Best Financial Services Inc,

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IntroductionLinda Best, a Certified Financial Planner (CFP) from Sarnia, Canada is the founder and sole shareholder of Best Financial Services Inc. which was established on January 1, 2001. Sarnia, the largest city in South Ontario, bordered the United States and was heavily populated with aging baby boomers and blue-collar workers. Best Financial earned its revenues mainly from blue-collar workers nearing retirement. Best financial had formed strong relationships with many clients throughout Sarnia and managed over 1000 financial plans allowing a steady revenue and profit growth. The key services provided by Best Financial are risk management, tax preparation and professional money management. The company’s Assets under Management were $22 million on as January, 2008.Gerald Young, one of the top clients of Best Financial had informed Linda Best that he would be moving his assets to one of Best’s competitors, Scotia McLeod. The loss has forced Best to think about the future direction of her company. Best needs to complete an assessment of the industry and Best Financial’s past performance, followed by projected financial results of her new strategy. She must decide whether to hire a new advisor or purchase a block of business from another financial planner. Q1. Perform a size- up of the industry. Identify the threats or opportunities.Answer:Financial planning is one distinct segment among many within financial services industry. The aim of the financial planners is to assist people to maximize the potential of their financial assets. Financial planners evaluate a client’s goals, personal circumstances and risk tolerance to help them grow and preserve their wealth, minimize taxes , complete estate planning and determine insurance needs.The financial planning has a prescribed six step process for financial planning outlined by FPSC(Financial Planners Standard Council).The industry offers various products suited to different needs of the different customers. A variety of products like Mutual Funds, Guaranteed investment certificates(GIC) , Life Insurance and Retirement plans are popular.The Revenue is generated through commissions and trailers. Additional revenue stream could be generated through life insurance sales and income tax preparation.Approximately 50000-600000 individuals offered financial advice or sold financial products in Canada out of which only 17000 had a CFP Certification. The CFP(Certified Financial Planner) designation was monitored by the FPSC and assured a client of the credibility of the financial planner as the certification assured a client that the planner had a sound understanding of the business.The future growth prospects for the industry were positive as a US study revealed that employment of personal financial advisors was expected to grow by nearly 35% by 2012.The prominent players in the market included large financial corporations like Assante Capital Management, Freedom 55 Financial and Sun life Financial, small financial planners who operated their own businesses. Risk management, tax preparation and professional money management were some of the services offered by these players to the clients.Threats:The threats faced by the players in the industry: * Due to the additional services being offered by the well renowned banks, there is a threat of losing high end customers. Even Mr. Gerald Young left Best Financial for the same reason. * The industry works on trust and good personal relationships so if one big client leaves the company, other big clients might leave too and this would prove to be a big setback for the company if those clients contribute to a high percentage of the total assets under management. * Transitioning clients from one advisor to another is difficult at a later stage could be problematic so proper planning in assigning clients to advisors should be carried out.OpportunitiesSome of the opportunities in the financial services industry are: * More than one third...
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