The ultimate objective of the financial advisor is to help clients prepare for the future using the various financial products available. If the financial advisor can minimise the number of traumatic experiences that inevitably occur in the course of the client’s investment journey, it can lead to a stronger client relationship. This task may sometimes seem like looking into a crystal ball, however, there is a difference between preparing for the future and predicting the future. In the world of investing, there are people who try to predict the future, and sometimes learn things the hard way. Isaac Newton for example, on 20th April, 1720 sold his stocks in the South Sea Company for £7 000 and made a 100% profit! He was later swept by the mania around the company and bought larger number of stocks near the market peak losing £20 000 eventually. It is reported that Isaac Newton, in the spring of 1720 lamented:
“I can calculate the motions of the heavenly bodies, but not the madness of people.” (Carswell, 1961: 131,199).
“nothing so much as if all the Lunatics had escaped out of the Madhouse at once” (Wilson,1941:103,124).
Financial crises are inevitable but, needless to say, they are very difficult to predict as well. In “Understanding Financial Crises” Moonstone Business School of Excellence (MBSE) presents a concise CPD module which provides an overview of financial crises. Topics covered in this module include:Unfortunately, in helping clients prepare for the future, financial advisors have to operate within the same environment (financial markets) as these “mad men” and sometimes, as one investor who profited from the South Sea company noted, there are times in the investment journey when it feels like
- Introduction to Financial Crises
- Some Noteworthy Financial Crises
- Systemic Risk and Interconnectedness
- Early Warning Signals and Critical Transitions
- The Moral Benefits of Financial Crises
Understanding financial crises will better equip the financial advisor guide the client from harming himself financially. Fortunately, the market is not only made up of “mad men” but also, “wise men” (financial advisors) who provide sound advice aimed at steering people towards the right investment path.
This MBSE module will provide successful candidates with a whopping 8.5 CPD hours, which will obviously address a major portion of the total hours required.
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