Pros and Cons Associated with Financial Mgmt

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Introduction

This research guide will discuss the pros and cons associated with financial management. Many ways of investing are available to society but all are not proven to be successful. Most recently, society has seen what the affects of the Madoff case has done to investors, as over $8 billion has be defined as fraud.

Financial Management Overview

The primary goal of the investor is financial growth and financial wealth. Society invests to increase portfolios and secure ones future. "If you were thinking of your life as a CFO would, you'd look at the (profit-and-loss) statements, balance sheets and so on," says Francie Dalton, president of Dalton Alliances, a business consulting firm in Baltimore. "And you'd keep a close eye on each line item -- like time, energy, attitude, outcomes." (Dunleavy 2009)

There are many ways one can invest. An individual can invest through his or her employer in the form of a 401K. An individual can contract with a broker, such as Charles Schwab or Merrill Lynch, and have this broker grow the individual's portfolio through the purchase of stocks and bonds. An individual can purchase his or own stocks directly or through online brokering services, such as E-Trade.

Once the decision has been made how to proceed, the individual proceeds. It must be noted just because a stock appears to be strong does not necessarily guarantee that it will be strong. All of the investors who fattened their portfolios with ENRON stock, a company that was "supposedly" profitable, lost everything. Today's investor must be savvy and educated to avoid the downfall of improper planning.

When No One's Looking, Watch Out

The Madoff investment scandal comes to mind in relation to this section, as this story is a current story. Most recently, the Financial Times magazine has found flaws in the laws that were written to protect the nation's investors from scams and scandals, such as the Madoff scandal. "Much of the blame for missing Bernard Madoff's alleged $50bn "Ponzi" scheme has been attached to the US Securities and Exchange Commission's enforcement division - and, in particular, to Linda Thomsen, its director, who announced her departure this week. Ms Thomsen was among the SEC officials excoriated by legislators during hearings over why they had failed to investigate apparently credible tips received about Mr. Madoff for nearly a decade. However, responsibility might belong elsewhere in the organization." (Chung 2009)

When those in charge ...