You have gleaned the following information from two new financial planning clients. Based upon this information, design an asset allocation that you believe meets with your clients' objectives and provide reasons this allocation makes sense. We are not yet making specific investment decisions, but rather deciding on a percentage allocation of the portfolio to various asset classes, such as money market, long-term bonds, short-term bonds, municipal bonds, corporate bonds, high-dividend stocks, no-dividend stocks, commodities, real estate, etc. Client #1 is a wife and husband who both work in the airline industry. They are both in their mid-40's, do not have kids at the moment but have not ruled out the possibility, they are in a high tax bracket and are concerned with their after-tax rate of return. They are focuses now on long-term capital gains and likely need a 9%-11% average rate of return to meet their retirement goals. They would like a diversified portolio and liquidity is not currently a major concern. Client #2 is a family of four, with both kids in high school. They are in a high tax bracket and are concerned about their after-tax rate of return. They are focused on safety of principal and they will need at least a 6-8% average rate of return on their portfolio. They would like a diversified portfolio, but liquidity is a concern due to the unknown cost of college plus the husband has a moderate health concern.

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