Planit:Calculating Your Client's Net Worth Exercise Answer Key

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Question One:

You have already done some investment planning with Walter and Alice Black, but now that they have seen your investment strategy, they are more comfortable with giving you the details of their investments. They tell you:

1. Their joint non-registered account has a current balance of $30,000 with:

  • $15,000 in Domtar (DTC); $5,000 of which is accrued investment returns
  • Recent investment of $10,000 in a Bond Portfolio
  • Recent investment of $5,000 in a Cash Balance

2. They also have another joint brokerage account with another firm holding:

  • $10,000 in Nortel Networks (Toronto) (NT); $5,000 was their original investment
  • $20,000 in a Canadian Tire Fund (CTC.A); $15,000 of capital was invested
  • $20,000 in a General Motors fund (GXM); $5,000 was return from the original investment
  • $50,000 in a Bond Portfolio; $10,000 of this is from accumulated gains.

3. The LIF you manage for Walter contains $150,000 of:

  • Royal Bank Stock (RY.NO.H) worth $25,000
  • Alarmforce Industries (AF) for $30,000
  • A bond portfolio with $60,000
  • AIC American Focused (AIC336) with $25,000
  • A cash balance of $10,000

4. Alice’s RRSP with you just contains the AGF Canadian Bond Fund (AGF933) worth $25,000 and a Bank of Nova Scotia fund (Toronto) (BNS) for $15,000.

5. Walter has an LRIF with another bank, with $50,000 in an Axiom Balanced Income Portfolio(ATL975)

6. Alice has a second RRSP with $25,000 of CIBC Renaissance Canadian Balance (ATL836)

7. Don’t forget to add the detailed information for their personal use account. They originally purchased their house for a price of $175,000.


Answer:

Use the navigation panel on the left to go directly to the Assets and Liabilities page.

1. Click on New Asset under the expanded Personal Use account to bring up the product selection screen.

Hint: To expand the accounts to enter detailed assets, click the “+” button on menu bar above the accounts.

2. Click on the Add Custom button.

3. Notice that the Allocation Breakdown is already appropriate for a Personal Use product.

4. Enter ‘Residence’ as the description and $400,000 into the Market Value field.

5. The ACB field for the residence should be the $175,000 they originally invested.

6. Click Save


To add the Blacks’ personal affects to the Personal Use Account:

1. Click on New Asset under the Personal Use account to bring up the product selection screen.

2. Use the Add Custom option.

3. Enter ‘Personal Affects’ as the description and $50,000 as the Market Value.

4. Click Save


To add the Joint Non-Registered Account:

  1. Click on Edit beside the account type Non-Registered Investments
  2. Enter in an appropriate Description. The Ownership should be 50% for Walter and 50% for Alice.
  3. Click on Save.
  4. Click on New Asset under the account to bring up the product selection screen.
  5. Search for Domtar as the Product Name and click Select beside the product with the code DTC.
  6. Enter an appropriate description and $15,000 into the Market Value field.
  7. Set the ACB field (Adjusted Cost Base) to $10,000 (the $15,000 of the current product value – the $5,000 of investment returns).
  8. Click Save
  9. Click on New Asset under the account to bring up the product selection screen.
  10. Search for a Bond as the Product Type
  11. Click Select for one of the products listed. (Keep in mind you will not allocate just any product to an account for a client in professional circumstances).
  12. Enter an appropriate description and $10,000 into the Market Value field.
  13. Click Save
  14. Click on New Asset under the account to bring up the product selection screen.
  15. Click on the Add Custom button.
  16. Set the Allocation Breakdown to 100 for Cash and 0 for all other asset classes.
  17. Enter an appropriate description and $5,000 into the Market Value field.
  18. Click Save


To add the non-managed Joint Brokerage Account:

