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Cases in Financial Planning: Analysis and Presentation - 4 th Edition ISBN: 978-1-946711-68-7

Did you know that a personal financial statement is really a story? Better financial planners know that preparing and analyzing personal financial statements is not all about numbers. Inside Cases in Financial Planning: Analysis and Presentation are the real stories of how to create a sound client relationship in order to implement a sound financial plan. You’ll meet The Burkes, a 100% complete financial planning case with analysis and answers. Plus, there are 10 comprehensive cases that range from easy to challenging. Also inside are mini-cases that illustrate how to analyze all of the sections of a financial plan. Woven throughout are tips and strategies for building a productive client relationship, including seven ways to to analyze a client situation. Real data, real cases; and appendices that are off the charts invaluable.

Cases in Financial Planning, Analysis & Presentation includes a variety of powerful learning tools and features: Complimentary financial planning software to assist with student analysis and presentations, Instructor materials include suggested solutions with supporting schedules, PowerPoint ® presentations for the introductory chapters, a grading rubric and software support. This professional case study perspective services multiple applications: Client analysis and presentation of in-depth financial planning solutions as part of a comprehensive curriculum in financial planning or financial management. A powerful and highly practical reference for practicing financial planner professionals Cases in Financial Planning, Analysis & Presentation is designed to meet the educational requirements for a Financial Plan Development course in any CFP Board-registered program. 

To access the Financial Planning Software you must have a registered Cases in Financial Planning textbook in your Money Education account. Once registered, click "Financial Statement Preparation and Analysis Software" in the My Books section of your account.  

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• Table of Contents
• Chapter 0: General Resources
• Chapter 1001: Part 1: Case Analysis & Presentation
• Chapter 1002: Part 2: Mini Cases: Examples & Exercises
• Chapter 1003: Part 3: Comprehensive Burke Case
• Chapter 1004: Part 4: Comprehensive Cases

For information regarding an earlier edition of this text, please e-mail your request to [email protected]

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Michael A. Dalton James F. Dalton Katheleen F. Oakley

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• Financial Solutions
• Graduates and Young Adults
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Case Studies and Results

Young family - planning their future, single professional - managing debt, married couple - planning for retirement, married couple - managing proceeds from a sale, single individual - pursuing an mba.

David was recently promoted earlier this year as Director of Engineering for a very large oil and gas exploration firm in Farmington, NM.   His salary is $150,000 per year plus substantial bonus opportunities and equity share of the firm.   Tiffany is a graduate of an East Coast liberal arts college specializing in health care issues.   She has worked as a consultant and now she is a full-time mom.   They are devoted to their family and live well within their means.  They have accumulated a substantial balance in their checking account.   As a family they enjoy camping in the mountains in Southwest Colorado. 

Step 1: What is important to David and Tiffany?

Step 2: financial diagnostics.

Tax Bracket: 33%  

Anticipated taxes $63,250

Contributions to 401(k) plan: $150 per pay period or $3,600 per year.    Contributions are primarily in an international fund. 

Group Life Insurance: $150,000

Existing Mortgage Interest Rate: 6.125%, Current Rate: 2.85% (Rate as of February 2013)

Step 3: Goals Based Recommendation

• Establish a will or trust and name a guardian for the children.
• David: Purchase a $500,000 10 year term life insurance and a $1,000,000 20 year term.
• Tiffany: Purchase a $250,000 10 year term life insurance and a $500,000 20 year term.
• Refinance Mortgage to lower payments and save interest and pay off auto loan
• Maximize 401(K) contribution and reallocate retirement investments
• Establish Educational 529 plans for children, reserve a fund for David’s MBA
• Provide tax clarity to prepare David and Tiffany for the higher tax situation

Step 4: Implementation and Execution of Recommendation

• Set up an appointment with attorney to prepare an estate plans, including preparing documents.
• Meet with independent life insurance agent to compare and select term life insurance policies
• Meet with mortgage lender to refinance.   Auto loan was paid off.
• Meet with human resource representative to increase 401(k) contribution and reallocate retirement investments.
• Meet with accountant to determine an prepare for higher income taxes and affirm tax saving practices
• Meet with an Investment Advisor to fund 529 plans and begin an investment savings program

Funding Retirement produced a tax deferred savings of $4,644 annually.   The projected retirement and investment savings is estimated to have a balance of $750,000 in 10 years and well over $1,500,000 in 20 years.  Based on that number it was determined that effective use of term life insurance will provide the protection gap until those balances are reached.  The staggered term resulted in a total of $2,250,000 of insurance at a minimal cost of $750 annually.  The mortgage refinance provided monthly savings of $283.  Overall the saving and investment programs more than offset the cost of annual life insurance policies and the one-time expense of preparing an estate plan.

The information provided   here is intended to be educational and should not be considered or construed as legal, accounting (tax), or financial planning advice. The strategies described may not be suitable for all individuals. Examples are provided for illustrative purposes only, and no representation is made that a person acting on these examples will achieve the results shown.

Although every effort has   been made to assure the integrity of this material (including the reliability of websites referred to in the text), no representation or warranty is given as to accuracy or completeness. We encourage you to consult with legal and accounting professionals (as appropriate) before applying any of the strategies discussed to your particular circumstances.  

