si financial experts
The Role of Financial Experts in Today’s Economy
Financial experts are professionals who are involved in the business of managing, interpreting, and assessing the financial aspects of any organization. There are different types of financial experts classified based on the nature of their work. Some work as accountants or auditors, while others become budget or financial analysts. More advanced forms of financial experts include controllers or treasurers. There are experts in investment who spend their time choosing investments, managing assets, and working closely with stock brokers or security salespeople. Some financial experts work in tax or financial planning and offer independent counseling on taxes, estate planning, or risk management. The specifics of their job vary considerably depending on the organization where they are employed. Maintaining accurate financial records, understanding and implementing state and federal laws, and providing advice to other employees in a wide range of financial areas are some of their responsible roles.
An expert from the corporate world, Mr. Ron Throgmorton, says, “Financially illiterate managers mean that they tend to make bad decisions.” But these days, managers control so much more than they used to that it is not clear there is the same pressure for them to be trained in CES. Throgmorton has been working in his specialty for 15 years now and has noticed many changes. One of these changes is the requirement of a much broader perspective when making decisions. “Our job used to be to be technical experts. Now the industry wants its financial experts to also be knowledgeable about business or anything that might have an impact on it. We really have to think ahead and learn to take care of our own destiny.” Indeed, the most compelling reason of the scope of today’s financial expert goes beyond forecasting for an organization. Unlike the majority of the professionals, financial experts must add value for their team, not just for themselves. No longer do they have the luxury of working in a comfortable vault filled with documents galore, but are forced to withstand increased competition, advancements in technology, and demands for more expanded support. “The days when customers used to sit back and wait for results are long gone,” continues Mr. Throgmorton with a grin. “Not only do they want results fast, but they want to also understand what’s taking place. That means I have to constantly improve my understanding of the business industry, especially given how different our top executives are,” comments Mr. Throgmorton, alluding to SABRE who doubles as an airline and computer company. “We give a lot of thought to improving the decision-making process, being quicker at responding, having better risk measures, and finding ways to communicate the story about what a financial decision means for us, such as buying advanced-technology airplanes or contracting for world’s best hedges. And we can’t afford to look upon the decision-making process as a building block approach,” concludes Mr. Throgmorton recalling that an investment can be rather misleadingly compensated by reduced costs and increased market share. Factors like overseas financial exposures or derivative-induced monetary volatility are but a few of the concerns; hence, anyone’s erroneous choice or action could rapidly erode the entire foundation, thus transferring the responsibility to others who are equally unequipped to grapple with the financial beast.
What skills and knowledge are essential for the modern financial expert? Market conditions and regulatory requirements are constantly changing, and globalization, the rapid integration of cultures and economies, has created growing demand for the services provided by financial experts. Success in this competitive job market means aligning one’s career with the business skills and analysis tools that are most likely to attract the best opportunities. Thanks to a combination of rigorous academic studies, practical in-job testing, and continuous in-class perspective validation, universities, colleges, and specialized programs in finance and other related fields form a base that must be supported by work experience and licenses. Many financial analysts are also certified as employees of banks and other financial institutions.
A financial analyst concentrates on the investment market and on any commodities and future markets. Knowledge published in specialized textbooks and other sources is enhanced by personal assumptions and other useful information passed by exchange brokers and their chief dealers. A very broad perspective on the real economy is then completed thanks to discussions with strategists and other specialized analysts working in the treasury and marketing departments, and with colleagues involved in corporate finance, investment banking, and hedge funds. Finite element mathematics for financial mathematics, the theory of differential equations in finance, general computer programming languages, software that supports scientific and financial activities, for instance including databases, mathematical packages, and multiple purpose spreadsheets, and regulatory rules, especially in countries adopting the Basel 3 rules, are also considered among the minimum sets of technical skills.
The role of financial experts in today’s economy has expanded far beyond its origins. What was once a profession that simply contributed to the functioning of financial markets has now helped to shape business and market strategy. Financial-based management consists of a number of different disciplines. We will discuss two main features: corporate financial management and business strategy. In each of the areas, we will discuss how financial experts help to improve the functioning of the economy. We will also illustrate the differences that financial managers of various types play in the operations of businesses and markets.
First, the basic area of corporate finance management is focused on creating the best financial plan for a business. This means trying to obtain the highest revenues with minimal costs, all within a business environment that changes daily. As a result, financial managers become involved in working out and implementing the short-term and long-term financial plans. Also important are the issues of working capital management, budgeting for capital projects, and the development of various types of financial tools, as well as investment and debt portfolios that a business should embark on. Small businesses require much work in this area, as new businesses have a difficult time coordinating all the opportunities available to them. Even mature businesses must constantly monitor this area of the economy or face the risk of being out of the market.
Being knowledgeable and experienced are not the only considerations when hiring a financial expert to analyze the strengths and weaknesses of a company, negotiate in complicated financial situations, or present findings as expert witnesses in high-stakes litigation. Financial experts are only as good as their ability to establish competence, reliability, honesty, and loyalty. Ethical transgressions can result in tragic consequences, including long-term prison sentences, financial ruin, and loss of professional licenses. Reputations that took many years to build can be destroyed in minutes when ethical and best practice guidelines are ignored. Attorneys and client entities that retain financial experts need to be able to trust the experts’ abilities and adherence to ethical principles and best practice standards. These standards involve a range of activities, including confidentiality, protecting information and data, continuously updating relevant skills and knowledge, avoiding conflicts of interest, uttering accurate reports, and insuring against potential damages for self, attorneys, and client entities.
The globalization of markets has made the world more complex, multi-dimensional, and fast-changing. Short-term changes are daily affecting processes that do have considerable influence on our societies. The agglomeration of financial resources and their faster and faster technology-improved turnover processes have changed the role of the financial actors in today’s economies. These changes are, at least in part, due to technical evolutions and the increasing amount and relevance of information flow. On the other side, they are being pushed and highlighted by the reduced interest in long-term real activities that normal people used to have and by the various kinds of discoveries involved in finance-economics exchanges and the risk-taking and risk aversion behaviors that have traditionally affected, for example, the price evolution processes.
In a vertical historical perspective, we have gone through a relatively long relationship, sustained by the practice and by the efficiency-related role of markets, between the worlds of economics and finance. The use of theories and models based on those three pillars has increased in importance, converging into the present time, in which financial resources are real economic problem solvers. Small firms, in particular, perceive the increasing tightness of credit markets, backgrounding many of their investment and productive decisions to their availability. These aspects are generally documented on the basis of single samples. Various economic surveys and investigations have pointed in the same direction. So we can say that the present relationship between economic and finance is part, since several centuries, of a general financial maturity-behavior process. The involvement changes and quantitatively significant increases seem to characterize some of the technical evolutions experienced in more or less recent history. This gives rise to the problem of how finance expertise has to be shaped in universities and professional business schools ten, twenty years from today. We have to identify and form efficient professionals to be employed in market and political economy money evaluation, portfolio management, risk handling, exchange changes, non-profit assistance to some labor, timing and frequency units in capital taxation, social and learning processes – routines that enable valid information to be interpreted and defended. At present, even because of global financial constraints and discipline in public spending, we may expect a reduced possibility of negative strategic errors or lack of flexibility, reduced technological performances of the productive system.
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