2017 FINANCIAL PLANNING CHALLENGE

PHASE 1 WRITTEN CASE

JUDGE’S GUIDE

PRESENTING ORGANIZATIONS:

AMERIPRISE FINANCIAL, FOUNDING CORPORATE PARTNER CFP BOARD OF STANDARDS

FINANCIAL PLANNING ASSOCIATION

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TABLE OF CONTENTS

Introduction ...............................................................................................................3 Rules & Guidelines .....................................................................................................4 Components to be Judged .........................................................................................5 Judging Process ..........................................................................................................6 Confidentiality Agreement .........................................................................................7 Feedback Form ..........................................................................................................8 Case Study & Supplement Attached Scoring Rubric Attached

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INTRODUCTION Purpose of the Judge’s Guide The purpose of this Financial Planning Challenge Phase 1 Judge’s Guide is to provide a basic understanding for Phase 1 judges as they prepare to review and evaluate the cases that have been submitted for the 2017 Financial Planning Challenge (FPC).

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RULES AND GUIDELINES Please be aware of the following as you review the submitted plans: A page length requirement was not provided to the teams. Requirements for the Phase 1 Written Case Competition included:

1. Teams must assess the client’s needs and prepare a comprehensive financial plan for the clients based on the data provided.

2. Teams must prepare a client welcome letter and a one page summary outline. 3. The written plan should include the following:

Assess the clients’ current financial condition.

Identify the major Strengths, Weaknesses, Opportunities, and Threats. (SWOT)

Identify and disclose specific assumptions used in analyzing each goal and need.

Discuss the resolution of any conflicts between the clients’ goals and needs, and the ability to satisfy them due to financial or other constraints.

Identify the extent to which other professionals are required to implement any recommendations.

The financial plans should have been created as if the students were presenting them to the client. Note: the judges that will be reviewing the submitted cases will be playing the role of the client. Thus the judges will want to ensure that the documentation is such that the client can understand what is being presented.

NO commercially available financial planning software will be allowed for any phase of the competition.

Teams may use spreadsheet, word processor, and presentation software applications, as well as calculators for the Case Competition phase at school. The Internet may be used to research and reference information, as long as it is not used for calculating and documenting any analysis for the Case Competition.

Teams should show their work. Teams will not get the maximum number of points available

if the judges cannot see how the calculations were performed. Include printouts of spreadsheets or other forms of calculations that fit within the rules and guidelines. Assumptions should be provided.

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COMPONENTS TO BE JUDGED Calculations

Used data from the Client Profile correctly Analysis of retirement, education, survivor and disability related to current and future

needs Used correct mathematical formulas Determined correct outputs

Financial Planning Concepts

Welcome Letter Analysis of retirement Comprehensive analysis of the Personal Financial Planning Subject areas Acknowledged and fully integrated the financial goals throughout the subject areas of

the financial plan Showed the use of Regulatory Compliance (For example: Consult your tax advisor) Explanation of Asset Allocation advice

Quality of the Advice

Recommendations are both “reasonable and actionable” Advice is Clear, Objective, Specific, and Thorough

Appearance / Creativity

Overall appearance and effectiveness of PowerPoint presentation summary Neatness (Text, Calculations, Graphs and Charts) Spelling, Grammar, and Punctuation

Written feedback is strongly encouraged and will be provided to teams.

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JUDGING PROCESS WRITTEN CASE PHASE 1

Participate in the Phase 1 Judge Orientation (date to be determined) Complete and return confidentiality agreement to DDowning@OneFPA.org Complete a grading rubric for each team Provide constructive feedback relative to each category as well as general feedback for each

team using the form found in this guide or by entering your feedback on the phase 1 judging overview.

Track each team’s total score on the phase 1 judging overview and send to DDowning@OneFPA.org by July 25

Send the grading rubrics and any additional feedback to DDowning@OneFPA.org by Aug 1 (electronically is preferred).