Kathy, age 44, is a radiologist in Taos who purchased a home in 2006 prior to the mortgage crises.  Her home was in need of repairs and obtained a second mortgage and third mortgage, one was for a new roof and the other was to upgrade the electrical.   In addition she had to borrow from her retirement plan in order to make other renovations.   She also has credit card debt, student loans and a car loan.   The burden of debt is overwhelming especially since she estimates that she purchased her home at the top of the market and the home value is less than the total outstanding mortgage debt.   Her salary is $67,000 per year and that does not include the rent she receives from her roommate.  Kathy is a hard worker and has worked extra hours to cover her debt.  She does some travel to visit her family in another state.   She also has been involved in business ventures.   She is savvy and knows that she needs to deal with her financial issues.  She does maintain a 403(b) fund and contributes to receive the maximum matching employer contribution.   Her cash flow is restricted because of the amount of debt she carries.

Step 1: What is important to Kathy?

Tax Bracket: 25%

Anticipated taxes: $6,770

Contributions to 401(k) plan: $100 per pay period or $3,600 per year.    Retirement contributions are allocated to a well defined structured investment program.

Group Life Insurance: $65.000 and a universal life policy $13,000

Existing Mortgage Interest Rate: 6.0%, Current Rate: 4.5% (Home Affordable Refinance Program)

• Refinance first mortgage and pay off credit card debt. Upon payment of credit card debt,apply those payments to principal on second mortgage.
• Half of the $205 savings on the mortgage payment should be applied to the retirement plan.
• Upon the 403(b) loan payoff in two years, apply the 200 per monthly payments as retirement contributions.
• Make an appointment with an attorney to establish an estate plan.

Step 4: Implementation and Execution

• Set up an appointment with mortgage lender to refinance first mortgage.  Increased principal payments to pay off credit card debt. Further principal reductions on other loans will continue as each debt is paid off.
• Increased initial contributions to retirement plan.
• Opted to defer an appointment with an attorney.   Kathy will use the health care power forms provided by her employer.
• Will continue to set aside money for emergency saving.

Refinancing the mortgage provided $2,400 saving to Kathy’s mortgage payments, the term length did not change.  Kathy will have no debt by the time she retires.  Concurrently, Kathy will add to her retirement plan.   It is projected that upon retirement she will have accumulated $469,000 by the time she retires based on an assumed 5% annual return.  The first two years the cash flow will be tight, however, as debt is paid off, there should be ample surplus in her cash flow to provide more leisure spending.

The information provided  here is intended to be educational and should not be considered or construed as legal, accounting (tax), or financial planning advice. The strategies described may not be suitable for all individuals. Examples are provided for illustrative purposes only, and no representation is made that a person acting on these examples will achieve the results shown.

Although every effort has  been made to assure the integrity of this material (including the reliability of websites referred to in the text), no representation or warranty is given as to accuracy or completeness. We encourage you to consult with legal and accounting professionals (as appropriate) before applying any of the strategies discussed to your particular circumstances. 

Albert , age 73 and Anne, age 67 live in Las Cruces.  Albert is a painting contractor and Cynthia teaches part-time at NM State University.   Because of their transitional life from one college to another they have rented rather than purchased a home.  Home ownership did not occur until the past five years.   They were dedicated to providing for their daughter’s education.   Now they are approaching retirement and drawing on Social Security even though both are still employed.  Albert sees that, although he enjoys his profession, he finds that he is less physically able to continue painting.   Cynthia would like to retire in two years and both would love to pursue art studies and literature.    Their primary concern is a stronger retirement and to pay off debt.   They live a modest lifestyle.   Albert prepares the household tax returns.   

Step 1: What is important to Albert and Cynthia?

Tax Bracket: 15% Federal and 4.9% New Mexico

Itemize:  They cannot itemize deductions

Other tax issues: They are receiving Social Security Benefits and 85% of the benefits are taxable.    Anticipated taxes: $8,044

Contributions to 403(b) plan: $200 per pay period or $3,600 per year.    Retirement contributions are allocated to 50% cash and 50% equities.   Tax savings comparison was calculated.

Met with an owner of a national tax preparation firm and ran tax scenarios on their tax software.  This determined the impact of maximizing 403(b) contributions.   In addition the tax preparer provided tax advice on Albert’s business.

• It was determined that Cynthia should maximize her contribution from $200 per pay period to 846 per pay period.  In addition their retirement asset allocation was reviewed and recommended alignment to a strategy appropriate for their stage in life.  Retirement projections were prepared and determined that Cynthia and Albert could retire in two years based on their current living standards and if she maximize her retirement contributions.
• That they prepare for the meeting with an attorney.
• That they have their financial plan available for their daughter in the event she needs to assist.
• That they utilize a tax preparation professional.
• Their budget and goals for education, travel, hobby and charity are doable.

Step 4: Implementation and Execution of Recommendations

• Cynthia increased her retirement contribution from $200 to $846 per pay period.  She also further diversified her cash position to several diversified bond strategies.   Her equities were reallocated to represent large-cap, mid-cap, small-cap, international developed and emerging market funds.  In addition a real estate trust and a commodity index fund were represented in the retirement portfolio.
• An appointment was made with a local attorney to draft their estate plan.
• Two sets of plans were provided; one for Albert and Cynthia and the other for their daughter.
• Albert will consider the tax preparer’s advice and engage their services the following tax year.
• The projects, travel, charity and seminars are budgeted.

