HND理财班 GU1 .doc

Group Award Graded unit 1Contents 1. Planning-Action Plan - 21.1. Introduction1.2. Likely resources to be used1.3. Strategy for carrying out report1.4. How the project will bw managed1.5. Timescales for project1.6. Sources of information2. Developing-Case Study Body - 52.1 Key factors in case study2.2 Likely financial needs of the clients2.2.1 Savings2.2.2 Mortgage needs2.2.3 Protection needs2.3 Suggestions for improvements2.4 Likely providers2.5 Relevant products and services2.6 Benefit-needs analysis2.7 Effect on tax position2.8 Justification for selections3. Evaluation - 13 3.1 Criteria for Evaluation3.2 Changes made during project compared to original action plan3.3 Effectiveness of process4. Bibliography - 16 Planning-Action Plan1.1. IntroductionWorking at the Cadogan Bank plc, I were introduced to Alexander Flynn and his wife Janet by the manager of bank's Western Branch as an Investment Service Manager. My task this time is to give solutions for my clients to manage their financial affairs, provide them effective products to ensure the best returns on saving and the best protection for their family and income.1.2. Likely resources to be usedI would like talking to my clients first to collect their demand and consideration with the financial management to satisfied their initial needs. Despite the essential information offered, I will have an active listening to understand the future planning about the family. I want to know how willing they considered to invest, and the management for their children's future including educations and marriages, and various preference will be considered to complete the ways to choose products. The relevant products will be picked up to have a further planning for the next stage. And to continue some further planning, I will have a contact with the clients in terms of time in order to make sure some details with the types of products. 1.3. Strategy for carrying out report According to the background of this couple, it's clear that both of them should have a systematic and complete management for their fabulous income, and with the condition that they have three children to bring up, they should take care of the potentially drained cost includes various school fees, and then they should consider different saving accounts with tax free and best profit. Meanwhile, some products of investment like income bonds, FRSBs and children's bonus bonds may have a good work in the future planning, as well as the protection products for children such as term life assurance that provides repayment on early death and life assurance will be essential when they get 16 years old.1.4. How the project will be managedThere would be a detailed analysis to give a suitable management for their financial affairs. The large amount of incomes mainly due to their own business company, and they also got three children to foster, so they should prepare a future fund for the children's education and plenty of living expenses, and normally, they should take action to prevent a series accident or some other risk in their daily life, not only the children but also the parents and maybe their high cost house. And in fact, the company were considered to change their mortgage to prevent the shortfall when comparing with the other mortgages, thus, they will favor the lending products, and maybe the interest only mortgages will work much. And it's necessary to persuade the client try to investment for some products which paying back in the long-term future.1.5. Timescales for projectTimePlan 4.15-4.17Read the case, and try to make some discoveries with the background, especially for the manager's personal life, and collect the initial information to preparing the next step. 4.18-4.22Back to the book to find out the suitable types for the case situation, and classifying the basic sources into different categories with it's different uses. 4.23-4.30Start the report for the first needs of the clients with some initial resources from the schoolbook, and preparing the next step with current products by various websites of providers. 5.01-5.07Complete the report with the providers, and compare the products to analysis their advantages and disadvantages. Make sure that they are offered the best benefit.5.08-5.10Review the report with the information offered to make sure that I make a good financial plan for the subject. 1.6. Sources of informationExcept the information from the case, there's many additional sources to offer the information, one important way is the textbook with a large number of professional information, and the other essential way is to search the websites to provide the companies for the clients which will consult to a series company. 2. Developing-Case Study Body2.1 Key factors in case studyThe clients are working for the Graphic design Ltd which has been extremely successful with a turnover of over 15m and profits of 4m last year. But recently, theres likely a substaintial shortfall from the projected returns on the policy to take out the mortgage for an endowment basis. Axlexander, who is 48 years old, is the Company Director and Chief Executive, draws a salary of 420,000 per annum from the business, as well as his wife Janet aged 44 and work as his personal assistant, paid a salary of 55,000 per annum. They have three children, two of them went to a local private school and charges 3,000 per child per annum in school fees, the last child will attend to the same school as soon as she is old enough. The family are living in a six-bedroom bungalow in an expensive part of town at a value of 1.25m for six years, and still have an outstanding mortgage of 450,000, while theyve got an idea to extent their house at the cost of 300,000.Alexander always unsure the long-term future for the company, thus he is ultra-cautious with his finances. At that time, theres no attention on the family financial affairs, Alexander never try to search the available protections for his family and income, and he may not like the way to make a riscky investment.2.2 Likely financial needs of the clients2.2.1 SavingsThe relevant saving accounts are listed as follows.-Individual Savings Accounts-ISAISA encourage savers to invest a wide range of savings, the legal maximum investment per annum is set at 5,000, and it provides three elements:cash ISA, stocks and shares ISA, insurance ISA.-Money Market DepositsSavers deposit large amounts to obtain higher interest rates. The interest paid on the deposit is fixed throughout the period at money market rates.2.2.2 Mortgage needsThe followed fitable mortgages may be need:-Commercial MortgagesThey are used for construction of, purchase of, or expansion of commercial property.