Case 1 – Wealth Management – Practice, Prof. Stucke

Case 1 – Wealth Management – Practice, Prof. Stucke
Current Model (?)
Cash $ 350,000
Municipal Bonds 3,500,000
Government Bonds
Other Credit 1,500,000
US Equities 5,800,000
International Equities 800,000
Emerging Markets 350,000
Gold 5,000
Bitcoin 15,000
Private Real Estate
(residences)
3,500,000
Private Equity 25,000
Total $15,845,000
• Married couple, husband is 63 years old wife is 53 years old
• Three children, ages 17, 19, 23, the youngest finishing private high school, the others in
private college or grad school
• One grandchild, age 2, parent is unmarried
• U.S. residents
• Husband has advanced diabetes and can no longer work
• Two residences, one in St. Louis and one in Florida
REQUIREMENTS
I.
Cover page
II.
Statement of Purpose/Intent
III.
Table of Contents
IV.
Theory/Concept Map (how the pieces fit together)
V.
Assumptions and Information, including Statement of Net Worth
VI.
Statement of Goals and Objectives, including Estate Considerations and Emergency Funds
VII.
Insurance and Risk Management Considerations
VIII. Retirement Plan
IX.
Philanthropic Objectives and Plan
X.
Estate Plan
XI.
Budget and Cash Flow Plan, including Debt Management (if any)
XII.
Asset Allocation and Investment Considerations/Concepts
XIII. Key Next Steps
XIV. Team Bios
Overall:
 Cash for emergency: 2500000 now, but we should tell the client
 Hope no life style change after retiring; want to learn indigo pottery in Japan; spend some time near daughter wherever she will be
 Risk tolerance: Can afford 2-3 million lose, not dip below 12 million

Retirement:
 Plan to retire at 50 (what to do from now till 50)
 Retirement living expense:
1. Keep Hong Kong Cricket Club membership, same living expense/charity
2. Buy a house in Phuket: 750000 to 1million(nice location)
3. Still paying rental fee or not?

Expense(before retirement):
 Rental fee: 5500/month
 Help rent fee of wife’s parents in France: 1500-2000/month
 Charity: 25000-50000/yr
 Hong Kong Cricket Club membership: 600 bucks/month
 Living expense: 200000/year

Insurance:
 Rental insurance: 2000/yr

Children Education:
 2 yrs of High school in Hong Kong: 28000-30000/yr
 4 yrs of College in the US: 80000-90000/yr

Income:
 Income: husband – 500k/yr(continue work for 7 yrs), wife – 250k/yr(6 yrs)
 Pension:80% to 200k of income-160k/yr/person?or total
 Investment profit

Gift, Additional Philanthropy and Heritage:
 Pay for grandkids school(big goals/optional)
 Down payment of child’s apartment
 Leave WashU 500000
 Leave Singapore zoo 50000(daughter loves it when she was young)
 Leave 50000 to wife’s day school in France
 Husband’s Brother’s son: 150k for college
 Wife’s 5 niece and nephews: 50k each
 The rest is all for daughter

Feedback:
1. Start conversation with how they’re doing or their family or leading into the holiday weekend
2. Ask risk tolerance by using dollars but not percent cause people understand how much better
3. 100-age is how many percentages equity you should keep; Asset allocation is relevant to age
4. Don’t mislead people about risk
5. Sit tight because the asset quality is there and you’re protected structurally
6. Have a heart to heart with your client
7. Quarterly meeting with clients usually, but more frequently in difficult years