Maximizing the 403(b) contribution will enable Cynthia and Albert to save $4,380 in taxes.  In addition, the 403(b) contributions will add $44,000 of principal to their retirement balance over the next two years.  The advice of the tax preparer will also save them an additional $1,000 in taxes.   Their attorney completed the estate plan.   Also they are preparing for their trip to France and they have completed the garden arbor.  Finally, they know that their budget will allow for charity and seminars.   

The information provided here is intended to be educational and should not be considered or construed as legal, accounting (tax), or financial planning advice. The strategies described may not be suitable for all individuals. Examples are provided for illustrative purposes only, and no representation is made that a person acting on these examples will achieve the results shown.

Although every effort has been made to assure the integrity of this material (including the reliability of websites referred to in the text), no representation or warranty is given as to accuracy or completeness. We encourage you to consult with legal and accounting professionals (as appropriate) before applying any of the strategies discussed to your particular circumstances.  

Michael , age 61 and Anne, age 58 live in Albuquerque.  Michael works at a major laboratory and Anne teaches music part-time at a local high school.  Anne’s family large owns a large concrete company in San Diego of which she owned a partial interest.   Her siblings purchased her share which amounted to around $7,000,000 and she has kept part of the money in cash.    Since the housing market in California has severely declined, Anne wants to make set aside ample reserves to help her family’s business weather through the difficult time.   One of the concerns is that monies have been spread to various banks in Albuquerque and much of it is uninsured.  In addition there is not a structure to provide for bond investments.  Michael and Anne are self-sufficient from their employment salary and do not rely on either the income or principal of the family business proceeds.  Preservation of the business proceeds is important; however they appreciate the need for equity investments to provide diversification and to stay ahead of inflation.  They hold no debt and are able to cover the educational expenses of their sons.

Step 1: What is important to Michael and Anne?

Tax Bracket: 33% Anticipated taxes: $40,000

Contributions to 401(k) plan: $100 per pay period or $3,600 per year.    Retirement contributions are allocated to a conservative fixed income program. 

• It was determined that $2,000,000 should be set aside to either lend or invest in the family concrete business.
• Invest the remaining proceeds in an asset allocation strategy
• Make an appointment with an attorney to establish an estate plan.
• Increase the contribution to their company retirement plan.
• Of the $2,000,000 set aside as an emergency reserve for the family business, Michael and Anne felt it would be best to establish a mini bond ladder that did not extend beyond a three year term.
• Michael and Anne met with their investment advisors to implement a coordinated asset allocation strategy.   Therefore they divided up the assets to provided a combined  50% bond/50% equity split.   This consisted of municipals, cds, on a bond ladder that does not exceed 12 years.   The equities were managed among large-cap, mid-cap, small-cap, international developed and emerging markets.  Other positions included real estate trusts and a commodity index.
• They met with an attorney specializing in estate planning.  This attorney established irrevocable life insurance trust to provide for estate taxes.
• Michael met with the human resources to increase his contribution to his retirement plan.

Restructuring the investment program increased their investment income from $50,000 to $200,000.  Much of the income was from tax free municipal bonds and reduced taxes on qualified dividends.  They did realize an increase in their tax bracket, but that was manageable.   The estate plan is now in place and they are prepared for the various tax changes that could come about.

Miguel, age 28, is a research analyst for an American company that has an office in Madrid, Spain.  He is single and no dependents.  Miguel desires to obtain his MBA at a top-tier business school.  His educational endeavor will be a major expense.  Although Miguel is an American citizen, he pays both US and Spanish taxes and participates in the Spanish health care and retirement programs.  Miguel monitors his income and spending.  He also sets aside savings for investments as well as contributes to his retirement plans.

Step 1: What is important to Miguel?

Bracket: 29.7% (Foreign Tax Bracket)   Anticipated taxes: $13,283

Contributions to retirement plan: $308 per pay period or $7,380 per year.    Retirement contributions are allocated to a well defined structured investment program.

• Miguel has saving in the amount of $46,000
• Miguel has retirement savings with a provision that he can draw without penalty provided it is used to fund education
• Miguel will still need to rely on student loan ranging from 6.8% to 7.9% interest rates.  However the above savings will reduce the reliance on such loans.
• Funding Source and Outlay – A plan was made to determine on when and how to draw on the mentioned resources to reduce the tax impact and the amount of loans necessary to finance his MBA.
• Loan Balance and Monthly Payment – A projection was made to determine what his student loan payment obligations will be after he obtains his MBA
• Miguel worked with his accountant to run a mock tax preparation to make sure there were no tax surprises in both foreign and US taxes. This plan was submitted as part of his application to one of the above MBA programs on how he intends to finance his education.

Miguel was accepted to the MBA of his choice and will be beginning the program in the Fall of 2014.

Although every effort has been made to assure the integrity of this material (including the reliability of websites referred to in the text), no representation or warranty is given as to accuracy or completeness. We encourage you to consult with legal and accounting professionals (as appropriate) before applying any of the strategies discussed to your particular circumstances.

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Thomas Bustamante [email protected] (505) 231-4607

Bustamante Financial Planning LLC is a registered investment advisor with the state of New Mexico. As such, it is registered to transact business with and provide investment advice to New Mexico residents. Only general information on available services is available through this website. In addition, it adheres to the de minimis requirements of other states for out-of-state clients.

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Enroll now and save $300 on our full three-course program with promo code PEAKRETIREMENT !

