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PMFA Case Study. Team 1 Zach Ball Connor Cloetingh Zhentao Zhong Alex Stansberry. Client Profile Basic Information Goals Risk Tolerance Vehicle Allocation Current Vehicle Allocation Current Asset Portfolio Future Vehicle Allocation Future Asset Allocation Within: Joint Trust

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pmfa case study

PMFA Case Study

Team 1

Zach Ball

Connor Cloetingh

Zhentao Zhong

Alex Stansberry

slide2

Client Profile

    • Basic Information
    • Goals
    • Risk Tolerance
  • Vehicle Allocation
    • Current Vehicle Allocation
      • Current Asset Portfolio
    • Future Vehicle Allocation
  • Future Asset Allocation
    • Within:
      • Joint Trust
      • SEP IRA
      • Roth IRA
basic information
Basic Information
  • Age 30
  • Business Owners
  • Salary $125,000 each
  • Current Investments: $1,000,000
john and jane spartan
John and Jane Spartan

Client Information Profile

goals
Goals

$5,818,397

  • Retire: Age 60
  • Life expectancy:95 Years
    • (35 years after retirement)
  • Maintain Standard of Living
    • Live off $150,000 per year
  • Obtain Financial Independence
  • Possess Financial Peace of Mind
risk tolerance
Risk Tolerance

Overall Moderate Risk:

  • Claim to be “aggressive” investors
  • Contradictions on some issues.
    • Cannot tolerate more than 10% losses
    • Can tolerate short – term declines to maintain purchasing power
    • Unwilling to wait several years to recover from losses due to extended down market.
income tax considerations
Income Tax Considerations
  • Based off 2012 Tax Rates
  • Married Filling Separately
  • Net Total Income $177,930 at a Rate of 28.83%
  • John able to contribute $22,930 in SEP IRA per year
  • Jane able to contribute $5,000 in Roth IRA per year
  • Tax rates likely to increase in future
  • Contributions likely to decrease
slide10

Asset allocation

Current Allocation Plan

Average Return 4.5% Downside Risk -0.5%

current portfolio analysis
Current Portfolio Analysis
  • Past performance does not guarantee future performance
  • Portfolio is not well diversified
slide12

Future Overall Strategic Allocation Plan

Average Return 7.72%

Downside Risk -12.02%

joint trust
Joint Trust

Current Allocation

Future Allocation

  • $800,000

$800,000

ira john sep ira
IRA- John SEP IRA

Current Allocation

Future Allocation

  • $100,000

$100,000

With yearly contributions of $22,930

roth ira jane
Roth IRA- Jane

Current Allocation

Future Allocation

  • $100,000

$100,000

With yearly contributions of $5,000 per year

possible investments ideas
Possible Investments Ideas
  • Equities
    • Money Managers
    • Mutual Funds
    • ETFs
  • Fixed Investments
    • Bond Mutual Funds
    • U.S Treasury Notes
  • Commodities
    • Gold
equity investment recommendations
Equity Investment Recommendations
  • Money Managers
    • Confluence Increasing Dividend Equity Account
      • 2.8% Annual Dividend Returns
      • 15.3% Standard Deviation
      • Higher Growth Option
    • Vireo Alpha Sector Alphadex Equity Plus
      • Invests in ETFs
      • Primary Focus on Protecting Downside Losses
      • Has ability to re-allocate assets to all cash in down markets
      • 9.82% Standard Deviation
recommendations cont
Recommendations Cont.
  • Mutual Funds
    • Davis New York Venture Fund (NYVTX)
      • Focus on Long Term Capital Appreciation
      • Invests in Large Cap Equities
      • Average Rate of Return 11.47%
      • 20.3% Standard Deviation
    • Calamos Growth and Income Fund (CVTRX)
      • Invested 45% in Stocks 35% in Bonds
      • 9.46% Return
      • 13.19% Standard Deviation
fixed income commodities
Fixed Income/Commodities
  • PIMCO Total Return Bond Fund (PTTRX)
    • Great diversification to protect against large downside swings
    • 8.34% Return Since Inception
    • Best in the Business Management Team
  • SPDR Gold Trust ETF
    • Diversifies the Portfolio
    • Safe Investment Tends to go up when Equities go down
summary
Summary

Reallocated funds within each account

  • Diversified Portfolio
  • Protected against serious losses

Will need to evaluate funds periodically to remain current

  • Reallocate funds in the future to meet needs
other considerations
Other Considerations
  • Life and Disability Insurance
    • What if something tragic were to happen?
  • Possibility of business failing
    • What if the internet company goes out of business?
  • What if they live longer than expected?
    • Will they have enough money to live 1 more year? 5 more years?