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Essay Example on Financial Wealth Management

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Carnegie Mellon University
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According to Turner and Gianiodis (2017), financial environment is part of an economy with firms, investors, and markets as the key players. There must be proper management of the finance environment since every day the world changes hence there must be a change in the roles performed by the management. This means there must be a change in the way of doing things due to the change of the financial environment. Just like the individuals having the private property, possess the ability to grow their capital, the financial environment can represent a large part of a well-developed country. Firms are merely business rendering goods and services to the potential and prospective customers. Wilke and Ritter, (2006) upholds that those placing capital into companies with the aim of financial return are called investors. They can either be individuals or businesses performing such a service. All those transactions just become possible due to the existence of the market. Athanassopoulou (2006) continues to argue that for an organization to operate successfully, it must satisfy the requirements in the firms, investors, and market thus a well financial management. There are three major components of the commercial environment which are; financial managers who decide on, financial markets and lastly the investors.

Turner and Gianiodis (2017) also argued that it has been noted with a lot of concern that there are several changes in the roles of financial managers of the organizations caused by various factors. The main factors are Regulatory impacts, Technological influences, Risks, and Stakeholders. The usual roles of financial managers are; estimation of the amount of finance required, determination of capital structure, choice of sources of generating funds for the organization, procurement of funds, a process of fund utilization, Profit and surplus disposal, cash management and financial control. Financial managers are sometimes forced to change their roles due to the factors mentioned above.

Turner and Gianiodis (2017) again explained that regulatory impacts are one of the strongest factors resulting to change of role by the financial manager. The government regulations normally affect financial services in various ways. The influence will depend on the nature of regulation brought about by the government. Increased regulation implies higher workload for financial managers since time and effort is required to adapt business practices to fit new regulations. The regulations can be detrimental to the financial managers or the whole organization just for a short-term but can latter benefit the organization in the long term. Several financial regulations have been set by the government to meet specific standards of the economy or standards of living. Commissions like The Securities And Exchange Commission performs the regulation of securities market hence protect investors against mismanagement of funds. Such regulations encourage more investment, hence helping to protect the stability of financial services companies. Other regulations are intended for the protection of other interests externally and not for benefiting the financial services or asset management. Financial managers can hence change from time to time depending on the nature of the regulation; hence they are not fixed at specific roles.

Technological influence is also a major factor affecting the change of role of finance managers. Financial manager role is going through a great revolution. Financial organizations become more elevated as corporations majorly rely on the strategic prowess of their financial managers. Hence the financial managers face new risks, responsibilities, and challenges, from managing a globally diversified business to mitigating new technological hazards. Its upon the managers to thrive and see on the best approach for the new risks and challenges evolving with their role, by leveraging new technology to help them thrive in this modern environment hence there is an addition of roles to the financial managers. The changing of the world resulting in the change in business requires wise and critical thinking by the new generation employees to identify the best way to perform duties. As the business has changed, it means the role of the finance manager must also change. Over the past half-century, financial managers have been performing roles across the board due to the advancement of the technology. Technological advancement will force the financial managers to know the programming languages on the issues related to information technology since most of the things will be done through the interest unlike in the past when most things were done through manual writing.

Athanassopoulou (2006) emphasizes that risk is a very serious factor affecting the change of financial manager roles in an organization. Proper measures must be taken in order to cab a future risk. This means that when risk is experienced, there must be a change in the way of doing things including the roles of the management of the organization. First, the management team must identify the source of the risk making the financial managers go extra mile the roles defined for them. There will be a need for the change of roles among the employees in order to come up with the amicable solution to control future risks in the organization. Athanassopoulou (2006) again added that the organization needs to make intelligent, sound and quick decisions in matters related to risk management. Such risks incurred in financial institutions include; interest rate risk which occurs when the maturities of assets and liabilities mismatch, market risk occurring when adverse movements in the costs of assets and liabilities. Credit risk when the organization's clients fail to pay the loan and other obligations, and liquid risk incurred when there are excessive withdrawals of liabilities by customers. Such risks and many others should be checked accordingly and cabbed by the managers in the organization.

According to Turner and Gianiodis (2017), stakeholders are investors or people involved like employees in the organizations whose actions determine the outcome of the decisions in the business and are optimistic to the success of the organization. They also include the business partners who depend on the organizations products for other uses. Stakeholders have several roles they perform to the organization. These include; decision making, direct management, investing in the business, corporate conscience and many others. Since the stakeholders can affect the operation of the organization, they can change the structure of leadership including the change of duty to departments like the financial managers. In case the stakeholders realize a future failure or success, they can change the roles of financial managers or simply advice the company to add certain roles to other employees. Turner and Gianiodis (2017) said that this had been seen in many companies where the stakeholders change the roles of different employees in the organization. Internal stakeholders like the managers, employees and also the board of management directors can decide to change their roles or even to reshuffle the roles among themselves depending on the factors considered.

Wilke and Ritter (2006) also added that an organization might decide to change the roles of financial managers as a strategy focusing a specific element. It can choose to change the roles as a way of doing away with the competitor hence the company may decide to do things differently. There is various change management strategy which are; Propose incentives, in a case where employees are of self-interest, the organization will encourage their employees by offering incentives thus this will increase or change the roles of the financial managers. The next strategy is exercising authority. An organization may decide to exercise its authority by reducing the number of workers hence the roles of the remaining workers will change or increase to cover the left vacuums. Moreover, an organization may decide the shift the burden of change by creating new structures, having new processes, workflows, and values- then transfer employees to the new one. This will help change the roles of the employees and hence financial managers. The company may also decide to recruit champions of change. Most employees normally dont allow change. In a case where there are some employees with high degree of resistance, can be recruited with new individuals who can easily adapt to change.

Turner and Gianiodis (2017) again argue that as a financial manager, one should be flexible to any change in the economic environment since there are many factors as shown above that can lead to the change in the economic environment. As an employee of the organization, he/she must be a quick decision maker to understand any possible change and how to adjust the change appropriately. Change is amicably, and adjustments are very important. They should also be fast learners in any change in the role performed.


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