Financial Plan for Joe and Jill Boggs Produced on 1 August 2017 PLAN STATUS: DRAFT

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Eustace Morrison
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1 FINANCIAL PLAN

2 Financial Plan for Joe and Jill Boggs Produced on 1 August 2017 PLAN STATUS: DRAFT

3 CONTENTS Introduction 1 Scenarios 2 Timeline and Goals 3 Income and Expenditure Statement 4 Family Balance Sheet 5 Cash Flow 6 Liquid Assets 7 Net Worth 8 Tax Forecast 9 Inheritance Tax 10 Capacity for Loss 11 Assumptions

4 1. INTRODUCTION Voyant Adviser is a sophisticated lifetime cash flow modelling tool for creating, managing and protecting wealth. We can help you analyse your current situation, define your objectives for the future and develop and implement a Financial Plan that makes best use of available resources. The software provides a realistic simulation of your lifetime wealth with extraordinary detail. We can stress test any scenario from early retirement to premature death or critical illness. We can show the return required from your liquid assets to achieve positive lifetime cash flow and perform complex tax calculations to identify opportunities for tax planning. Voyant Adviser is a key part of our Money Management Service but it can be used for clients that want advice without an ongoing service. What s included in the Money Management Service?! FINANCIAL ADVICE We provide ongoing financial advice by using Voyant technology and lifetime cash-flow modelling techniques to build and develop your Financial Plan. Your Plan should be reviewed every 12 months or sooner if the need arises. " ADVISER SUPPORT You can ask for information about your investments and pensions at any time. We can also provide information to third parties such as your accountant or solicitor. # FINANCIAL UPDATES We typically monitor the performance and suitability of your investments every quarter and provide a written update every 6 months. This includes a Portfolio Report and/or Investment Tracker Report. We also keep you informed about any relevant news and legislative changes. $ SECURE CLIENT PORTAL Important documents will be uploaded to your Secure Client Portal for safe storage. You will receive an whenever a new document is added to your password protected Portal. % INVESTMENT MAINTENANCE We may rebalance your investments and advise you to replace any retail investment funds we identify as unsuitable. This service applies to pensions, ISAs, investment bonds and wrap accounts. It does not apply to cash, property investments, structured products, discretionary portfolios and specialist investments such as venture capital trusts

5 2. SCENARIOS Voyant can model any number of scenarios to identify opportunities and risks. BASE PLAN No changes to your current situation Liquid assets in 2027 [52/52] 80,228 Annual return required from liquid assets 6.47% FINANCIAL PLAN Additional life insurance Liquid assets in 2027 [52/52] 65,273 Annual return required from liquid assets 7.25% + JOE DIES IN 2018 Liquid assets in 2027 [52] 0 Annul return required from liquid assets 43.09% + JILL DIES IN 2018 Liquid assets in 2027 [52] 34,221 Annual return required from liquid assets 23.07% The FINANCIAL PLAN is set out in this report

6 3. TIMELINE AND GOALS Voyant is based on the calendar year so the Plan Start date is 1 January ' 42/42 Plan Start 2017 ( 42/42 Spend 36,929 a year (RPI linked) 2017 ( 42/42 Take out additional life insurance: 238,281 (Joe) P 2017 ( 42/42 Take out additional life insurance: 152,344 (Jill) P 2020 ( 45/45 Spend 6,000 on new bathroom 2023 ( 48/48 Spend 9,000 on new kitchen 2025 ( 50/50 Spend 4,000 on special holiday 2040 ( 65/65 Retire 2070 ) 95/95 Plan End ** People tend to spend less as they get older excluding long-term care costs P A Financial Planning Report or letter of recommendation will be provided if we are recommending a new product or service and you decide to activate your Financial Plan

7 4. INCOME AND EXPENDITURE STATEMENT Joe Jill Family Total Incomes Local Shop 28,000 Local School 8,500 Withdrawal from Any Bank 1,509 Total Incomes 28,000 8,500 1,509 38,009 Expenses Basic Expenses ABC Mortgage Protection 435 New Term Assurance 360 New Term Assurance 285 Any Mortgage - payment 11,586 Food 5,100 Council Tax 1,500 Utilities 1,080 Water Rates 300 Sky TV 900 Broadband 420 Vehicle 5,250 Social 2,400 Holiday 2,000 Total ,971 31,616 Tax Expenses Income Tax on Local Shop 3,132 National Insurance Tax on Local Shop 2,380 National Insurance Tax on Local School 40 Total 5, ,553 Other Expenses Contribution to Local Shop Pension 840 Total Total Expenses 6, ,971 38,

8 5. FAMILY BALANCE SHEET Joe Jill Jointly Owned Total ASSETS Investments Any ISA 23,254 Total 23,254 23,254 Savings Any Bank 15,000 Total 15,000 15,000 Pensions Local Shop Pension 2,542 Total 2,542 2,542 Property Home 180,000 Total 180, ,000 Total Assets 25, , ,796 LIABILITIES Any Mortgage 145,000 Total 145, ,000 NET WORTH 25,796 50,000 75,

6. CASH FLOW Income and liquidated capital assets are shown in blue. The black line shows total expenses. Any red in the Plan shows a shortfall, i.e. you have run out of liquid assets.

