Planit:CPF Accounts Case Study

From Planipedia

This case study is specific to financial planning in Singapore, so has fixed values rather than indices by country. For a similar case study applicable to other case studies, please see Planit:Assets and Liabilities Case Study or Planit:Calculating Your Client's Net Worth Case Study.

Example Problem One:

You are the financial planner for Alvin and Grace Cheng, who are retired and would like to have a clearer understanding of their net worth.

Alvin’s CPF-SA account has $60,000 invested in Singapore equity, $40,000 in a unit trust, and $70,000 in an Uob Unifund (Product Code 432589). His Ordinary Account has a balance of $212,000 with 20% in cash, 15% in fixed income, 30% in global equity, and 35% in Singapore Equity. His Medisave account has a value of $150,000.

Enter these detailed holdings and determine the net worth of Alvin's CPF accounts.

Solution using Detailed Assets:

To add Alvin’s CPF-SA Investments:

1. Click on Edit beside the account Alvin CPF.
2. Under Regulatory Types choose CPFIS - SA and set the Ownership to 100% for Alvin Cheng.
3. Change the Description to be more specific.
4. Click on Save.

1. Click on New Asset under the new account to bring up the product selection screen.
2. Click the Add Custom button.
3. Set the Allocation Breakdown to 100 for Singapore Equity.
4. Enter an appropriate description and $60,000 into the Market Value field.
5. Click Save

1. To add the unit trust, click New Asset again under the client’s CPF-SA Account
2. Set the Product Type to Unit Trust and click search.
3. Select any product that is returned.

Note: This does not mean when your client tells you they have invested money in a unit trust you should choose any product within that range. You should either enter a generic product or obtain more information. But for the purposes of this exercise we are just learning how to add certain product types.

1. Enter a description and change the Market Value to $40,000.
2. Click Save
3. To add the Uob Unifund, click New Asset under his CPF-SA account.
4. In the Description field, enter the product code 432589. Change the radio button on the right to Product Code.
5. Only one result should be returned after clicking Search. Select this product.
6. Enter an appropriate description and $70,000 as the Market Value.
7. Click Save

To add Alvin’s CPF-OA Investments:

1. Click on New Account.

1. Under Account Types choose CPFIS and for Regulatory Types choose CPFIS - OA

Note: It does not matter if the client has a CPFIS or regular CPF account. The only difference is who chooses the products allocated to the account, but this is irrelevant for entering the assets.

1. Set the Ownership to 100% for Alvin Cheng.
2. Change the Description to be specific to the Ordinary Account.
3. Click on Save.
4. Click on New Asset under the new account to bring up the product selection screen.
5. Click the Add Custom button.

1. Set the Allocation Breakdown to 20 for Cash, 15 for Fixed Income, 30 for Global Equity and 35 for Singapore Equity. The rest should remain at 0.
2. Enter an appropriate description and $212,000 into the Market Value field.
3. Click Save

To add Alvin’s Medisave Account:

1. Click on New Account.

1. Under Account Types choose Personal Use

Note: Even though a Medisave account isn’t exactly Personal Use, we do not want the Medisave being included as an asset for any life goals analysis, and it is not a standard life or disability insurance policy. By showing it as a Personal Use account, you as the advisor can monitor its value as a separate type of asset, without it incorrectly affecting your analysis.

1. Set the Ownership to 100% for Alvin Cheng.
2. Change the Description to be specific to the Medisave Account.
3. Click on Save.
4. At the summary level Assets and Liabilities screen, enter $150,000 beside the new Medisave Account. Click Save at the bottom of the summary Assets and Liabilities screen.