End-Term Examination

(PGP 2019 – 21), Term - VI

Course Name: Wealth Management

Name:
Regn. No.:
Total marks: 40 Time: 90 minutes

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Note Attempt all Questions. Marks are given in parenthesis

Question 1 (15 Marks)

Mr. Chuni Lal is a managing director for the investment firm GROW & ASPIRE, which is
located in the Asia-Pacific region. Lal is 43 years old, is married, and has two children, ages 12
and 10. He and his family reside in a home that they own in Singapore. In a conversation with
his wealth manager, Lal states that he wishes to fund the undergraduate tuition for his children to
study abroad. Lal expects the tuition cost to be approximately £40,000 per year. Lal also wishes
to fund his children’s weddings at some point in the future. Because the education costs will
occur in the next 5–10 years, Mr. Lal states that they are his top priority.

 Lal anticipates working until age 65 and does not know how much he and his wife will need to
fund their retirement lifestyle. He mentions his desire to purchase a flat in London and let (rent)
it as part of their retirement plan. The flat would cost approximately £1.5 million. Lal is also
concerned about the future health care expenses of his wife’s parents and to what degree he and
his wife may need to support them financially.

a)  Identify Lal’s planned goals.

b)  Identify Lal’s unplanned goals.

c)  Discuss the issue of goal quantification for Lal.

d)  Discuss the issue of goal prioritization for Lal.

Ans 1a)

Ans 1b)
Ans 1c)

Ans 1d)

Question 2 (10 Marks)

Jatin Sahni, a private wealth manager, recently received feedback from clients and colleagues as
part of his performance review. Clients commented favorably on how Jatin coordinates with
external tax and legal professionals and on how well he listens to and understands his clients’
needs. Colleagues remarked on Jatins broad knowledge of traditional and alternative asset
classes and his ability to obtain new client engagements.

Describe which technical and soft skills Jatin demonstrated as part of his performance review.

Ans 2:

Question 3 (15 Marks)

Harika is a private wealth manager. After a successful introductory meeting with Nishant
Chopra, she is meeting again with this new client to plan a wealth management strategy. Hari
seeks additional personal information from Chopra.

Harika learns that Chopra is 45 years old and is currently employed as an attorney. Chopra has a
number of specific financial goals that he wishes to achieve in the future but has no particular
return objective for his portfolio. Because he has been investing for 20 years, Chopra is
comfortable with moderate levels of market volatility. His employment provides for his current
expenses, so Chopra’s liquidity requirements are minimal. Chopra prefers to have his
environmental and social concerns reflected in his investment choices.

a) Discuss additional personal information that Harika should gather from Chopra in order
to properly advise this new client.

Harika then focuses on Chopra’s financial goals:

 Chopra wants to fund university expenses for his three children, with the first payment
starting in 10 years. Chopra does not know what to expect in terms of college costs.
 Chopra plans to retire at age 62 and expects to need $80,000 per year to fund his
retirement lifestyle. He is concerned that an increasing level of medical expenses for
himself and his wife may reduce his financial assets.
 Chopra expects to purchase an apartment building in three years and plans to use the
rental income from this investment property to help fund his retirement needs.
 Chopra’s wife enjoys donating to philanthropic causes. She currently donates $10,000 per
year, but by the time Chopra retires, she hopes to increase this amount to $30,000 per
year.
 Chopra collects antique furniture and budgets $15,000 per year for additions to his
collection. He mentions that this year’s antique purchase will be his next large expense
and currently has the highest priority of all his goals.
 b) Discuss the issues relating to Chopra’s:

i. goal quantification.

ii. goal prioritization.

Harika continues the discussion with Chopra in order to evaluate his degree of risk tolerance
associated with each of the following individual goals:

Chopra considers retirement a long-term goal and is willing to endure a 10%

Retirement: drop in expected retirement spending. However, he is very concerned with
having sufficient funds to cover medical expenses.
Chopra sees the investment property as a source of stable income, so it is very
Investment
important to him to purchase the building. He realizes that maintenance and
property:
repair expenses will be necessary, and he also considers those very important.
Chopra’s wife strongly influences him to fund her philanthropic causes, and
he wants to maintain some level of annual contribution. Chopra believes that
Philanthropy:
his wife would be willing to maintain her $10,000 per year contributions and
not increase that amount.
Antique
Chopra is willing to reduce or eliminate his spending on antique furniture.
furniture:

c) Determine Chopra’s degree of risk tolerance associated with each of the following
individual goals. Justify each response.

Determine Chopra’s degree of risk tolerance associated with each of the following
individual goals. Justify each response.
Goal Degree of Risk Tolerance Justification
Lower
Retirement  
Higher
Lower
Investment Property  
Higher
Lower
Philanthropy  
Higher
Lower
Antique Furniture  
Higher

Ans 3a)

Ans 3b)

Ans 3c)