Enroll now and save 10% on our full three-course program with promo code RICPFALL23 !

This course applies students' knowledge and skill set in personal financial planning techniques to a comprehensive case study. Students will integrate into a prioritized comprehensive financial plan core financial planning disciplines of: -Retirement -Investment -Risk management -Income tax -Employee benefits -General principles * Students are eligible to enroll in the capstone course (HS 333) after completing the first 6 courses of the curriculum in both the CFP Certification Education Program and the ChFC program (HS 300, HS 311, HS 321, HS 326, HS 328, HS 330). HS 333 is a course designed to bring together elements from all of the previous foundation courses, and prepares students to synthesize and apply their knowledge of the financial planning process, insurance, taxation, investments, retirement, and estate planning through the delivery of a comprehensive financial plan. 000279 CFP^® ChFC^® Single Course 7 1.00 Financial Planning Professional Designations & Certifications Early Career Professional Mid Career Professional No No 0002791 0

Master’s in Personal Financial Planning

Online master of science degree in personal financial planning.

The Master of Science Degree Program in Personal Financial Planning is tailored for financial planners who are interested in expanding their knowledge beyond typical financial licensing and credentials. The curriculum is based on a client-centered, problem-solving method using case studies to give you a hands-on approach to the material.

Students accepted into the Master of Science in Personal Financial Planning will select from two pathway options:

• Traditional Pathway or
• Client Psychology and Communication Pathway

The Traditional Pathway allows students to select from a variety of elective courses to fulfill the program’s elective requirements. The Client Psychology and Communication Pathway structures the elective courses to provide students with a more detailed understanding of behavioral finance, client psychology, and improved communication skills.

The Master of Science in Personal Financial Planning is a registered program with the United States CFP Board. Students who earn 15 credits in core coursework and 3 credits in advanced coursework (PFPL600) will satisfy the education requirements to sit for the CFP ® Certification Exam. 

Program at a Glance

Flexible, online format.

The MS-PFP program requires a total of 30 credit hours. It consists of 10 courses that are worth three credit-hours each. Eight of the courses are required while two of the courses are electives. 

Course content is delivered through an innovative online format to give you the flexibility to achieve your next education goals.

Sit for the CFP ® Exam

As a CFP Board Registered Program, our graduate degree fulfills the education requirements for CFP ® certification.

To sit for the national CFP ®  certification examination, the first five courses of our 10 course program and the final case study must be completed. 

Stackable Credit

If you have already completed your required education for CFP ® certification through the College, you may qualify for up to 15 hours of transfer credit toward the Master of Science in Personal Financial Planning program, which could put you halfway toward earning your master’s degree. Graduates of certain professional designation programs offered through the College may also qualify for transfer credit.

Learn more about stackable credi t that may apply.

Personal Financial Planning Program Details

Program curriculum.

The Master of Science degree program in Personal Financial Planning is tailored for financial planners who are interested in expanding their knowledge beyond typical financial licensing and credentials. The curriculum is based on a client-centered, problem-solving method using case studies to give you a hands-on approach to the material.

Students accepted into the Master of Science in Personal Financial Planning must earn 30 semester credits with a minimum 3.00 grade point average to graduate from the program. A maximum of 21 credits may be completed through Credit for Prior Learning, which includes transfer credit, articulated credit, and alternative credit. For more information about the College's Credit for Prior Learning opportunities, please review the College Catalog

To sit for the national CFP ® certification examination, the first five courses of our 10 course program and the final case study must be completed. 

Course Sessions

We offer multiple start dates to give you flexibility as you pursue your Master of Science in Personal Financial Planning online.

• Courses are 8 weeks long.
• A minimum of 135 hours of study per course is recommended (approximately 17 hours per week).

Registration for classes opens approximately 5 weeks prior to class start dates.

Academic Calendar (2023-2024)

Required Courses for the MS-PFP Program

The program consists of ten (10 courses) comprised of:

• Eight (8) required courses and
• Two (2) elective courses

The eight required courses include:

Prerequisite(s): None

Prerequisites: PFPL510 and PFPL540, or equivalent

Prerequisite: PFPL520

Prerequisites: PFPL510, PFPL520, PFPL530, PFPL540, PFPL550, or equivalent

Elective Courses for the MS-PFP Program

For the Traditional Pathway, students choose from the following elective courses listed.

For the Client Psychology and Communication Pathway,

• Elective 1 must be PFPL522 Behavioral Finance or earning the Accredited Behavioral Finance Professional℠ designation
• Elective 2 must be PFPL650 Client Psychology and Communications

Prerequisite(s): PFPL510 or PFPL520

Prerequisite(s):  ACCT545

Building on financial statement analysis tools and techniques covered in ACCT545, this course will provide advanced analysis of the asset side of the balance sheet, including receivables, inventory and long-lived assets. Additional coverage includes using financial information in making decisions associated with credit analysis, contracting and valuation. In depth study of the sources and uses of cash, as identified in the statement of cash flows (operations, investing, and financing). 

Prerequisites: None

Prerequisites: PFPL520 (or equivalent)

Prerequisite(s): PFPL510 and PFPL520 (or equivalent)

Prerequisite(s):  PFPL520 and FINA565

This course explores derivatives, alternative investments and alternative investment strategies.  The course covers the mechanics and markets for options, forward and futures contracts. forward and futures pricing, equity options and interest rate derivatives.  Additionally, it covers alternative investments and alternative strategies including the use of derivatives in these strategies.  Learners will be introduced to hedge funds, real assets, private capital, liquid alternatives and the use of derivatives and alternative investments in portfolio management.

