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Describe how you research and consider complex broking solutions based on the clients’ needs
While providing complex broking solutions to the client, we need to focus on the special or complex features like whether the client is looking for a commercial real estate or residential apartments, it must also be noted whether he is looking for personal possession or commercial or rental, also the other aspect is that the client is a local resident or international purchaser. The broker should involve in performing the analysis on asset allocation and various types of risk like market risk, economic risk, volatility in the expected income and allocation of capital etc. The broker must also need to perform a thorough investigation on various loan structures, the broker should analyse on various legal aspects like consumers affairs act, contract law, insurance act, life act, privacy act, trade practices act etc. These aspects must be considered and analysis needs to be drawn for providing best broking solutions. (Grum, 2016) Sometimes some general insurance products which are offered by the companies to the clients are not straightforward / standardized. Therefore, in such cases the broker would always ask their clients to refer to Tier 1 advisor for his judgment and analysis. The broker will analyse the future cash flow generated from the property, loans which need to be repaid and the next cash inflow generated by the client. Based on these data the loan structure the loans and other possible analysis will be performed. The broker will also ensure that all relevant compliance has been carried out like industry codes and practices, disclosure of any conflict of interest, Social security regulations, Trade practices law etc. All these laws will be verified and checked before applying for loan, in case of any inappropriate or non availability of information & documents, the broker tend to reject processing of the relevant documents and suggest the client not to proceed further.
Describe and/or provide evidence of how you identify and manage risk when dealing with clients with complex loan requirements?
The first step is to evaluate the risk issues which include analyzing the current and future economic conditions, borrowing cost / interest rate of the loan, market risk which broadly includes understanding the economic cycle, GDP growth of the country, interest rates, inflation, real estate market, changes in the stock market etc. will be analyzed and risk will be categorized. The broker will perform diligent risk categorization like Catastrophic, Critical, Marginal and Negligible. The broker will then intend to perform various risk assessment tools like detailed real estate valuation process using discounted cash flow approach and relative valuation approach, this tends to provide a detailed value of the property based on the assumptions carried out by the broker. Once the valuation is performed the broker will communicate the values to the clients along with the key assumptions. (Liptai, 2016). The broker and client may involve in discussion on the issues towards undesirable valuation. The broker will perform detail risk assessments and probability will be assigned based on the severity of the risk and the impact which those risks may cause. All the stakeholders who are involved in the loan process like the financial institutions, Tier 1 advisor, client, seller and others are considered, their views will be seek and information regarding risk are sourced and categorized. The code of ethics is maintained by disclosing the fees, remunerations and other financial obligations to the client which may influence broker recommendations, the broker will also consider the various laws pertaining to transaction of property like contract law, Consumer credit code, integrity checks on the buildings, sellers, buyer etc. , the broker will always aim to perform activities with utmost good faith, the broker will also involve in other legal aspects like social security regulations, trade practices act, also the broker intends to read all the news and information relating to the property and will share them with the clients for taking informed decisions making.
Bergstrand, Jeffrey and Peter Egger, (2011). Gravity equations and economic frictions in the world economy. In Palgrave Handbook of International Trade, edited by Daniel Bernhofen, Rod Falvey, David Greenaway and Udo Kreickemeier. Palgrave MacMillan.
Blonigen, Bruce and Wesley Wilson, (2008). Port efficiency and trade flows. Review of International Economics 16(1), 21-36.
Grum (2016). Influence of Macroeconomic Factors on Prices of Real Estate in Various Cultural Environments. Procedia Economics and Finance, Volume 39, 2016, Pages 597–604
Hummels D and Schaur G (2013). Time as a trade barrier. American Economic Review. 103(7):2935–2959.
Liptai, Tina. (2016). Making every moment count. Real Estate Journal / Nov–Dec 2016 / 11
UNCTAD (2015). The intrinsic relation between logistics performance and trade facilitation measures. Transport and Trade Facilitation Newsletter. First quarter. Issue No. 65. Available at http://unctad.org/en/PublicationsLibrary/webdtltlb2015d1_en.pdf