Financial Market, Brokerage, and Asset Management, Research Paper Example

In finance and accounting practice, a basic equation is often used to measure a company or organization’s assets against their debts or liabilities. This equation is referred to as the basic accounting equation. This equation is as follows. Assets = Liability + Stockholders’ Equity. Assets can be liquid or non-liquid; liquid meaning that the asset is easily convertible to cash within one year. More complex assets with variable factors such as shares of stock, bonds, or mutual funds are often managed by a broker or some type of financial specialist. (Brigham 2013 240-244)

Asset management companies as well as brokerage firms provide services to the general public for handling, advising, and consulting with their clients. These financial specialists deal with their clients on how to purchase, manage, and liquidate their assets so that they may receive the highest possible return on their investments. (Brigham 2013 244)

The finance include the loans of money, the actions of global corporations, transnational or not, and the flow of capital, which is driving the trade. Financial services are increasing and this type of transaction is continuously adapted to the context social, economic, and technological. With this increase is also an increase in the number of data to handle and with it, the risk of fraud. (Hillier 2011 176-177)

Fraud can occur in the industry of financial markets and sometimes the asset managers themselves have been known to embezzle their client’s assets. This is why it is important to conduct research, credibility, and company ratings before committing to a financial advisor or asset manager. (Hillier 2011 181)

Asset management is an activity which consists in the responsible management of the capital and the guarantees of the companies such as stocks and bonds by administering institutions (such as banks), to achieve the greatest benefits to the investors. Unlike the services of financial advice, asset management is not only a way to have investment advice, but it is also a relevant activity on the part of the institutions of administering assets, who must make decisions on the management of the investments. (Rose 2014 52-53)

The center of this type of commercial banking business lies in the management of assets from private companies and national and foreign companies; whose assets may be submitted in the form of actions, pension funds, real estate, and liquid assets. The objective of asset management is present in the management of the investment portfolio of customers taking the consideration of its risk. (Rose 2014 203)

The industries that have a high number of assets are that a fault in one of them, in a highly competitive environment, it is very costly. In addition, must adhere to a series of regulations on safety, health and environment while maintaining the maximum availability of the assets, spaces and infrastructure, which is essential for the competitiveness of organizations. (He 2013 319-321)

The functions of the active management are becoming an essential element in organizations that are leaving aside the reactive behavior (fault – repair) and are taking the philosophy of total planning of the life cycle of the assets, processes of preventive maintenance and other best practices. (Brigham 2013 241)

Some organizations still see the management of assets as part of the maintenance plan, until it shows the impact of a correct management of the business assets. This change in mentality demonstrates the change that is currently happening from the management and maintenance to the management of the business assets. In the entire system of financial market, the most important account to any entity whether public or private, is its’ assets. This is why effective asset management is imperative for success in financial markets. (Rose 2014 171)

References

Brigham, E., & Ehrhardt, M. (2013). Financial management: theory & practice. Cengage Learning.

He, Z., & Xiong, W. (2013). Delegated asset management, investment mandates, and capital immobility. Journal of Financial Economics, 107(2), 239-258.

Hillier, D., Grinblatt, M., & Titman, S. (2011). Financial markets and corporate strategy (No. 2nd Eu). McGraw-Hill.

Rose, P., & Hudgins, S. (2014). Bank Management & Financial Services, 9th.