This article highlights the three basic laws of success that anyone can apply for astute financial management. The three laws include generating more income than expenditure, investing the difference, and understanding where the money is going.
My understanding after reading the article is that:
- Spending more money than one is making leads to poverty and debt.
- This trend explains why most people are currently in credit card debt.
- A paltry 7% of Americans invest monthly, which is a sign of poor financial management (Garret par. 4).
- The savings that come from spending less than the earnings should be invested regularly to create more wealth.
- Tracking expenditure and investments is a healthy financial management practice.
The authors argue that different departments in organizations are under constant pressure to cut operational costs. The need to remain profitable occasions this push for cutting administrative costs. Unfortunately, most departmental heads do not report directly to the CEO, and thus, they cannot advocate investments that cut operational costs.
My understanding after reading the article is that:
- Adjusting the cost structure cannot be done in a single move, as it requires a systematic approach.
- The changes done on the cost structure are directly proportional to the organizational disruption occasioned by such changes
- A department can have 10% cost cuts without affecting how it relates to the rest of the organization (Coyne, Coyne, and Coyne par. 9).
The article notes that wealth is shifting from baby boomers to generations X and Y, which calls for a change of approach by players in the wealth management industry. This young generation relies on technology to get services, and thus, wealth management institutions need to come up with innovative ways of getting things done.
My understanding after reading the article is that:
- A mixture of offline and digital ways of meeting client needs are inevitable for the wealth management players in the contemporary times.
- However, 62 % of high-net-worth individuals feel that inasmuch as digital wealth management services are convenient and inevitable, meeting a financial advisor face-to-face is equally important (Moreno par. 7).
- Cybercrime and hacking will be the greatest challenges of wealth management in the future
The author notes that banks should currently be looking for mergers and acquisitions due to low valuations. In the face of the public markets, banks are valued less favorably as compared to other sectors like technology, health, and telecoms among others.
My understanding after reading the article is that:
- In the first quarter of 2016, financial services closed 154 deals worth $14.6 billion, which is the lowest value in the last decade (Watt par. 5).
- The financial sector is yet to recover fully from the effects of the 2007/2008 economic recession.
- Investing in the banking sector currently is the best move for anyone out to buy on fundamentals with some value.
The article argues that integrating environmental, social, and governance (ESG) into investment portfolio as a way of sustainability investing (SI) leads to informed decisions and performance. The strategy of SI has evolved from a “nice to have” concept to be one of the value creation models in investment.
My understanding after reading the article is that:
- Sustainably invested assets grew by 61% between 2012 and 2014, which makes it one of the fastest expanding areas of finance (Skroupa par. 11).
- Companies with the best ESG scores are likely to be highly competitive in the market.
Works Cited
Coyne, Kevin, Shawn Coyne, and Edward Coyne. “When You’ve Got to Cut Costs Now.” Harvard Business Review 2010. Web.
Garret, Mathew. “Three Fundamental Laws Of Success In Financial Management.” Forbes 2013. Web.
Moreno, Hugo. “The Future of Wealth Management.” Forbes 2016. Web.
Skroupa, Christopher. “When Capital Generates Social Impact And Financial Results.” Forbes 2016. Web.
Watt, Chad. “Upside in Downtrodden Financials.” Forbes 2016. Web.