John Smith is a new investment advisory client. He is a $45-$year$-$old aerospace engineer with no children. He is currently going through a divorce. In the divorce, it is expected that he will split $50\%$ of his assets with his spouse, in addition to paying $$50,000$ annually in alimony until his expected retirement date at age $65.$

The couple$$s assets currently consist of an investable portfolio of $$800,000.$ They rented an apartment $($and therefore have no house to split$).$ After the divorce $($expected to be finalized in the next three months$),$ John plans to buy a small house in the suburbs, for which he will need a $$50$k down$-$payment. He will also need $$10$k to buy furniture and appliances for the new place.

At his engineering Job, John earns a pre$-$tax salary of $$180,000$ per year. His living expenses $($not including alimony$)$ average about $$65,000$ per year. Increases in salary will offset any increases in living expenses. His tax rate is $30\%$ on all income $($including investment income$).$ John expects he will need $$2,000,000$ at the time he retires. John$$s company offers a $401$k for pre$-$tax contributions, but John currently has not contributed.

Of the $$800,000$ of investable assets,

$$100,000$ is in cash

$$400,000$ of it is in an Aerospace and Defense ETF.

$$300,000$ is in bonds.

When asked about risk preferences, the client states that he is aggressive and doesn$$t care about risk. However, in talking with him, he mentions that he sold a large chunk of stock in the market downturn in $2008$ because he was concerned that the market wouldn$$t recover. You wonder whether his desire to take risk is based on the fact that the equity market has been performing exceptionally well recently.

John also mentions that he is on the board of directors for a small publicly traded engineering firm, for which he may have access to material, non$-$public information.

Please list all relevant IPS Objectives and Constraints for this client. Please also answer the following question in the risk objective section:

What about the scenario suggests that the client might need educating about market risk?

Note: In calculating the return requirement, assume all income is taxed as it is earned. $($No need to do any inflation adjustments$).$ Please state the required pre$-$tax and after$-$tax return objectives. Also, it is advantageous to show your work $($or at least your inputs to your calculation$)$ as it allows me to give partial credit even if the calculation is not done correctly.