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 2

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 3

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 4

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 5

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 6

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 7

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 8

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 9

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 10

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 11

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 12

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 13

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 14

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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