Identify and Develop Broking Options for Clients with Complex Needs

This document discusses the process of identifying and developing broking options for clients with complex needs. It covers relevant legislation, regulations, and codes of practice, as well as key products available in the broking industry. It also explores organizational guidelines and procedures for assessing the impact of risks and documenting broking recommendations. The document provides insights into relevant risk issues and explains the importance of comprehensive and ethical discussions with clients. It also discusses the use of risk profiles to assess the impact of risks on clients or organizations and suggests methods for further questioning and information gathering if sufficient information is not available.

CASE: IDENTIFY AND DEVELOP BROKING OPTIONS FOR
CLIENTS WITH COMPLEX NEEDS.
Name of the Student:
Name of the University:
Author Note:
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PART I: WRITTEN ACTIVITY
1. Relevant Legislation, Regulations and Codes of Practice.
The induction training helps to integrate new employees into the company so that they can
easily understand and cope up the work system and get to know procedures of the different
departments of any broking organization.
Relevant Legislation
An induction process must include health and safety management.
 New workers must be ensured to develop good work habits, which will be same with
safe practice of work.
 Induction workplace must look for healthy and safe places.
 Some emergency equipment, such as personal protective equipment must be placed in
the induction workplace, which may require additional training
 fire alarms and firefighting equipment should also be placed, and locations of these
equipment’s and demonstration should also be there
 First aid and other emergency contacts must be placed.
Regulations and codes of practice
a. An induction program should be started by bringing new employees to the mission,
goals, and values of the company. It’s important of the employee induction process
because this provides the reasons why the company exists, where it has come from, and
where it is headed.
b. Other staff members should be introduced to the new employees and let them know
what they do. Welcoming email can also be written to everyone by Supervisors in the
organization.
c. The trainer should use some visuals, past years’ sales figures, and theory based training
need to be avoided. As human beings like to remember the data more than text. Real life
examples of market competition information are important so that they can easily connect.
d. Senior management should be involved by the trainers, so that the trainees can get to
know the people who are there in the scenes of the company.
e. Participative learning methods can be most effective by the process of question and
answer.
f. Product Training
To achieve the success the base should be strong; the training should focus on the core
product areas mainly the Financial Market including the following products.
1. Derivative- Future & options
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2. Mutual Fund, ETFs, NCDs
3. Commodity Derivative
4. Currency Derivative
5. Equity
g. Market training - Trainer should provide some Basic knowledge about capital market and
Derivative market
Currency market and commodity market information should also be included in the
induction program
A Structure of the induction training
 Meet and greet all the employees.
 Introduce them with whole existing team and explain their role.
 A brief of organisation overview need to be given to them.
 The work policies, organisation culture should be described to all the employees
 Explain the role and position of the new employees and what org. is expecting from
them.
 The performance standard need to very clear on the first day only
 A complete review and feedback must be taken from all the new employees.
2. Key Products Available In the Broking Industry.
A. Mutual fund: a combined stock policy that mobilize fund from stock-holders to
stocks, bonds, short-term fund market tools, and/or other securities is known as mutual
fund. Normally the operators manage this portfolio of securities and gain income from
different way such as dividend, interest and capital gains. The incomes gets shared by
shareholders of mutual fund. Generally, financial firm has their own stream of in-house
mutual funds, and the limits of investment is habitually small. This process does not
contain any rigidity on selecting products from various sorts like Equity, Debt and Fund
Markets. Most schemes are open ended that offer liquidity. A person can invest in
Mutual Fund - either in form of Lump-sum or Systematic Investment Plan (SIP).
B. Treasury Bills (T-bills): Treasury bill refers a common short-term currency market
instrument, issued by the RBI, Government of India through. Treasury bill gets issued
with a maturity period of 14, 28, 91, 182 and 364 days. US Treasury issues Treasury bills,
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or T-bills, are short-term debt instruments. To handle T-bills, here we will need to use a
middle-man.
C. Bill Re-discounting Schemes (BRDS): Bill Re-discounting Schemes is scheme of
currency market when banks raise funds by issuing promissory notes in groups and
maturities, this matches with the discounted trade bills. This scheme helps to keep
money liquidity in the market. There is a minimum 15 days and maximum 90 days
limit of transaction. The bank borrowing in this scheme may issue promissory note
to lender and a certificate at an effect - the bank holds genuine bills equaling to the
transaction amount.
D. Capital Gain Bonds: Capital gain bonds are just another type of bonds where a
person can be exempted in terms to long-duration capital gains when the same is
invested in bonds then, the exemption will equal to the amount of investment made,
whichever is less. Interest rate offered is 6% per annum approximately.
3. Organisational Guidelines and Procedures on Assessing Impact of
Risks and Documenting Broking Recommendations.
