Reference no: EM132460542 , Length: 6000 Words

Diploma in Financial Planning - Case Study Assignment -

This assessment covers the following units:

Core Unit 2: Financial Management and Tax Planning

1. Demonstrate the ability to analyse and evaluate financial information

1.1 Determine the client's attitude towards savings and debt

1.2 Assess the impact of potential changes in income and expenditure

1.3 Identify conflicting demands on cash flow

2. Demonstrate the ability to prepare a net worth statement

2.1 Produce an accurate net worth statement based on current circumstances

2.2 Produce an accurate net worth statement for any or all of the following, as appropriate:

(i) In death

(ii) On specific events such as illness, disability, retirement

2.3 Include all the relevant assets and liabilities

2.4 Identify the ownership basis of the assets

2.5 Identify and apportion all relevant debts

2.6 Provide a date for each net worth statement

2.7 Clarify whether each net worth statement relates to lifetime, death or other scenarios

3. Demonstrate the ability to prepare an income and expenditure analysis

3.1 Produce an income and expenditure analysis and identify clearly the time period to which it relates

3.2 Identify gross and net income

3.3 Distinguish between regular and irregular receipts

3.4 Apportion income between recipients, where necessary

3.5 Calculate client expenditure

3.6 Calculate shortfall or surplus income

4. Demonstrate the ability to evaluate the client's tax position and liabilities

4.1 Produce an accurate tax calculation for the client

4.2 Identify the taxable nature of assets

4.3 Calculate a tax liability for each relevant tax

4.4 Identify clearly the time period to which the tax liability relates

4.5 Calculate National Insurance contributions

5. Demonstrate the ability to develop and evaluate financial management strategies

5.1 Develop financial management strategies

5.2 Identify an appropriate and effective financial management strategy

5.3 Ensure that the identified financial management strategy meets the client's stated objectives as fully as possible

6. Demonstrate the ability to develop and evaluate tax planning strategies

6.1 Develop tax planning strategies

6.2 Identify an appropriate and effective tax planning strategy

6.3 Ensure that the identified tax planning strategy is appropriate to the client's circumstances

7. Demonstrate the ability to produce effective recommendations which meet client objectives and are technically accurate

7.1 Clarify whether the client's objectives can be achieved within current and/or future cash flow restraints

7.2 Clarify how the solution can be adjusted, if necessary, to fit any identified cash flow restraints

7.3 Consider a liquidity and/or cash reserve

7.4 Explain how each recommendation meets the client's objectives as fully as possible

7.5 Explain the tax position resulting in comments to the client

7.6 Ensure that the proposed solution meets the client's agreed objectives as fully as possible

7.7 Ensure that the solution is technically accurate

Core Unit 3: Personal Risk Management

1. Demonstrate the ability to analyse and evaluate risk and personal risk management issues

1.1 Quantify and qualify the client's needs and objectives

1.2 Identify the client's attitude to mortality and morbidity risk

1.3 Discuss the client's financial exposure to mortality and morbidity risk

1.4 Analyse and take into account existing risk management strategies and insurance policies

1.5 Take into account existing or anticipated assets or capital

1.6 Use appropriate, reasoned and reasonable assumptions

2. Demonstrate the ability to develop and evaluate personal risk management strategies

2.1 Develop personal risk management strategies

2.2 Identify an appropriate and effective personal risk management strategy

2.3 Ensure that the identified personal risk management strategy meets the client's stated objectives as fully as possible

3. Demonstrate the ability to prepare effective recommendations which meet client objectives and are technically accurate

3.1 Analyse the taxation considerations of the solution during lifetime and on death

3.2 Explain the qualifications, caveats and implications of the solution clearly to the client, for example, taxation, underwriting, legal and generic contract limitations

3.3 Ensure that the solution is affordable within parameters agreed with the client

3.4 Ensure that the solution matches the client's agreed investment risk attitude (where appropriate)

3.5 Explain the ownership and method of arranging the solution

3.6 Take into account social security benefits, where applicable

3.7 Ensure that the proposed solution meets the client's agreed objectives as fully as possible

3.8 Ensure that the solution is technically accurate

Core Unit 4: Asset Management

1. Demonstrate the ability to analyse and evaluate existing and desired portfolio provision

1.1 Quantify and qualify the client needs and objectives

1.2 Establish clear portfolio parameters

1.3 Analyse existing assets and compare them against the portfolio parameters

1.4 Identify all relevant assumptions and portfolio returns

1.5 Determine the client's risk tolerance and capacity for loss and compare it to the existing portfolio

1.6 Analyse the existing portfolio and identify any gaps

1.7 Analyse current and future income requirements

1.8 Calculate the following:

(i) Capital needed at a given date

(ii) Capital discounted back to today's value

(iii) Capital/income needed now

(iv) Shortfall/surplus

1.9 Ensure that the link to portfolio return is in line with the client's identified attitude to risk

1.10 Consider diversity in the portfolio

2. Demonstrate the ability to analyse risk

2.1 Analyse and evaluate the different types of risk with regard to:

(i) Systemic and non-systemic

(ii) Economic, political, market, volatility, longevity, deviation from an index, inflation/deflation etc

2.2 Identify and quantify appropriate mortality and morbidity risks

2.3 Consider diversification methods to reduce risk

3. Demonstrate the ability to develop and evaluate asset management strategies

3.1 Develop asset management strategies

3.2 Identify an appropriate and effective asset management strategy

3.3 Ensure that the identified asset management strategy meets the client's stated objectives as fully as possible

4. Demonstrate the ability to develop asset management solutions which meet client objectives and are technically accurate

