Introduction
A broker dealer is an investment adviser who uses business acumen as well as financial expertise and know how to review a client’s short-term objective as well as long term retirement goals. A broker dealer is otherwise known as a personal financial adviser. The working hours of a broker dealer are the normal working 8-5 hours , and to do this job one usually requires a bachelor’s degree in a financial related area. It is a respected profession and the annual salary of a broker dealer is estimated to be around $151,000. Their duty can be classified into three segments in a general way.
Investment goals of the client
This is the part where the broker dealer reviews the financial data of the client. This helps in evaluating the goals as well as assess their strength in terms of monetary value. The broker dealer also reviews the client’s personal information. This helps in assessing because it aids in the tailoring of financial recommendations that the personal financial adviser will give to the client. This is in relation to the client’s net worth. Some of the personal data of the client comes in form of documents of profit and loss as well as a statement of financial condition. the former shows the revenue and the expenses of the client, where revenue can be in form of interest income or earnings from a labor agreement. Revenue can also be in form of the participation by the client in financial market activities such as stock trading. On the other hand, when the personal financial adviser looks at the expenses, what they are looking for are the bills, the interest expense as well as liabilities and equity. The broker dealer also looks out for the asset which is an economic resource that an individual owns. Liability is the opposite of an asset; it is a debt such as mortgages and loans that a client is obligated to pay back when due. It is therefore the duty of a broker dealer to review the financial data of a client, as stipulated above, in order to measure a client’s risk profile which indicates whether a client prefers risky assets such as stocks which are volatile, or the less risky type such as the bonds and notes.
Portfolio assets
A broker dealer also advises the client on the selection of portfolio assets. This is done based on the risk profile and financial data. A risk averse customer is one who does not invest highly in risky assets such as financial futures, options as well as other derivative products. This is the opposite of a risk taker, where risk is the probability of a loss arising from unfavorable security price fluctuations.
To ensure regulatory compliance
This is where the broker dealer covers the customer as well as himself by abiding by the professional standards and industry practices which are a requirement by the government. This is to be considered when providing asset-selection recommendations. The broker dealer is expected to have knowledge and to practice this, as this is a part of his duty.
