Business Wealth Portfolio Plan
Order Instructions
Please use scenario 1 below and attachment to create a business wealth management memo.
The client has asked for your firm’s advice on ways to anticipate and mitigate risks, provide retirement benefits for employees, comply with tax laws in ways that
are most beneficial to the company’s long-term bottom line, and plan for business succession. (In order to determine relevant laws and regulations, assume the
business is headquartered in the state/location where you currently reside or in a location in which you might be interested in doing business in the future. Be
sure to state clearly in your memo what location you are using.)
To prepare for an initial conversation with the client, the portfolio manager has asked you to prepare a brief, high-level memo laying out issues or concerns
related to business wealth management in broad terms.
Specifically, the following critical elements must be addressed:
I. Executive Summary. Briefly restate the client’s request, as well as how you went about answering it. What additional information might you need to
gather from the client to better assess the business’s needs?
II. Business Risk. How might the client mitigate common business risks? Support your response with specific examples that illustrate both the risk and
potential ways to address it. Your suggestions do not need to be exhaustive, but should give an idea of the different types of financial risk a start-up
might face, including elements of the financial statements that the client should pay particularly close attention to as they review annual performance.
III. Retirement Benefits. What are the key considerations in planning retirement benefits for the business? What options might the client consider and
why? Be sure to discuss the pros and cons of each option and how those would (or would not) change as the business grows. Your suggestions do not
need to be exhaustive, but should serve as a starting point for discussion with the client.
IV. Tax Implications. How might the client incorporate tax considerations in planning? Give examples of different federal or state tax rules that might apply
and how these might impact the company’s opportunity for growth. Because the purpose of the memo is to start a conversation with the client, your
response does not need to be exhaustive but should be illustrative of different types of tax management strategies the business might consider.
V. Business Succession Planning. Suggest business succession options for the client to consider. Justify your response, highlighting the strengths and
weaknesses of the different options and how the client might go about determining which option best aligns with the needs.
Scenario
Profile 1
Jane and Richard, a married couple in their mid- to upper-forties, have been building the $1.5 million they inherited about five years ago. Jane and Richard are
very optimistic about the current market and want their portfolio to meet or exceed the stock market expectation of the last year. They have asked your firm to
suggest a personal wealth portfolio commensurate to the market and risk level. The clients are open to various investment options to achieve their goals and
expectations. In addition, the clients want to maximize wealth including offshore investment options or other strategies to minimize U.S. tax consequences.
Their goal is to have sufficient funds available to maintain their current lifestyle of $200,000 per year (adjusting for inflation and not including pension or social
security benefits) when they retire in 10 years. They also want to provide for their 14-year-old daughter Mary’s upkeep and schooling should something happen
to them.
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