Prerequisite: PFPL530

Prerequisite: PFPL550

Prerequisite(s): PFPL560 and PFPL570

Prerequisite(s): PFPL600 and either PFPL522 or ABFP ®

Tuition and Fees

Application Fee: $35

Tuition:   Tuition for each course in the program is $1,450 or $14,500 for the entire degree tuition.

For more information on the Master of Science Degree in Personal Financial Planning fill out the form below

Apply for the MS Personal Financial Planning Program 

Application Process

• Submit a completed Graduate Degree Application with non-refundable application fee
• Order official transcripts directly from the college/university where the undergraduate degree was earned and have it sent directly to the Registrar’s Office. Transcripts submitted to the College from the student will not be accepted. 

College for Financial Planning Attn: Office of the Registrar 9000 E. Nichols Ave Suite 200 Centennial, CO 80112 [email protected]

Please note:

English Language Proficiency

International transcripts, frequently asked questions about the master of science degree in personal financial planning, how can i find out the status of my application, how do i apply.

To apply for admission to the programs, you will need to:

• Complete and submit the application at https://www.kaplanfinancial.com/wealth-management/masters-program/application .
• Pay the application fee.
• Request official transcripts for prior learning from the college/university to be sent directly to the Registrar’s Office.

How does grading within the Master of Science in Personal Financial Planning Degree Program work?

Unlike most other programs and courses, grades for the MS program are not solely based upon final examinations. Instead, students are graded on a variety of scheduled assignments, research projects, papers, group discussions, and examinations. A complete listing of all graduate degree program grading policies may be found in the College Catalog .

How many courses/credits are needed to obtain a Master of Science Degree in Personal Financial Planning?

How often are the master of science degree program courses held.

There are five Master of Science Degree Program course sessions held each year. Classes begin roughly every 10 weeks. The classes last for eight weeks each, and there is a two-week break between classes.

Is a College for Financial Planning student handbook available online?

Students currently enrolled in a program offered by the College for Financial Planning ® - a Kaplan Company can view academic policies in our College Catalog .

Is the Master of Science in Personal Financial Planning Degree Program accredited?

The Master of Science Degree in Financial Planning is an accredited program by the Higher Learning Commission (HLC). Full details can be found on the HLC website . This degree program is also approved as an education requirement by the Certified Financial Planner (CFP)* board for those looking to sit for their CFP Certification.

*The Certified Financial Planner Board of Standards, Inc. (CFP), is a Washington, D.C.-based independent 501(c)(3) non-profit organization whose mission is to benefit the public by granting, upholding and promoting the Certified Financial PlannerTM (CFP®) certification.

What are the requirements to enroll in the Master of Science Degree Program?

Master of Science Degree in Personal Financial Planning requires the following:

• A bachelor's degree from a regionally accredited institution
• The equivalent bachelor's and/or graduate degree from a foreign Institution*

A complete listing of all graduate degree requirements may be found in our College Catalog available here .

What is the admissions decision time frame?

What is the expected time to degree, what is the mpas ® designation, and how do i obtain it.

The MPAS ®  is a unique designation available only to graduates of the College’s Master of Science Degree Program in Personal Financial Planning. It is ideal for individuals who are employed at firms that exclusively reimburse for designations and certifications.  Upon graduation, students have 6 months to apply for the designation. There is no charge to initially obtain the designation; however, designees must complete renewal requirements every two years to maintain it. A detailed list of the requirements can be found on our designation renewal page.

What is the refund policy?

Refunds are calculated for students in accordance with the refund policy. The full program policy can be found in our College Catalog .

What transfer credit is available for the Master of Science in Personal Financial Planning Degree Program?

There are multiple programs and courses that may be eligible for transfer credit into the Master of Science Degree Program in Personal Financial Planning:

• Accredited Behavioral Finance Professional, ABFP SM
• Accredited Portfolio Management Advisor,  APMA ® 
• Accredited Wealth Management Advisor, AWMA ®
• Chartered Retirement Planning Counselor, CRPC ®  
• Chartered Retirement Plans Specialist, CRPS ® 
• Chartered SRI Counselor, CSRIC ® 
• College for Financial Planning ® —a Kaplan Company CFP ®  education program

For more information on transfer credit please view our College Catalog on our policies and forms page for details.

Interested in a Master of Science in Financial Analysis?

The College for Financial Planning ® — a Kaplan Company offers a Master of Science in Financial Analysis (MSFA) online program. Coursework is aligned to the the learning outcomes of the CFA Institute's CFA Program, helping concurrently prepared candidates for the Chartered Financial Analyst ® (CFA ® ) exam. 

Case Study: Young and Ambitious

Every Client That Comes To Work With Us Has Their Own Story.

Here are some case studies that best exemplify how we’ve helped different clients over the years., every client that comes to us has their own story., case studies, cash flow planning for burnt out physician.

