The Construction of a Financial Plan for a Client
Construct a basic financial plan for a client. The client can be you, a family member, or a friend. The client has to be someone from whom you can gain financial information and interview for goals, objectives, special problems, and net worth knowledge.
Refer to Chapter 9 of the text for guidance to formatting a basic financial plan. When applicable, include tables/charts/graphs to illustrate quantitative data or to support the narrative.
The financial plan should include:
•A financial plan style cover page
•Client profile, summary of goals and assumptions
•Develop an executive summary of observations and recommendations
•Construct a cash flow analysis (a simple net cash flow evaluation: cash inflows minus cash outflows)
•Construct a net worth analysis (a simple balance sheet for the client: assets minus liabilities = net worth)
•Tax analysis (what can the client do to minimize taxes?)
•Retirement analysis (determine if client’s current investments and savings will be sufficient to sustain long-term retirement)
•Insurance/risk management analysis (determine how much life insurance is needed to replace income and consider if any of the following needs to be covered—health/disability, long-term care, property/liability insurance, umbrella insurance)
•Investment analysis (Include an identification of risk tolerance, complete an asset allocation analysis, and consider risk/return of current portfolio (what it should be and how the portfolio should be altered)
•Estate planning analysis (consider all options to see if relevant to the client)
•Specialized analysis (be sure to include at least one of the following—educational funding, planning for special needs, refinancing scenarios, or saving for special problems)
•Implementation and monitoring section
•Provide a one-page summary describing your role in the process of developing this financial plan: include a discussion of client relation and interaction, the research and analysis process (including assessment of risk), development of the financial plan, and delivery of the financial plan to the client.
Be sure to include a minimum of three but no more than five references (cite all references properly according to APA style). The financial plan should be eleven to fourteen pages in length (not including title and reference pages).