Financial Planner

Financial Planner Career Overview: A Financial Planner advises individuals on setting personal financial goals and strategies. Many work independently or in small firms, though larger financial services firms either are adding Financial Planners to their staffs or are insisting that their Financial Advisors (or Financial Consultants) also become certified as Financial Planners.

Education: A Bachelor's Degree is expected for a Financial Planner. Coursework in finance, accounting and/or economics is helpful, though not required. Strong quantitative and analytic skills are essential. An MBA may be valuable in the hiring process, depending on the firm.

Certification: Requirements to function as a Financial Planner vary by state. Even in jurisdictions where it is not mandated by law, passing the exam to become a Certified Financial Planner (CFP) is highly advisable. The CFP designation increases your credibility and marketability, both to employers and to clients.

Duties and Responsibilities: A Financial Planner helps clients create personal budgets, control expenditures, set goals for saving and implement strategies for accumulating wealth. He or she may have working relationships with Financial Advisors, Investment Managers and/or Mutual Fund Companies, utilizing these specialists for the actual investment of their clients’ funds. The job requires keeping current about developments in financial products, tax laws and strategies for personal financial management, particularly with respect to retirement plans and estates. Success also requires sales ability, both in the acquisition of new clients and in the development of new ideas to improve the financial situation of existing clients.

Typical Schedule: The time commitment is highly variable, dependent on the type of practice you are in, your client load, and the effort you are putting into acquiring new clients. Thus, it can range from a part-time effort of under 40 hours per week to one that far exceeds 40 hours. To accommodate their clients' schedules, Financial Planners frequently must be available for meetings and telephone consultations in the evenings and on weekends.

What's to Like: Depending on the firm, a Financial Planner may enjoy a high degree of professional autonomy. The job should appeal to those who enjoy teaching, given that many of your clients will be unsophisticated financially and require education in the fundamentals of personal finance. The job also offers an opportunity to improve your clients' lives in a tangible way.

What's Not to Like: Financially unsophisticated clients often require much handholding from a Financial Planner, and may be quick to criticize recommendations that did not produce results as they expected.

Salary Range: Per the Princeton Review, average salaries for Financial Planners can range from $20,000 starting to $40,000 for those with 5 years' experience, to $90,000 for those with 10-15 years’ experience.

Financial Analysts

Financial analysts evaluate and analyze a company’s financial situation. They also prepare recommendations to help a company invest, manage and spend company funds.

Financial Analyst Specializations:

• Budget Analysts
• Credit Analysts
• Investment Analysts
• Mergers and Acquisitions Analysts
• Money Market Analysts
• Ratings Analysts
• Risk Analysts
• Security Analysts
• Tax Analysts
• Wall Street Analysts

Salary Range for Financial Analysts:

$30,000 - $110,000+

Annual earnings are determined by a variety of factors including field, title, place of employment, level of education, and experience.

Minimum Education:

Bachelor’s Degree

Essential Classes for Financial Analysts:

• Business
• Finance
• Accounting
• Computer Science
• Statistics

Job Outlook for Financial Analysts:

The job outlook for financial analysts is good. The field is expected to grow as fast as the average field or occupation.

Financial Advisor

Financial Advisor Career Overview: 

Financial advisor (FA) and financial consultant (FC) are contemporary titles for stockbroker, broker, account executive or registered representative. A variant spelling, financial adviser, also is used sometimes. Traditionally, the job has involved buying and selling securities (such as stocks and bonds) on behalf of clients. The change in titles is supposed to reflect the fact that, rather than being focused primarily on facilitating transactions, Financial advisors really should be investment advisers and financial planners who take a holistic view of their clients' financial needs and goals. Other variations in title, such as wealth management advisor, also are used, sometimes to denote a financial advisor who has additional training, certifications and/or experience.

Some financial advisors specialize in serving individual or retail clients and others concentrate on business or institutional clients. Some securities firms prefer that financial advisors specialize in this fashion, others leave it up to the individual advisors to choose whatever mix of clients they prefer. Business clients who require specialized advice and services (such as in working capital management or business loans) may prefer financial advisors with detailed knowledge in these areas.

Education: A bachelor's degree is expected for a financial advisor. Coursework in finance, accounting and/or economics is helpful, though not required. Strong quantitative and analytic skills are vital. An MBA can give you a leg up in the hiring process, depending on the firm, but compensation (see below) is tied strictly to performance, not to academic credentials.