The organizational guidelines on accessing impact of risk are
 The system should have the ability to calculate all necessary market risks regarding
assets, liabilities & subjects off the balance sheet items.
 Risk regarding interest rate, exchange rate and pricing should be included.
 “There are different ways to measure market risks; each has its own benefits and
restrictions. There are different models like net income simulation, re-pricing gap
report, economic valuation model”.1
 Correct, reliable, accurate and timely information should be employed; it’s an
important factor in risk measurement process.
 Factors accessing the negative effects on the system should have a reliable source
for selection.
 To manage market risks financial Institutions, need to follow three fundamental
managerial approaches:
 Practical guidelines and policies for risk management.
 Audit independence with internal control.
1 Palea, V. (2014). Fair value accounting and its usefulness to financial statement users. Journal of Financial Reporting and
Accounting, 12(2), 102-116.
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 Appropriate board of directors and senior management with organizational
structure.
4. Relevant Risk Issues.
a. Borrowing risk and gearing
'Gearing' refers to the Borrowing and investing, using existing investments as security.
A regular investment plan can be processed by combining Regular gearing with an
investment lending facility.
Risks of gearing
Gearing can magnify gains also. The risks needed to be considered, like:
 Value of investment may fall however the loan balance remains same
 Investment returns can get overweight by interest of cost, what can impact on cash-
flow.
b. Economic risk: Economical risk is the incident when macroeconomic environment
like exchange rates, government regulation, or political stability get misbalanced and
this affect on investment, usually one in a foreign country. Economic fluctuations
effects on the volumes and liquidity, the cost of intermediation can also be highly
impacted by economic conditions. There are some economic issues that can be
solved by engaging in international operations. We need to take extra preventive
measure to insure on time delivery. We are dealing with factors of Geography and
economic conditions. Economic instability may be an issue if co.’s transactions
involve businesses in third world nations. Even if they are politically stable, they may
lack the infrastructure to provide a sound economic environment.
c. Specific product risk: this is a high risk in any investment. Investors makes
decisions on the basis of assumptions and technical analysis financial products like
mutual fund, interest rate etc. which lead them to certain conclusions about how an
investment is likely to perform. An important part of investment analysis is
determining the key product for an investment which is going to be profitable and
assessing the risk/reward ratio of potential losses against potential gains.
d. Institutional risk: Financial institutions are the firms and institutions that provide
financial products and services to customers who may not be able to get them more
efficiently by themselves. Sometimes they face unrelenting pressure from the
bottom line. Uncertainty challenges like Regulatory changes, data breaches and
other cyber risks apply further pressure global economic system. The Insurance
sector will face a number of key challenges, including risks associated with bad-faith
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litigation, government and global regulatory compliance, data security and growing
cyber/privacy risks.
e. Income risk: The income amount or return paid by a fund, when decreases in
value it is called the Income Risk. The impact of this type of risk is having most
impact in money market and short-term income strategies, where in long term
investments are based on interest rates and do not have potential Impact of income
risk. In case of individual bond the income risk becomes an extension of the income
risk rate. The decline in interest rate in short term debt securities will lead to a
decrease of the risk yield of that fund. The income risk and income risk rate are
almost similar concepts other than the initial applies for funds and the other applies
for individual debt securities.
f. Risk factors and return expectations of the client: there are two
fundamental factors (risk and return) that should be considered in analyzing any
investment. Naturally all investors want to make the highest possible return from
their investments. However, potential return and potential risk always balances out
with each other. Financial advisor or money manager to do investment analysis for
individual clients must create accurate risk assessment. Thus the money manager
can decide the most suitable investment for that client.
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PART III: RESEARCH TASK AND WRITTEN/ORAL QUESTIONS
1. Identity and briefly explain the following types of complex features that you will need to
discuss, review and clarify if they relate to a client situation and needs:
a. Commercial loans: A commercial loan is a debt-based funding arrangement
between a business and a financial institution such as a bank. It is typically used to
fund major capital expenditures and/or cover operational costs that the company
may otherwise be unable to afford.
b. Chattel leases: A chattel mortgage is a common way to finance cars in
business. It is a commercial finance product where a financier lends the money to
buy a car and the customer makes regular repayments.
c. Native title rights: “The Native Title Act 1993 is a law passed by the Australian
Parliament that recognizes the rights and interests of Aboriginal and Torres Strait
Islander people in land and waters according to their traditional laws and customs ”.2
d. Heritage issues: Heritage can be a serious issue in cases where the property
usage can become an illegal affiliation towards the client and the broker.
e. Contaminated Sites or properties near noxious industries: In some
cases, and scenarios the sites used for mortgage broking, there should be
transparency check done to get an over view of the property, as in may cases the
property contains hazardous situations like they are having high pipe lines below
them or for the fact that they are near industries which can he radioactive or having
chemical release that has direct or indirect effect on health.
