The analysis of Perpetuity

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  • Topic: Financial adviser, Financial services, Financial planner
  • Pages : 12 (3682 words )
  • Download(s) : 44
  • Published : April 16, 2014
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As a finance major currently signed up for the CFA charter, I inspire to go into the financial services industry. This specific industry has a long and significant history of high profile legal issues. The topics discussed within business law will surely come up in my near future within the financial services professional world. With the emergence of new investment vehicles and technology, there have been many elaborate insider trading and financial fraud crimes that have occurred in the last decade. With these increased crimes, punishments have also increased in magnitude. In order to foster a successful career as a future financial planner/advisor, I must be extremely aware of the various laws and regulations that relate to this field and to the many before me that have fallen victim to these crimes.

In the last decade, the financial services industry has seen an extremely negative reputation decline. This has been due to the countless financial crimes that have been conducted. As an aspiring financial advisor/planner, I must professionally be aware of the various legal problems that exist in this field and ensure I don’t fall victim to committing any of these crimes. Financial planning and advising services deals with helping clients with the various topics: equities, fixed income, real estate, insurance, taxes, retirement, and general financial planning. Dealing with clients on a daily basis, brings up many different liabilities. Certain financial advisors or planners must act as fiduciaries to their perspective clients. As discussed in class, there is a certain relationship regarding an agent and his principal. In my case, as a financial advisor I would act as the agent and my principal would be my clientele. Fiduciary, is the trust or loyalty I owe to my client, as an agent I am supposed to place my principals interests ahead of my own. Essentially a fiduciary relationship ensures that my client is given reasonable care, is accounted for, and I display obedience or follow my principals instructions to the best of my ability. In this role, I will always be liable for any of my actions that break the law or this fiduciary that damages my client. There are also employment opportunities for financial advisors where they don’t have a fiduciary for their client, but rather for the company that they work for (Woodruff, Mandi, "Crime Writer Wins $50 Million Lawsuit Against Her Financial Advisor”). Although this is common, at the same time I must always ensure I treat my client’s finances as if they were my own; with extreme care and integrity.

In the last decade financial advisors/planners have especially fallen victim to providing wrong and unethical advice for client’s assets. There have been many instances where financial advisors will try to sell financial products to a client in order to just generate larger commissions or fees, instead of really placing their client’s best interests into their financial plan. Although some financial planners have and are currently getting away with this strategy, I personally do not believe it’s sustainable and if anything went extremely wrong with any client’s finances, there could be severe liability issues. A major problem for financial advisors is not picking investments that are suitable for particular clients. If an advisor doesn’t take the necessary steps to ensure the clients investments suite his or her needs, then he could be liable. Client risk tolerance screening is an important step some advisors don’t do correctly or fail to do altogether. Not informing clients of what particular investments they are being thrown into, is also a common problem advisors face. Also, not explaining that there is inevitable risk with any investment is a problem advisors run into. The last main problem that financial advisors most commonly fall victim to is not picking investments that match the clients risk level, needs, and financial stability. When an advisor is more focused on...
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