Question

You are now a certified financial planner who has recently graduated from college. Your parents are helping you to get started in your new business. Since your parents own a midsize company, they decide that IF you can come up with a good retirement plan for the 275 employees that they employ, they will hire you as the financial planner for the business.

They want to make sure that all the employees in the company have some medical benefits as well as income when they retire. Most of these people have worked for your parents since you were a little child and you call many of them "Aunt" or "Uncle”.

What are you going to suggest to your parents? Are 401K's the way to go? What about Roth IRA's? Perhaps some type of stock option? This is a tough question.

Most of the employees (200) are making $65,000 a year right now and have been employed with the company for at least 15 years.

What are you going to suggest? What do you think makes the better plan for these loyal and hardworking employees?

Make sure you cite your references in APA format and response has to be 250 words.

Answer 1

Financial planning may be of various types. If company have no rules and regulations to obey further in this regard, then its better to tink that all the eggs should not to be put in one basket , as the first step. Whatever be the corpus , the total allocation should have four or more segregations which will help the fund to churn in a very effective way . Those segregations of investments should be a mix of low risk--low return to high risk--high return investments. Segregations of the employees should depends on their ages i.e. if the employee is in their young ages that means he is having the risk risk capacity and as the ages increases it means risk taking ability has gone down , so the mix should be very sensitive in this regard to get the best returns. Govt bonds funds, fixed deposits , equity investments are the various options. Stock options are also very good if employees are serving the company for last 15 years. Apart from the investments part, all the employees should be covered under medical insurance and accidental insurance which helps the company in meeting expenses, if required in emergency.