Jackie and Larry Stein Jackie and Larry are in their mid-50s. As a department chair at one of Boston’s large healthcare networks, Jackie must balance her clinical workload, administrative duties, and research goals. However, after several decades in medicine, the workload and stress

Pharma Executive with Complex Stock Options

Robert and Claire McDonough Robert and Claire are both in their early 40s with twin eight-year-old boys. Claire works in the development office for an international non-profit and Robert is a cardiologist turned pharmaceutical executive

Retiring With A Concentrated Stock Portfolio

Stacy and John Simmons Stacy and John came to Artemis to get their financial house in order in preparation for their retirement. They had long-managed their investment portfolio on their own but felt they were ready to enlist some professional support

Physician Couple with Public Pensions and Estate Planning Needs

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What is financial planning?

Key takeaways

• Financial planning involves defining your goals, understanding your financial picture, and taking steps to advance those goals.
• Financial planning professionals can help you with a variety of needs, including budgeting, investment management, and retirement planning.
• Wherever you are on your financial journey, a sound financial plan can give you peace of mind and confidence.

Financial planning can help you chart a course to get what you want out of life. By helping you figure out how much money you have and where it should go, financial planning is a way to set goals and get on a path to achieve them.

Feed your brain. Fund your future.

Financial planning is creating a comprehensive plan to reach your financial goals. By considering your whole financial life, it provides guidance on reaching both small, short-term targets as well as larger, long-term ones.

You can create a financial plan on your own or work with a professional financial planner who has the knowledge and time to integrate many aspects of finances into a plan, can identify risks and opportunities, and can help keep you on track in making progress toward your goals.

Why is financial planning important?

Financial planning is important because it helps you identify and prioritize your goals. It also aims to give you a complete picture of where you stand financially and identify changes you may need to make to increase the likelihood of achieving your goals—for example, which account types and financial products make sense for your personal situation. Some advantages of investing like compounding potential returns are realized over time so having a plan and starting early is important for the long term.

A financial plan can also help you uncover vulnerabilities, like not having enough saved in an emergency fund or being underinsured. And it may make you feel more confident and comfortable with the choices in your investment portfolio when the markets go up and down. That's why having a financial plan is important for people of all ages and financial backgrounds—not just older, wealthy people. Note that a financial plan is not a set-it-and-forget-it exercise, but an ongoing process that changes as your circumstances do. Your goals as a single person may be different from those of a married couple with children, for example.

Types of financial planning

Financial planning is a broad term that can cover a range of different techniques and goals. Most financial plans include multiple types of financial planning to take a holistic view and may address some or all of the following.

Cash-flow analysis

You may think of this as budgeting . Cash flow analysis helps you get a sense of what you have coming in each month and how you're using it. You need positive cash flow so that you can generate funds to pay down debt, build an emergency fund, or invest. By getting into the nitty-gritty of your cash flow, you can make conscious choices about where you want your money going and identify areas you may be able to trim or cut out entirely.

Debt management When you have multiple types of debt repayments competing for your dollars (think: credit card debt, student loans , and a mortgage), it can be difficult to figure out which you should prioritize paying first. Financial planning focused on debt management can help you identify ways to lower interest payments and strategize ways to repay your debts that work best for you while keeping you on track to meet your other financial goals and budgeting demands.

Retirement planning We all know we should be saving for later, but the question of how much to save for retirement —and in what accounts—can be tricky, particularly as you get closer to the age you hope to set up your permanent out-of-office message.

Retirement planning for those decades from retirement may be as simple as working their way up to contributing the maximum pre-tax salary allowance to a retirement account, like a 401(k) or individual retirement account (IRA) . For those near retirement, it may involve how to generate retirement income, such as figuring out which retirement accounts to draw from first, covering essential expenses, and how to manage Social Security income. A plan could give you peace of mind that you won't outlive your assets.

Investment planning Both retirement savers and those who are looking to build wealth outside of a retirement account can benefit from investment planning that aligns with their time horizon, financial situation, and risk tolerance . Investment planning can help you analyze and manage your portfolio holdings to better ensure your investments are working as well as they can for you. It may also reinforce the nature of market cycles—short-term downturns are expected but have historically always been followed by upturns, for example. Good investment planning may help keep you calm during rough stretches in the market and resist panic selling.

Education planning There are no ifs, ands, or buts—paying for an education is expensive. And it becomes even pricier if you're hoping to set aside enough for multiple children's educations. Education planning helps you figure out how much you need to save and the best strategies and accounts to cover education costs from pre-K to post-grad.

Tax planning If you're a W-2 worker (most 9-to-5ers are) without a complex financial situation, you may not need much more to do your taxes than self-service tax software. But for those with more complicated finances or people trying to determine the best way to manage income in retirement, financial planning can help you figure out the most tax-efficient way to manage your money. From taking advantage of tax deferral for savings goals, to qualifying for deductions and credits, to minimizing taxes to heirs, taxes touch many areas of financial planning.

Estate planning Don't let the name fool you. When it comes to financial planning, estate planning is less about sprawling manor homes and more about making sure you make your wishes known through documents like wills and trusts. Many estate planning techniques start with careful planning while you're living. Planning for what happens after you or your partner is gone can be hard to think about, but it's an important step in financial planning for all types of people, even those who are younger and who don't have large bank balances. It also helps you plan for who makes decisions if you become unable to and who becomes guardian for your children if necessary—important things regardless of wealth level.

Insurance planning Managing risk is fundamental so you don't encounter financial catastrophe that prevents you from achieving your goals. You probably know the importance of having health insurance, but there are countless other types of insurance that might help you during times of hardship. Financial planning can make sure you understand how disability and  life insurance , as well as long-term care coverage, among other types of insurance, fit into your financial picture to help protect you and those you love.