2. What information do you need to identify when you are exploring and discussing with
client’s risk issues and tolerance?
The information’s that needs to be analysed, discussed and explored regarding client’s
risk issues and tolerance are
 Level of risk-taking that the client will be ready to accept.
 The class of Assets he wants to invest.
2 Müller, M. A., Riedl, E. J., & Sellhorn, T. (2015). Recognition versus disclosure of fair values. The Accounting Review, 90(6), 2411-
2447.
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 The market expectations.
 The return on investment expected and the discussion should include a detailed
explanation about the risk and return phenomenon.
3. Why is it important to ensure that discussions with clients are conducted
comprehensively and ethically?
Clients, at the time of working, a company must utilize in enabling the client’s growth or
change process is to earn their trust, self-assurance, and respect. This is the most
important part of the client appointment strategy, which must be established in the
early phase of the relationship. For those in broking industry, this poses a great
challenge. Unfortunately, many professionals in our field will face difficulties in the area
of client relationship building. In an effort to meet the clients’ needs, companies can find
themselves “befriending the client”.
4. Briefly explain how to use a risk profile to assess the impact of risks to the client or
organisation.
A risk profile is an assessment component to asses an individual's readiness and skill to
take risks. It also refers to the fears to which an organization is exposed. A risk profile is
important for assessing proper investment distribution. Organizations should use a risk
profile as a way to alleviate potential risks and threats. Risk can always be called as a trade-
off between risk and return that states the trade-off between earning a higher return and
having lower probability of losing money. If a plan will be executed the consequences of its
risk can be assessed by Risk impact assessment. Then the resultant risks are ranked in terms
of criticality and importance which provides insight to the projects where decision on the
resource management can be taken, mitigating the realization of high probability/high
consequence risk can also be done.
5. What methods could you use to engage in further questioning and information gathering
if you have not gathered sufficient information to complete an adequate risk profile?
Discuss at least 2.
Interviews: Interviews should be conducted in person or over the telephone. This process
helps to gather data from directly from the person.One-on-one conversation with them of
at-risk youth who can help you understand the issue
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 Interviews can be done formally (structured), semi-structured, or informally
 Questions should be focused, clear, and encourage open-ended responses
 Interviews are mainly qualitative in nature
Questionnaires and Surveys: Responses can be analysed with quantitative methods by
assigning numerical values to Likert-type scales. And this result can be documented.
 In this case Results are generally easier to analyse.
Documents and Records: contains of examining existing data in the form of databases,
meeting minutes, reports, attendance logs, financial records, newsletters, etc.
 This may be an economical way to gather information but may be an incomplete data
source
6. Areas of the client situation that you may need to analyse to determine their
opportunities and constraints?
a. Clients goals and objectives
b. client's websites, and company documentation such as operations policy and
procedures
c. The products and services client purchase most.
d. What the consumer would like to see and how they perceive the company.
e. How other companies meet the client's identified goals and objectives -- this can
include going to industry events.
7. Discuss 3 of the research methods you could use to research loan structures or options.
Financial analysts uses various types of research methods among them we as traders
can use Fundamental analysis which studies of financial, economic and industrial
information for a security to predict the movement of the price of its stock. We will use
fundamental analysis so that we can predict future market prices based on these
factors. This method can be separated in 2 categories, that is top-down and bottom-up.
Top down analysis looks at how global, national economic factors can affect a specific
security. Bottom-up first looks at a microeconomic level. it first emphasizes on specific
security and then decides when a good time to buy the security is.3
3 Paugam, L., & Ramond, O. (2015). Effect of impairment testing disclosures on the cost of equity capital. Journal of Business Finance &‐
Accounting, 42(5-6), 583-618.
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8. What are the 4 areas that we need to analyse complex financial issues in terms of?
The core 4 areas that needs to be analyzed for complex financial issues are
1. Financial Market
The financial market will define as the areas where the financial transactions will take place.
2. Financial Products
The financial products refer to the instruments that help in saving, investing and trading.
3. Financial System
The national or global level that help in operating and exchange of funds.
4. Financial Institutions
The business houses engaged in the facilitating these transactions.
9. Identify and define the information you will need to include and compare in your model
to analyse and prioritise the available options.
Any financial professional need to know how to analyze the financial statements of a firm
effectively. This can be done using following three key areas:
a. The industry economic characteristics must be Identified at first
b. uniqueness of product, level of profit margins should be found out
c. Company strategies should be Identified
d. The quality of the firm’s financial statements should be Assessed
e. Forecasting financial statements is very much needed to analyses.
10. What will you need to do with the available options once you have the outcomes of your
modelling?
 Once I will have all the options available to me to properly model my business I will start
implementing them.
 A proper structure needed to be made so that the implementation can become easy
 Having the researched data according to this we need to explore the market.
