Finance -Mike Michaels & Jane Jones - Financial Suitability - Report Writing Assignment Help

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Finance Report Writing Assignment Help

Case:  Mike Michaels is a 35-year-old accountant working in the planning department of the local council (OCCUPATIONAL PENSION, more likely Final Salary Scheme, contribution based).  His annual salary is £42,000. (3 times this, £126,000 death in service benefit) He has been a member of the local government pension scheme since he started working there at age 21. (14 years in, 25 years left, = 39 years’ service upon retirement, possibly 60^th scheme = 39/60 x final salary)He has no plans to change his employment at the moment. In his spare time Mike loves all sports, these include, rugby, tennis and squash.  Last year he broke his ankle playing rugby and was off work for 4 months (It wasn’t the first time he had suffered a hobby related injury).  Fortunately, the local government pay their employees 6 months full pay, followed by 6 months half pay if they are off work due to an accident/long term sickness, Mike therefore received his full pay whilst he was off work, but it did make him wonder how he would have managed financially if he had been off work for much longer. Sickness & accident policy (sporting activities need to be declared) He is engaged to Jane Jones, a trainee nurse at the local hospital. Jane is 30 and is a member of the NHS pension scheme. (NHS Occupational Pension Scheme, again Final Salary Contribution based)  She earns £24,000 per annum. (3 times this, £72,000 death in service benefit)  She will become fully qualified in two years’ time. (Money will increase, so will death in service benefit, Pension & possibly disposable income, review this then) Mike lives in a 3-bed roomed semi-detached house in Newport.  He recently had the house valued as he was thinking of selling it and buying a new property with Jane, although he has since changed his mind as Jane thinks it would be better if she moved in with him. The house was valued at £175,000. (Add Jane onto mortgage, or possibly re-mortgage onto a fixed rate, 5 years? With Brexit soon upon us), will it be big enough if they have children? Mike has a repayment (capital and interest) mortgage with the Principality Building Society and a balance outstanding of £135,000. (£40,000 of equity, or 77% loan to value for re-mortgages)  The remaining term is 18 years. (Finishes when he is 53 & Jane is 47)  His monthly mortgage repayment is £505 per month. (Saving if re-mortgaged? Costs of survey & conveyancing?) He hasn’t got any existing life assurance policies; these were cancelled when he split from a previous partner, Sharon. He now relies on his death-in-service benefit through his pension at work which he believes could be used to pay off the mortgage in the event of his death. (If they are going to live together a joint mortgage protection life assurance may be better?) Mike realises that he spends virtually all of his disposable income on his housing costs and his sporting interests, he would like to be more conscientious with his income and realises that he needs to save more on a monthly basis. (Needs a budget planner, Essential, day to day & non-essential) Jane rents a studio apartment in Cardiff bay the property is well maintained by her landlord. (Save on rent if move in, though Council tax will increase, spare cash)  Jane has a life assurance policy with Aviva – a level term assurance which includes critical illness cover.  The policy is for £100,000. (Keep it or new joint? Is critical illness needed, more expense?) Jane would also feel happier if Mike were to take out some sort of life assurance to cover his mortgage, she feels this is only fair as she has cover on her life, and she wouldn’t want to end up paying his mortgage, or even worse, be ‘out on the street’ should something happen to him! (Jointly as mentioned above) They plan to get married in 3 years’ time. (Need to save for this)  They have existing savings which between them amount to £25,000. (Is it diversified enough to reduce risk and maximise returns?) Mike has £3,000 in a cash ISA and £6,000 in a stock and shares ISA (Tax Free) with Santander (invested in the 2016/17 tax year).  Jane has £5,000 invested in premium bonds  (Chance of winning?) and £8,000 in a reward saver with the Post Office and keeps a balance of approximately £3,000 in her current account. (Advise on savings) They very rarely need access to their savings, only withdrawing money for one off expenses, and the last one being a new washing machine for Jane, which cost her £500. They have also both stated that they are happy with their existing pension schemes through work (Occupational Schemes, leave alone) and they do not wish to be advised on retirement planning just yet, this is too far away to even consider at the moment. They anticipate a greater disposable income over the coming months and would like to save £450 each per month for 3 years (for their wedding). (Savings here, tied up as opposed to instant access, ISA Tax free??)During your first meeting with Mike and Jane you have ascertained that Mike has quite an adventurous attitude towards risk, however Jane considers herself to be very cautious. (RISK PYRAMID & Risks Associated) They are interested in advice on the following:-

• A policy for Mike that would enable him to continue paying his mortgage in the event of an accident or long term illness (particularly due to some of his previous sporting injuries). Mike wants to make sure that any policy you advise will fit with his existing employment provision. (RESEARCH & ADVICE NEEDED)
• A life assurance policy to cover Mike’s mortgage. They know there are lots of different types of life assurance and they want your advice on which type of cover would be most appropriate. Mike is concerned that this may be expensive. (Research & Advice Needed)
• A recommendation for a suitable savings or investment product to enable them to pay for their wedding in 3 years’ time. They are also happy to review their existing savings. They want advice on the most tax efficient options and require a degree of instant access to their money. They understand that there are better alternatives to ISA’s, Maybe, but risk and tax avoidance?? (Research & Advice Needed)
• They want to be sure that their assets would pass to one another in the event of either of them dying. (A WILL)

Task:

• You must submit a suitability report which contains your recommendations to Mike and Jane along with the rationale behind the recommendations you have made (maximum 2,000 words)
• You should include any appendices which provide evidence of real-life financial products that you have researched (including website details, date accessed and screen prints). Please use Harvard referencing for all research.
• The report should be written as if from a financial advisor to a client. It must clearly address the main priorities identified by the client.

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