Name: Vaibhav Sharma
Roll No.: 2200520700063
Subject: Financial Planning
Subject Teacher:
Dr. Harshmit Kaur Saluja
Financial Planning
Assignment-1
Role of Financial Planner
Risk Assessment and Management: Financial planners play a crucial role in assessing and
managing the risks associated with derivative instruments. They analyze the risk tolerance and
objectives of their clients and recommend appropriate derivative strategies to hedge against or
speculate on price movements, interest rate changes, or other underlying variables.
Derivative Instrument Selection: Financial planners help clients select the most suitable
derivative instruments based on their risk profile, investment horizon, and market outlook. This
involves evaluating various derivatives such as options, futures, forwards, and swaps to
determine their suitability for achieving specific financial goals.
Portfolio Construction: Financial planners incorporate derivative strategies into clients'
investment portfolios to enhance risk-adjusted returns or achieve specific investment objectives.
They may use derivatives to diversify portfolios, hedge against downside risk, or capitalize on
market opportunities while considering factors like liquidity, counterparty risk, and regulatory
considerations.
Monitoring and Rebalancing: Financial planners continuously monitor derivative positions
within clients' portfolios to ensure they remain aligned with their investment objectives and risk
tolerance. They may recommend adjustments or rebalancing strategies in response to changes
in market conditions, portfolio performance, or clients' financial circumstances.
Education and Communication: Financial planners educate clients about the characteristics,
benefits, and risks of derivative instruments to help them make informed investment decisions.
They explain complex concepts in understandable terms, provide updates on market
developments, and address any questions or concerns clients may have regarding their
derivative investments.
Regulatory Compliance: Financial planners ensure that derivative transactions comply with
relevant regulatory requirements and industry standards. They stay abreast of regulatory
developments and adhere to best practices to safeguard clients' interests and maintain the
integrity of the financial planning process.
Client Relationship Management: Financial planners cultivate strong relationships with their
clients built on trust, transparency, and professionalism. They listen to clients' needs, goals, and
concerns, tailor financial recommendations accordingly, and provide ongoing support and
guidance to help clients achieve their financial objectives over time.
