Expectation

This assignment expects you to seek out, extract and analyse relevant information from various sources. You are expected to write and present a well-structured, cohesive and clear financial plan using appropriate writing style and language. (Show all workings)

Scenario

Kenneth Ma is 40 years old and his spouse, Sandy Lam is 36 years old. They have been happily married for the past ten years. They have two children, Anita, 7 years old and Simon, 5 years old. Kenneth has been the Chief Marketing Director for Yoyo Sdn Bhd for the past five (5) years. In his line of work, Kenneth has to travel extensively to meet up with new clients, government officials and private companies to secure new contracts. He believes in giving his family the best life has to offer for them. However, his work schedule over the last few years leaves him limited time to spend with the family. As such, he often attempts to compensate for his absence by buying lavish gifts for his wife and children.

Sandy is a Chief Public Relation Officer at Glamour Sdn Bhd. She loves to keep in trend with famous designer brands fashion for her as well as the children. Appearance and status is very important to her. Sandy also needs to travel and entertain clients often.

The couple has been feeling a pinch of the rising costs of urban living lately. The couple has a mortgage loan on a double storey link house in Sunway City, Ipoh which they bought five years ago. They have also taken two car loans. Kenneth drives a Mazda 6 while Sandy drives a Toyota Vios. Their daughter, Anita attends an international private school in Wesley Methodist School Ipoh (International). In order to make sure she is not left behind in her studies, the couple sends her for English and Mathematics tuition classes. Anita also goes for ballet and piano classes once a week. Their son, Simon attends a reputable pre-school, Kinderjoy. The household has a live-in Filipino maid and Kenneth has employed a private driver to assist in ferrying him and the family around town.

Kenneth household Statement of Assets and Liabilities for the year 31 December 2020

	Balance (RM)	Monthly installment payment (RM)
Cash	15,000
Fixed Deposit	25,000
Car loans	180,000	5,000
Housing loan	675,000	2,813.33
Employee Providend Fund contributions	350,000
Antiques collection	25,000
Jewellery	37,500
Property Market value	755,877
Cars Market value	130,000
Hire Putchase Home theatre system	13,250	1,104.17
Credit card outstanding balance	15,670	Balance due

Notes:

1. The monthly Employee Provident Fund Deduction is 11%. SOCSO contributions, refer to the PERKESO website.
2. Assume these expenses incurred evenly over the year 2020.
3. This is an emergency expense.
4. On average, there is remaining 3 years to go to settle the car loans.

Kenneth has been diagnosed with hypertension and Type II diabetes last month. Kenneths paternal family line has also had a history of heart attacks and strokes related ailments. Due to Kenneths busy and often pressure to meet revenue targets, he does not have the time for a good workout. He is also often stressed out and he smokes about a packet of cigarettes a day. Besides that, he has been eating at irregular hours and getting less than five hours sleep a day. Kenneth also sometimes forgets to take his prescribed medication.

On the other hand, Sandys mother passed away few years ago due to breast cancer when she was 60 years old. Her maternal grandmother also succumbed to the similar disease five years ago. Due to fear, she often tries to avoid talking about this topic and she has not gone for an annual medical checkup for the last five years. She is of the opinion that, she is still too young to contract any serious diseases. Both Kenneth and Sandy have some group medical insurance coverage that is provided by their companies. However, these policies do not cover the children and they are unsure the extent of the coverage for themselves. Their son, Simon has asthma and suffers from dyslexia.

Kenneth is considering changing his familys medical insurance policy provider by purchasing the ACE Medical Health Insurance (ACE) card in the coming year as in his opinion it appears to have better coverage. Besides, this ACE card policy does not require a medical check-up so Kenneth thinks that they will not discover his familys medical condition.

Kenneth and Sandy are rather unknowledgeable on estate planning matters. They feel that they still have time and they should live life for the day and worry about this when they are older. Kenneth is also passionate on humanitarian courses and would like to leave 20% of his assets to Hope Foudation.

Both Kenneth and Sandy are not very savvy in investing and most of their savings are in the form of cash and fixed deposits. Kenneth is also concerned on how Sandy and the children can be adequately provided for in case anything untoward was to happen to him. Kenneth and Sandy would like to save an additional RM 2 million (excluding their Employee Provident Fund contributions and current savings) from now until Kenneth reaches 60 years of age. These concerns have prompted Kenneth to reflect and seek advice on how to improve his households financial situation.

By using the six-step financial planning process, prepare a comprehensive financial plan for Kenneth and Sandy.

(a) Estate planning

1. Include instructions for passing your valuables.
2. Include instructions for your care if you become disabled before you die.
3. Name a guardian and an inheritance manager for minor children.
4. Provide for family members with special needs without disrupting government benefits.
5. Provide for loved ones who might be irresponsible with money or who may need future protection from creditors or divorce.
6. Include life insurance to provide for your family at your death, disability income insurance to replace your income if you cannot work due to illness or injury, and long-term care insurance to help pay for your care in case of an extended illness or injury.
7. Provide for the transfer of your business at your retirement, disability, or death.
8. Minimize taxes, court costs, and unnecessary legal fees.

b. Recommendations

Provide recommendations relevant to Kenneth and Sandys situation based on your analysis above.