Additional Information: The “official” answers are based on the judge’s calculations and perspectives. Judges are

encouraged to confer to ensure that calculations are similar. Each case is scored by different reviewers representing each presenting organization.

Please see scoring rubric. Average points from all Phase 1 written reviews will be ranked and combined with the

scores received in Phases 2 and 3.

Each phase of the competition will be assigned a point value which will be weighted as follows: Phase 1 – 30% Phase 2 – 50% Phase 3 – 20%

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2017 Financial Planning Challenge

Reviewer: ________________________________________ Date: ________________________________________

Confidentiality Agreement

I agree to hold in trust and confidence for the Financial Planning Challenge, all of the financial planning cases that I have received or will receive in connection with the 2017 Financial Planning Challenge. I will use the cases only to participate in the written review process, and will not disclose or show the cases, to anyone who is not a participant in the review. I also agree (a) not to copy the cases, (b) to return my original copies and score sheets to the designated representative at the conclusion of the session, and (c) not to discuss the results of the written case competition with anyone not participating in the review. Accepted and Agreed to By: Signature: ___________________________ Title: _______________________________

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Provide general comments for each case submission below (or by entering your feedback on the phase 1 judging overview) and return electronically to DDowning@OneFPA.org.

FEEDBACK

TEAM: Financial Planning Concepts: Financial Planning Calculations: Quality of Advice:

Please do not write on the back of this page.

Financial Planning Challenge

PHASE 2: CASE STUDY PRESENTATION

SCORING RUBRIC

TEAM: _________________________________________________ JUDGE: ____________________________________________________

4

Exemplar

3

Good

2

Fair

1

Poor

TEAM SCORE

Accessibility of

language

The language used was intuitive to any

client

Most of the language used was intuitive to

any client

Some of the language used contained jargon

that was unintuitive to

most clients

Most of the language used contained jargon

that was unintuitive to

most clients

_________ (out of 4)

Connection between

recommendations and

clients’

priorities/objectives

The team provided a plan that directly

related to the clients’

priorities and objectives

The team provided a plan that mostly

related to the clients’

priorities and objectives

The team provided a plan that only

remotely related to the

clients’ priorities and objectives

The team provided a plan that did not relate

to the clients’

priorities and objectives

_________ (out of 4)

Rationale/Recommenda

tions

The relevant pros and

cons of the recommendations

were articulated

Most of the relevant

pros and cons of the recommendations

were articulated

Few of the relevant

pros and cons of the recommendations

were articulated

None of the relevant

pros and cons of the recommendations

were articulated

_________ (out of 4)

Additional issues for

the client to consider

The team articulated a

variety of relevant

issues for the client to consider

The team articulated a

few relevant issues for

the client to consider

The team omitted

several relevant items

for the client to consider

The team failed to

mention any items that

were relevant for the client to consider

_________ (out of 4)

Alternative courses for

the client to consider

The team articulated

several possible

alternative courses of action for the client to

consider

The team articulated

some possible

alternative courses of action for the client to

consider

The team articulated

few potential

alternative courses of action for the client to

consider.

