There is an excel sheet provided by the professor for reference and I have attached that here. There is no word limit. The assignment requires to be crisp and have neccesary details.
CFP 103 Assignment 2 Written assessment designed to evaluate communication skills. Worth 15% of your final grade. Delivery details: Deliverable no later than 5:00 PM EST 5 November 2021 Email to
[email protected] Your assignment must be completed and sent in a Word file (I will decline pdfs, jpegs and other files). I will not download files from the ‘cloud.’ You ay also provide supporting documentation with EXCEL if you wish. Your document must be written in size 12 Arial font and the file name must be formatted as: Last name_first name_cfp103_assignment 2 The purpose of this assignment: It is designed to help you learn how to communicate clearly through written language. You are tasked with developing a financial plan for hypothetical clients. Fair warning: I would not leave this assignment until the last minute, and/or do the very least amount of effort possible because that will annoy me. Follow the guidance I provide below on how to build your case. Requirements: 1) Appropriate cover/title page 2) Review of the facts (name the clients, their goals and objectives, and the purpose of your report) 3) Create a financial analysis of their situation: how is their money allocated currently? Is this advantageous? 4) How much can they save (reasonably) and how should they save it? Where should they allocate their resources? Why? 5) How do their investments grow over time? 6) You will then make a recommendation to the prospective clients. This recommendation should be logical and reasonable, employing facts to substantiate your position. Specifically you will tell them what to do and when they should do it. You will fail this case study if you do not do this step. 7) At all times keep written language appropriate and professional. Helpful notes: The importance here is to teach you to make convincingly strong arguments in a professional environment. You should complete the case well before the deliverable date and ask someone to review your work. Get a critical analysis of your work and see how you can improve it. It is recommended that non-native English speakers/writers particularly check their work, noting that in Canada we follow British spelling practices. CFP 103 Assignment 2 You are asked to provide tax planning assistance to the following couple. Specifically, given the financial information below, you are asked to design tax efficiencies for them during the accumulation stage of their financial plan. Remember, what I am looking for is why you make the recommendations you select. I want you to explain the advantages and disadvantages associated to your recommendations, followed by ideas on how to mitigate (offset) any disadvantages, and then suggest an implementation plan. I am less concerned about the math than I am with the reasons you create. That is not to say the math is immaterial, but rather that my interest is in your decision making ability and communication strength. You are welcome to offer an excel document to supplement/substantiate any recommendations. Assignment Details A couple come to you asking for recommendations on the tax efficiency of their existing portfolio. Specifically, they are uncertain about how they how have structured their investment portfolio across registered and non registered holdings. They want · Recommendations on how to optimize the tax efficiency of their entire investment portfolio · Clear understanding of any tax implications arising from your recommendations · Clear understanding why you make the recommendations you select Consider only investment holdings (not real estate, etc) for the purposes of this assignment. Bob - aged 50 - moderate risk investor with a desired 40% income producing/60% equity producing split across his investment portfolio - has available $50 000 of RRSP contribution space and $25 000 of TFSA space. Agatha - aged 48 - low/moderate risk investor with a desired 50%/50% split across her investment portfolio between income and equity - has available $55 000 of RRSP contribution space and $20 000 of TFSA space Total TFSA space for each partner has accrued since that specific program was created. Current Holdings Bob has $135 000 in his RRSP, 60% of which is invested in long term equities that he hopes will experience capital appreciation. The rest of his RRSP holds dividend-yielding investments. Bob holds several bonds worth $50 000 in his TFSA. He has $35 000 of interest earning GICs in his non registered portfolio. They mature at the end of this month (at the value of $35 000). He has $10 000 of dividend earning stocks in his non registered account as well. The adjusted cost base for these stocks is $7 500. Bob will have another $50 000 to invest this December when he receives an inheritance from an aunt who recently passed away. He intends to spend $10 000 of this inheritance on a vacation for Agatha once the pandemic is over. Agatha has $205 000 in her RRSP, 40% of which is invested in interest generating bonds and 25% in dividend producing equities. The rest is invested in equities. She holds only interest bearing bonds in her TFSA. She does not hold any investments in a non registered account. Bob’s recently deceased aunt like Agatha, and left her a $20 000 inheritance gift separate from what she left Bob. Agatha intends to invest this money as well since she does not need it. Bob has rrsptfsa $ 50,000.00$ 25,000.00of space In existing RRSP $ 135,000.0060%is long term equities81000 40%is dividend yielding54000 Non registered$ 35,000.00GICS maturing this month $ 10,000.00dividend stocks ACB is $7,500 another $50,000inheritance $ 10,000.00for vacation BUT NOT RIGHT NOW Current allocationof WHAT he has 1) it is not why? because his GICS earn interest outside of registered plans he has $ 35,000.00in GICStaxed at highest marginal rateThe ISSUE too late now, but move them into RRSP at maturity Generates an income tax deduction with a refund determined by his marginal rate This might offset any taxes on interestHow I offset or MITIGATE the issue the remaining $ 10,000.00we move this into his RRSP as well, there will be a tax consequnce but we will use out math here to offset or mitigate the problem Now, we cannot calculate the tax implications of the dividends because we don’t have the yield BUT when he sells and puts the porceeds into an RRSPm we can calculate the effect $ 10,000.00dividends stock value $ 7,500.00ACB $ 2,500.00capital gain 50%inclusion rate $ 1,250.00taxable capital gainPROBLEM ?we are not told his marginal rate but it does not matter WHY? $ 500.00supose a 40% marginal rate then he owes $500 in capital gains tax 10000BUT hes putting $10 000 into his RRSP, right 40%same marginal rate $ 4,000.00tax benefitMITIGATES or offsets the tax effect we can assume any marginal rate we want WHEN the inheritance comes along, he should invest the full$ 25,000.00of TFSA space possible $ 5,000.00of remaining RRSP space $2,000of RRSP overcontribution space $ 32,000.00 this leaves $ 18,000.00of inheritance remaining of that$ 10,000.00for the vacation $ 8,000.00for future RRSP. TFSA spacebecause, remember, it comes to him in december we are told see how I bring that fact in one final time to reinforce what I am doing? I make the argument airtight see how I solved the issues? This is how you do a case I reocgnize the problems caused by the advice, but then I address/solve/ameliorate those problems with a solution Agatha has rrsptfsa $ 55,000.00$ 20,000.00of space