Certification: Becoming a financial advisor requires passing the Series 7 exam offered by FINRA and meeting continuing education requirements. Major Wall Street firms used to run extensive training programs to prepare recent college graduates for careers as financial advisors, but many of these have been dismantled in a spate of cost cutting during the past several years. As a result, getting started in this field is becoming more difficult. Firms are increasingly raiding each other for experienced financial advisors, while shunning the investment necessary to train new ones. When they do train new ones, they tend to limit the entrants to experienced financial industry professionals looking for a career change. You must be sponsored by a FINRA member firm (that is, your employer) to sit for the Series 7 exam. In some firms, for certain more senior financial advisor positions, and in some states, one or more additional credentials may be required.

Duties and Responsibilities: Financial advisors counsel clients on investment opportunities, consonant with the latter's needs, goals and tolerance for risk. The job requires keeping abreast of the financial markets, constantly monitoring the specific investments in clients' portfolios, and being on top of new investment strategies and investment vehicles. Financial advisors must be confident about decision-making under uncertainty and under extreme time pressure, have excellent people and communication skills, and know how to deal with failure and with dissatisfied clients. Success is highly dependent on sales ability, both in the acquisition of new clients and in the pitching of investment ideas to existing clients. Serving clients, compliance and practice management are closely-intertwined issues for financial advisors.

Financial advisors can greatly enhance their productivity and their ability to serve a large book of business if they are supported by one or more sales assistants. However, in many financial services firms, financial advisors must fund the pay of their sales assistants, in whole or in part, out of their own compensation (see below).

Typical Schedule: The time commitment can be heavy (60-80 hours per week or more), both for those starting out in the field and for established financial advisors committed to delivering excellent service and to growing their business.

What's to Like: Financial advisors have a high degree of professional autonomy, more akin to being an independent entrepreneur than a corporate employee. There is a close correlation between performance and reward, with virtually unlimited earnings potential. Do your job well, and you make a discernible, positive impact on your clients' lives.

What's Not to Like: The pressures on a financial advisor to process a constant avalanche of information, to make quick decisions under uncertainty that, if wrong, can be costly to clients, to sell constantly and to justify yourself daily can be overwhelming for some people.

Compensation Range: Per the Bureau of Labor Statistics, median annual compensation was about $68,200 as of May 2009, with the top 10% earning over $166,400. Financial advisor compensation typically is commission-based. That is, a financial advisor gets a share of the revenue generated for the firm by his/her clients. Other metrics, such as the total value of client financial assets on deposit with the financial advisor's firm, may also factor into compensation. Top financial advisors can earn well over $1,000,000.

Finance Officer

Finance officers, also known as financial managers, supervise the operations of banks, credit unions, and finance companies. Exact duties vary depending on the finance officer’s title, place of employment, level of education, and experience.

Common Finance Officer Titles:

• President
• Vice-President
• Controller
• Loan Officer
• Trust Officer
• Reserve Officer
• Securities Trader

Salary Range for Finance Officers:

$37,000 - $135,000+

Annual earnings are determined by a variety of factors including field, title, place of employment, level of education, and experience. For more specific information, visit Salary Wizard to get a free personalized salary report.

Minimum Education: 

Bachelor’s Degree

 Essential Classes for Finance Officers:

• Business
• Finance
• Management
• Mathematics
• Risk Analysis
• Statistics

Job Outlook for Finance Officers:

The job outlook for finance officers is good. The field is expected to grow as fast as the average field or occupation.

Ten Investment Resolutions

It's that time of year when many of us establish one or more New Year's resolutions. This often means committing to improving one's lifestyle by losing weight, exercising more, or drinking less. Many investors could benefit from resolutions targeting their financial health as well. Just as many individuals endanger their well-being with bad habits, numerous investors suffer from ill-advised practices that are detrimental to their wealth. Perhaps a set of New Year's investment resolutions, along with an advisor capable of helping investors adhere to them, will lead to a more prosperous future.

Most of us are creatures of habit and discover that making permanent changes in our behavior is surprisingly difficult.  To make matters worse, our commitment to change is sometimes tested by examples of those who ignore prudent behavior to their apparent advantage and those who follow it to their apparent detriment. Winston Churchill lived to age 90, fortified by an ample supply of champagne and cigars, while author and jogging enthusiast Jim Fixx died of a heart attack at age 52. These isolated examples may test our faith but should not encourage us to abandon a proven set of prescriptions; continuing to apply them will still improve our odds.

