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Financial Planning Case Competition Process

Financial Planning Case Competition Process for Public Health


1) Read the case


2) Create a Profile

– Include the client(s) names, ages, dates of birth, employment etc.


3) Goals

– Identify the goals that are presented in the case, assess their level of priority and order the goals accordingly. The most important goals should be presented first.

Assignment Help with Questions & Answers

Order Goal Timeframe Amount


There may be times when the clients place different priority on the same goals. You will have to take into account the difference of opinions and you may want to present different options.


If you make any assumptions at this point make sure that they are clearly stated.


4) Current Financial Situation

– Assess the client’s current financial situation. You will likely receive the Net Worth statement and cash flow statements as a part of the case. You will need to review these statements and make comment.

– Identify any opportunities, issues or constraints that may exist in each of the 6 financial planning components

Component Opportunity Issues Constraints
Financial Management–          Net Worth-          Cash flow
Asset Management–          review current asset allocation-          rate of return achieved vs. desired return

–          risk tolerance and assets are consistent


Risk Management–          Review current insurance coverage-          Where are they exposed to risk
Tax Planning–          review tax information that is provided-          Identify areas where taxes can be reduced, income splitting opportunities etc.


Retirement Planning–          Assess current savings-          Are objectives realistic

–          What changes are required?

Estate Planning–          Look for current Wills and POAs-          Look for opportunities to minimize tax and probate (e.g., joint accounts and beneficiary designations)


If you make any assumptions at this point make sure that they are clearly stated.


5) Identify Appropriate Strategies

– Identify appropriate strategies to address the opportunities, issues and constraints that were identified for each of the 6 financial planning components.

– Provide the clients with the advantages and disadvantages of the strategy


If you make any assumptions at this point make sure that they are clearly stated.


6) Make Specific Recommendations

– Your recommendations will be based on the strategies that you identified for each of the clients goals and objectives. Make sure that you take into account both the quantitative and qualitative information provided in the case. Your recommendations must address both the numbers and the other details provided.

– Your recommendations should include a Gantt chart to illustrate the timelines

Here is a sample Gantt chart done in excel (non-financial planning related)


7) Clearly Identify Next Steps for both the Financial Planner and the Clients


8) Clearly identify the follow-up strategy for both the short- and long-term.


9) Ask the Judges if there are any questions.




6 Financial Planning Components:

(ROT – refers to the rule of thumb)


1) Financial Management:

Net Worth:

  • Evaluate their net worth position by looking at their assets versus liabilities
  • Measure their progress toward their financial goals
  • Identify how the assets are distributed amongst the different categories e.g., they are only invested in real estate or their liabilities are too high


Cash flow:

  • Evaluate their cash flow position by looking at whether or not they are operating in a surplus and deficit

Surplus/Deficit = Cash inflows – cash outflows

  • Highlight the sources of income
  • Identify the categories that are ‘leaky’ (too high) and could be reduced (ensure that these recommendations are in line with the clients attitudes and objectives)
  • Assess spending and savings patterns. Are they directing funds towards achieving their goals.




Debt ratio = Liabilities / Net worth


Current ratio = Liquid assets / current liabilities


Liquidity ratio = Liquid assets / Monthly expenses


Debt-payment ratio = Monthly credit payments / take-home pay


Savings ratio = Amount saved each month / Gross income (ROT: >10%)


Gross debt service (GDS) = Mortgage (P, I, Heat,  and Taxes) / Gross monthly income (ROT: < 32%)


Total debt service (TDS) = Mortgage (P, I, H and T) + payments on other o/s debt/ Gross monthly income (ROT < 40%)


Note: I don’t think that they would expect all of these ratios to be included. I would suggest choosing one or two that may be relevant to the client’s specific situation


Emergency Fund:

  • Determine if the client has an emergency fund and if it is adequate
  • ROT: 3 to 6 months of living expenses (sometimes this can also be based on 3 to 6 months of income)
  • The amount required is highly debatable. Ensure that you explain the specific amount that you have chosen based on the details of the client.

E.g., If they have stable jobs then maybe 3 months is sufficient and if they are paid on commission then 6 months might be required.

  • Recommend where that emergency fund should be invested e.g., TFSA



  • Evaluate the debt that the client has including balances, monthly payments, interest rates and attitudes toward debt
  • Typically, we would pay down the debt with the highest after-tax interest rate first
  • If there a couple of debts with small balances, you could recommend to pay these first (regardless of interest rate) so that the clients feel like they have been able to retire some of their debt quite quickly and then tackle the debt with the highest interest rates (You will need to consider the clients attitudes toward debt)
  • Calculations: TVM – Annuity payments




Asset Management:

  • Determine the client’s risk tolerance, time horizon, attitudes toward investments, experience and return expectations
  • Review investment holdings
  • What is their current asset allocation?
  • Determine an appropriate asset allocation (ROT: 100 – age of client = the % of equities in the portfolio; then factor in an adjustment, if necessary, based on the KYC information)
  • If the client’s current asset allocation is in line with their KYC information, than comment on that.
  • If the client’s current asset allocation is out of line with their KYC information, than recommend an appropriate asset allocation.
  • Consider the tax efficiency of their current investments e.g., non-registered, RRSP and TFSA
  • Ensure that you consider the tax consequence of any sale of assets when making recommendations. E.g., capital gains tax (50% inclusion rate)
  • TVM calculations may be required to determine required savings


Risk Management

  • Review client’s existing insurance coverage; including:
    • Life insurance (Type and amount of coverage)
    • Disability insurance (Amount of coverage)
    • Critical illness insurance (Amount of coverage)
    • Health and dental insurance
    • Home and auto (I doubt that this will be in the case other than the in the cash flow statement)
  • Identify if there are any financial obligations or risks that the client has not managed or has insufficient coverage (exposure to risk)
  • Consider the client’s risk management objectives and attitudes towards insurance
  • Consider any lifestyle and health issues that would impact your recommendations
  • Complete the Capital Needs Analysis (see next page)
  • Recommend an appropriate amount of insurance coverage for life and the type of life insurance. This should be based on their cash flow or what they can afford, their attitudes towards insurance and their goals.

