Question C1 (50 marks)

You just graduate from University of Hong Kong, major in Management. You are employed by Standard Chartered Bank as wealth management associate. During your training, you are given the below three situations for practice.

Situation 1: Mary and Eddie, ages 43 and 47, have a daughter who is completing her first year of university and a son three years younger. Currently, they have $200,000 in savings and investment funds set aside for their children's education. With increasing education costs, they are concerned whether this amount is adequate. In recent months, Mary's mother has required extensive medical attention and personal care assistance. Unable to live alone, she is now a resident of a long-term care facility. The cost of this service is $6,750 a month, with annual increases of about 5 percent. While a major portion of the cost is covered by Social Security and her savings, Mary's mother is unable to cover the entire cost. In addition, Mary and Eddie are concerned about saving for their own retirement. While they have consistently made annual deposits to a retirement fund, current financial demands may force them to access some of that money

Situation 2: While I knew it might happen someday, I didn't expect it right now. This was the reaction of Patrick when his company merged with another organization and moved its offices to another country, resulting in him losing his job. Patrick does have some flexibility in his shortterm finances since he has three months of living expenses in a savings account. However, "three months can go by very quickly," as Patrick noted.

Situation 3: Nina, age 23, recently received a $30,000 gift from her aunt. Nina is considering various uses for these unexpected funds including paying off credit card bills from her last vacation or setting aside money for a down payment on a vehicle. Or she might invest the money in a tax-deferred annuity for retirement purpose. Another possibility is using the money for technology certification courses to enhance her earning power. She is overwhelmed by the choices and comments to herself, "I want to avoid the temptation of wasting the money on impulse items. I want to make sure I use the money on things with lasting value.

Required:

You are required to select any TWO of the above situations and answer the following questions.

a. Identify the main financial planning issues that need to be addressed.

(10 marks)

b. Suggest any TWO additional information either quantitative or qualitative you need before making recommendation.

(20 marks)

c. Recommend the most appropriate TWO actions based on the information provided and your assessment of the situation,

(20 marks)