American Research and Management

Today I had a meeting with Mr. Eric Strand at American Research and Management to discuss the financial planning portfolio that I will be working on over the next few weeks. We came up with a made up family called the “Smiths”. I have been given some background on their ages, occupation and annual salary. We decided they had two children in which they hope to save some money aside for their college fund. The Smiths don’t currently have a will and the value of their home is $550,000 with a $150,000 mortgage. They have a risk tolerance of 70% equity/ 30% fixed income for investments, in which they currently have some Mutual funds between AAA and CCC. Their retirement plan comprises of a 401(k) in Mr. Smiths name that’s currently 80% vested with a 2% match for employees. His current 401(k) balance is $100,000 and earns 7% annually.  The Smiths would like to retire when they are 65 and feel they will need $2,000,000 to do so.  They anticipate living until they are 85 years old.  Both Lisa and Peter’s parents are still alive.  Lisa’s parents are in their early 80’s with no major health concerns.  Peter’s parents are in their late 70’s and in excellent health; Peter’s grandparents lived into their late 80’s and early 90’s.

My task is to create a portfolio, which incorporates all aspects of their children’s needs, estate, investments, retirement and everyday budgeting. I will try to put answers to these questions:

1.    Do they need Life Insurance, if so How much and what Kind?

2.    How do they save for their children’s educations?

3.    How do they save for retirement?

a.    IRA?

b.    401K

c.    How Much?

4.    What type of estate planning document do the Smiths need?

5.    How should they invest?

6.    Budgeting

7.    Should they refinance their mortgage?

 As the Smith’s are a made up family, I have somewhat flexibility in deciding how much to put aside for needs and change aspects to ensure they are in the green at the end of the financial year. The Smiths portfolio is really to give me a taster of what producing a real one would be like, while discovering new terminology such as a UTMA, 529 plan, health proxies and FILO scores.  The great things about creating this portfolio is it incorporates all aspects that I’ve learnt from my other two experiences at Ameriprise Financial and Coldwell Banker in terms of investments and mortgages.