The team did not

articulate any

alternative courses of action for the client to

consider

_________ (out of 4)

Identification of the

role of other

professionals in

helping the client reach

their goals

The team identified all relevant professionals

who could enable the

client to reach his goals

The team identified some relevant

professionals who

could enable the client to reach his goals

The team identified few relevant

professionals who

could enable the client to reach his/her goals

The team failed to identify any relevant

professionals who

could enable the client to reach his goals

_________ (out of 4)

Details of advice for

further action

The details of the advice were

constructed to provide

the client and other

professionals a clear

path for subsequent

action

Most of the details of the advice were

constructed to provide

the client and other

professionals a clear

path for subsequent

action

Some of the details of the advice were

constructed to provide

the client and other

professionals a clear

path for subsequent

action

None of the details of the advice were

constructed to provide

the client and other

professionals a clear

path for subsequent

action

_________ (out of 4)

Specificity of dollar

amounts/percentages

in plan

The team provided all

of the relevant,

specific amounts in each phase of the plan

presentation

The team provided

most of the relevant,

specific amounts in each phase of the plan

presentation

The team omitted

several relevant,

specific dollar amounts/percentages

in several phases of

the presentation

There was little/no

specificity with regard

to dollar amounts/percentages

in the presentation

_________ (out of 4)

Clarity of Presentation The team provided a

presentation designed

exclusively to help the client better

understand the

recommendations and subsequent courses of

action

The team provided a

presentation that, in

most cases, helped the client better

understand the

recommendations and subsequent courses of

action

There was little focus

on helping the client

better understand the recommendations/subs

equent courses of

action

There was no focus on

helping the client

better understand the recommendations/subs

equent courses of

action

_________ (out of 4)

Creativity The team used lots of creativity in either the

visual or oral

presentation to help bring the

recommendation’s to

life

The team used some creativity in either the

visual or oral

presentation to help bring the

recommendations to

life.

The team used little creativity in the visual

and oral presentation

to help bring the recommendations to

life.

The team demonstrated no

creativity in the visual

or oral presentation to help bring the

recommendation’s to

life.

_________ (out of 4)

Professionalism/Organi

zation

The team appeared

professional both in

appearance as well as in organization

The team appeared

professional most of

the time in appearance as well as in

organization

The team was

inconsistent with

regard to professionalism and/or

organization

The team was

unprofessional in

appearance and/or unorganized a

significant portion of

the time

_________ (out of 4)

TOTAL: ________(out of 44)

Judge’s Signature: ______________________________________________________________________________________________________________

P R E S E N T I N G O R G A N I Z A T I O N S

Financial Planning Challenge 2017 Phase 1: Written Financial Planning Case Study

The first phase of the competition consists of a financial planning case study for two hypothetical clients.

Students must assess the client’s needs and prepare a comprehensive financial plan for the clients based

on the data provided. Teams must prepare a client welcome letter and a one page summary outline. Use

of commercially available financial planning software is prohibited.

Submission:

Student teams must submit their comprehensive financial plan and other required documents by May 26, 2017 to Destre Downing, FPA, Learning and Development, at DDowning@OneFPA.org

Each team should submit their financial plan and other required documents as one (1) compiled document in PDF format with the school and team member names on the title page.

Important: Please do not include your school’s name or team member names on any pages other than your title page.

The written plan should include the following:

Assess the clients’ current financial condition. Identify the major Strengths, Weaknesses, Opportunities, and Threats. (SWOT) Identify and disclose specific assumptions used in analyzing each goal and need. Discuss the resolution of any conflicts between the clients’ goals and needs, and the ability to

satisfy them due to financial or other constraints. Identify the extent to which other professionals are required to implement any

recommendations.

Judging:

A panel of judges representing each presenting organization will review the submissions based on a standardized grading rubric to maintain consistency.

Each submission will be assigned a point value based on the quality of their submission. The phase 1 score has a weighted score of 30%.

Financial Planning Challenge 2017

Case Study: Jake and Amy Edwards

Introduction: Below is a case study of a fictional family named Edwards. They represent a high net worth family nearing

retirement. They are a high complexity case, requiring advanced advice in estate planning, concentrated

positions and tax planning. The case study will allow you to practice analyzing a complex situation.

Jake and Amy Edwards have entered your office to have a second pair of eyes to look over their financial

situation. They currently live in Bloomington, MN and plan on staying there through their retirement.

Begin by reading their background and start making note of the Edwards’ goals and concerns. Then review

their financial information on pages 3 and 4.

