Needs Analysis – 1;Financial Planning – Detailed Cases ;

Needs Analysis – 1;Financial Planning – Detailed Cases ;

Case A


There are 4 Modules Available to
Address Specific Financial Planning Needs
& Answer Spec

Needs Analysis – 4
Sample Output – Retirement Needs Analysis – Summary 1 Page

Note:  Lifestyle goal (needs) = desired expenditures (excluding debt service & investment activity)

Needs Analysis – 5
Sample Output – Retirement Needs Analysis – Summary 2 Page

Needs Analysis – 8
Sample Output – Survivor Capital Needs – Summary 1 Page

Needs Analysis – 12
Sample Output – Estate Capital Needs – Summary 1 Page

Note:    Adjustments = difference between living value of pensions & annuities and amount that will be paid to estate

Detailed Projections – 7
Projected Cash Flow

– chart – year 1  – combined after-tax cash flow from all sources compared to needs
–    graph – year-by-year – lifestyle expenses versus cash flow
–    chart – year-by-year – income excess/deficiency

-year-by-year after-tax cash flow versus needs

– year-by-year after-tax cash flow from all sources

– disposable  = AT Cash Flow – Reinvested Growth – Lifestyle Needs

– Investment activity    – black lettering – using money
– red lettering – cash inflow (eg. Selling house)

Detailed Projections – 8   – Projected Cash Flow – Sample Output

Detailed Projections – 11 – Net Worth – Sample Output – Summary 1

Detailed Projections – 12 – Net Worth – Sample Output – Summary 2

Optimize – 1

Optimize – 2
Sample Data Input

Optimize – 4  — Sample Optimization – Projected Cash Flows

Part 1A – Issues
A 1-page summary of the key issues of the case (those articulated by the client & those identified by you the financial planner).  Point form is acceptable with a 1 –

2 sentence explanation of the issue.

Needs Analysis – 1

There are 4 Modules Available to
Address Specific Financial Planning Needs
& Answer Specific Questions

Needs Analysis – 4
Sample Output – Retirement Needs Analysis – Summary 1 Page

Note:  Lifestyle goal (needs) = desired expenditures (excluding debt service & investment activity)

Needs Analysis – 5
Sample Output – Retirement Needs Analysis – Summary 2 Page

Needs Analysis – 8
Sample Output – Survivor Capital Needs – Summary 1 Page

Needs Analysis – 12
Sample Output – Estate Capital Needs – Summary 1 Page

Financial Planning – Detailed Cases
Case A

Tom & Tricia Chou attended a recent information evening and you have determined the following information from 2 subsequent meetings.  Tom is 43 and Tricia is 41.

Their children are Sasha (7 years) and Nicki (5 years).  Tom has a 17 year old son, Rob, from a previous marriage.  He pays child support of $250/month until Rob is 21

or finished school.  Tom will also pay Rob’s education expenses.  Tom has an education savings fund for Rob of $35,000 invested in XYZ Canadian Equity Fund.  Tom &

Tricia started RESPs for Sasha & Nicki when they were born.  They contribute $100/month/child to the RESPs which are currently valued at $10,000 (Sasha) and $7,000

(Nicki).  They are both invested in ABC Canadian Equity fund.  The Chous plan to support each of the children for 4 years of university.  They have assumed a current

value of tuition of $5,000/year and $500/month of expenses.

Tom & Tricia purchased a home in 1999 for $300,000 which has a current estimated value of $450,000.  They have a $200,000 mortgage that they recently renewed at 4.9%

with a 20-year amortization.  The monthly payments are $1,303 for the 1 year fixed mortgage.  They would like to have the mortgage paid by the time they are 60.

Tom owns a business with his father, Fred, as joint tenants.  The business has been in operation for almost 20 years and produces a stable income of $85,000/year for

each of them.  The business has key person insurance on each of their lives.  Fred wants to start decreasing his hours worked in the business and travel more.  He is

in good health, a widower with 2 other children and 5 other grandchildren.  His remaining estate, valued at $600,000, will be divided 25% to Tom and 37.5% each to his

other two children.  He doesn’t want to retire as long as his health is good because he loves the business.

Tricia is a senior manager at a national Search Agency.  She earns $75,000/year plus commissions that range from $12,000 to $30,000 and average is $20,000 that is her

expectation for the current year.  She has an excellent extended health plan that covers the entire family, a defined benefit pension plan, disability insurance of 70%

of salary and group life of 2x salary.  Tricia’s mother lives on a small pension and is becoming increasingly frail.  For the last year, she has lived in a small

apartment in the Chou’s basement and cares for Sasha & Nicki after school

Tom & Tricia provided the following information about their financial assets.  Tom tries to contribute $10,000/year to his RRSP.  Tricia contributes 0/month to

hers.  She has a good pension plan that will pay 2% of the average salary of her last 5 years.  She currently has 10 years of service; she and her employer each

contribute 5%/year to her pension plan.  The business is estimated to be worth $300,000 escalating at approximately the rate of inflation.

