Assignment attached
BFIN 4010 Needs Based Assessment “THE INVESTMENT POLICY STATEMENT” & ROLE PLAY PRESENTATION 20 % Of Grade Assignment: As part of a 20 Minute Role Play Presentation each Student will prepare a comprehensive Investment Policy Statement (IPS) based on a specific Client Case (See Guidelines and Marking Rubric Below). The role play presentation will be conducted online or in person with your instructor acting as the client similar to the role play completed in BFIN 2360 however the focus will be on presenting investment recommendations you have prepared for your client and dealing with questions and objections the client may have surrounding the investment plan. While there may be numerous financial planning opportunities, the focus for the assignment is specific to your investment and portfolio management recommendations relative to retirement and estate planning objectives. The Role play is structured as a follow up meeting where you previously gathered data on client KYC information, goals and Investment constraints. The intent of the exercise is to review the client data and make new recommendations based on a revised Investment Policy Statement (IPS). You will articulate to a client how you plan to reposition the existing investment portfolio into a revised portfolio that meets their short term- long-term goals, needs and manages any constraints. The new plan must meet suitability requirements and be structured to advance optimization strategy around asset allocation, diversification, risk adjusted return, taxation and fee characteristics. You should be making specific recommendations on products such as Stocks, Bonds, Mutual Funds, ETF’s, Segregated Funds or other Life Insurance products. The intent is to create an optimal risk adjusted return portfolio, net of fees, and taxes taking client goals and constraints into account. You will be marked 10% on the IPS plan and preparation document and 10% on the actual presentation collectively 20% of the grade. You will submit the IPS plan in writing at the time you present. Assume the context for the IPS document would be appropriate for a client face to face discussion. The Case Mr. Bob Smith Age 40 and Mrs. Helen Smith Age 32 live in Calgary with their 2 Children Anna age 8 and Hanna age 11. Bob has worked as an engineer for 15 years in the Energy Sector for Canadian Natural Resources (CNRL). His income is $150,000 CAD Per year with a 1% Stock option bonus appx 1,500.00 shares issued per year. He also has a (DCP) pension plan (Conservative portfolio 4-5 % return expectation) he matches his employer contribution of 6% of his income per year into the program that is managed at Sunlife. He sees himself as a conservative risk averse investor preferring safety of capital over growth. He is concerned he has to concentrated a position in oil and gas stocks related to his CNRN stock. He would like recommendations on reducing that risk. He has a will, POA, and PD and Helen is the sole beneficiary. Bob has a 3 X annual salary term Life insurance policy with his employer. He also has disability insurance, Critical Illness $50,000 and a comprehensive family health benefits program including prescriptions, eye car, dental for the entire family. Bob wants to retire at 55 with $200,000 per year family income. Assume a 90-year life expectancy. Bob and Helen would also like to sell his (inherited ) condo and buy a new recreation property at Sylvan lake for approximately 1,300,000 in the next 5 years. Helen is a stay at home mom, she is also a 33% shareholder in a family owned private business that is operated by her brother (KYC Enterprises and Property) she receives annual dividends of $45,000 per year and expects those to remain as long as the business remains in the family. She intends to pass her business interest off to her children as part of her estate, or in the event of an untimely passing her husband is named beneficiary under her current will. She also has a POA and updated PD as part of the estate plan. She currently holds an individual 500,000 T- 20 Life Insurance policy with Bob as Beneficiary. She sees herself as a growth-oriented investor, preferring to take on more risk in an effort to achieve a higher return. She would like to invest some of her Cash currently in savings she expects an 20 % Return on any Investment. Helen wants to retire fully with Bob at age 55 and agrees that $200,000 per year as a family income in retirement is a good goal. Assume a 90-year Life Expectancy for Bob and Helen. They also wish to leave a 3,000,000 estate to the kids split 50/50. They will consider a variety of tax efficient investment options including individual stocks, bonds, Mutual Funds, ETF’s, and insurance related products. KYC Information Utilizing the BMO Investor KYC Questionnaire Bob and Helen wish to retire fully at age 55. Key goals 200,000 income, purchase a new property at Sylvan Lake 1,300,000. In 5 years. Bob: Identified as a Conservative Investor looking for inflation protection and safety, willing to accept a - 1-6% volatility in YOY returns. Helen: Identified as a growth investor interested in growthless concerned with near term portfolio volatility. Able to accept - 11-15% YOY volatility in returns. Constraints: (Liquidity, Time Horizon, Tax, Regulatory, Personal Circumstance) Recreation Property goal, 15 years to save- 90 year life expectancy, extensive estate goal for children, taxation of small business assets. The Current Net Worth Statement: Assets: Home 900,000 Personal Property 200,000 Recreation Condo- Sylvan lake 400,000 Car 90,000 Truck 120,000 Investment Assets: Cash CHQ Acct and Emergency Fund 75,000 Cash (Savings Acct CIBC) 500,000 KYC Preferred Shares (4,500 X 1000.00) 4,500,000 CNRL Stock 22,500 Shares Current Price ($80.00) 1,800,000 CNRL (DCP) Pension (Sunlife- Balanced Fund) 300,000 Total: $8,885,000 Liabilities: Credit Cards 80,000.00 Personal Loans HELOC (Prime +.50) 250,000.00 Auto 160,000.00 Total 490,000.00 Net Worth A-L = 8,395,000.00 The Current Cash Flow Statement per annum: Income: Bob ( Employment Income) salary 150,000 Helen (Dividend Income) 45,000 Total Family Income: