Explain various discretionary benefits

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Outline the following discussion with a clear topic sentence, thesis, and hypothesis.

The financial service industry mainly deals in the management, investment, transfer and lending of money. In this industry, all the financial services are provided to the organizations for the management of money. Financial industry has a large number of financial institutions like banks, credit card companies, stock broking companies, insurance companies and investment funds. Every company performs the business for earning money, but making of money is the business of financial institutions by providing fiscal services to the customers.

The main sectors of the financial industry are Investment Banking, Commercial Banking, Money center banks, Investment services, Mortgage companies, Brokerage firms, Exchanges, investment research providers, Debt and Credit rating agencies. In the financial industry, the two basic levels of services are carried out, in which buying and selling of shares and securities takes place by the investors and companies. In this case, a discretionary benefit means the brokerage account in which the client allows the broker to carry out the transaction without asking the client (Financial Services Regulations, 2010).

Various discretionary benefits are used in the industry like disability insurance, life insurance and retirement plans for the benefit of employee. Long term and short term benefits also play an important part in the financial service industry. From the past few years, the financial industry is facing a large range of regulatory changes. The regulatory framework has a wide range of financial products which are securities, derivatives, general and life insurance, deposit accounts and providing payment facilities. It is very important to understand the implications and practical applications of the financial services to operate the functions and regulations properly. It is also necessary to know the main challenges that occur in the types of discretionary benefits offered by the financial service industry for the coming 5 years and 10 years.

// After having the brief introduction on the research of industry and it's various process, the discretionary benefits and it's various types are conducted in an effective way. All the related topic are discussed under the heading of Discretionary Benefits.//

Discretionary Benefits:

Discretionary benefit is the benefit in which the client allows the broker to perform the transactions in the brokerage account without asking the client. Discretionary benefits help the employee in achieving compensation other than wages and salary. There are several types of discretionary benefits provided by the financial service industry like protection programs, paid time benefits, benefits include accommodation and enhancement.

The types of discretionary benefits are as follows:

1. Protection programs: In the discretionary benefit, the financial service industry provides protection programs to the customers and employees such as disability insurance, life insurance and retirement plans for the smooth and well protected life from the future uncertainties.

2. Paid time benefits: Paid time benefits are the benefits which are given to the employees by paying them paid leaves. The employees get paid when they are on vacation leaves, sick leaves and holidays.

3. Accommodation and enhancement: The financial service industry provides the facility of accommodation and enhancement as a facility to its customers and employees. These benefits help the financial service in promoting the mental, physical and emotional behavior of the employee.

4. Family assistance: The financial service industry provides various plans for the well being of the families. The financial services provide better plans and schemes related to the assistance programs, skills and knowledge acquisition which include education and schooling.

Protection programs and family assistance benefits are typically offered in the financial service industry. To meet all the challenges of business, financial services deliver the powerful benefits to the customer and employees. The aim of the financial service industry is to increase the flexibility and adaptive financial plans. The paid time benefit which misses in the industry.

For the expansion of business, long term and short term benefits provide financial relief to various business needs. Cash flow is considered as the power for the growth of financial services. Short term profit helps the industry in paying the suppliers, increase in inventory and covers the expenses. When the business doesn't have enough cash, it provides cash resources and protects business reputation. Short term benefits create surplus cash with the help of operating credit (The Benefits of Financial Transactions Taxes, 2008).

Long term benefits help the financial service industry in overall improvements. Leasing helps the long term benefits in achieving the business equipments. Long term benefits are useful for structuring the match of assets and helps in preserving cash and working capital. Long term benefits are an effective option to support the business growth plans. It helps in forecasting the cash flow of the financial services with the help of regular payments. Both long and short term benefits help the industry in achieving the goals required for investment.

Short term benefits have higher rate of interest which permits the investor to earn lump-sum money. Short term benefits help in earning the higher rate of return within a short period. In financial service, a short term benefit is considered for one to ten years where as long term benefit is for more than 10 years.

