Structured products planner of the year - Money Management by pengxiang


									                                                                                                          case	study	2

Structured products
planner of the year

Anita	(58)	and	Jonathan	(60)	Barney	are	retired	and	live	in	Bristol.	They	have	two	children,	
Nathan	(25)	and	Amy	(18).				
Their	£800,000	home	is	mortgage	free.	They	aim	to	live	there	as	long	as	possible	rather	
                                                                                                                 £500  First	prize
than	downsize.	Since	selling	their	business	for	£750,000	in	June	2009	they	have	travelled	

extensively.	Their	current	annual	expenditure	is	£32,000	and	they	anticipate	spending	an	
extra	£10,000	pa	on	travel	if	possible	until	Anita	is	75.
Jonathan	and	Anita	receive	gross	annual	income	from	annuities	of	£55,000	and	£15,000	
respectively	rising	at	3%	pa.	Both	will	receive	full	State	pension.
Anita	is	very	cautious,	and	has	so	far	kept	her	savings	on	deposit	through	concern	about	                              Runner	up
potential	losses.	Jonathan	understands	stock	market	investing,	and	is	more	adventurous	
with	a	portfolio	of	funds	that	he	has	selected.	However,	he	acknowledges	his	lack	of	portfolio	
diversification	and	some	past	mistakes.	He	has	not	reviewed	his	portfolio	since	he	retired.             Your answers should be no more than
Their	wills	leave	all	assets	to	each	other	on	first	death	and	then	the	residual	estate	to	their	        2,500 words. Please ensure that you state
children.                                                                                               the number of words used for each case
Amy	starts	a	four	year	degree	course	in	September.	                                                     study entry.

current	assets:                                                                                         Full rules see p3

n	anita:	£100,000	in	a	12	months’	fixed	term	building	society	account	(gross	interest	3.2%	
pa),	maturing	in	July	2011.	In	2009	she	invested	in	offshore	fixed	term	deposits,	with	Allied	
Irish	Bank	(£150,000)	and	Anglo	Irish	Bank	(£250,000),	paying	gross	interest	of	4%	and	
4.5%	pa	respectively.	They	mature	in	July	2011.	
n Jonathan:	£120,000	on	deposit	(0.70%	gross	interest	pa).	He	has	an	investment	
portfolio	currently	valued	at	£830,000,	invested	in	the	following	funds:	21,350	units	in	
Henderson	Global	Technology	acquired	September	1999;	113,500	units	in	Invesco	Perpetual	
High	Income	acquired	September	2005;	96,300	units	in	Allianz	RMC	BRIC	Stars	acquired	
June	2008;	8,300	units	in	JP	Morgan	Natural	Resources	acquired	October	2005;	36,500	
units	in	Octopus	Absolute	UK	equity	acquired	February	2010.	No	dividends	were	taken	in	
2010/11.	He	also	has	an	ISA	with	£20,000	in	iShares	MSCI	Japan.	Jonathan	has	the	
opportunity	to	invest	£200,000	in	a	small	start	up	business,	which	he	is	keen	to	do.


Now	that	the	Barneys	are	retired	they	would	like	greater	certainty	over	their	investment	
returns.	It	is	important	for	them	to	preserve	the	value	of	their	assets	for	the	benefit	of	their	
Also,	having	financed	Nathan	through	university,	they	wish	to	do	the	same	for	Amy	costing	
£14,000	pa.	They	are	also	considering	gifting	£100,000	to	help	Nathan	purchase	an	

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The	Barneys	require	you	to	review	their	portfolio	to	check	if	their	goals	can	be	achieved	and	
what	restructuring	of	their	assets	may	be	required.	You	should	include	advice	on	
reinvestment	of	Anita’s	£400,000.	
You	should	also	advise	how	best	to	fund	their	additional	required	expenditure	for	their	
travels,	Amy’s	university	funding	and	a	gift	of	£100,000	to	Nathan	and	the	implications	of	
doing	so.	
In	addition	you	should	outline	in	bullet	point	form	any	other	areas	and	risks	that	you	think	
are	important.

                                                                                                    	                       financial	planner	of	the	year	2011		9

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