financial options counseling improvement suggestions
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FINANCIAL OPTIONS COUNSELING:Existing Methods and Improvement Suggestions
Prepared by:Tonya Morris
Financial Options Counseling Methods and Improvement Suggestions
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Report Outline
• Introduction• Purpose• Consumer scenarios
– Collaboration failure– Various investment opportunities– Overcoming financial setbacks
• Educational requirements• Conclusions• Recommendations
March 8, 2011
Financial Options Counseling Methods and Improvement Suggestions
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Introduction: Many consumers are unaware of the financial options available to them.
Without this knowledge:
Consumers fail to take advantage of potentially beneficial investment opportunities.
March 8, 2011
Financial Options Counseling Methods and Improvement Suggestions
4March 8, 2011
Introduction: Some consumers have received poor financial advice.
Effect:
Financial devastation• Negative return on investments• Empty pockets and bank accounts• Depleted “nest eggs”
Financial Options Counseling Methods and Improvement Suggestions
5March 8, 2011
Purpose: To investigate the existing methods of financial options counseling as experienced by three separate consumers and any problems they incurred while making investment decisions.
Gail LindyJessica
Collaboration Failure
Various Investment
Opportunities
Overcoming Financial Setbacks
Financial Options Counseling Methods and Improvement Suggestions
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Meet Gail, an employee, who becamea victim of collaboration failure.
While employed with Company X, an optimal financial plan was discussed and agreed upon.
Gail began making regular investments into a 401K plan.
When her employment ceased, her 401K funds were transferred to Firm W.
Standard procedure, but there was a glitch.
Collaboration Failure
March 8, 2011
Gail
Financial Options Counseling Methods and Improvement Suggestions
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Collaboration FailureGail
The transferred funds were below Firm W’s threshold (minimum investment level).
Company X was not informed of Firm W’sinvestment threshold.
Firm W’s personnel did not discuss alternative investment options with Gail.
Gail withdrew her funds and deposited them into her regular bank account.
Financial Options Counseling Methods and Improvement Suggestions
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Collaboration FailureGail
Consequences:
Consumer dissatisfaction
Consumer distrust
No investment opportunity
Negative feedback
Financial Options Counseling Methods and Improvement Suggestions
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Various Investment OpportunitiesJessica
Jessica, a private investor, was privyto various investment opportunities.
Jessica wanted to save a lump sum for her upcoming vacation through her personal bank.
She was advised of three investment options:Place the funds in a regular savings account.Purchase a 6-month CD.Purchase a CD with no predetermined expiration date.
Financial Options Counseling Methods and Improvement Suggestions
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Various Investment Opportunities
Jessica
Investment option dilemmas:A regular savings account:
Funds could be withdrawn• For any reason• At any time
A 6-month CD :Funds could not be withdrawn for six months. Vacation was in four months.
Financial Options Counseling Methods and Improvement Suggestions
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Various Investment Opportunities
Jessica
Investment option chosen: A CD with a variable expiration date:
Expiration date could be manually set to coincide with Jessica’s vacation date• On date of expiration, funds would be automatically
deposited into her regular checking account• Additional stipulation:
24-hours prior to expiration date, Jessica could decide against the automatic deposit option and return the funds to a 6-month CD.
Financial Options Counseling Methods and Improvement Suggestions
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Various Investment Opportunities
Jessica
Advantages:
Consumer satisfaction
Consumer confidence
Optimal investment opportunity
Positive feedback
Financial Options Counseling Methods and Improvement Suggestions
13March 8, 2011
OvercomingFinancial Setbacks
Lindy
Meet Lindy, a long-time investor, who overcame the financial setback of 9-11.
Substantial losses on September 11, 2001 as a result of the terrorist attack on the U.S. World Trade Center.
Through diversified investments:She followed her financial counselor’s advice. Didn’t put “all [her] eggs in one basket”.Has recovered her losses incurred from 9-11.
Financial Options Counseling Methods and Improvement Suggestions
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OvercomingFinancial Setbacks
Lindy
Consequences:
Can never recover benefits of original investment
Forced to come out of retirement to help recoup losses
Looks more closely at guaranteed funds
Financial Options Counseling Methods and Improvement Suggestions
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OvercomingFinancial Setbacks
Lindy
Overcame financial setbacks through:
Trustworthy financial counselors
Financial counselors’ proper financial training
Investment firms’ standard practices
Stable client-advisor relations
Financial Options Counseling Methods and Improvement Suggestions
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OvercomingFinancial Setbacks
Lindy
Advantages:
Consumer confidence in financial advisor’s management skills
Overall consumer satisfaction
Good consumer-advisor relations
Financial Options Counseling Methods and Improvement Suggestions
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What does it take to become a successful financial advisor?
A financial advisor must have a keen understanding of: Banking
Insurance
Stock Market Prices
Financial Options Counseling Methods and Improvement Suggestions
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What does it take to become a successful financial advisor?
A successful financial advisor should have . . .
a Master’s Degree in finance
or
a Bachelor’s Degree in finance
Financial Options Counseling Methods and Improvement Suggestions
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What does it take to become a successful financial advisor?
In addition to college education, a financial advisor must complete financial courses and advising programs that include:
Investing tactics
Retirement planning
Insurance
Financial Options Counseling Methods and Improvement Suggestions
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What does it take to become a successful financial advisor?
Financial advisors are well educated and have the financial knowledge necessary to give sound financial advice.
With all this education and training,why would there be a need for improvement?
Financial Options Counseling Methods and Improvement Suggestions
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What does it take to become a successful financial advisor?
In addition to education and training,successful financial advisors must:
Develop their counseling skills.
Exhibit an interest in consumer needs.
Willingly seek other investment options.
Be attentive of consumer investments.
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Conclusions
Consumers seeking financialoptions counseling need to:
Be made aware of financial options available that will produce optimal results.
Be treated equally; receive the most advantageous advice for their financial needs.
Be able to rely on the advice of their financial advisors.
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Conclusions
Consumers seeking financialoptions counseling need to:
Be made aware of financial options available that will produce optimal results.
Be treated equally; receive the most advantageous advice for their financial needs.
Be able to rely on the advice of their financial advisors.
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Recommendation: Improvement #1
Standardized investment process with defined principles
Financial Options Counseling Methods and Improvement Suggestions
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Recommendation: Improvement #2
A uniform scope of practice for all investment firms
and financial institutions
Financial Options Counseling Methods and Improvement Suggestions
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Recommendation: Improvement #3
Consistent training methods and standardized curriculum
Financial Options Counseling Methods and Improvement Suggestions
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Recommendation: Improvement #4
Every investment firm, financial institution,
financial advisor and
benefit-offering employer should collaborate(work together).
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Recommendation:
These improvements will help:
Strengthen client relations
Simplify the investment process
Alleviate confusion
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ReputableFinancial
Advice
ContinualConsumer
Trust
RecurrentFavorable
Investments
Satisfied Consumers
MaintainedClient
Relations
A happy client is a repeat client.
Financial Options Counseling Methods and Improvement Suggestions
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Financial Options Counseling
Taking steps to improve the investment process,
business practices, and financial training programs
will help consumers make sound financial investments
with optimal results.
Financial Options Counseling Methods and Improvement Suggestions
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