Question

A business owner-client approaches a financial planner for advice on selecting a retirement plan for the business. What factors should guide the financial planner's recommendations?

1. The owner's retirement savings need
2. The owner's current age
3. The amount of risk the client is comfortable assuming
4. The financial stability of the business.

Answer 1

All the factors below should guide the financial planner's recommendations:

• The owner's retirement savings need: This will determine the required kitty size at retirement so that the retirement needs are fulfilled. The planner's recommendation of the plan will be dependent upon the owner's requirement.
• The owner's current age: This one tells how much time do we have to reach to that retirement goal. The younger the owner, more is the time available to save and achieve the retirment target kitty.
• The amount of risk the client is comfortable assuming: This will determine which investment plan should the client adopt. The risk level will suggest whether the investment should go in a stock fund, bond fund or a mix of the two.
• The financial stability of the business: this gives the comfort whether a steady annuity can be invested in the invested account.