Against the background of the asset allocation, fund managers consider the degree of diversification that makes sense for a given client (given its risk preferences) and construct a list of planned holdings accordingly. The list will indicate what percentage of the fund should be invested in each particular stock or bond. The theory of portfolio diversification was originated by Markowitz (and many others). Effective diversification requires management of the correlation between the asset returns and the liability returns, issues internal to the portfolio (individual holdings volatility), and cross-correlations between the returns.
Though the investment management industry may provide lucrative returns, there are also key problems that come with running such a firm. The revenues of investment management firms are directly linked to the market's behavior. This direct connection means that the company's profits depend on market valuations. A major decline in asset prices can cause a decline in the firm's revenue, especially if the price reduction is great compared to the ongoing and steady company costs of operation. Also, clients may be impatient during hard times and bear markets, and even above-average fund performance may not be able to sustain a client's portfolio.
The planner might have a specialty in investments, taxes, retirement, and/or estate planning. Further, the financial planner may hold various licenses or designations, such as Certified Financial Planner (CFP), Chartered Financial Analyst (CFA), Chartered Financial Consultant (ChFC), or Certified Investment Management Analyst (CIMA), among others. To obtain each of these licensures, the financial planner must complete a different set of education, examination, and work history requirements.
Conventional assets under management of the global fund management industry increased by 10% in 2010, to $79.3 trillion. Pension assets accounted for $29.9 trillion of the total, with $24.7 trillion invested in mutual funds and $24.6 trillion in insurance funds. Together with alternative assets (sovereign wealth funds, hedge funds, private equity funds and exchange traded funds) and funds of wealthy individuals, assets of the global fund management industry totalled around $117 trillion. Growth in 2010 followed a 14% increase in the previous year and was due both to the recovery in equity markets during the year and an inflow of new funds.

Marriage. Many couples wait to explore life insurance options until they have children or purchase a home, says Divam Mehta, founder of Mehta Financial Group in Glen Allen, Virginia. "While those are the standard benchmarks, I recommend searching for appropriate life insurance solutions as soon as marriage for a myriad of reasons," Mehta says. "First, the foundation of any financial plan should be insurance. Second, when individuals enter marriage, they are not only forming a union of the souls, but also a union of finances, most notably debt. Many young couples will have student loan debt, car loans and or credit card debt that lenders can possibly go after. The third and most important reason that marriage is an appropriate moment for life insurance is that that it the sooner you start, the more affordable it is, and the more time you have to accumulate cash value if it is a permanent policy."

It’s best to go with a certified financial planner (CFP), which is an instant signal of credibility – but not a guarantee of same. To start, ask people like you if they can recommend a planner. If you have kids, ask a colleague who also has children. If you’re single and just out of college, check with a friend in the same boat. If possible, you want to find a planner with successful experience advising clients in the same stage of life as you.
An initial meeting with a financial planner is like a first date: It’s the chance to get to know one another and see if you mesh on a personal and philosophical level. Take this opportunity to find out everything you can, including how much you can expect to pay, how the financial plan will be presented and how often to expect ongoing communication. (Here are 10 questions to ask a financial advisor to gather information and see whether you click.)
An initial meeting with a financial planner is like a first date: It’s the chance to get to know one another and see if you mesh on a personal and philosophical level. Take this opportunity to find out everything you can, including how much you can expect to pay, how the financial plan will be presented and how often to expect ongoing communication. (Here are 10 questions to ask a financial advisor to gather information and see whether you click.)
In Australia, a company providing financial services must obtain a licence from the Australian Securities and Investments Commission (ASIC). However, there are no requirements for the individuals providing the financial advice, and the ASIC website states that "Holding an AFS licence does not provide a guarantee of the probity or quality of the licensee's services."[4][5]
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