Planit:Incorporating Security Selection into Your Implementation Strategy Exercise Answer Key

Robert and Sally Barber have asked you to take their investment strategy to the next level by allocating their target portfolio with real products. Use the Security Selection screen to allocate new products to the detailed accounts. Allocate {{{cash product}}} of a cash product to Sally's RRSP account and keep {{{other money}}} of the {{{account 2))) product already in the {{{account 1}}}.

Answer:

Click on Security Selection under the Implementation section. You will notice the detailed information you created on the Assets and Liabilities screen is pre-populated.

TIP: a handy tool to help you complete the allocation is on the third section of the Security Selection screen. The first two columns identify the current and target asset allocation in terms of percentages and dollar amounts. The third column shows how much of each asset class you have actually recommended so far using the Security Selection screen, in dollars and percent. And finally, the last column shows the variance between the recommended portfolio and the target portfolio (red being a deficit, and black being even or a surplus). So by looking at this last column, you can quickly see how much of each asset class you have yet to allocate.

Start by allocating a cash product to Sally’s RRSP account.

1. Click on the Select button under the Choose Fund column, beside Sally’s Template:Account 1} account.
2. In the drop-down menu for Asset Class choose the Cash option.
3. Click Search.
4. Click the Select button beside any product.
5. In the detailed Asset Information screen, simply enter an appropriate amount, as shown in the third section of the Security Selection screen. For example, enter Template:Cash product} in the Market Value field for this product. Click Save to return to the Security Selection screen.

You’ll notice also that in the second section of the Security Selection screen, the new Cash product has been included for {{{Female name}}}’s RRSP investments at a value of {{{cash product}}}. All of the clients’ previous products currently have $0 allocated in the recommended account allocations. If we wanted to edit the $5000 of cash we just put into Sally’s RRSP account, we could do so in this screen, by editing the Recommended {{{Money}}} Amount for the appropriate row and then clicking the Update button below.

Originally, {{{male name}}} had $20,000 of Canadian Mutual Fund Equities in his RRSP account, and we are going to recommend that he keep $3,000 of these equities in place. To do this, scroll down to the second section, and under the Canadian Equities section, for Robert’s RRSP account, set the Recommended $ Amount to {{{other money}}}. Click Update.

Since the asset classes and target portfolios can vary wildly from the core and corporate websites, there are many ways to properly complete the security selection process. To properly complete the allocation so that it matches the target portfolio, repeat the steps above, allocating different products to different accounts. Remember to refer to the last section of the screen, in order to gauge how much more or less is required of an asset class. Also, the first section of the screen will show you how much more or less must be allocated within each account.

After completing the “Security Selection” you may return Home where your data summary will be displayed.

Solve for the following problem:

Robert and Sally Barber have asked you to take their investment strategy to the next level by allocating their target portfolio with real products. Use the Security Selection screen to allocate new products to the detailed accounts. Allocate {{{cash product}}} of a cash product to Sally's general investment account and keep {{{other money}}} of the {{{account 2))) product already in the {{{account 1}}}.