4.1 Make allowance in the portfolio for liquidity

4.2 Identify and explain all assumptions

4.3 Ensure that all assumptions are reasoned, reasonable and take account of variations in returns of different asset classes

4.4 Ensure that the affordability of capital/income required is based on the agreed cash flow/expenditure pattern

4.5 Identify and justify asset/product ownership

4.6 Identify obstacles to achieving the client's specific objectives

4.7 Take into account existing or anticipated assets or capital

4.8 Take into account social security benefits and contributions, if appropriate

4.9 Take into account and explain all relevant taxation considerations

4.10 Ensure that the solution takes identified mortality and morbidity risks into account

4.11 Identify and explain any relevant implications, limitations and legal/taxation considerations

4.12 Ensure that the solution is consistent with the client's agreed investment attitude

4.13 Ensure that the proposed solution meets the client's agreed objectives and needs as fully as possible

4.14 Ensure that the solution is technically accurate

Core Unit 5: Financial Planning Practice

1. Demonstrate the ability to analyse and critically evaluate financial planning information

1.1 Identify all the information required for a financial plan

1.2 Establish and record the client's needs, objectives and aspirations

1.3 Quantify and qualify the client's needs and objectives

1.4 Ensure that other needs and issues are considered, recorded and a conclusion reached

1.5 Quantify and qualify potential problems

1.6 Establish the client's attitude to investment risk in relation to each of the objectives

1.7 Ensure that the plan includes all relevant client data

1.8 Identify any missing client data

2. Demonstrate the ability to ability to develop and use assumptions in the financial planning process

2.1 Discuss assumptions regarding investment growth, price inflation and earnings inflation

2.2 Discuss other relevant assumptions

2.3 Ensure that all assumptions are:

(i) Adequate

(ii) Reasoned

(iii) Reasonable

3. Demonstrate the ability to produce comprehensive recommendations which meet client objectives and are technically accurate

3.1 Develop comprehensive recommendations for each of the client's objectives

3.2 Explain how the proposed solutions solve the identified problems as fully as possible

3.3 Clarify whether the client's objectives can be achieved within current and/or future cash flow constraints

3.4 Clarify whether the solution can be trimmed, adjusted or prioritised to fit cash flow constraints, if the client's objectives cannot be achieved

3.5 Explain the required actions, timing and responsibilities

3.6 Explain the underwriting process for life assurance products, where appropriate

3.7 Explain the application process for investment products and services including unit trusts, wraps and platforms

4. Demonstrate the ability to write a clear, concise financial plan which meets a client's objectives and is technically accurate

4.1 Include all the components of a financial plan:

(i) Contents page

(ii) Introduction

(iii) Objectives

(iv) Attitudes

(v) Assumptions

(vi) Assets and liabilities

(vii) Income and expenditure

(viii) Financial Management

(ix) Tax planning

(x) Personal risk management

(xi) Asset management

(xii) Retirement and/or estate planning

(xiii) Action plan

(xiv) Reviews

4.2 Ensure that the plan is a single document (bound or electronic)

4.3 Ensure that the plan has a logical structure, and is easy to read and follow

4.4 Use clear and appropriate language throughout the plan

4.5 Explain and justify all recommendations

4.6 Refer to and justify the exclusion of any financial planning issues

4.7 Provide a clear action plan for the client

4.8 Ensure that the solutions are generally suitable for the client, with no evidence of unsuitable advice

4.9 Ensure that the solutions are technically accurate

5. Demonstrate the ability to understand the review process

5.1 Explain the reason why client reviews are needed

5.2 Explain what a client review will cover and who will be involved

5.3 Explain the timings and actions involved

5.4 Explain how the review process will be initiated

Optional Unit 6: Retirement Planning

1. Demonstrate the ability to analyse and evaluate retirement planning issues

1.1 Quantify and qualify retirement planning needs and objectives

1.2 Establish the income and capital required to achieve current or future objectives, needs and the timescale(s) applicable

1.3 Take into account and analyse existing assets or capital

1.4 Use appropriate, reasoned and reasonable assumptions

1.5 Take into account social security benefits and contributions

1.6 Take into account taxation considerations 1.7 Quantify and qualify appropriate mortality and morbidity risks

2. Demonstrate the ability to develop and evaluate retirement planning strategies

2.1 Develop retirement planning strategies

2.2 Identify an appropriate and effective retirement planning strategy

2.3 Ensure that the identified retirement planning strategy meets the client's stated objectives as fully as possible

3. Demonstrate the ability to produce effective recommendations that meet the client's needs and objectives and are technically accurate

3.1 Analyse the taxation considerations of the solutions

3.2 Explain the qualifications, caveats and implications of the solution

3.3 Take into account social security benefits, where appropriate

3.4 Ensure that the solution takes identified mortality/morbidity risks into account

3.5 Ensure that the solution is consistent with the client's agreed investment attitude

3.6 State and explain any relevant implications, limitations and legal/taxation conditions/consequences

3.7 Ensure that the capital or expenditure from income required can be afforded based on the client's agreed cash flow/expenditure pattern

3.8 Ensure that the proposed solution meets the client's stated needs and objectives as fully as possible

3.9 Ensure that the solution is technically accurate

Case study: Pre-retired Barker

Task - Your task is to produce an integrated Financial Plan that comments on the issues identified in the case study.

Attachment:- Financial Planning - Case Study Assignment Files.rar