘ might mean in real terms,
- the most efficient use of their pension savings and other existing assets (for example: non pension investments and savings, equity investment and inherited money), and
- what provision they should make to minimise the inheritance tax implications in their pension strategies should Paul and/or Nadine pass away prematurely.
Financial details are stated below.
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