TASK :

As a Wealth Manager, prepare a Financial Plan based on the case background of George and Cindy Lee. Your proposal should include :

1. Feasibility of the Financial Goals
2. Investment Preferences
3. Investment Strategies
4. Other Key Factors (as appropriate)
5. Your Recommendations and Action Plan

Note : As the case may not likely contain all possible information, you are required to make no more than 5 necessary and reasonable assumptions as appropriate for the case. Your report should list and explain these assumptions at the beginning of the report.

Case Background :

George and Cindy are 36 & 35-year old respectively) and have a son aged 5. George has been working as Senior Manager in a major property development company since his graduation, holding a BBA in Finance. He has been working hard with much stress from work and he wants to find time for social life and hobbies.

After graduating from the university, Cindy started working as a civil servant but after they had their son 5 years ago, she quitted her government job and took a part-time tutor job, which allowed her to spend more time at home raising their son. They live in a small apartment (still under mortgage) in North Point which they bought 5 years ago.

On the financial side, they do not seem to have serious concerns since George expects his job should be very stable with decent income. They did not seriously consider financial planning so far. However, Cindy is concerned about over-spending by her husband. George, on the other hand, holds a very different view. He believes that he should have the right to spend his money as long as he provides adequate financial support to the family.

Despite their different views, they can compromise on two issues :

• They want to save enough money to help pay for the sons education until he finishes the undergraduate degree (in a local university or overseas university).

• They commit to bring in greater discipline in their financial life to provide for their retirement. They made a rough guess based on market survey to save at least HK$6 million for retirement.

Insurance Coverage George Cindy

Life Insurance $1,300,000 $1,300,000

George and Cindys Financial Needs :

• Completely fund the university education for their son.
• Buy a new car for HK$450,000 in about 3 years.
• George to retire at 60 and thereafter wish to maintain their current living standards.
• To establish a portfolio or other arrangements to save for retirement.

Assets and Liabilities for George and Cindy as at December 31, 2020

Liquid Assets HK$

Cash & Checking A/C balance 200,000

Savings A/C balance 600,000

Investments

Mutual Funds 250,000

Local Stocks 400,000

Retirement Plan

Mandatory Provident Fund 320,000

Housing

Apartment at North Point (market value) 6,000,000

Automobile

Car at market value 120,000

Personal Property

Watches & Jewelry 120,000

Furniture & Appliances 80,000

Current Liabilities

Current Bills (unpaid balance) 10,000

Long-term Liabilities

Mortgage Loan 1,400,000

Other Loans

Personal Loan 80,000

Income & Expenses Data for George and Cindy for the year 2020

Income (annual)

Salary (after tax) George 500,000

Salary (after tax) Cindy 150,000

Expenses (annual)

Mortgage payments 100,000

Utilities 24,000

Management Fees 24,000

Property rates and taxes 42,000

Other household expenses 30,000

Food and supplies 80,000

Restaurant Expenses 25,000

Clothing 45,000

Personal care 6,000

Car Loan payments 35,000

Gas, Tolls, Parking 65,000

Repairs 10,000

Entertainment and Vacation 40,000

Medical Expenses 15,000

Insurance Life, automobile 36,000

Education expenses 40,000

- End -