FAY (Financial Advice for You) was formed as a not-for-profit and non-governmental organization by Qamar Qureshi, a retired civil servant. In his words, common people who have scarce resources and save money through extreme hardships often lose all their saving primarily because of non-availability of good financial advice. Investment banks and other financial institutions are not interested in having such common persons as their clients; nor can these people afford to pay their exorbitant fees. Retired from civil service with no personal financial worries, Qamar Qureshi has devoted his remaining life to the cause of helping the less fortunate and less informed members of the society. His organization, Financial Advice for You or FAY, offers free financial advice to anyone who knocks at its doors. However, if a better off person with considerable means approaches them for financial advice, they charge a nominal fee in order to defray some of their administrative costs. Qamar Qureshi operates from a small office located on the fringes of Islamabad where he feels he is closer to his intended beneficiaries. Initially, people were skeptic of the motives of FAY and very few persons called on its office. However, by the end of the first year of its operations, FAY had provided useful advice to more than 240 grateful persons. Financial advice was provided by Qamar Qureshi himself as well as several volunteers carefully selected by him. These were generally young graduates from management schools who had no personal financial troubles and were keen (like Qamar Qureshi) to help the less informed members of the society. At any given time, at least three volunteers were present in the office to attend to any client who dropped by. It is one of the important rules of FAY that they play no part in arranging loans or other forms of financing for any person. They offer only financial advice to their clients. They may provide them the names and addresses of relevant financial institutions, but categorically refuse to participate in the actual fund raising exercise. Although FAY’s relationship was open to several possibilities, typically a client would have two sessions with a counselor (or advisor). In the first session, the client would provide all the necessary information and discuss the particular financial problem he or she was experiencing. The counselor would record all this information and write up a “case” either alone or with the help of other volunteer(s). The case would end with a set of specific financial advice in accordance with the rules of FAY. A second meeting was then held with the client in which the recommendations were explained to him. Generally, Qamar Qureshi preferred to be personally present at these second sessions. In most cases, this was the end of FAY’s association with a particular client, but occasionally some clients would come back for further clarification or advice. CLIENT 2: Jameel Jaffery Jameel Jaffery is working as a chemical analyst in an industrial company with a decent salary and year-end bonuses. He is fifty years old and expects to retire at the age of 60 years. He believes that he and his wife will live to be eighty. He wishes to know the amount of money that he should save each year during his remaining working life (i.e. 10 years) that would guarantee him an annual return of Rs 200,000 for the 20 years following the period of investment. There is one more requirement. Jameel has a granddaughter whom he wishes to give (or leave) a sum of Rs 1,000,000 when he attains the age of 80 years. Assuming that Jameel Jaffery will: deposit the first installment of his planned annual investment today, and each subsequent installment will be deposited exactly one year after the previous deposit, withdraw a sum of Rs 200,000 exactly one year after the deposit of the last of the ten installments and thereafter every year for the following 19 years, the best rate of return available on an investment of this nature is 13% p.a., payable annually in arrears, there is no tax on investment income, Required:Prepare a suitable note for client, which includes the following: Your understanding of the specific needs and circumstances of the client, Your recommendations for him/her
FAY (Financial Advice for You) was formed as a not-for-profit and non-governmental organization by Qamar Qureshi, a retired civil servant. In his words, common people who have scarce resources and save money through extreme hardships often lose all their saving primarily because of non-availability of good financial advice. Investment banks and other financial institutions are not interested in having such common persons as their clients; nor can these people afford to pay their exorbitant fees. Retired from civil service with no personal financial worries, Qamar Qureshi has devoted his remaining life to the cause of helping the less fortunate and less informed members of the society. His organization, Financial Advice for You or FAY, offers free financial advice to anyone who knocks at its doors. However, if a better off person with considerable means approaches them for financial advice, they charge a nominal fee in order to defray some of their administrative costs.
Qamar Qureshi operates from a small office located on the fringes of Islamabad where he feels he is closer to his intended beneficiaries. Initially, people were skeptic of the motives of FAY and very few persons called on its office. However, by the end of the first year of its operations, FAY had provided useful advice to more than 240 grateful persons. Financial advice was provided by Qamar Qureshi himself as well as several volunteers carefully selected by him. These were generally young graduates from management schools who had no personal financial troubles and were keen (like Qamar Qureshi) to help the less informed members of the society. At any given time, at least three volunteers were present in the office to attend to any client who dropped by.
It is one of the important rules of FAY that they play no part in arranging loans or other forms of financing for any person. They offer only financial advice to their clients. They may provide them the names and addresses of relevant financial institutions, but categorically refuse to participate in the actual fund raising exercise. Although FAY’s relationship was open to several possibilities, typically a client would have two sessions with a counselor (or advisor). In the first session, the client would provide all the necessary information and discuss the particular financial problem he or she was experiencing. The counselor would record all this information and write up a “case” either alone or with the help of other volunteer(s). The case would end with a set of specific financial advice in accordance with the rules of FAY. A second meeting was then held with the client in which the recommendations were explained to him. Generally, Qamar Qureshi preferred to be personally present at these second sessions. In most cases, this was the end of FAY’s association with a particular client, but occasionally some clients would come back for further clarification or advice.
CLIENT 2: Jameel Jaffery
Jameel Jaffery is working as a chemical analyst in an industrial company with a decent salary and year-end bonuses. He is fifty years old and expects to retire at the age of 60 years. He believes that he and his wife will live to be eighty. He wishes to know the amount of money that he should save each year during his remaining working life (i.e. 10 years) that would guarantee him an annual return of Rs 200,000 for the 20 years following the period of investment. There is one more requirement. Jameel has a granddaughter whom he wishes to give (or leave) a sum of Rs 1,000,000 when he attains the age of 80 years. Assuming that Jameel Jaffery will:
- deposit the first installment of his planned annual investment today, and each subsequent installment will be deposited exactly one year after the previous deposit,
- withdraw a sum of Rs 200,000 exactly one year after the deposit of the last of the ten installments and thereafter every year for the following 19 years,
- the best
rate of return available on an investment of this nature is 13% p.a., payable annually in arrears, - there is no tax on investment income,
Required:Prepare a suitable note for client, which includes the following:
- Your understanding of the specific needs and circumstances of the client,
- Your recommendations for him/her
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