Coursework Questions

Please Answer the Coursework Questions

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Please Answer the Coursework Questions

Question 1

Private bankers and other wealth managers have the responsibility of handling clients’ possessions. Consequently, they have to exemplify desirable qualities in order to ensure customer satisfaction. One such attribute is honesty. It is crucial for a wealth supervisor to exhibit integrity in his or her line of work to earn the clients’ self-reliance. In most occasions, various property owners speak in confidence to private bankers. This sensitive information could entail family or property matters. For example, a customer may deposit ten million dollars in his or her bank account. Such clients may not be willing to disclose their resources to other family members hence confide in the private bankers (Bragg, 2011). For this reason, the merchant banker should be trustworthy. He or she should not disclose such details to other parties including the customer’s family members or employees in the bank.

Secondly, the wealth manager should always have the necessary resources before dealing with a client. This will make him/her appear responsible and skillful. This attribute creates a desirable first impression. Clients view such a banker as suitable and reliable in terms of handling their material goods. This quality entails several characteristics. For example, the private banker ought to comprehend his customers’ needs and economic environment. Furthermore, he/she should look into the client’s financial capacity and risk tolerance (Ungar and Sakanashi, 2001). This will help in offering suitable recommendations with regard to the punter’s investment particulars. This feature is not only helpful to the bank’s clients but also to the personal money depository. The financial institution needs employees who understand its clients’ financial needs and capacity in order to avoid business transactions that may jeopardize its operations in terms of risk management.

Another feature of a successful wealth manager involves keeping the clients updated on the financial situation of the bank and the market. The supervisor should inform customers of any variations in their resource distribution and portfolio. For example, the managers should notify their clients of fiscal disasters facing the bank or the market (Hens and Bachmann, 2008). This is not only a sign of proper business ethics but also illustrates responsibility. It aids in averting future conflicts between the bank and its customers. Clients will reduce the risk of losing their investments because of economic disasters. On the other hand, the private bank will avoid the loss of influential customers that may occur because of the employees’ incompetence and the firm’s uncommunicativeness. Therefore, it is crucial for private wealth depositories to consider such employees’ attributes in their hiring process.

Question 2

Islamic finances show a higher level of safety and ethics as compared to conventional banking. This is mainly because of the connection between Islamic business transactions and the Quran. According to Islamic teachings, moral principles are not only a recommendation in commercial operations but are also a way of life for all Muslims. Sharia compliant individuals strictly follow laws enacted within their religious conviction regardless of their exclusion in the national policies. For example, some branches of government in countries with large numbers of Muslims do not offer guidelines on issues such as gambling (Hassan and Mahlknecht, 2011). However, Sharia illegalizes such acts in the business setup. Islamic laws also prohibit commercial deals pertaining pornographic materials and drugs. On the other hand, traditional money depositories do not focus on the moral aspect of business transactions. This makes Islamic finances more ethical than conventional banking.

Quran also emphasizes on integrity in the industrial system. This holy book recommends that individuals in the commercial environment should exhibit honesty when dealing with clients or fellow employees. They should also conduct thorough investigations before making concrete business decisions or transactions. According to the Quran, these guidelines help in avoiding cases of corruption and mischief. Its strong stand on these vices makes the Islamic banking sector more ethical than the conventional system (Lewis and Algaoud, 2001). Likewise, the policies of this Sharia compliant mode of banking make the system safer than the traditional trade. This is through the employment of strategies such as the deposit insurance system. Sharia acquiescent banks protect their clients’ investments through partial or full compensation in case of losses caused by the institute’s delayed payment of its monies.

Islamic banks also have unique provisions based on hazard weighting of resources. These provisions do not occur in traditional money depositories thus improving safety of the clients’ investments (Jaffer, 2009). Islamic contracts guiding the risk weighting of finances in commercial institutions regards the involved parties as co-investors. Consequently, the client and financial institution shares the losses incurred equally. This reduces the risk involved in such transactions thus increasing their safety. Moreover, institutions mandated to oversee Islamic banks offer guidance on risk aspects as a way of ensuring safety of the customers’ possessions. This is through the interpretation of various Islamic treaties such as Mudaraba, Ijarah and Salam. This makes the consumers aware of the risks and operations of each contract thus they are able to sign commercial agreements that confer with their needs. This unique feature of Islamic banks makes it safer than the traditional mode.

References

Bragg, S. M. (2011). The new CFO financial leadership manual. Hoboken, N.J: Wiley.

Hassan, K., & Mahlknecht, M. (2011). Islamic capital markets: Products and strategies. Chichester, West Sussex, U.K: Wiley.

Hens, T., & Bachmann, K. (2008). Behavioural finance for private banking. Chichester: Wiley.

Jaffer, S. (2009). Islamic wealth management: A catalyst for global change and innovation. London: Euromoney Books.

Lewis, M., & Algaoud, L. M. (2001). Islamic banking. Cheltenham, UK: Edward Elgar.

Ungar, A. B., & Sakanashi, M. T. (2001). Your employee stock options. New York: HarperBusiness.