hard · Certified Financial Planner Investment Planning
During a meeting, Mrs. Yuen reveals she is 'terrified' of losing principal, while Mr. Yuen wants to 'swing for the fences' with the buffered note to make up for a late start in saving. No IPS exists to reconcile these views.
What is the planner's first step under Step 2 of the Financial Planning Process?
- Implement the broker's recommendation as it fulfills the Duty to Follow Client Instructions for Mr. Yuen.
- Use a Monte Carlo simulation to show Mrs. Yuen that higher risk is necessary for their success probability. In this case
- Facilitate a discussion to identify, select, and prioritize their goals and reconcile their differing risk tolerances.
- Draft an IPS that splits the difference by allocating 50% to the buffered note and 50% to cash.
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