Note: In most cases, term insurance is sufficient to cover the client’s immediate needs especially if they don’t have a large surplus of cash available

  • Recommend other types of insurance based on the client’s exposure to risk e.g., disability, CI, Health and dental etc.
  • Review beneficiaries on all policies (where possible)




Capital Needs Analysis:

Immediate Cash Needs                           

     Current cash assets, plus
     Life insurance proceeds, plus CPPdeath benefit ($2,500) less
     Final expenses
Cash Available (1) $ $

Debts and Lump-Sum Needs/Obligations

     Emergency fund
     Short term debts (LoC, Cr C, Loan)
     Education Fund
     Other long-term needs:
     Total Debts/Lump-Sum Needs
      +/- Cash Available (from above)
Capital Required to Pay Debts (2) $ $

Long Term Income Needs

     Minor Children Income Needs
     Dependant Income Needs – pre-retirement
     Dependant Income Needs – beyond retire’tNote: (Base these amounts on the eliminating     the items on the cash flow statement that would no longer be required based on the individual passingOr Assume a fixed percentage of their after tax income)

You could adjust their income needs for the survivor benefit (see next page)

     Capital Required to Provide Income (3) $ $


Total Life Insurance Required


_____2______   +    _______3___  – _____1_____   =   $                               





  • Current benefits replace approximately 25% of YMPE (average over last 5 years)







2009 – 2012 limit of $5,000

2013 -2014 limit of $5,500

2015 – 10,000

2016 – 2018 limit of $5,500

2019 – $6,000


Tax Planning:


Look for opportunities for tax sheltered income (TFSA, RESP, RRSP)

Considered non-registered portfolios for securities (capital gains only taxed when realized)

Look for deductions (RRSP, Childcare, Spousal support paid) and ensure they are being claimed in effective manner and, to extent possible, on client with highest MTR

Look for enhanced use of non-refundable tax credits

  • Combine all charitable donations for family on one return
  • Transfer of tuition from student (who cannot use it all) to spouse, parent or grandparent.
  • Claim medical expenses for optimal 12 month period

Consider tax implications of different types of investment income (interest/dividends and capital gains) — think of after tax rate of return.

Look for other tax shelters if client has risk to handle leverage

  • Rental property
  • Investment Loan

Look for income splitting opportunities (i.e  invest income of lower income spouse and let higher income spouse pay household expenses)

Look for deductions for self employed individuals

Look for non-taxable benefits for employees (or taxable benefits as it is still cheaper than buying benefit outright)

WATCH out for schemes/strategies that seem too good to be true —- usually are:

  • Watch for income attribution
  • Watch for Non-Arm’s Length Transfers (double taxation)







Retirement Planning

  • Review all sources of retirement income, including:
    • RRSPs (Limits in risk section)
    • TFSAs (only if the purpose is retirement savings)
    • Locked-in RRSPs
    • RRIFs
    • RPPs

Defined Benefit

  • Career Average = (% x career av. earn) x years
  • Final Average = (% x final av. Earnings) x years
  • Best Average = (% x Best av. Earnings) x years
  • Flat benefit = (yrs. Of service/base years) x benefit rate

Defined Contribution

  • What is the client putting in and what is the employer putting in? Is this maximized?
  • DPSPs
  • Group RRSPs
  • CPP /OAS
  • Consider the client’s retirement expenses. This can be done by looking at today’s expenses and eliminating the expenses that would no longer be a part of their cash flow after retirement (e.g., two cars, RRSP contributions etc.)
  • Consider the client’s retirement objectives and attitudes toward retirement. Ensure objectives are realistic.
  • Calculate the required amount of savings for retirement based on the client’s goals. (TVM Calculations)
  • Make recommendations to meet goals and objectives
  • Review current retirement savings strategies RRSP vs. TFSA
    • If MTR now is > MTR in retirement than RRSP
    • If MTR now is = MTR in retirement than RRSP or TFSA look at other factors
    • If MTR now is < MTR in retirement than TFSA
    • If in low income tax bracket usually TFSA is best
  • ROT: A reduction of expenses by $5,000/year results in a decrease of $100,000 in needs analysis



Estate planning

  • Review their existing estate planning documents. Do they have an up to date will and POAs
  • Look for ways to minimize probate taxes upon death by ensuring that there are beneficiary designations on all registered accounts and insurance products
  • Look for opportunities to make assets joint with right of survivorship, where it makes sense. Explain the benefits and risks.
  • Look for ways/situations where it is relevant to use a trust. Since the tax advantages of trusts have diminished, it is usually a control issue.
  • Assess client’s tax liability upon death. Determine if there is any need/desire to elect out of spousal rollover upon death of first spouse.

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