Meet the Denmarks: Why is it important to gather detailed and accurate financial data?

We created the Denmark family to demonstrate financial life planning strategies without impacting the privacy of our clients. Although scenarios may be based on actual life events experienced by current clients, all information is 100% fictional.

Shortly after their first meeting with Fraser & Partners, the Denmarks received a follow-up email that included a financial questionnaire to collect information about their personal household and April’s business. The email provided secure options for transferring confidential information and documents back to Fraser & Partners. As a computer systems analyst, Conrad appreciated the attention to cyber-security. He knew all too well that regular email is not a safe form of confidential communication.

As manager of the household finances, Conrad was tasked with filling in the questionnaire. It was thorough and he was prepared!

Annual Income:

Annual Lifestyle Expenses:

Annual Family Expenses:

April and Conrad built a new home in 2003 when housing prices were low. The cost at that time was $200,000 and they were able to make a down payment of $25,000 using a combination of wedding gifts and a $10,000 gift from April’s grandparents. At first, it was hard to pay both the mortgage and their student loans, but they persevered. As Conrad filled in their monthly mortgage payment, he thought to himself “we have the capacity to pay off this debt much more quickly now. If only the mortgage prepayment options were more in line with what we could afford to pay…” The mortgage is up for renewal in a couple of months, so this was a topic he wanted on the table for planning.

Primary Home Owned Jointly Conrad 50% / April 50%

Mortgage

Annual Home Expenses

Conrad’s parents had purchased a family cottage back in the 70’s. They wanted their kids to grow up at the lake enjoying all the perks of lake life. Although his parents hadn’t transferred the title to the boys yet, they were thinking about it and Conrad knew this would soon be an asset for their family. He and his brother Ben were already splitting the property taxes and expenses.

Family Cottage – Ownership Conrad’s Parents

Family Cottage – Expenses Conrad 50% / Ben 50%             

Conrad liked to own a truck – you never know when you’re going to need to haul something, especially out at the lake. April, on the other hand, wanted something that was environmentally friendly and practical for chauffeuring the kids around town.

Vehicles

Once Conrad completed entering the information, he continued to collect all the documents as requested:

  • Pay Stubs
  • Banking statements
  • Investment statements
  • Most recent tax returns and Notices of Assessment
  • Mortgage document and most recent year-end statement
  • Household and auto insurance
  • Loan document and most recent year-end statement
  • All insurance policies
  • Employee benefit booklet
  • Will, Power of Attorney for Property and Power of Attorney for Health Care (Health Care Directive)
  • Balance Sheets & Income Statements for the business

Conrad felt bad as they had no Wills to provide. This had been on their list for a long time and they just never seemed to get around to it. Once April had prepared the information on her business, they submitted it all through the secure portal. Shortly after, the Denmarks received confirmation from Fraser & Partners that the documents had been received and in order. The email also included some options to meet online and verify the information. The Denmarks were excited to see how everything would look.

The Online Meeting

As April rushed home from visiting her parents, she was grateful that the next meeting was online as they both had busy schedules. Conrad pulled out the laptop and clicked on the online meeting invitation.  Seconds later, they heard June’s voice over their speaker and could see her screen on theirs. They stepped through the numbers and it wasn’t long before April noticed something was amiss. “Conrad, you forgot to mention our family gym membership. That adds another $2,000 a year.” Conrad paused for a second, “you’re right. I’m glad we gave this a second look.”

After a few other changes, Conrad and April were confident that the data gathering process had accurately captured their current situation. They could see how the work they had put into it would pay off. They looked forward to analyzing the impact of the numbers in relation to the vision they had carved out in the first planning session.

The next installment of The Denmarks will review their current financial picture to uncover planning issues and opportunities.

 

The information in this commentary is for informational purposes only and not meant to be personalized financial planning advice. The content has been prepared by the team at Fraser & Partners from sources believed to be accurate.

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