Financial Options Counseling Improvement Suggestions

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

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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.

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Introduction: Some consumers have received poor financial advice.

Effect:

Financial devastation• Negative return on investments• Empty pockets and bank accounts• Depleted “nest eggs”


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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


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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

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Gail


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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.


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Collaboration FailureGail

Consequences:

Consumer dissatisfaction

Consumer distrust

No investment opportunity

Negative feedback


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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.


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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.


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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.


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Jessica

Advantages:

Consumer satisfaction

Consumer confidence

Optimal investment opportunity

Positive feedback


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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.


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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


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Lindy

Overcame financial setbacks through:

Trustworthy financial counselors

Financial counselors’ proper financial training

Investment firms’ standard practices

Stable client-advisor relations


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Lindy

Advantages:

Consumer confidence in financial advisor’s management skills

Overall consumer satisfaction

Good consumer-advisor relations


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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


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A successful financial advisor should have . . .

a Master’s Degree in finance

or

a Bachelor’s Degree in finance


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In addition to college education, a financial advisor must complete financial courses and advising programs that include:

Investing tactics

Retirement planning

Insurance


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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?


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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


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A uniform scope of practice for all investment firms

and financial institutions


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Consistent training methods and standardized curriculum


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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.


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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.


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Financial Options Counseling Improvement Suggestions

Economy & Finance

Transcript of Financial Options Counseling Improvement Suggestions