For many members of the public, finance and investing is something to be avoided unless essential. It might be something they consider when buying a house, for example, or taking out a pension – but in general, it’s seen as risky, scary or even boring. That’s where financial professionals who really know the markets can help direct people in the right way. This article will look at three distinctive examples of a financial market – and explain how professionals in each of them approach the giving of financial advice.
When it comes to property, the requirements on financial professionals are quite specific and rigorous. This is mostly due to the fact that there’s a high demand for mortgages: as a result, a systematic set of industry standards has emerged for mortgage products. And after the financial crisis of 2008, lending rules have been tightened – so it’s now harder to get approval for some.
For a residential mortgage, your mortgage professional will ask you about your earnings, the size of your deposit, and your employment status. For a buy to let or a commercial property, you might be asked to produce a business plan or evidence of how a tenancy might work. In other financial markets, however, things aren’t quite as stringent. If you’re overstretching yourself financially to buy a property, a financial professional would need to stop you – but if you’re saving hard to enter another type of financial market, you might stand a better chance.
Stocks and shares
What this means in practice is that financial professionals in other markets can take a different approach. Take the example of stocks and shares: stockbrokers might advise you to go down a certain path depending on affordability, but ultimately, they can also take a more speculative approach on your behalf. If you want to take a high-risk but potentially high-reward strategy, for example, they can put together a portfolio of shareholdings which reflects this – at your request.
But financial professionals wear many hats, and in some cases their role is actually to direct you towards a market you hadn’t previously considered. This is certainly the approach taken by those brokers who specialise in CFDs, or contracts for difference. These derivative products are traded on the margins, and they’re easily accessed – almost always through the web. They’re relatively new – so for CFD brokers, there’s a real market education job to do. Brokers can also provide trading tips if you want to learn about CFDs, or they can set you up with customised accounts based on the sectors you want to trade.
The service you’ll receive from your chosen financial professional can really vary depending on the market you choose to enter. From the highly regulated world of mortgages to modern alternatives such as CFDs, each market will have the sort of financial professional you need on hand to help you make wise and hopefully profitable decisions.