Gregor and Adeline Evans have been referred to you by one of your clients. They have been married for $10$ years and have two children. They have never worked with any financial planner before. Gregor$$s father, Frederick, passed away recently, and Gregor is acting as the executor of the estate. He is overwhelmed and would like to seek your professional advice to help with their financial affairs.

Personal Information

Gregor $($age $42)$ and Adeline $($age $37)$ live in White Rock, British Columbia. Their son Grayson, $8$ years old, has autism and is qualified for Disability Tax Credit. Their daughter Beverly, $6$ years

old, is currently in kindergarten at Little Flower Elementary School. The couple would like to support as much as possible for their children$$s post$-$secondary education.

Gregor has been running his engineering consulting business for the past $10$ years. Over the years, he has gained many loyal clients and makes gross revenue of approximately $$200,000$

per year. He pays himself a flat salary of $$80,000$ every year. As a self$-$employed individual,

Gregor pays both the employee and employer portions of CPP $($Canada Pension Plan$).$

Adeline has been working as a full$-$time teacher at Maple Secondary School for $14$ years. Her

employment income for last year was $$72,000.$ She has enrolled in the provincial teacher$$s

pension plan $($Defined Benefit Plan$).$

Financial Management

They purchased their primary home together $5$ years ago for $$650,000.$ They own the house

jointly. The current market value is about $$720,000,$ with a mortgage balance of $$440,000.$

When they purchased the house, they signed a $5-$year fixed rate closed mortgage with an

annual interest rate of $2\mathrm{.}8\%$ amortized over $25$ years. They received mortgage renewal

package from their bank a couple of weeks ago. Under the current high interest rate

environment, they would like to seek your advice on which renewal option to choose or make a

lump$-$sum payment towards their mortgage. Gregor will receive an inheritance from his father$$s

estate, about $$250,000.$

Gregor always carries a high credit card balance. His latest credit card statement shows a

balance of $$3,500$ with an interest rate of $20\mathrm{.}99\%,$ on which he has been making the minimum

payment. On the contrary, Adeline is a big saver. Her risk appetite is low to medium, and

prefers slow, steady growth.

Gregor$$s Investments

Gregor holds high volatile stocks in his RRSP account. He does not know much about the

capital market and listens to his friends when picking investments. Gregor describes himself as

an adventurous risk$-$taker. His understanding for RRSP account is saving for retirement,

therefore he can tolerate elevated risk. Gregor does not make RRSP contributions every year.

The current market value of his RRSP investment is $$45,000.$

Adeline$$s Investments

Adeline$$s pension plan takes some of her RRSP contribution room. Her RRSP account balance

is $$60,000$ investing in Fidelity Monthly Income Fund.

Joint Non$-$registered Investments

The Evans$$ have a joint non$-$registered GIC $($Guaranteed Investment Certificate$)$ account and

hold several non$-$redeemable and redeemable GIC certificates. Current balance is $$22,500.$

Risk Management

Both Gregor and Adeline are healthy. Gregor has no personal life, disability, critical illness, or

long$-$term care insurance coverage. He pays the medical expenses himself. He is interested in

establishing one. He would like to have his business pay the insurance premiums if that is

possible.

Adeline has life and disability insurance protection from her work, but she does not know the

details of the insurance policy.

Estate Planning

The Evans tell you that they do not have wills or powers of attorney.

Goals and Objectives

Gregor and Adeline tell you that their priority is to make sure their son would have sufficient

funds to live a moderate lifestyle. They are worried that Grayson might not be able to support

himself. They also want to maximize their after$-$tax income, and save sufficient funds for

retirement.

Instructions

As a team of financial planning professionals, during your discovery meeting with the clients,

you need to collect necessary information about the household$$s financial situation; analyze the

information with regards to your client's goals, needs and priorities. Help them to create a

personalized financial plan. Please incorporate their household Net Worth Statement and Cash

Flow Statement. Make any educated assumptions to support your planning advice.

$$ What short$-$term and long$-$term financial goals would be appropriate for this situation?

$$ What actions should be taken to achieve these financial goals? For example, do they need to

change their current saving plans?

$$ What economic conditions and possible household events should be considered?