Detailing the finance section of obtaining CeMAP courses
The finance section of the CeMAP is a difficult area for the average beginner. The student must undergo the basic principles of a financial planner in a rather quick time period. If he/she has no background in basic finance it can be an uphill battle to say the least. Although, many contrarians will point out that taking on such a challenge without any previous knowledge could also be a benefit because the CeMAP seeker has a completely blank slate. Thus, any previous knowledge could convolute any new knowledge to be conveyed and later practiced upon achieving certification.
The basic starting point is that of a financial planner. This entails giving advice to a prospective client about the “do's and do not's” with the clients income, savings, and investment portfolio. For example, if the client is in their 20's, the advisor will assist in the long term future planning of retirement, asset allocation into aggressive growth equities, and a regular savings program. Items like buying a piece of real estate, adequate insurance, and consistent deposits into a retirement fund will be top ranking criterion for this age group.
Alternatively, for a person in the early 60s bracket, the advisor would direct the future retiree to conserve their savings into low risk, low yield secured assets that generate a constant source of income. Therefore, it is critical of the advisor to be aware of the investment vehicles available in the UK financial markets, as well as knowing the most beneficial investment strategy for his/her clients.
A substantial and often overlooked area of financial advising is proper planning and portfolio adjustment that limit losses to taxation. An inadequate advisor can cost 10-20% value loss if not done according. Items such as, year end stock loss sells to offset capital gains is a well known yet often ignored tactic in keeping the tax man away. Also, depending upon the clients tax bracket, varying the buy and hold strategy versus growth or dividend stocks can have a vast difference in long term gains. One of the worst scenarios would be to inform your client that you succeeded in making an annual gain of 5% above the FTSE or NYSE only to later receive a call several months later from the same client who claims he/she has a massive out of pocket tax return to pay.
This in mind, we shift thoughts to gaining new clients and their turnover that a CeMAP holder can undergo. A good advisor can generate new clients, but an excellent advisor can retain them for many years. Even better, the best source of advertising is word of mouth advertising from your clients. This method is tried and true simply because your client – who you make money from – is bragging to others about you making him more money. Its a positive feedback loop that pays great dividends ten fold or more along the lines of professional financial planning.