9 6. CASH FLOW Income and liquidated capital assets are shown in blue. The black line shows total expenses. Any red in the Plan shows a shortfall, i.e. you have run out of liquid assets. Surplus income is allocated to your Plan cash account. Key Points and Highlights You will run out of liquid assets in 2063 [88/88]. The annual return required to maintain positive cash flow is 7.25%. This is high for the level of risk you are taking with your investments and pensions. Whilst spending more on life insurance is putting a further squeeze on your finances, the financial implications of premature death are severe. The value of your property in 2055 [80/80] is forecast to be 471,523. You were not keen on the idea of downsizing but equity release could be used to provide extra liquidity. You will have no disposable income for saving until You need to speak to your employers about income protection. How long will you be paid if you are unable to work due to accident or disability? We can update your Financial Plan in due course. You may need additional insurance but that will be difficult to pay for without reducing non-essential expenses. Your Financial Plan is achievable but there are later life pressures that we need to address

7. LIQUID ASSETS Non-liquid assets include property and other assets that cannot be turned into cash quickly. They are shown in grey. Liquid assets are cash, savings, investments and pensions.

10 7. LIQUID ASSETS Non-liquid assets include property and other assets that cannot be turned into cash quickly. They are shown in grey. Liquid assets are cash, savings, investments and pensions. Key Points and Highlights The standard linear growth rate for your investments and pensions is 6.96% a year. This is based on the mean performance (50 th percentile) of a Balanced Portfolio. If we reduce the growth rate by 1% (44 th percentile), your liquid assets will run out in 2053 [78/78] instead of 2062 [87/87]. There is an 80% you will run out of money according to the Monte Carlo simulation

11 8. NET WORTH Net worth is the total value of your liquid and illiquid assets such as property, investments and pensions less liabilities. Net worth does not include the sums assured for life insurance or critical illness cover. Key Points and Highlights Base Plan in 2055 [80/80] 708,287 Financial Plan in 2055 [80/80] 607,045 + Joe dies in ,523 + Jill dies in ,523 The extra life insurance costs have reduced your Net Worth by 101,242 in 2055 [80/80] but premature death could cost you 237,

9. TAX FORECAST Voyant is an extremely sophisticated lifetime tax calculator that covers Income Tax; National Insurance; Capital Gains Tax; Inheritance Tax; Dividend Tax; Lifetime Allowance Charge.

12 9. TAX FORECAST Voyant is an extremely sophisticated lifetime tax calculator that covers Income Tax; National Insurance; Capital Gains Tax; Inheritance Tax; Dividend Tax; Lifetime Allowance Charge. The latest tax tables and rules are built into the software and projected forward using standard assumptions. The tax forecast helps us to identify potential problems and plan accordingly. Key Points and Highlights You are paying Income Tax and National Insurance (Additional Taxes). These can be reduced by making pension contributions in 2026 when you have disposable income. If you want to engage in tax planning now, you must reduce your non-essential expenditure to generate disposable income

13 10. INHERITANCE TAX Voyant calculates your IHT liability every year based on the taxable value of your estate. It takes account of all exemptions and reliefs including IHT taper relief on transfers. Key Points and Highlights Your Base Plan and Financial Plan do not show an Inheritance Tax liability

11. CAPACITY FOR LOSS The linear investment growth rate in your Financial Plan is 6.96% per year. This is based on the mean return from a Balanced Portfolio.

14 11. CAPACITY FOR LOSS The linear investment growth rate in your Financial Plan is 6.96% per year. This is based on the mean return from a Balanced Portfolio. The actual growth rate required to maintain positive cash flow is 7.25%. There are several tests we can run to simulate the effect of different investment outcomes. MONTE CARLO SIMULATION Monte Carlo tests the vulnerability of your Plan to market forces by running 100 iterations with different growth rates. The probability of Plan success is 20%. Plan success is defined as not running out of liquid assets

15 MARKET LOSS EVENT A market crash starting in 2020 and lasting four years is applied to your Timeline with returns of -20% in year 1, -10% in year 2, 5% in year 3 and 10% in year 4. The simulation is run to test sequential risk. Sequential risk is the notion of making withdrawals from an investment portfolio during or immediately after periods of poor performance. Liquid Assets Market Loss Event 35,753 41,528 73,289 Financial Plan 6.96% 53,753 65, ,545 HISTORICAL PERFORMANCE The investment profile has changed from 100% Balanced Portfolio to 100% UK Equity and the performance of the FTSE All Share Index between 1963 and 2016 is applied to your Timeline. You would never invest 100% in one market but results show the effect of non-linear growth and market volatility. Liquid Assets Historical Performance 69,923 75, ,167 Financial Plan 6.96% 53,753 65, ,545 The level of risk you are taking is responsible and I regard your Capacity for Loss as LOW MEDIUM HIGH. There are some potential weaknesses towards the end of your Financial Plan but sequential risk is unlikely to cause a problem whilst you are working

16 12. ASSUMPTIONS The assumptions used to generate your Financial Plan are set out below. They are based on current market conditions and conservative expectations. They are reviewed at the start of every Plan and used consistently across multiple scenarios unless the goal of the scenario is to test alternative assumptions. For example, a higher or lower Investment Growth Rate. Your Financial Plan is based on Medium default assumptions unless otherwise stated. Default Assumptions Low Medium High Inflation Rate Savings Growth Rate Investment Growth Rate (taxable) Investment Growth Rate (tax-free) Property Growth / Depreciation Rate National Average Earnings Annuity Rate Consumer Prices Index CPI Retail Prices Index RPI year Gilt Rate Tax Table Assumptions Nil Rate Band Escalation Main Residence Nil Rate Band Escalation

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