Tom’s RRSP has a current value of $250,000 and is invested in the following mutual funds:

XYZ Canadian Equity        $50,000
XYZ Precious Metals          25,000
ABC US Equity                50,000
ABC Canadian Bond          75,000
ABC Money Market          50,000

Tricia’s RRSP has a current value of $30,000 and is invested in GICs.  She would like to do some investment planning but is so busy with her job, the children and her

mother that she never gets around to it.

Tom & Tricia have the following investments in their joint non-registered account:

Mutual Fund            Current Value        ACB

Canadian Bond             $15,000            $ 15,000
Canadian Equity              76,150             104,700
US Equity              22,800               17,050
Foreign Specialty              25,000               18,000

Tom considers himself to be a buy/hold investor but enjoys the challenge of investing in some short term plays.  Over the years, he feels that he has made more money

than he has lost.  He feels that some losses and volatility are part of the investment process.  He belongs to an investment club that meets monthly to analyze stocks

and make investment decisions.  He has about $10,000 invested with the club.  Tom has evaluated their risk tolerance as:

Non-registered            Registered
Tom            moderate aggressive        moderate aggressive
Tricia            moderate growth            moderate

Tricia and her mother own a cottage on Ahmic Lake as joint tenants.  The cottage has a current value of $250,000, an ACB of $75,000 and escalates in value about

5%/year.  Tom & Tricia pay for all expenses and repairs to the cottage.  Tricia is an only child and will inherit the remainder of her mother’s estate of about

$100,000.  For planning purposes, they feel that it is best to assume that this money will be required for her mother’s ongoing care in the future.  Her mother is

currently 73 and they are concerned about costs if she should require LTC.  Her mother is still in reasonably good health but strokes run in the family.  They would

like to discuss available options with you.

They also have a $10,000 1-year GIC  and $15,000 in Canada Premium Bonds.  Their chequing account fluctuates from $2,000 to $5,000.  Tom has term insurance of


Tom uses the company car.  Tricia takes the TTC and shares her 2012 Infiniti with her mother.  It has a current value of $20,000 and she has car payments of $450/month

for the next 36 months.  Tricia never keeps a car for more than 5 years.  The Chous don’t have any debt other than credit card debt that fluctuates between $500 and

$1,000 per month.  They pay this off almost every month.  They really don’t have a budget.  They spend what is left after their fixed payments, RESP and RRSP

contributions.  They also try to save $200/month that is invested in their non-registered joint account.

They want to be debt-free by 60, have sufficient education savings to fund 4 years of university for the three children and have the option to retire at 60 if they

choose.  They would probably work part-time and travel extensively.

Both Tom and Tricia are in good health, exercise regularly, play golf, ski and Tom still plays hockey.  They expect to live to 85 or 90 and don’t want to rely on OAS

or CPP to maintain their standard of living.

From their last tax returns (2013), you determined the following:

Tom            Tricia

Employment income        $85,000            $105,000
CPP Premiums                3,600                      1,800
EI Premiums            –                     820
Taxable benefits                3,000                              950
Income Taxes              18,700                    22,300

Current expenses include the following:

Joint            Tom         Tricia

Property taxes            3,600/year
Property insurance        600/year
Utilities                300/month
Phone                60/month                    40/month
Cable & Internet            100/month
Groceries             250/week
Eating out             80/week            40/week         50/week
Cleaning Service             75/biweekly
Home maintenance         1,500/year
Clothing                 3,000/year            2,000/year         3,000/year
Car insurance                                     900/year
Gas                                         25/week
Car license                                     100/year
Public Transit              50/month
Fitness Club              100/month

Sports & entertainment                  200/month
Children’s lessons & activities            100/month
Miscellaneous                          50/week           50/week
Gifts                   2,000/year
Charity                   2,000/year
Holidays               10,000/year

– property taxes                           100/month
– insurance                           600/year
– utilities                               750/year
– miscellaneous                           800/year

Tom and Tricia haven’t reviewed their wills for 5 years.  They feel too young to bother with POAs.  Both their parents have recent POAs and wills.


Prepare a comprehensive financial plan for the Chous.  The analysis and recommendations should be customized to their financial situation, goals & objectives and their

concerns.  Also, include any other observations or concerns that you have noted

Additional  Case Clarification:

?    Treat the GIC & Canada Premium Bonds as cash.
?    The rate of return assumptions in the default are unrealistically high – the following should be used
?    Inflation 2%
?    Cash    3%
?    Cdn Bonds 5%    Foreign Bonds 5.5%
?    Cdn Equity 8%    Other Equity 9%


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