Question

Financial Analysis:

John Fisher a married, 40-year-old business owner with two children (ages 16 and 10) comes to you with $1,000 a month to invest. This money is in excess of his contribution to his company pension plan.

A. Discuss the steps you would follow in advising John in setting up his retirement strategy.

B. Discuss the strategy you would use in choosing insurance and investment products for John and the products you would select assuming John’s risk tolerance to be of a moderate level and all family members to be in good health.

Answer 1

A. Before advising John with his retirement strategy I will evaluate what John already has and owns in terms of assets and investments. The next step would be to determine John’s financial goals and objectives. After John’s financial goals and objectives have been determined the risk profile of John and rate of return for different investment vehicles will be reviewed. This will help in determining and finding out which investment vehicles and mediums will best suit John in terms of optimization of risk and return. This will enable us to narrow down choices and finalize the best among the available choices. Once the investment has been made it will have to be reviewed periodically so as to ensure that it is effective and the risk profile is as per John’s requirements.

B. Here I will start by assessing John’s current insurance coverage and the amount of assets held by him. After this I will analyze his goals and then determine what John would like to achieve form the insurance products and investment products in which investments will be made.

John has a moderate risk tolerance level and this will be kept in mind when selecting the appropriate asset class and the types of insurance for him.