Capstone: financial plan and presentation | CPE | Boston University

Scope of the engagement: The Kemps have asked you to develop a comprehensive financial plan that will help them meet their goals and help them improve their financial position. The Kemps want you to prepare a statement of net worth and review their various insurance policies for proper coverage. They expressed an interest in acquiring long-term care insurance and they want you to recommend the type of policy they should purchase. They also want you to review their investment portfolio and recommend an asset allocation strategy that maximizes investment performance, is diversified, and matches their risk tolerance level. The couple is very concerned about how the additional income from the installment agreement will be taxed. They would like you invest the 20% down payment and future installment payments. Their only liquidity need is $40,000 for a new car (this is net of any trade-in). Their current marginal tax bracket is at the highest federal rate. In addition, the couple has asked you to review and recommend estate and gift tax minimization strategies. Lastly, the Kemps are not concerned about saving for retirement. However, they would like you to evaluate how they can grow the 401(k) tax-free and distribute the maximum amount left in the account to their two children upon death. Goals: John and Mary have worked with you to prioritize their goals in the following order. 1) Reduce any estate and gift tax liability and insure all estate planning documents are in order. 2) Review insurance contracts and discuss the implications of purchasing a long-term care policy. 3) Establish a college funding plan for the three grandchildren. 4) Reduce personal income taxes. 5) Based on their risk tolerance level, recommend a diversified portfolio that meets the Kemp’s investment needs and expectations.

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