How much does financial planning cost?

How much financial planning costs depends on whether you decide to go it alone or work with a professional. If you DIY, there are low- to no-cost online tools and resources that can help you put together your own financial plan . For instance, Fidelity has a range of online calculators you can use to estimate how much you need to save to retire by a certain age, or you could a use a robo-advisor to manage your investments. If you prefer to work with a pro, they may charge based on a percentage of the assets they handle for you, by the hour, or a one-time flat fee.

How to create a financial plan

Ready to start financial planning ? Check out our guide on how to make a financial plan . As you draft your plan, either on your own or with a pro, remember that a solid financial plan is more than just numbers. It's a map that puts you in the driver's seat to fund the life you envision for yourself now and in the future.

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September 8, 2017

Financial plan with solutions of a real life case study.

Sadique Neelgund

Note – This case study is published in Steven Fernandes book There is always a financial solution …  published by Bestsellers18 which is a compilation of different case studies. Sharing here with permission of author.

Name  – Abhishek Goel (30)

Family – Father (67), Mother (63)

Resides in – Delhi

Occupation : Service

Job Details : Works as Chief Manager Claims for a Private General insurance company.

Background:

Abhishek is single and stays with his parents in his father’s house in Delhi. He has an elder brother who works abroad. Abhishek remembers that at an early age he got a first-hand experience on savings when his parents encouraged both the brothers to open a children’s bank account which was being operated from the school premises. Both brothers started saving Rs. 5 per month and this money was utilised in the next academic year to purchase some books, stationery, etc. His father used to work in an engineering firm while his mother was a teacher. When he was in the first standard, his father’s company faced lockout and for nearly 2 years the family survived on his mother’s income. His father got an opportunity to work in the gulf later and for some time the family’s finances were on track.

Again, tragedy struck when his mother had to give up her job due to health reasons. After working for a couple of years abroad, his father’s firm closed down and he had to come back. His mother started taking tuitions at home to make ends meet. Since the convent school where the siblings were studying were aided by the government, they did not have to pay any fees for their secondary school education. Abhishek’s mother ensured that every expense was monitored and followed a strict budget. Both the brothers understood the family’s grim financial situation and consciously supressed their desires for story books/ toys etc. The difficult financial situation made the brothers realise that good education and qualification was the single most path to getting a good job and ensure financial stability. With the generous help from charitable donors Abhishek and his brother got interest free loans to complete their higher education. Abhishek completed his BE in Automobile engineering while his brother did is Hotel management.

Even during his first few years of college, Abhishek had started earning by giving tuitions. Part of this money was deposited in his bank and rest was given to his mother to manage the family’s expenses. Abhishek has had a very good rise in his career in the last 9 years since he has been working and presently he is in a very good position with a well-known General insurance company. Since he has been only exposed to traditional investment options like Insurance, Post office and FD schemes, Abhishek started his investment journey from 2007 with these products. To save tax he purchased traditional insurance policies and invested the rest in Fixed deposits. Even then he has been able to create a good investment basket because he has kept his expenses to the minimum and tried to save as much as he could.

Last year he booked an under construction flat worth Rs. 62 lakhs for which he paid the down-payment of 10% from his own savings. He is expected to get possession of the flat by December 2018. So far, he has taken a loan of Rs. 18.50 lakhs and he intends to try and pay as much as he can from his own sources in the next 2 years before possession.

Savings habit: In almost all cases with a few exceptions, our parents are the initiators into the world of savings and investments. Abhishek too understood the importance of savings through his parents who encouraged him right from his school day. He had never looked back ever since. Most of us lose our way once we get caught up in our work and other family responsibilities. Abhishek continues this habit till today and now savings has become an integral part of his responsibilities.  He only needs guidance on how/ where to invest the savings.

Insurance as an investment: Most people buy insurance as an investment product or rather it is sold that way to make it attractive for the buyer. Investment oriented insurance policies are of two types – Traditional and Unit linked. Traditional policies typically invest in government bonds, approved securities and instruments which provide fixed income while Unit linked policies invest in instruments varying from government bonds to equities as per the fund chosen by the investor.

Traditional insurance policies typically don’t provide more than 5-6% returns over the long term while equity oriented funds in unit linked policies can fare better than traditional policies in the long run. Therefore, traditional insurance policies don’t serve as a good investment for the long term. How can a product which cannot beat inflation help you to reach your long-term goals? Abhishek made an early start but due to lack of knowledge and with a view of saving tax, he invested in traditional insurance policies, allocating a good amount of premium.

What is the present situation?

Basic Numbers

Monthly Income: Rs 90000

Monthly surplus: Rs. 32522

Networth Statement

ASSET ALLOCATION

Emergency fund: Apart from the savings account, the fixed deposits provide a decent back up In case of any emergency.

Life insurance : Abhishek is covered for Rs. 1.09 crores through 1 term pan of 1 crore and two traditional plans. He also has a traditional pension plan for which his monthly contribution is Rs. 8145 and the maturity is in 2041. He has a limited premium traditional policy where the last payment is to be done next year. The last policy is an endowment policy which will mature in 2028.

Health Insurance : Abhishek is covered for Rs. 5 lakhs through his employer group insurance policy. His parents are covered for Rs. 2 lakhs each through a separate policy. He also has a separate health cover of Rs. 15 lakhs through a combination of mediclaim and top up policy.

