GU1-Guidelines-Stage-2-Developing-1771

Gu1_Stage2_Draft2_Apple1GradedUnit1Stage2DevelopingAwardStructure:FinancialServicesSCN:091-169-937Candidate’sName:Wei,AppleHNDCentreXianDaCollegeofEconomicsandHumanitiesShanghaiInternationalStudiesUniversitySupervisor:Tang,RichardDate:May17,2011Gu1_Stage2_Draft2_Apple2Taskofcontents1.Casestudyanalysisa)Keyfactors...............................................................................................2b)Client’sfinancialneeds.............................................................................2c)Suggestiononresolvingclient’sfinancialneeds.....................................32.Approachdevelopmenta)Selectingarangeofproviders(100words)..............................................4b)Selectingrelevantproductsandservices.................................................5Gu1_Stage2_Draft2_Apple31.Casestudyanalysis(300words)a.Keyfactors(100words)•Prepareaclientprofile(thesewordswon’tcount)ForAlexander:putJanetandhischildrenunderhisprofileUseatableforthisCustomerProfileAlexanderAge48yearsoldIncome£420,000perannumEmploymentstatusCompanydirectorandchiefexecutiveofGraphicDesignLtdTaxpositionBasicrate20%of35,000(7000)+higherrate40%of150001(45999.6)+additionalrate50%of234999(117499.5)=170499.1£FamilyStatusJanetAge44yearsoldIncome£55,000perannumEmploymentstatusAlexander’spersonalassistantTaxpositionBasicrate20%of35,000(7000)+higherrate40%of20000(8000)=15000£Adam,SheilaandCarinaAge14,10,3respectivelyEducationConditionAdamandSheilaattendalocalprivateschool,Carinawillbesenttothesameschoolassoonassheisoldenough.Schoolfees£3,000perchildperannumFinancialCondition1)Thecouplehaveanoutstandingmortgageof£450,0000ntheirproperty.2)Carinawillattendalocalprivateschoolsoon.3)Adamwillattendcollagesoon.4)Thecompanyoperatessmoothlywithaturnoverofover£15mlastyear.•DiscussthecustomerrequirementsReturnsonsavingsandYestheyneedit1)Astheyhavethreechildren,theyneedtogivethemalifeguaranteeandfinancialprotection.2)Thecoupleisinmiddle-aged,sotheyneedittohaveafinancialsupportafterretirement.3)Theirchildrenwillgotocollegesoonerorlater;theyneedittohaveaneducationprotection.Gu1_Stage2_Draft2_Apple4Protectionforthefamilyandincome1)HealthinsuranceisnecessaryInordertoagainstthebadsituationduetothelongtermsicknessofeitherAlexanderorJanet;itcanprovideafinancialsupportwhentheincomeiscease.2)Lifeinsuranceisneeded;itcanprovideprotectionfortheirchildrenifdeathoccurstoeitherAlexanderorJanet.3)Redundancyinsuranceisindispensible;itcantakeprecautionsagainstthebadsituationlikethecompanygoesbroke.4)Abusinessprotectionisalsoneededtoprotecttheviabilityofthebusiness.•ChallengesandIssuesLookforissuesrelatingtothejobThejob:SincethecoupleworksinthesamecompanysotheproblemisthatbothmaylosetheirjobatthesametimeoncethecompanyinemergencysituationnumberofchildrenThechildren:Thecouplehasthreechildren,allofthemwillattendthecollegeinthefuture,sotheeducationfeesofchildrenisasubstantialamountofexpenditure,theyneedtomakeaplanfortheirchildren’seducationasnecessary.themortgageandThemortgage:thecouplehaveanoutstandingmortgageof£450,000ontheirproperty,asthecoupleearnawagesof470,000perannual,itisabsoluteabigproblemasitalmostequaltothewholefamily’incomeforoneyear!Oncetheylosetheabilitytomaintaintheirmortgagepaymentstheywilllosetheirhomes.Anotherproblemisthattheprojectedreturnsonthepolicyarelikelytoresultinasubstantialshortfallinthevaluecomparedtotheoutstandingmortgage,whichmeanstheyhavetotakemeasurestochangethesituation.thecompanyAlexanderisthecompanydirectorandchiefexecutiveofthecompany,theoperationofthecompanyhavebiginfluenceoverhim,heassumeagreatresponsibilityforthecompany,ifthecompanywentburst,notonlyhisfamilywillbeinareallybadsituationbutalsohewillbeheavilyinthedebts.b.Client’sfinancialneeds(100words)Whendecidingtheclient’sfinancialneeds,youhavetoconsiderhisoccupation,status,liability,financialconditions,savinggoals,attitudetorisk,andtypesofassets(refertoMay’sslide14)foralltheneedsbelow:•SavingsneedsShortterm,mediumterm,orlongterm?Gu1_Stage2_Draft2_Apple5Shorttermsavingisnecessary.a)Oncetheemergencyhappened,thegoodliquidityofshorttermsavingcanprovidethefamilysomeemergencyfundstofallbackon.b)Someplanprovidestax-freepolicywhichcanalsosavingtheirmoneyfromhighincometaxrate.2)Mediumtermsavingisneeded.Amediumtermsavingplancanpreparethecollegefeesfortheirchildrenandgiveaprotectiontothechildren’education.3)Longtermsavingisindispensible.Alongtermsavingplancanpreparatorytotheirfuturelife,oncetheygetretired,thesavingplancangivethemfinancialsupportandlifeguarantee.•MortgageneedsDotheyneedtorevaluethehouse?Sincetheprojectedreturnsonthepolicyarelikelytoresultinasubstantialshortfallinthevaluecomparedtotheoutstandingmortgage,itisnecessarytorevaluethehouseinordertobalancethemortgagewithreturns,duetotheincreasingpriceofthehouse,thefamilycangetamorefavorableratefrombank.AlthoughImprovementsmaymakeahomemoresaleableratherthanmorevaluable.Butitwillbemorelikelytoattractbuyersandbanksforthereasonthatonceyoulosetheabilitytopayfortheproperty,thebankwilltakeoverit.Dotheyneedtorefinanceth