Essays on Financial Planning Assessment 1 - Discussion Questions And Practical Exercises Article

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Question 1(a): The primary sources of financial information available to investors and financial advisors include: Annual ReportsSEC filingsAnnual Reports: The Annual Report to Shareholders is the principal document used by most public companies to disclose corporate information to shareholders. It is usually a state-of-the-company report including an opening letter from the Chief Executive Officer, financial data, results of continuing operations, market segment information, new product plans, subsidiary activities and research and development activities on future programs. Annual Reports are probably the best single source of information on public companies. (University of Pittsburg, 1)Financial Publications: Financial Publications like The New York Times, The Wall Street Journal etc are another useful source of financial information for investors.

These are ideal sources of financial information not only because of their high standards of reporting but also because a large portion of the publications are dedicated to business. These are widely recognized financial periodicals which are known for their high quality, up to date financial information, and are often considered useful daily sources of information by business-persons, accountants and financial specialists alike. In addition to this, these periodicals are in publication for many years and are institutionally recognized sources of financial information.

On a more generic note, other sources of financial information include: NewspapersTelevisionInternetOther sources e. g. clicked-on bannersQuestion 1(b): The greatest threat that financial investors face when it comes to the use of internet as a source of financial information is speculation. News can be generated on the internet merely on happenstance which leads to several problems faced by the investors. For that matter, Trent Hamm comes up with a simple solution: “If a claim is made in a personal finance book or magazine that piques my interest or might be the basis of a personal finance choice of mine, I generally don’t immediately trust it; instead, I seek out supporting sources.

If I continue to find the same idea expressed from a lot of different sources, I usually trust it. ” (Hamm, 1)Another problem faced by investors is the severe lack of security due to “phishers” who have infiltrated the internet. In the corporate environment, one simple slipup could compromise an entire network, spark financial fraud, or even lead to industrial espionage.

(Check Point, 1)Question 2(a): According to Wikipedia, a financial adviser is a professional who renders investment advice and financial planning services to individuals and businesses. Ideally, the financial advisor helps the client maintain the desired balance of investment income, capital gains, and acceptable level of risk by using proper asset allocation. Financial advisers use stocks, bonds, mutual funds, REITS1, options, futures, notes and insurance products to meet the needs of their clients. (Wikipedia, 1)Therefore, the basic function of financial investor can be defined as the intermediary present to align the needs of the client with the investing opportunities that are present in the market but are unknown to the client.

Due to this, financial advisors play a pivotal role in determining the direction and amount of money that is invested. They are usually paid in a basic fee plus commission package; however, clients do tend to change this structure in accordance with their liking and the investment that they are making.

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