Background: Names:

Jake Edwards (60), Vice President, Deluxe Corp

Amy Edwards (58), Sr. Vice President, Hormel

Children: April Dunlevy (34), daughter Spouse: Adam (33) Chelsie Hubert (32), daughter Spouse: Mark (34) Ryan Edwards (30), son Spouse: Julie (30)

Grandchildren: Ashley (8) and Megan (5) Parents: April and Adam Steven (3) Parents: Chelsie and Mark

Primary goals and objectives

Jake and Amy are nearing retirement and would like to figure out how much is needed for retirement and

long term care. Also they would like to verify they are properly investing their funds to place them in the

best taxation situation possible. Jake and Amy would like to retire in seven years when Amy reaches 65.

With retirement quickly approaching Jake and Amy both have a risk tolerance of “moderate”. They are ok

with losing a little bit of money here and there in the stock market but want to make sure they have a net

profit and not a net loss over the coming years.

Jake and Amy are concerned with a potentially large estate, and the estate tax liability that may present

itself upon their death.

Other goals

Jake and Amy have a history of donating to United Way. They want to leave funds upon their

death.

Jake and Amy would like to make sure money and assets are efficiently distributed to their

children and grandchildren. They are open to a discussion about making gifts during their lifetime.

The Edwards believe education is important and would like to fund their grandchildren’s education.

The Edwards are also concerned that they are not a burden on their children in case of a

prolonged illness and want to ensure they leave something to their children.

Insurance information

Jake and Amy both have universal life insurance and have group disability insurance plans with their

employers. Jake and Amy both purchased a $1,000,000 Universal Life insurance 10 years ago. Jake has

a premium of $5,486.04 per year while Amy has a premium of $3,421.56. Jake and Amy both plan on

stop making payments around age 65.

The Edwards currently have no long term care insurance.

Income tax information

The Edwards’ are in the highest federal tax bracket at 39.6%, and 8.97% marginal state income tax

brackets. Their annual property tax on their home is $19,000.

Estate information

Jake and Amy have simple wills created for the distribution of their assets. They also have a durable

power of attorney for healthcare proxy directive executed naming each other as health care representative

and their oldest child, April, as alternate. Jake and Amy have their accounts all under their own names,

but both Jake and Amy are beneficiaries of the entire Edwards’ accounts.

Statement of Financial position Jake and Amy Edwards (As of December 31, 2016) ASSETS

Checking Account: Jake1 $ 40,000 Checking Account: Amy2 $ 20,000 Savings Account: Jake 1 $ 100,000 Savings Account: Amy2 $ 120,000

Total Cash and Cash Equivalents $ 280,000

Rollover IRA: Jake $ 450,000 Rollover IRA: Amy $ 480,000 Deluxe 401(k): Jake $ 900,000

-Deluxe Matching Account $ 40,000 Hormel 401(K): Amy $ 1,200,000 -Hormel Matching Acct. $ 100,000 Hormel Cash Balance pension plan $ 350,000 Brokerage Account: $ 2,000,000 -see appendix for detail 529: Jake3 $ 112,000 Deferred compensation: Jake2 $ 85,000

Total Invested Assets $ 5,717,000

Personal Residence: $ 1,200,000 Lake Home: $ 500,000 Boat: $ 80,000 Jet Ski: $ 5,000 Vehicle: Jake $ 70,000 Vehicle: Amy $ 50,000 Furniture and household items: $ 600,000

Total Personal Use Assets $ 2,505,000

Total Assets $ 8,502,000 LIABILITIES Auto Loan: David $ 18,240 @ 4.5%

Total Liabilities $ 18,240

Net Worth $ 8,483,760

1Jake is beneficiary 2Amy is beneficiary 3 Education beneficiaries are the grandchildren

Statement of Cash Flows Jake and Amy Edwards (As of December 31, 2016)

Income - Annual Taxes, Expenses and Savings - Annual Jake $ 160,000 salary $ 30,000 bonus Taxes – Federal $ 187,918 Amy $ 360,000 salary Taxes – Social Security $ 14,694 $ 130,000 bonus Taxes – Medicare $ 12,875 $ 160,000 deferred comp Taxes – State $ 39,648 Investment income $ 68,000 Capital gain Total - Taxes $ 255,135 $ 32,000 ordinary div $ 25,000 qualified dividend Auto Payments $ 9,600

