Transcript The Purpose of Investment Banking

Personal Finance: Another Perspective
Careers in the
Investments Industry II:
Financial Planning
Private Wealth Management
Winter 2012
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Potential Jobs in the Investments Industry
 I. Investment Banking
• Investment banking, Asset Management, Sales and
Trading, Research
 II. Financial Planning/Private Wealth
Management
• Investment advising, Insurance, and Estate planning
 III. Corporate Finance
• Pension Fund Administration and Management
 IV. Financial Consulting
• Pension Fund Consulting
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II. Financial Planning
 Objectives
• A. Understand the purpose of Financial Planning
• B. Understand the structure of a Financial Planning
firm
• C. Know how financial planners are paid
• D. Know where the potential jobs are in Financial
Planning
• E. Know how to prepare for a career in Financial
Planning
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A. Purpose of Financial Planning
 What is the purpose of financial planning?
• To help the client determine how they can meet
their personal goals through the proper management
of their financial resources
 Why be a financial planner instead of a
stockbroker or accountant?
• Financial planners take the “big picture” view of a
persons financial situation and make
recommendations based on the clients needs in such
areas as:
• Budgeting , Savings, Taxes, Investments,
Insurance, and Retirement and Estate Planning
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Purpose of Financial Planning (continued)
 What does Financial Planning entail?
The responsibility of the financial planner is to:
• 1. Establish and define the client-planner
relationship
• 2. Gather client data, including goals
• 3. Analyze and evaluate the client financial
status
• 4. Develop and present financial planning
recommendations and/or alternatives
• 5. Implement the financial planning
recommendations
• 6. Monitor the financial planning
recommendations and re-evaluate as necessary
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B. Structure of a Financial Planning Firm
 What is the structure of a financial planning
firm?
• While there are many different types, major
divisions might include:
• Budgeting and Debt Reduction
• Advice and analysis on proper budgeting and
savings and debt reduction strategies and
help
• Investments and Research
• Advice and analysis on financial assets, asset
allocation, and security selection
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Structure of a FP Firm (continued)
• Insurance
• Advice and analysis on using insurance products
to achieve your financial goals
• Retirement and Estate Planning
• Advice and analysis on retirement and estate
planning to help individuals achieve their goals
and minimize taxes
 Financial planning is a process, not a product.
• While it can be performed in conjunction with
providing financial products, it can also be a distinct
and separate part of the practice
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C.
How are Financial Planners Paid?
 Financial planners are generally compensated
in four different ways:
• 1. Fee based. Some charge a specific fee for their
services on a per-hour or per-project basis
• 2. Assets under management. Some charge a
percentage of the value of the client's assets under
management
• 3. Commissions. Some receive commissions from
investment or insurance companies for products
sold
• 4. A combination of fees and commissions, and
even a salary if they work for a financial company.
 Financial Planners must disclose their method and
source of income to their clients
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D. Jobs in Financial Planning
 Where are the jobs in Financial Planning?
• Most financial planning professional either work for
themselves or take positions with:
· Banks
· Financial planning organizations
· Life insurance companies
· Accounting or law firms
· Stockbrokerage and securities brokers
· Mutual Fund managers
· Credit counseling organizations
· Large companies to look after employee
benefits
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E. What does it take to be a
Successful Financial Planner
 What are the key skills for a financial planner?
• People skills
• FPs have good counseling skills and are driven
by a genuine desire to help other people.
• Analytical skills
• FPs take a 'big picture' approach to their clients'
lives. The ability to synthesize information
clearly is a key skill.
• Generally candidates with a background in the
following areas stand a better chance at being
successful:
• Counseling, Accountancy, Law, Insurance,·
Investments, and Finance
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The Financial Planner (continued)
 What are the skills gained as a Financial
Planner?
• A solid understanding of the key areas of personal
finance
• Key knowledge of debt and debt reduction
strategies
• Knowledge of how the Capital Markets work
• A good understanding of companies and industry
composition and structure
• Professional presentation analysis
• Some financial modeling and quantitative work
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The Financial Planner (continued)
 What are the major challenges of financial
planners?
• Most Financial Planners are paid on a transaction
basis, rather than a salary
• This makes smoothing income important
• Personal contacts and meeting with the public are
critical to success in this business
• You must be willing to hear people say no, and
not take it personally
• These factors make this industry difficult
• 80% of those who start this industry leave before
two years
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E. How to Prepare for a Career in
Financial Planning
 How do you prepare for a career in this field?
• Understand the industry, positions, and lifestyle
• This is an industry for self-starters—are you
suited?
• Start building your contacts—meet with speakers
• Get to know Financial Planners in the areas
• Do well in your classes—work hard and smart
• Use your time efficiently
• Look to beginning your CFP (or CFA) program
• It is looked on highly in the industry
• Have a good Personal Financial Plan
• Show potential employers as an example of
your best work
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A Career in Financial Planning
 How do you spiritually prepare for a career?
• Don’t get discouraged
• Understand yourself and your goals
• Keep your priorities in order
• Obedience is the first law of Heaven--do what
you should
• Follow the Spirit
• He is your competitive advantage--stay worthy
of His help
• Remember the Lord’s hand in your blessings
• Always be appreciative of his blessings
• Remember to share them with others
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Review of Objectives
 Do you:
• A. Understand the purpose of Financial Planning?
• B. Understand the structure of a Financial Planning
firm?
• C. Know how financial planners are paid?
• D. Know where the potential jobs are in Financial
Planning?
• E. Know how to prepare for a career in Financial
Planning?
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