Prepare a financial plan for the following client and write a critical report for Joe considering the two
possible developments in Joe’s life as listed below. The report must explain and discuss the
financial plan and provide the reasons for the choices included in the plan.
5 years ago:
Jane was 26, she was studying for a MSc in Physics in Dublin. Jane hoped to graduate that year and
start working shortly after that.
5 years on…:
You are a financial advisor who works for an independent institution and Jane is one of your clients, you
have to produce a report with a financial plan used to advise Jane on how best to manage her finances
(property, investment and pension) according to the two circumstances (scenarios) below:
1. Jane is now 31 and works as a researcher physician for a national agency in London. She is
satisfied with the way her career has progressed so far, although she started working later than
expected. Her job is not very safe as the agency is at risk of closure due to lack of funds. Her
current annual salary is £65,000, she currently rents a small flat for which she pays £2,000 a
month in rent.
Jane is considering buying her own place.
Jane is in a DC occupational pension scheme, but not in any personal scheme, she would like to
start contributing to a private pension but she is wondering whether they are good value for
money and if that would allow her to live comfortably once she retires or whether she would be
better off buying a property to let or investing in a fund.
Jane has a credit card on which she pays 42% APR and which she rarely uses. She has also
£30,000 in a saving account from which she receives 0.5% annual interest rate and £10,000 in another saving account from which she receives 1% but has no access to the money for 3 years.
She would like to earn more interest on her savings as well as gain accessibility to them but does not know how, she is willing to take more risk.
2. Jane is 31 now and a part-time researcher in London, she has been working since graduating and she is currently employed but would like to go full time as soon as possible. Her annual salary is £35,000, she is in her employers DC pension scheme, but she would like to opt out to have more disposable income now. She rents a small flat in Wimbledon with her husband who is a free-lance journalist and currently earns between £40,000 and £55,000 a year, however she would like to move into a bigger place as her child is now 4 and will soon need more space. She would like her daughter to go to University so would like to start saving for it. Her savings are: £25,000 in a savings account which provides her with 0.8% interest a year and 20,000 in a joint account with her husband, on which they receive 1.2% APR. Jane is very risk averse but would like higher interest on her savings as she is concerned about how to pay for her daughter education. Jane and her husband Nick would like to buy a property in the next 5 years and are considering interest-only mortgages.
For both scenarios above advise Jane on how best to manage her savings, property and pension
contributions in order to maximise her wealth in the medium term (next 5 to 10 years) and in the
long term (20 to 25 years).
Please take into consideration her personal circumstances as well as attitude to risk, you need to
provide your own assumptions on salary growth, inflation rates, expected return on investments.
Tax implications should NOT be included.
a) Address the client’s financial needs.
b) State and justify all assumptions.
c) Demonstrate familiarity with the relevant literature and products.
d) Attempt to apply concepts and theory to the case study