Insurance – Auto $ 3,260 Insurance – Home $ 7,000 Insurance – UL - Amy $ 3,421 Insurance – UL – Jake $ 5,486 Insurance – LTD $ 2,000 Benefits $ 7,687

Utilities $ 25,000 Medical $ 8,000 Donation to United Way $ 12,000 Property tax (primary) $ 19,000 Property tax (lake home) $ 7,000

Food – Groceries $ 8,000 Food – Restaurants $ 12,000 Auto – Fuel/Repairs $ 5,400 Clothing $ 10,000 Entertainment $ 16,000 Hobbies $ 7,000 Travel $ 37,020 Gifts $ 17,608 Charity $ 46,971 Misc. - Lifestyle $ 11,500 Total - Expenses $ 281,365 Savings Jake – 401(k) $ 24,000 Amy – 401(k) $ 24,000 JT – Brokerage $ 83,500 Deferred Comp $ 160,000 Capital gain/div reinvests $ 125,000 Total - Savings $ 303,500 Total - Taxes, Expenses, Total - Income $ 840,000 Savings $ 840,000

Brokerage account statement

Symbol/CUSIP Investment description Cost basis Current market value

Cash $100,000.00 $100,000.00

stocks

GOOG Google, Inc. $50,000.00 $500,000.00

MMM 3M Co 10,000.00 18000.00

AMZN Amazon.com Inc 5000.00 8000.00

AMGN Amgen Inc 18,000.00 20000.00

BRK-B Berkshire Hathaway Inc DEL 20,000.00 23000.00

CAT Caterpillar Inc 30,000.00 29000.00

CSCO Cisco Systems Inc 26,000.00 26000.00

C Citigroup Inc 6000.00 7000.00

COST Costco wholesale corp 11,000.00 13000.00

FB Facebook Inc 42,000.00 50000.00

GILD Gilead Sciences Inc 25,000.00 21000.00

GS Goldman Sachs Group Inc 22,000.00 22000.00

JNJ Johnson & Johnson 19,000.00 20000.00

NKE Nike Inc 12,000.00 21000.00

ORCL Oracle Corp 20,000.00 17000.00

PG Procter Gamble co 13,000.00 11000.00

QCOM Qualcomm Inc 10,000.00 10000.00

V Visa Inc 15,000.00 20,000.00

ETFs

TIP iShares TIPS Bond ETF 160,000.00 153,000.00

IVV iShares S&P 500 ETF 155,000.00 152,000.00

IWR iShares Russell Mid-Cap ETF 125,000.00 132,000.00

PFF iShares US Pref Stock ETF 168,000.00 135,000.00

XLB Select Sector SPDR materials ETF 48,000.00 25,000.00

VXUS Vanguard Total International ETF 35,000.00 47,000.00

Fixed income

172967FW6 Citigroup 4.45% 01/10/2017 $48,000.00 $50,000.00

19416QEA4 Colgate-Palmolive 1.95% 02/01/2023 22,000.00 24,000.00

25179MAH6 Devon Energy Corp 6.3% 01/15/2019 53,000.00 53,000.00

278642AE3 Ebay Inc 2.6% 07/15/2022 48,000.00 49,000.00

38141EA58 Goldman Sachs 5.375% 03/15/2020 53,000.00 55,000.00

565849AF3 Marathon Oil Corp 5.9% 03/15/2018 51,000.00 52,000.00

72447XAC1 Pitney Bowes 5.75% 09/15/2017 24,000.00 25,000.00

871503AJ7 Symantec Corp 2.75% 06/15/2017 33,000.00 35,000.00

883556AX0 Thermo Fisher Sci 2.75% 03/01/2021 26,000.00 27,000.00

912828N22 US Treasury 1.25% 12/15/2018 45,000.00 50,000.00

$1,548,000.00 $2,000,000.00