Justify a proposed comprehensive and integrated nancial service package that is appropriate for the financial needs of two customers at different life stages.

Authors Avatar by ellouise1997hotmailcom (student)

Justify a proposed comprehensive and integrated financial service package that is appropriate for the financial needs of two customers at different life stages.

I have now finished all my training to be a financial adviser. My manager would like me to write a report to advise and suggest an integrated financial service package to two different customers.

My first customer that I will be providing an integrated financial service package to is Ifter Ali who is 21 years old. Ifter is in his last year of university studying Business Studies whilst living at home with his mother. He has informed me that he would like to own property as soon as possible but has limited understanding of finance. Ifter has a student loan of £13,000 an overdraft of £1,000.  In 4 months he will be going onto the PWC graduate trainee programme with a starting salary of £25,000.

Firstly, Ifter already has a current account due to having an overdraft of £1,000 and therefore I recommend that he keeps the account open. Once his first salary goes into his current account the overdraft will be automatically be paid off. However, Ifter should be aware that he will be getting paid a little over £2083 a month and once the overdraft has been paid off he will only have a small amount of money left. In addition to his overdraft he also has a student loan of £13,000. Once Ifter starts work he will be required to pay off is student loan as he will be earning a salary more than £21,000. To work out how much Ifter has to pay I took his salary of £25,000 and subtracted £21,000 which gave me £4,000. I then found out 9% of this which is £360 which I then divided by 12 to get a monthly payment of £30. This is a small amount to be paid monthly and therefore Ifter can use his leftover money to save for his desire to buy a house. Furthermore, having a current account also has many other benefits such as direct debits. I suggest that Ifter sets up any direct debits such as a phone bill or insurance to be automatically paid at the beginning of the month. This will be beneficial as he will not have to remember to pay the bills and also having it paid out on the first of the month will allow Ifter to see how much money he has left to spend on other items. Lastly, for retail banking services and products I suggest that Ifter applies for a credit card. This is because when making online payments it is safer to use a credit card. If Ifter doesn’t receive the product the credit card company will then pay him back compared to a debit card where they won’t.  But, it’s important that once he receives his items that he pays off the item in full as if he doesn’t he will have to pay large amounts of interest.

Secondly, there are other financial services or products that I believe will be beneficial for Ifter. I recommend that he gets life assurance. Because he is living with his mother he may want to have extra protection In case something happens to him so his mother is left with some money. Being young means that his monthly payments will be low as he is at low risk. If he wants to pay less monthly, I advise to take out a term assurance. Nevertheless, term assurance is only payable if the death occurs before the end of a specified term usually up to 30 years compared to whole assurance which is payable whenever the death occurs. Similarly, I suggest that Ifter gets insurance. He may want to have insurance such as car or phone insurance to make sure that he and his personal belongings are always covered if they get stolen or damaged. Another financial service Ifter can use is pensions. When he starts his new job at PWC he will have the opportunity to join the occupational pension scheme. This is when money is paid into the pension usually from your salary and employer. I recommend to do this because although Ifter may qualify for the state pension, it’s a very small amount of money which is hard to live on. Therefore the earlier money gets put into an occupational pension the more money he will have in the long-haul thus letting him have a good lifestyle when he reaches a pensionable age. Lastly, although Ifter would like to get onto the property ladder as soon as possible, it isn’t reasonable. You can only get a mortgage that is four time more than your salary and with the outstanding debt he has he will only be lent £86,000 which isn’t enough to buy a property; he would also need to put down a deposit before getting a mortgage. Therefore I suggest that Ifter waits until his salary increases or finds somebody who he can have a joint mortgage with, in order to be able to borrow more money.

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As Ifter doesn’t have a lot of money currently it would be a good idea to look at savings products. One of the most secure savings products is premium bonds. Ifter could win prizes from £25 to £1 million of tax free cash; this money doesn’t earn any interest. Ifter can withdraw his money at any given time with no penalties if he ever needed it back. So it is 100% risk free and he may win some money to put towards a deposit for a house. Ifter could also use Direct ISA’s. Alike to Premium Bonds, ISA’s are tax ...

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