Structured Decision-Making Essay

Length: 2 pages Sources: 2 Subject: Economics Type: Essay Paper: #24422146 Related Topics: Decision Making, Investment Portfolio, The Decision, Decision Making Process
Excerpt from Essay :

Decision Making

Career Chosen

The chosen career is investment/financial advisor. This position involves working within the context of a bank or financial services firm, as a broker serving a set group of clients. When determining investments for clients, there is information that should go into the decision, provided by both the client and the company that you work for, as well as by companies in the markets. The investment decisions that you make for/with the client are supposed to reflect this information. That said, many people do not use rational, informed decision-making when they make their investments.

Structured Decision

A structured decision with respect to building an investment portfolio would follow the format laid out in the text. The initial phase is the intelligence. An investment advisor would already have performed intelligence with respect to the different types of investments, and have a set list of favorites. But there needs to be intelligence with the client as well, in order to discover what the problem is. The problem is basically the investment objectives -- say a person wants to have a large retirement fund, while setting aside

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That can be gained by making inquiries of the client, and usually it helps to have a structured methodology for this.

The next step is the design phase, where the possible solutions are uncovered. The end solution will be different for each client, but the decisions will have some basic formats. Then, these need to be narrowed down to find the right one for the client. This starts with a near-infinite array of options and ends when the client has a completed portfolio of specific securities. To get to that stage, the advisor and client will work together to choose the best solution. Usually the advisor selects a few options and presents those to the client, and a discussion is held about the best ones. The client and advisor are both influencers of this process. Finally, the implementation is where the advisor will track the performance of the portfolio, evaluate whether it is meeting the client's needs, and whether it is performing as expected, and then making periodic adjustments (new decisions) to continue to address the problem.

There is a lot of information needed to make this decision. The first is to understand the client's needs -- financial situation, financial objectives, risk preferences and investment…

Sources Used in Documents:

An unstructured decision might involve which potential customers to pursue -- each advisor builds his/her own book of business and must make this decision at the outset of the marketing process. Some hard data might be used -- demographics, income levels, geographic or psychographic targeting, but a lot of this decision could be the result of happenstance or randomness. An advisor could buy a list of phone numbers and have a team of callers to dial those people. Which potential clients to pursue will still be influenced by the decision-makers experience and judgment, based on experience at finding the best areas of potential new clients. Some information is used to help refine this decision, but this decision is actually one of the areas where there is a large discrepancy between advisors, and where many gain much of their competitive advantage.

Reference

Laudon, K. & Laudon, J. (2006). Chapter 10: Improving decision-making and managing knowledge.


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