Topic: Financial Plan

Complete a financial plan based on the circumstances provided. Since most individuals take the general principals course as their introduction to the field of financial planning, it is understood that students will not yet have gained technical expertise in the other areas of the field that may be addressed.

The purpose of this project is to present a basic condensed version of the type of full plan you will complete in the capstone course should you continue your studies and to expose those with other objectives to the financial planning process.

A successful plan in this context will be one that is understandable by the client in plain English as if delivered as a summary by telephone. You will need to include a recommendation from each area of financial planning.

These again are general principles, investments, insurance, retirement planning, tax planning and estate planning.

The client whose circumstances we will examine is Sam Calvin, a physician in California. Although many planners will collect substantially larger amounts of information prior to presenting a plan, the condensed data available should be sufficient to demonstrate the process in action and introduce new planners to some of the common issues that will be encountered.

The following is the client information you have already received:

Dr. Calvin is divorced, 48 years old and lives in Riverside, CA.

He makes $120,000 annually as a physician in an urgent care center.

His mortgage is $1,500 monthly. Currently he pays 6% on an adjustable loan.

His divorce was settled without alimony payments. There were no children.

In addition to funding his company retirement plan annually at 10% of earnings, he also contributes to a taxable account where mutual funds are purchased for $250 per month. He is pleased with the performance of the funds overall but has not reviewed their progress in relation to one another or rebalanced since opening the account four years ago.

He inherited 500 shares of a single internet stock valued at $100 per share for a total value of $50,000 but does not know if he should sell or hold.

Dr. Calvin's malpractice insurance as well as group health and group term life are covered by the facility he works for. He does not have disability coverage.

Dr. Calvin has comprehensive auto coverage and a homeowner's policy but has not elected to purchase an umbrella policy.

Although contributing 10% to his group retirement plan, Dr. Calvin in concerned that at 48, he may not be able to maintain his current level of income based on a present combined balance of $350,000 in his group plan and IRA from a past employer, the latter of which accounts for $200,000 of the overall balance.

He would like ideas on additional ways to supplement his retirement savings. The Dr. enjoys working and is willing to continue to do so until 65, but may wish to cut back on hours gradually.

Dr. Calvin pays a hefty tax bill as a single filer who has only his retirement account contributions and mortgage deductions as write offs. He is willing to look at other opportunities including charitable giving or other tax advantaged strategies but does not know where to start.

Dr. Calvin has a will but it has not been updated since he was divorced seven years ago. He would like members of his own family and potentially his Alma Mater, the University of San Francisco School of Medicine to receive the proceeds of his house and other accounts and possessions. He has not established a trust since his divorce but would like to do whatever necessary to preserve the majority of assets after his death and avoid probate.

Like many clients, Dr. Calvin is busy and will try to follow actionable easy to understand recommendations. He looks forward to interacting with a planner over an extended relationship.

A successful submission will contain:

Uses clear English accessible to a retail client with minimal experience. (For this text, a verbal statement via telephone should be possible, without any visual aid, graph or other additional material.)

Provides at least one recommendation from each content area of financial planning. (Investments, Insurance, General Principles, Estate Planning, Tax Planning.)

Where applicable, conveys the trade offs that may exist between competing interests as related to the areas of financial planning. (An investment that may have tax or estate planning implications, for example.)