PMFA Case Study Team 1 Zach Ball Connor Cloetingh Zhentao Zhong Alex Stansberry

 Client Profile  Basic Information  Goals  Risk Tolerance  Vehicle Allocation  Current Vehicle Allocation  Current Asset Portfolio  Future Vehicle Allocation  Future Asset Allocation  Within:  Joint Trust  SEP IRA  Roth IRA

Basic Information Age 30 Business Owners Salary $125,000 each Current Investments: $1,000,000

Client Information Profile Retirement AgeIdeal John60 Jane60 Annual Retirement Spending $150,000 Annual Savings SEP-IRA$22,930 Roth IRA$5,000 Estate Goal$0

Goals Retire: Age 60 Life expectancy:95 Years ▫(35 years after retirement) Maintain Standard of Living ▫Live off $150,000 per year Obtain Financial Independence Possess Financial Peace of Mind $5,818,397

Risk Tolerance Overall Moderate Risk: Claim to be “aggressive” investors Contradictions on some issues. ▫Cannot tolerate more than 10% losses ▫Can tolerate short – term declines to maintain purchasing power ▫Unwilling to wait several years to recover from losses due to extended down market.

Income Tax Considerations Based off 2012 Tax Rates Married Filling Separately Net Total Income $177,930 at a Rate of 28.83% John able to contribute $22,930 in SEP IRA per year Jane able to contribute $5,000 in Roth IRA per year Tax rates likely to increase in future Contributions likely to decrease

Current Vehicle Allocation

Strategic Investment Vehicle Allocation

Current Allocation Plan Average Return 4.5% Downside Risk -0.5% Asset allocation

Past performance does not guarantee future performance Portfolio is not well diversified

Future Overall Strategic Allocation Plan Average Return 7.72% Downside Risk %

VehicleDepositsGrowth WithdrawalsDeposit Cap IRATax- deductable Tax-freeTaxed$5,000 Roth IRAAfter-taxTax-free $5,000 Joint trustAfter-taxTaxedTax- FreeN/A SEP-IRATax- deductable Tax-freeTaxed$50,000 Investment Vehicle Analysis

Joint Trust Current AllocationFuture Allocation $800,000

IRA- JohnSEP IRA Current AllocationFuture Allocation $100,000 With yearly contributions of $22,930

Roth IRA- Jane Current AllocationFuture Allocation $100,000 With yearly contributions of $5,000 per year

Possible Investments Ideas Equities ▫Money Managers ▫Mutual Funds ▫ETFs Fixed Investments ▫Bond Mutual Funds ▫U.S Treasury Notes Commodities ▫Gold

Equity Investment Recommendations Money Managers ▫Confluence Increasing Dividend Equity Account  2.8% Annual Dividend Returns  15.3% Standard Deviation  Higher Growth Option ▫ Vireo Alpha Sector Alphadex Equity Plus  Invests in ETFs  Primary Focus on Protecting Downside Losses  Has ability to re-allocate assets to all cash in down markets  9.82% Standard Deviation

Recommendations Cont. Mutual Funds ▫Davis New York Venture Fund (NYVTX)  Focus on Long Term Capital Appreciation  Invests in Large Cap Equities  Average Rate of Return 11.47%  20.3% Standard Deviation ▫ Calamos Growth and Income Fund (CVTRX)  Invested 45% in Stocks 35% in Bonds  9.46% Return  13.19% Standard Deviation

Fixed Income/Commodities PIMCO Total Return Bond Fund (PTTRX) ▫Great diversification to protect against large downside swings ▫8.34% Return Since Inception ▫Best in the Business Management Team SPDR Gold Trust ETF ▫Diversifies the Portfolio ▫Safe Investment Tends to go up when Equities go down

Summary of Cash Flows

Summary Reallocated funds within each account Diversified Portfolio Protected against serious losses Will need to evaluate funds periodically to remain current Reallocate funds in the future to meet needs

Other Considerations Life and Disability Insurance ▫What if something tragic were to happen? Possibility of business failing ▫What if the internet company goes out of business? What if they live longer than expected? ▫Will they have enough money to live 1 more year? 5 more years?

Questions?