  1. Click on New Account at the top of the screen.
  2. Enter in an appropriate Description. The Ownership should be 50% for Walter and 50% for Alice.
  3. The Account Type should be non-registered investments, with Regulatory Type set as ‘Open’.
  4. Click Save.
  5. Expand the new account by using the small “+” sign beside the account. Click on New Asset under the account to bring up the product selection screen.
  6. Search for Nortel Networks as the Product Name and Select beside the product with the code NT, and the Company with Toronto.
  7. Enter an appropriate description and $10,000 into the Market Value field.
  8. The ACB should be $5,000 to represent the original investment.
  9. Click Save
  10. Click on New Asset under the account to bring up the product selection screen.
  11. Search for a bond as the Product Type.
  12. Click Select for one of the products listed.
  13. Enter an appropriate description and $50,000 into the Market Value field.
  14. The ACB field can be set to $40,000: the balance of the $50,000 portfolio – the $10,000 in capital gains.
  15. Click Save
  16. Click on New Asset under the account to bring up the product selection screen.
  17. Search for CTC.A as the Product Code and Select the Canadian Tire product.
  18. Enter an appropriate description and $20,000 into the Market Value field.
  19. The ACB field can be set to $15,000
  20. Click Save
  21. Click on New Asset under the account to bring up the product selection screen.
  22. Search for General Mtrs as the Product Name and click Select beside the product with the code GXM.
  23. Enter an appropriate description and $20,000 into the Market Value field.
  24. The ACB should be $15,000 since $5,000 of the current value is investment gains on the capital.
  25. Click Save

To add Walter’s managed LIF Account:

1. Click on Edit beside the account already named Walter’s Registered Investments

2. Change the Regulatory Type to LIF, and enter in an appropriate Description.

3. Set the Ownership to 100% for Walter. Check the Managed checkbox.

4. Click on Save.

5. Click on New Asset under the account to bring up the product selection screen.

6. Search for Alarmforce as the Product Name and click Select beside the product with the code AF

7. Enter an appropriate description and $30,000 into the Market Value field.

8. The ACB field can be left at the default since we were not given further information.

9. Click Save

10. Click on New Asset under the account to bring up the product selection screen.

11. Search for RY.NO.H as the Product Code and Select the product.

12. Enter an appropriate description and $25,000 into the Market Value field.

13. Click Save

14. Click on New Asset under the account to bring up the product selection screen.

15. Search for AIC336 as the Product Code and Select the product.

16. Enter an appropriate description and $25,000 into the Market Value field.

17. Click Save

18. Click on New Asset under the account again.

19. Search for a bond as the Product Type

20. Click Select for one of the products listed.

21. Enter an appropriate description and $60,000 into the Market Value field.

22. Click Save

23. Click on New Asset under the account.

24. Click on the Add Custom button.

25. Set the Allocation Breakdown to 100 for Cash and 0 for all other asset classes.

26. Enter an appropriate description and $10,000 into the Market Value field.

27. Click Save


To add Alice’s managed RRSP Account:

1. Click on Edit beside the account already named Alice’s Registered Investments

2. Ensure the Regulatory Type is RRSP, and enter an appropriate Description.

3. Set the Ownership to 100% for Alice. Check the Managed checkbox.

4. Click on Save.

5. Click on New Asset under the account to bring up the product selection screen.

6. Search for AGF933 as the Product Code and click Select beside the product.

7. Enter an appropriate description and $25,000 into the Market Value field.

8. Click Save

9. Search for Bank of Nova Scotia as the Product Name and click Select beside the product with the code BNS and the Company Name with Toronto.

10. Enter an appropriate description and $15,000 into the Market Value field.

11. Click Save


To add Walter’s non-managed LRIF Account, held with another bank:

1. Click on New Account at the top of the screen.

2. Enter in an appropriate Description. The Ownership should be 100% for Walter.

3. The Account Type should be registered investments, with LRIF as the Regulatory Type.

4. The Managed checkbox should remain blank.

5. Click on Save.

6. Expand the new account using the “+” sign.

7. Click on New Asset under the account to bring up the product selection screen.

8. Search for ATL975 as the Product Code and Select the product.

9. Enter an appropriate description and $50,000 into the Market Value field.

10. Click Save


To add Alice’s non-managed RRSP Account, held with another bank:

1. Click on New Account at the top of the screen.

2. Enter in an appropriate Description. The Ownership should be 100% for Alice.

3. The Account Type should be registered investments, with RRSP as the Regulatory Type.

4. The Managed checkbox should remain unchecked.

5. Click on Save.

6. Expand the new account with the small “+” sign, then click on New Asset under the account to bring up the product selection screen.

7. Search for ATL836 as the Product Code and click Select beside the returned product.

8. Enter an appropriate description and $25,000 into the Market Value field.

9. Click Save


In the bottom right hand of the Summary Assets & Liabilities screen, the total Net Worth for Walter and Alice Black is calculated.

Click on the View button beside the Net Worth Statement in order to generate this PDF report.

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