-Personal Pension MortgagesThese are particularly suited to high net worth individuals who are closer to retirement. My clients can retire at any time from age 50.2.2.3 Protection needsThe suitable products for this family are various, the term assurance policies may be chosen cause its the most common and oldest one which has a number of types to choose. And the whole of life policies protecting series of life problems as accidental death, death, ill, critical illness from receiving repaid benefits. Besides variable insurance like property insurance which including buildings insurance, contents insurance and personal possessions cover are avaliable for their arrangement.2.3 Suggestions for improvementsAlexander should pay attention on his personal finance as he dont care how much he could earn from the received salaries in a large number, and theres no protection for his property nor his family. Keeping the savings in the best profit account and tax-free account without risk should be the first choices, then the securities of his family members should be considered with a series of assurance, and may be some property inssurance are essential for their house and some other personal assets.2.4 Likely providersI would like to offer the ISA as the mian saving product, and the most suitable one is the cash ISA for a secure deposit account with its specifications.l Deposit-based savings with the Cadogan Bank.l Earn tax-free interest on savings.l Save up to 5,340 per tax year.l No notice periods get the money whenever you need(minimum withdrawal of 10).l Current interest rate is 0.50 AER.l Run the account by phone, branch, or online 24/7.l Quick set up.l Easy to pay money in.l Start saving from 1.Especially from 6th April 2011, clients can save with the new higher ISA allowance of up to 10,680.With the ISA account, I recommend the assorted offset mortgage to help clients reduce the mortgage balance which is charged interest on through the Cadogan bank individual saving account(ISA) in a flexible way.ProductInitial interest rateFollow on interest rate The overall cost for comparison isApplication feeHow much could I borrow? Early repayment chargeOffsetTracker2.79 (BBBR+2.29)variable for termN/A2.9 APR149970(max) of the value of your home. (Minimum Loan 200,000, Maximum Loan 1m)1 of the priginal balance upon full redemption until 30 June14 OffsetTacker2.98(BBBR+2.48)variable for the termN/A3.4 APR99970(max)of the value of your home1 of the original balance upon full redemption until 30 June14OffsetTracker3.29(BBBR+2.79)Variable for the remaining term N/A3.4 APR99975(max)of the value of your home1 of the original balance upon full redemption until 30 June14Offset trakers are providing various benefits and operating conditions to take action, while the first tracker offers the lowest initial interest but the highest application fee, thus the last offset tracker seems to be most efficient for the 75% maximum money to borrow with the normally cost in application fee, and the initial interest can't be the obstacle for the family. The life and critical illness insurance should be essential for a three children family, and I suggest the life level term.Company Monthly PremiumUpgrade OptionCover AmountAgeas28.68Guaranteed20.18 extra to add 300.000 Critical Illness Cover2,000,000Scottish Provident17.63Guaranteed Not Available2,000,000We acting for the protection products, and two of them I offered are both woks much. The Ageas requires a higher premium monthly, but also available to add 20.18 for the additional critical illness cover, this would be more useful with the Scottish Provident which is also covering $2,000,000 for the accidental death.2.5 Relevant products and servicesThe childrens saving account allows the customers to save for their childrens future, we provide the future fund for it, and the bonus account is teaching the children to learn the basic of looking after their own money, both of the accounts pay good rates of interest and reqiure an average balance of 50 be maintained over the year to quality.And the house insurances are available for them to choose with it's complex types and details. The emergency policy is the most suitable one, especially with children.Section of CoverCover ProvidedSpecific Section ExclusionsPlumbing and Drainage1) Damage to failure of the plumbing and drainage system damage where the internal flooding or water damage is likely consequence.2) Blocked toiletAny replacement of water tanks, cylinders and central heating radiators; external pipes, taps and overflows no causing internal water damage.Any claim for leaking waste pipes.Security Damage or failure of external lock, door or window.Any claim for failure or damage to internal locks, doors, glass, external garages or outbuildings.Lost KeyLoss of the only available key to the property which cannot be replaced and normal access cannot be obtained,Loss of keys to internal doors, garages and outbuilding.Primary HeaingPrimary Heating system where the system has failed or broken down.Any claim involving boiler over 15 years old or over 238,000 btu net input(70 Kilowatt)Excludes replacement of water tanks, cylinder and central heating radiators.In my opinion, they are essential items to be followed, the scopes covers the most inaccurate activaties. They provide the effective preventions and are practically to use. 2.6 Benefit-needs analysisFrom the information above, Alexander earn money from the saving account maximum per year is 5,340 without tax paid, and he can get the loan maximum is 75 of the value of the house, that means 937,500 could be borrowed if he pays 3.29 initial interest rate. And the life level term protects their family members damage from death in value of 2,000,000.2.7 Effect on tax positionInterests from the saving account as ISA are tax-free benefits, and if they get benefits from the life level term, there are death duty and accession tax to pay for.2.8 Justification for selectionsThe products that I suggested are essential for Flynns which is in charge of a large lump sum. The best way for the family to manage money is saving, because Alexander may not prefer to have an investment as well as they should take care on the loss which may have bad influence with the childrens future. The mortgages that I offered are effective enough for their big cost, and the assurance guaranteeing their elementary benefits from death.3. Evaluation3.1 Criteria for EvaluationI make this evaluation to compare my report with my original plan which was made exactly for the clients. The original plan for this report is same as the action plan while the details to make this report is based on the resources from the schoolbook. The offered providers are chosen according to the essential information that I have ever learned, and the evaluation should be judged back to the schoolbook with the useful informations.3.2 Changes made during project compared to original action planThe methods that I used during the research period were mainly focused on the review of the schoolbook and the browse of the websites, this is due to the needs of my plan, and this two sources of information are covering all the basic materials and extend resources which offering the providers. Most of the processes were exactly following the timescales, because I've made a comparatively relaxed time for the preparation, especially in the first two steps which requires me to collect the background elements and the relevant products' information, that's very essential and easy to collect, due to it mainly depen