CLU School of Business Poster Session 2010
MBA in Financial Planning Students’ Abstracts at this Session
Student(s): Gregory Hoelzel and Jeremy Kovachevich, Charley Herbert, Debby Lang Faculty Mentor: Mr. Harry Starn Faculty Mentor: Mr. Harry Starn |
Walker Family Comprehensive Financial Plan A jigsaw puzzle necessitates the ability to see the big picture to understand where each piece fits; a comprehensive Financial Plan is no different. Science and art are uniquely blended, consistent with the objectives of the client. Our Team performed a Case Study Analysis concerning a young, married couple with children from former marriages, elder parents to potentially care for, budgeting concerns, and retirement income, education, and multi-generational wealth transfer issues. Recommendations included: estate planning resolutions; budgeting techniques; retirement and education funding analysis; redirect of investment allocation; insurance and risk management strategy implementation; minimization of current and future tax liability; planning for a future lump-sum gift; utilization of employee benefits program. If left unchecked: the former spouse inherits the IRA, children argue amongst themselves about how the estate should be divided, large portfolio drawdown, the breadwinner becomes disabled with no income replacement, POA/Healthcare Directives missing when an emergency takes place. Three Portfolio Project Can you really do better by randomly choosing a portfolio of investments than by conscientiously and actively managing a portfolio? Three $1,000,000 investment portfolios were prepared. One portfolio consisted of randomly selected equities. Another portfolio consisted of the S&P 500 stock indexes. The last portfolio consisted of a deliberately selected portfolio of $600,000 equities, $200,000 in fixed income, $50,000 in cash, and $150,000 in “other” investments. Price data were collected over 13 weeks. Trading and re-balancing rules established. At the end, the composite portfolio performance of a class of 20+ “Financial Planners in-training” was compared against the random, index, and this project’s actively managed portfolios. Conclusion: A portfolio chosen at random has an equal or better chance of consistently outperforming an actively managed portfolio…supporting the efficient market hypothesis. However, a ray of hope exists. Perhaps a skilled trader can outperform a randomly selected portfolio …at least in the short term. |
