Final Exam (Day 2): Investment Advising ModelIMPORTANT: Your model is due via email to me by April 24, 2024 at 11:59pm ET.
If you build out a presentation and get Taylor Swift or Travis Kelce to respond (e.g., Social
Media “Like”) by May 1, 2024 at 10:00am ET, then you will receive an automatic A in the
class. Please indicate on social media “Information is for entertainment only” and be sure
to tag #berrycollege and #campbellschoolofbusiness. Good luck!
Guidelines
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You may choose to build out your model for Taylor Swift or for Travis Kelce
o Sending something will earn you a minimum score of 50 points
Build out a personal balance sheet (Financial Capital) for Swift or Kelce as of
December 31, 2024
o Must categorize by correct asset & liability type (must have 5 different types)
▪ This is worth a maximum value of 5 points
Build out a cash flow management plan starting at the beginning of 2025.
o Model out Travis Kelce retiring from the NFL after the 2025 season
o Model out Taylor Swift retiring from touring after 2025 (Tortured Poets)
o You advise Taylor and Travis to have three sources of income throughout their
earnings years (i.e., utilizing their human capital)
o They will each reside in California and are subject to California state income
tax
▪ Income tax rate is 49.3% (Federal 37% + California 12.3%)
o Real estate is expected to increase 4% annually
▪ Any real estate sales rolled into another property can use a 1031
capital gains exchange
▪ Any real estate sales after 1 year have a 20% tax rate (ignore
depreciation)
o Equities are expected to increase 8% annually
▪ Any annual leftover cashflow can be swept into a trust to be used in
retirement
o Spending inflation is expected to average 3% annually
▪ Note: Spending should be reasonable based on his or her income and
celebrity status but you’re the financial advisor, so tell Taylor or Travis
to make more or spend less!
o All debt is 5% annual interest-only loans (real estate, jets, and boats)
▪ Note: Interest expense decreases taxable income
o Real estate upkeep is 2% of home value
o Property taxes are 3% of home value
▪ Note: Decreases taxable income
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o The information incorporated above is worth a maximum value of 10 points
o Real estate deprecation useful life is 20 years
o Jet and yacht deprecation is in the year of purchase
▪ Note any asset purchase will need upkeep:
• Jet and boat annual upkeep is 50% of the purchase price
• Passive net income for jets and boats average 1.0% of
purchase price (i.e., covers upkeep and earns a profit)
• Jets and boats have 15 years of useful life then they are worth
zero
o Incorporating deprecation and passive income into your model is worth a
maximum value of 10 points
o Each will set up a family office. Expenses are 0.5% of gross income and 1.0%
of assets
▪ Setting up a family office will result in 1% more annual return to each
asset type: Real Estate and Equities
▪ Incorporating family office expenses is worth a maximum value of 5
points
Build out a retirement plan (latest date to start is 50 – each would like to retire early)
o A retirement portfolio is expected to earn 6% with a 6% volatility
▪ Setting up a family office will result in 0.5% more annual return and
2% less volatility
▪ Expenses are same as above
o Any trust assets prior to retirement earn the equity returns noted previously
o Health care inflation is expected to average 4% annually
o They do not want to earn any income from human capital starting in age 50
o Taylor and Travis would each like to maintain 80% of their pre-retirement
spending as retirement spending
o Each wants a minimum of 67% confidence that they will not outlive their
assets at the age of 85
o Health care expenses starting at age 50 are expected to be $15,000 each year
(12/31/2024 value)
o Assume death at age 85 (end of calendar year)
o This plan is worth a value of 10 points
Build out a philanthropy plan
o You’ll need to develop a values and mission statement (include in Excel)
o They would like to donate 50% of their net worth remaining (minimum of
$10,000,000) to charity at the age of 60
o They would like to contribute a minimum of $10,000,000 at death to their
children
o This plan is worth a value of 10 points
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