Coursework Brief and Requirements

Section B: Coursework Brief and Requirements The scenario you will be working with revolves around a High Net Worth couple who are looking for advice…

Section B: Coursework Brief and
Requirements

The scenario you will be working with revolves around a High Net
Worth couple who are looking for advice

CookMyProject▪The
HNW couple are married with two children, one still at University

▪The
husband is a 60-year-old Partner at a Law firm.

—His
annual (gross) salary is £90,000

—He
has a Final Salary Defined Benefit Pension Plan from his employer
(paying 50% of earnings).

—He
expects to continue working for another five years

▪The
(58 year old) wife was a Lawyer, but did not return to work after
having children. She has a modest Final Salary Pension paying c.
£15,000 per annum

▪The
couple own (Mortgage free) 4-bed home in Virginia Water Surrey,
currently valued at c.£2.0m

▪The
wife recently inherited £0.85million.

▪The
husband expects to inherit c.£0.5 million within five years

▪They
do not know what to do with the money, but have the following ideas:

—They
value education & dislike the thought of student debts.

▪They
would like to cover their child’s tuition and maintenance costs for
the remainder of their time at university (one year).

▪Currently,
they have no investment portfolio, but do have £150,000 in various
accounts between them.

▪They
are potentially conservative investors with little experience of the
Financial Markets

Client
Objectives & Profiling

1.
How much money is the Client thinking of Investing?

£1.0m

2.
What percentage of your current liquid (cash or cash equivalent)
Assets does this represent?

100%

3.
How long would you expect this money to remain invested?

>10
years

4.
What is the purpose of this Investment?

Wealth
Preservation though hoping for some growth in the long term

5.
How much of a drop over one year would cause you to ask us to sell
and re-invest the proceeds in something risk-free?

15%

6.
Has your attitude toward risk changed in the last five years?

Somewhat
less risk averse

7.
If your attitude toward risk has changed recently, what has been the
reason?

Approaching
Retirement & children leaving University

8.
Do you intend to take a regular income from the Portfolio?

No

9.
How would you rate your knowledge of investing in Bonds, Equities,
Commodities?

Fair

10.
Have you ever worked in the Financial Services sector?

No

Students
working in groups will create an investment portfolio with an initial
value of £1.0m that best meets the requirements and preferences of
the HNW couple.

—Use
your discretion to rank the couple’s needs and explain your
assumptions and reasoning.

▪Groups
will write a report describing the portfolio: the report should
resemble an investment prospectus.

▪The
report’s content will describe and explain the following:

—Client’s
(short & long term) requirements and preferences using a logical
system;

—Portfolio
objectives & Investment strategy, e.g. active, passive, etc.

—General
risks that may affect the performance of the portfolio

—Portfolio
composition and qualitative and quantitative reasons for composition,
e.g. asset class and security characteristics

—Selection
and/or construction of an appropriate benchmark

—Portfolio’s
historical performance, both absolute and relative to the benchmark

—Predicted
future returns

—Reasons
to expect future performance to remain the same or improve; and,

—Risks
that future performance may be poorer.

▪Management,
transaction, and administration fees will not be considered.

▪However,
Spelling, Grammar, Clarity & Report layout will be taken into
account

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