Investments: Investments are very well diversified into debt and equity with debt comprising 55% of the allocation and equity at 45%. Property has been excluded as its for self-consumption.

Liabilities: Presently there is only 1 loan which is a home loan taken on the under-construction property.

Abhishek has opted for EMI payments (instead of only pre EMI interest) as it enables him to claim tax benefits on both principal and interest payments as well as loan outstanding keeps reducing with each EMI payment.

Risk Profile: Moderate

Recommendations:

Emergency fund: Abhishek needs to maintain an emergency fund of Rs. 1.75 lakhs, which should take care of nearly 3 months of expenses. Presently he has maintained Rs. 1.05 lakhs in savings account which can be maintained as it is and additionally he should move Rs. 70000 from his FDs into a liquid fund.

Accident Insurance: Abhishek should take a personal accident comprehensive policy which will cover for accidental death, permanent and partial disability including weekly/monthly compensation for loss of work due to total temporary disability. A PA cover of Rs. 50 lakhs with a TTD cover of Rs. 15 lakhs are suggested. The premium for this will be approximately Rs. 7000

Life Insurance: Considering the financial goals and outstanding liabilities, Abhishek’s cover is adequate. He needs to stop the traditional pension policy as well as the endowment policy which matures in 2028. The yield on these policies are less than 6% and hence coming out of those will make sense now rather than continue them till maturity which is more than 12 years to 20 years from now. Surrender of the 2 policies will fetch him approximately Rs. 3 lakhs. He should revisit the cover post marriage.

Health Insurance: The present cover is adequate as per his age. He should include his wife’s name when he gets married next year.

Debt Management: Even though the actual loan approval amount is Rs. 50 lakhs, Abhishek should not take the full disbursement. He should try and use his own sources to pay for the property and keep the loan to less than Rs. 30 lakhs. A higher loan and EMI can hamper future goals. He can use the Rs. 3 lakhs from insurance surrender to pay for slab wise payments. The policy surrender will also enable the increase in surplus amount every month.

Financial Goals:

1. Marriage (2017)

Current value: Rs 4 lakh

Future Value: Rs. 4.36 lakh

Status of goal 1:

Abhishek does not want to spend too much on marriage and considering the fact that the marriage expenses will be shared with his spouse, he would not like to exceed Rs. 4 lakhs. A part of the Fixed deposits can be used for this goal.

Returns expected in fixed deposits: 6% post tax.

 2. Buying a car (2018)

Future Value: Rs. 4.66 lakhs

Status of goal 2:

He needs to start Sip of Rs. 18500 in ultrashort debt funds for a period of 24 months to achieve this goal.

Returns expected in Ultrashort debt funds: 6% post tax over the required time horizon.

3.   Educational funding for 1 child (2036 – 2041 )

Current value: Rs. 32 lakhs

Future Value: Rs. 2.42 crores

Status of goal 3:

Considering the long-term nature of this goal, Abhishek needs to invest Rs. 14000 per month for 25 years in a combination of largecap and balanced funds. Due to the present surplus, he can easily invest for this goal.

Returns expected in the mutual funds portfolio: 13% over the required time horizon.

4.   Retirement Planning (2041)

Present Annual expense (Excluding children’s expenses and EMI’s) –Rs. 3.60 lakhs

Future Annual Expense – Rs. 19.53 lakhs

Corpus required – Rs. 4.53 crores.

(Inflation considered: 7%, Returns on corpus during retirement 9%, Expected life expectancy at 85 years)

Status of retirement goal – One principle which Abhishek has followed when he left his last organisation in 2014 is to transfer his EPF to the new employer rather than withdraw which most people do. With compounding and regular contribution, the EPF turns out to be a good amount during retirement. Considering a 5% increase in basic year on year his EPF in the year 20141 should be worth Rs. 1.93 crores. The mutual funds and equity shares if maintained that long can fetch him Rs. 1.45 crore and Rs. 1.56 crore respectively. These 3 assets are sufficient to create a good retirement corpus as per today’s needs.

Most of us plan retirement when there are either 10 or less years for one to retire. That leaves very little time to enable compounding of your investment and the savings and investments required in the short time will also be huge.

Taxation: Abhishek’s EPF and life insurance premiums of 2 policies (Term and 1 traditional) exceed the limit of Rs. 1.5 lakhs provided under 80C.  He is also utilizing the 80D deduction up to Rs. 25000 due to health insurance premium of self and parents. He can avail the home loan interest benefit on under construction property in 5 equal instalments from the year of completion of his flat.

Conclusion – It’s truly said, “Experience is the best teacher”. Abhishek’s life is a live example of how his childhood period of financial turmoil has moulded him to be a better saver and investor. At his age, he had done a fairly good job of creating a good investment basket. There are several like him who have an opportunity to choose what is right. Many of his age, having similar salary may not have accumulated as much as he has. In this age of uncertainty, it’s very critical that the younger generation focuses on saving and building up a good corpus right from the first salary. Else there will always be regrets and “I should have done that” sighs when you evaluate your life in your 40s and 50s.

Note – This case study is published in Steven Fernandes book  There is always a financial solution …  published by Bestsellers18 which is a compilation of different case studies. Sharing here with permission of author.

2 Thoughts to “Financial Plan with Solutions of a Real Life Case Study”

Perfect planning report for this family

Absolutely Perfect Planning.

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