McZhao then focuses on Cree’s financial goals. Cree plans to retire in 17 years and expects to need EUR200,000 per year on an inflation-adjusted basis to fund a desired retirement lifestyle for himself and his spouse. However, he is also concerned about how increasing medical expenses might affect his portfolio’s ability to fund their retirement. As a potential solution to this concern, Cree hopes to purchase an apartment building within the next three years and use the rental income from this investment property to help fund medical expenses during retirement. Cree wants to fund university expenses for his three children, with the first payment starting in 10 years and continuing for 12–15 years. Cree’s wife enjoys donating to philanthropic causes. She currently donates EUR10,000 per year, but by the time Cree retires, she hopes to increase this amount to EUR30,000 per year. Cree collects antique furniture and budgets EUR15,000 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.
Discuss how a capital sufficiency analysis may assist McZhao in helping Cree with goal prioritization across his identified goals.
Solution
Capital sufficiency analysis is the process of evaluating whether a client has sufficient capital resources to determine if their current and future capital resources can adequately support their lifestyle, financial goals, and long-term financial stability. Whenever the capital sufficiency analysis does not support the investment objective, the wealth manager must work with the client to revise objectives and create those that the wealth manager judges to be achievable. After quantifying his children’s education goals and the apartment building purchase goal, a capital sufficiency analysis would allow Cree to assess the likelihood of being able to achieve each of the stated quantified goals (retirement, children’s education, apartment building purchase, philanthropy, and antique furniture collection). If his capital resources appear to be insufficient based on McZhao’s capital sufficiency analysis, then Cree can choose to prioritize which goals should be adjusted downward or eliminated and which are most important to maintain.
我的回答：Since purchasing investment proerty within a relatively short time horizon and Cree consider the income as stable souce to cover medical expense, the capital sufficiency analysis can help him determine whether other goals need to be adjusted so as to meet her primary goals.
感觉回答偏了，我写成了是否能满足短期购房目标了，标准答案的意思似乎是，在满足购房之后再盘一盘资金做sufficiency analysis看看其他长期的goal是否要调整，是看到capital sufficiency analysis都是朝着满足长期其他目标去看么？
以及这类题的回答要点是哪些？除了答出如果insufficiency就要adjust objective，还有哪些点需要涉及？