So, for those who find making such promises useful, here are ten investment-related resolutions that will stack the deck on your favor for better long-term wealth:

1. I will not confuse entertainment with advice. I will acknowledge that the financial media is in the entertainment business and their message can compromise my long-term focus and discipline, leading me to make poor investment decisions. If necessary I will turn off CNBC and turn on ESPN.
2. I will stop searching for tomorrow's star money manager, as there are no gurus. Capitalism will be my guru because with capitalism there is a positive expected return on capital, and it is there for the taking. And for me to succeed, someone else doesn't have to fail.
3. I will not invest based on a forecast—whether it is mine or anyone else's. I will recognize that the urge to form an opinion will never go away, but I won't act on it because no one can repeatedly predict the future. It is, by definition, uncertain.
4. I will keep a long-term perspective and appropriately consider my investment horizon (i.e., how long my portfolio is to be invested) when determining my performance horizon (i.e., the time frame I use to evaluate results).
5. I will continue to invest new capital and work my plan because it is time in the market—and not timing the market—that matters. 
6. I will adhere to my plan and continue to rebalance (i.e., systematically buying more of what hasn't done well recently) rather than "unbalance" (i.e., buying more of what's hot). 
7. I will not focus my portfolio in a few securities, or even a few asset classes, as diversification remains the closest thing to a free lunch. 
8. I will ensure my portfolio is appropriate for my goals and objectives while only taking risks worth taking. 
9. I will manage my emotions by learning about and acknowledging the biases and cognitive errors that influence my behavior.
10. I will keep my cost of investing reasonable.

 Most of us find it hard to follow a sensible diet or a sensible investment strategy 100% of the time. If you must stray when managing your wealth or well-being, moderation is the key. Chocolate cake is OK, as long as it's not for dinner every night. Speculating on a stock or two is all right as well, as long as you don't do it with your investment capital.

Finally, just as successful athletes rely on coaches and trainers to help them achieve their goals, most investors can benefit from having a "financial coach" to remind them about their New Year's resolutions and keep them on track toward a more prosperous future.

Here's to good health and good wealth in 2011.

Thanks to Brad Steiman and Weston Wellington, both Vice Presidents at Dimensional Funds Advisors, for providing the main content of this post.

What Can I Do with a Finance Degree ?

What Can I Do with a Finance Degree?

There are many different jobs available to graduates with a finance degree. Nearly every type of business needs someone with specialized financial knowledge. Degree holders can choose to work for a specific company, such as a corporation or bank, or choose to open their own business, such as a consulting firm or financial planning agency. Possible job options for individuals with a finance degree include, but are not limited to:

• Credit Analyst - Credit analysts analyze financial information and assess the risk of offering credit to businesses (commercial business analysts) and individuals (consumer credit analysts.) 

• Finance Officer - Also known as a financial manager, finance officers typically manage the operations of banks, credit unions, and finance companies.

• Financial Advisor - A financial advisor is a cross between a financial planner and investment advisor. These professionals help people invest money and achieve financial goals. 

• Financial Analyst - Financial analysts evaluate and analyze a company’s financial situation. They also prepare recommendations to help a company invest, manage, and spend company funds.

• Financial Planner - A financial planner assists individuals with budgets, retirement planning, and other money management tasks.

• Loan Officer - A loan officer is a bank or credit union employee that assists individuals during the loan process. Loan officers often assess creditworthiness and determine whether or not individuals are eligible for a loan.

• Investment Banker - An investment banker advises and raises funds for a corporation. 

Tax Saving Tips

Nothing is certain but death and taxes. The time of the year has come to think about your taxes for the last financial year. If you are a first timer in paying income tax,

But do you really give a thought while investing for the purpose of tax-saving? The Income Tax law is complicated due to the variety of cases it needs to cover, but even for seasoned professionals certain aspects of Income tax laws are confusing or not knowledgeable. Here are some tips which might be helpful for some extra saving of tax:

1) Get insured but with a caveat: With the new DTC proposal, all life insurance policies whose sum assured is greater than 20 times the annual premium, the maturity proceeds are taxable as normal income. So if you are trying to buy any life insurance policies just to save tax, be aware to have annual premium less than 5% of sum assured. This does not apply to term insurance though, since there is no maturity proceeds.

2) Use losses in stocks to save tax: Short-term capital losses can be set off against both short-term as well as long-term capital gains. This is something most people often miss, especially for salaried employees who do not seem to account the stock losses in the IT-declaration proof submission to the employer.

3) Pay rent to your parents if you stay with them: If you stay in a house owned by your parents (or even spouse) and if their income is not significant (especially true to senior citizen parents), then you can pay them rent which can be used to save against HRA. The person receiving the rent has to pay taxes though if the income exceeds the stipulated amount.

4) Use alternate LTA claims: Typically LTA claims can be taken only once in two years. So if you & your spouse both are working, you can decide to alternately claim the LTA benefit with your respective employers.

5) Give loans to your children: If you give a lump-sum amount to your major children as loan (interest-free), you can avail of the tax-benefit since no income or gift tax is applicable on such a loan. This is similar as giving them a gift, the difference would be that when you gift the ownership of the money gets transferred to your children.