 Business plan should be made on the basis of financial support.
 Other legal issues like trade license, other legal certificates should be found out.
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11. What are the requirements that you will need to check to ensure the preliminary options
comply with?
The requirements that needs to be checked as to ensure the compliance of the preliminary
options are the Transparency guidelines that need to be followed , Service provider
Registration, Rules and regulations followed in the country and also if the client holds
foreign nationality the rules applicable there also needs to be addressed, the service
provider experience is also an important.
12. How can you assess the ability of the preliminary options to successfully meet client
needs?
 To provide good customer service and to meet customers need, we need to understand
how our customers are and what they want.
 Gathering information about as many of our customers is very much needed.
 Knowing details such as how they live, what they do and interests will be useful
 Good customer relationships we need to meet.
13. What types of explanatory material could you develop or obtain to help clients review the
selected broking options?
 We can establish a human connection and still be professional.
 Using internet connection we can obtain clients review as we are having a wide no
of social networking sites.
 For the aged people we can use one to one communication rather than digital
platform
 We need to understand the communication channels. As we are having a lots of
options we need to find out which channel should we use for whom.
14. Briefly discuss why you might consider a referral to each of the following in a broking
situation:
a. Accountant: A very critical and important financial functions is normally played by
an accountant who is related to the collection, correctness, recording, analysis and
presentation of a business, organization or company's financial operations. He also
presents the financial data to people within and outside of the business. An
accountant's role may include primarily financial data collection, entry and report
generation. Following are some major roles.
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Management of Financial Data.
Advice & Analysis.
Compliances regarding Regulation and reporting.
Affiliations regarding External Business.
b. Financial advisor: Financial advisor provides with specialist advises to clients on
management of money. The specialist searches the market finds out the most
appropriate products or services that the client should invest. He also need to make
the client aware of the product that meets their demand and then to secure the
sale.
2. Lawyer: The responsibilities of Corporate Lawyer are to handle all our company’s
legal transactions, partnerships, and projects. Duties include consulting and leading
all corporate legal processes such as mergers, compliance issues, transactions,
partnerships, and lawsuits. Lawyer prepares the suitable legal documents for court
proceedings. Other duties include negotiating deals on behalf of the company,
checking the legal issues related to new products and services, and the most
importantly they Protects the company against legal risks and violations.
15. List 3 examples of risk management strategy recommendations you may incorporate into
your materials for the client.
 Assessing the quality of enterprises on Risk Management Program
 Identification of Risk should be the first step risk management practice. Recognizing
risks, and overall impact of this phenomenon on the org, can help an expert to
provide recommendations that enable to develop an efficient risk management plan.
 Calculating the Risk sources can be the important to of risk management, which may
be within or outside the system. Types of potential risks includes: bank customers,
workers of a corporation, technical, cost, contractual, climate conditions etc.
 The risk expert can easily evaluate once a potential hazard has been identified.
16. Why is it important to include a brief description of the anticipated fees and charges in
your client materials?
Clear idea: A client will have a clear idea about the fees and all charges, so this can help to
avoid future confusions between clients and company agents.
Anticipated revenue: Company will be able to anticipate the future revenue as the costing
and pricing is very clear to them.
Transparency: will be clearly maintained between client and organisation
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17. Briefly discuss the types of information that you would include on complaints resolution,
both internal and external, in the client materials.
 Customer details: we should have a clear communication with customers regarding their
wants and choices, culture
 We make our Front-line staff conscious of the complaint handling process
 The information about complain should be identified at very first so that any
appropriate evaluation can be found out
 Complaint Officers must deal with all complaints on their merit in an objective and
unbiased manner.
18. What information should you include in your documented broking information and loan
structures, to be presented to clients?
 A complete explanation of financial system needed to be documented
 Details about the Financial Products we wish to offer to our client
 The components of the whole financial system
 How does the money flow in our financial system?
 Accounting measures, revenue and expense schedules should be included
 Some key points like Payment System, Pooling of funds, Maturity
Transformation, Risk Management, Provision of Liquidity, Price Information etc.
 Financial instruments like Cash instruments, Commercial Paper, Bill Re-
discounting Schemes (BRDS),Mutual funds, Term money, Treasury Bills (T-bills)
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Reference:
 Paugam, L., & Ramond, O. (2015). Effect of impairment‐testing
disclosures on the cost of equity capital. Journal of Business Finance
& Accounting, 42(5-6), 583-618.
 Müller, M. A., Riedl, E. J., & Sellhorn, T. (2015). Recognition versus
disclosure of fair values. The Accounting Review, 90(6), 2411-2447.
 Palea, V. (2014). Fair value accounting and its usefulness to
financial statement users. Journal of Financial Reporting and
Accounting, 12(2), 102-116.
Student name-
Unit code –
Date -