// After discussing the discretionary benefits of the industry and its types, factors which are influencing present benefits practices of the industries are discussed in the given research and changes in the industry over the next 5 years and 10 years are analyzed.//

Present Benefit Practices:

1. There are several factors that affect the discretionary benefits provided by the financial service industry:-

2? Loyalty of the employee: - The discretionary benefits depend upon the loyalty of the employee. The degree of loyalty is the basic measurement of Discretionary Benefits. The loyal employees get much discretionary benefits.

3? Need of motivation: - The discretionary benefits are the important tools for motivating the employees. For getting the maximum output from an employ it is necessary to motivate him from time to time by providing various discretionary benefits to him. The intensity of benefits depends upon the degree of the motivation required. The sectors, in which the higher motivation level of employees is required, the degree of provided discretionary benefits is equally higher.

4? Tax Advantages: - Another factor that influences the discretionary benefits is the tax benefit of the employer. The employer may deduct the annual income contribution of these types of benefits as usual business expense. Payments received from different employee benefit plan, are saved by the employers. As this income is received tax free by the employees, even if it is provided with the employer's contribution. So for getting tax advantage the employer provides the discretionary benefits.

5? Inflation: - Inflation is also one of the major factors that influences the benefits provided by the industry. If the benefit levels are related with the employees' wages, the level and cost of these benefits increases as the wages increase. When benefit levels are stated as fixed amounts, inflation results in employee pressure for increase.

6? Legislation: - In recent few years the laws and regulations have liberalized and have allowed more group insurance coverage to be available to an increasing variety of groups. The federal government and many states have also passed legislation mandating that certain benefits be included in group insurance contracts or that existing benefits be broadened.

7? Financial position of the company: The Company's financial position is also an important factor to be considered. The company which has a solid financial position in the market tends to provide more benefits to their employees. At the time of recession the company cut shorts these benefits.

The financial service industry is one of the rapid growing industries. New innovations are taking place rapidly in this sector. The discretionary benefits, provided by the financial service industry also get changed in upcoming years. With the growing inflation rate and competition, the role of these discretionary benefits will be increased in order to retain the potential and loyal employees. The demand of these kinds of benefits will increase. The companies are focusing on providing better and new innovative discretionary benefits like holiday packages, medical insurance for the family of the employee, more extensive pension plans etc.

The major changes that occur in the industry for next 5 years and 10 years are that the industry will be able to focus on the service which is provided to the customer. The segment of the market is large and needs enough practice to implement it, as early as possible. In the coming 5 or 10years, the global economic conditions would be difficult to analyze and forecast the variance of the research. The major changes that would occur in the coming years in the industry would be to attract the customer, and motivate the employees to remain satisfied in the competitive world. The aim of the industry would be to acquire, keep and engage the value added staff of the industry.


The financial service industry should work on earning benefits in order to improve the condition. Banks, insurance companies and security firms should try to reduce the cost of internal process of the industry. Reduction in the cost of services and better customer service will help the industry to grow their business in strong competitive market also. It is very necessary for the industry to maintain strong relationship with the customer. The finance industry should effectively support their clients by providing them with value added services and by lowering the costs.

The financial service industry should provide relevant information at right time to the customers. The burden of financial advisor should be reduced. So that advisors are able to work efficiently across the distribution channel. The financial service industry must improve their banking system which includes renewal of channels, such as ATMs, call centers, branch advisory system to increase the business. In the above discussion of the research, the financial service industry is described, with the help of relevant examples and its dealing process which includes management, investment, transfer and lending of money (Financial Services, 2010).

The main sectors of the industry are investment banking, commercial banking, investment services, brokerage firms and mortgage companies. The financial service deals the business in money but aim of other industry is to earn money. Discretionary benefits and its types such as protection program, paid time benefits, accommodation and enhancement, and family assistance are explained to understand the benefits of financial services. It is very important for the industry to know the short term and long term benefits of the business to analyze the condition of the market. In the research, various present benefits practices are researched to influence the industries behavior. The major changes in the discretionary benefits over the next 5 years and 10 years are analyzed. At last some of the ways are discussed to improve the benefits offered by the industry.

The response addresses the queries posted in 413 words.

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