Inflation Index Funds

Inflation is definitely a cause of worry for every individual. If the purchasing power of money keeps getting reduced, then a person will not be able to sustain present living standard, unless his income is increasing proportionately.

Inflation is such a beast that it not only makes your present life difficult, but can ruin your savings/investments for the future. It is to be noted that before May 20015, SEBI prohibited any capital-protected products. But now SEBI, relaxed these rules, allowing issuers to offer funds that provide capital guarantee. Currently there are numerous fund houses marketing such capital guarantee funds, but inflation turns out to be a real beast.

It is no wonder that the “mehangai dayan” song is such a hit.

I am just waiting, when the government or financial institutions will start launching a inflation protection funds. Such inflation-indexed funds are not a novel idea and they definitely exists in other parts of the world. For e.g. Treasury Inflation-Protected Securities (or TIPS) are the inflation-indexed bonds issued by the U.S. Treasury. The principal is adjusted to the Consumer Price Index, the commonly used measure of inflation. The coupon rate is constant, but generates a different amount of interest when multiplied by the inflation-adjusted principal, thus protecting the holder against inflation.

Reserve Bank of India published a paper on inflation-index funds [PDF] in December, indicating that these might become reality soon in India.

It is proposed that we may issue  IIBs wherein the principal is indexed and the coupon is calculated on the indexed principal, as set out in the discussion paper on Capital Indexed Bond issued by the Bank in 2005. 

In simple terms, here is how it works :

Assume the IIB are released with a 10-year bond with 2% interest to be paid semi-annually. It means every six months, interest at 2% will be calculated and paid to the investor. Assume you invested Rs 100 in January. So after six months, the interest needs to be paid. But before the interest is calculated, the principal is adjust to current inflation rate. In this case the principal (Rs 100) is first adjusted for inflation (assume 8%). So the inflation adjusted inflation will be Rs 108. The 2% interest will be calculated on this inflation adjusted  principal thus giving higher returns.

The key benefits of such a investment avenue is that it is risk-free way to beat inflation although the real returns are not very spectacular. It will be a great tool as a portfolio diversification method and specially useful for conservative investors or senior citizens.

Retirement: Mutual Funds, Bonds, and other ways to risk your money.

oh yea - I'm tackeling it. I will attempt to sort through my latest reading, though I can't promise a complete picture as of now! It seems like the more I learn the more unsure I am about what I should invest in for my retirement...which is definitely not what I intended.

A short recap of what I've learned:

Mutual Funds
By buying one, I am agreeing to let someone else decide which specific stocks to invest in AND paying that person to do it.  Now, there are pros and cons to this.
Pros: you can blame someone else when your portfolio decreases in value, you can rely on someone else to make pretty important decisions
Cons: smart, intellectual stock martket gurus can't truely predict the market either.

I will definitely put money into mutual funds because I feel like my knowledge about different markets and companies is not up to par...and I have paranoia/stress issues....it's best if someone else worries about the market. Though I'm sure this thinking is not fool proof!

As long as I pick a mutual fund with no loads, and VERY low commission ... and in a perfect world I will also check out the bio of the person in charge of the MF. Generally, if they have been the manager for over 4 years, they're 30+ and successful, I'm happy! But hey, I'm still learning!

There are lots more things to look at regarding mutual funds, and so I will revisit when I'm done with my first book =)

Bonds
I will also add these to my retirement fund. Why? because yes, diversification is key, but ALSO because they are a lot more safe than stocks! and having mentioned earlier that I can get quite paranoid, I think I like this option..depending on what I choose. Also keeping in mind, that when saving for the long term, anything gaining under 4% interest may not be as beneficial as you think, since the average inflation rate is at around 3% or so I've been told. So bottom line, you probably can't rely completely on bonds. =(

So yea, I've pretty much summerized my opinions here. No actual data to help make better decisions - will need to work on that!! I will start including actual research soon. But now that some of my thoughts are on paper, it will be easier to move forward!!

and we'll address the whole other ways to risk your money...

Credit Analyst

Credit Analyst

Credit analysts analyze financial information and assess the risk of offering credit to businesses and individuals.

Credit Analyst Fields:

* Commercial Business Analysts

* Consumer Credit Analysts

Salary Range for Credit Analysts:

$28,000 - $110,000+

Annual earnings for credit analysts are determined by a variety of factors including field, title, place of employment, level of education, and experience.

For more specific information, visit Salary Wizard to get a free personalized salary report.

Minimum Education:

Bachelor’s Degree

Essential Classes for Credit Analysts:

* Business

* Economics

* Finance

* Accounting

* Mathematics

* Statistics

Job Outlook for Credit Analysts:

The job outlook for credit analysts is good. The field is expected to grow as fast as the average field or occupation.