Professional Documents
Culture Documents
ON
BY
BABLI DIXIT
PREFACE
MBA program is one of the most reputed professional courses in the field of Management. There is a study project as an integral part of MBA. As a complementary to that everyone has to submit a report on the work conducted in the industry. This report is thus prepared for the study project done at . The topic of the project is, !"M#A$AT%&' A(A)*S%S "+ &A$%",S +%(A(!%A) %(ST%T,T%"(S %( T-' MA$.'T/. The organi0ation shall make all possible efforts to have a secure and safe domain. The data1information is very important and most critical to the business re2uirements3 therefore proper measures should be adopted so that the information is well secured and protected.
BAB)% 4%5%T
ACKNO5LED6EMENT
% 7&! $$ -. $(n1 ! "#8n9$ ") -. &!): 1" ;%(d <<<<<<<< 8" CCMC= R($#(9 $# >#) #8$ , n ;%(d(n; *)!1 ") -. ! &)!" )n COMPARATIVE ANALYSIS
OF VARIOUS FINANCIAL INSTITUTIONS IN THE MARKET % am also thankful to all of my teachers and friends for their support and encouragement in finding out the appropriate material for this project report, without their thankless support and efforts, making this report would have been impossible for me. % am also thankful to 66666666666666. for providing me re2uired facilities in the department.% would also like to thank the whole respondents who provide me the best knowledge and for their help and cooperation throughout the project
BAB)% 4%5%T
GUIDE#S 1ERTI=I1ATE
I here certify that the research work embodied in the dissertation entitled Stream Flow has been under taken and completed by BABLI DIXIT bearing the Reg. No. %%%06$EMBA007% under my guidance and supervision. I also certify that he has fulfilled all the requirements under the covenant governing the submission of dissertation to the KS ! for award of MBA.
Place: Da e :
DE1LARATION
I, Ms. BABLI DIXIT, a Final Year Management Student o !!M!, "IS#I$%S#, &ere'( de)lare t&at I &a*e dul( )om+leted m( +ro,e)t on
;1OM-ARATI<E ANALYSIS O= <ARIOUS=INAN1IAL INSTITUTIONS IN THE MARKET>
or t&e a)ademi) (ear 2-.2/2-.3. T&e in ormation su'mitted is true and original to t&e 'est o m( 0no1ledge.
BABLI DIXIT.
E/ECUTIVE SUMMARY
2
The project !omparative Analysis of various +inancial %nstitutions in the market/ was done to get the idea, as well as knowledge, benefits and use of financial advisor in the present scenario. The basic objective behind the study carried out by me is to know much more about the prospects of +inancial #lanning in the growing economy. #eople should come out of the concept of just keeping their money in Savings Account and +i7ed 4eposits and should concentrate on their financial planning to ma7imi0e returns by taking proper guidance from financial planner. Most of the advisors provide e7pertise information and knowledge about various financial products, like bonds, mutual funds, insurance, e2uity market and real estate etc. The in8depth analysis of the report will help the reader know much more about the investors and financial advisors. %nvestors having low saving potential, growth of capital acts as a primary objective behind investments. %nvestors get high level of satisfaction from e7isting financial advisors, which depicts that there is a need of financial institutions to approach these investors in a proper manner so as to provide value additions to the saving potential and portfolio. The sum up, there has been a sustained effort and dedication involved to make this study a comprehensive market study but at the same time. The researcher is open to any kind of suggestions that further needs to be considered in respect to the course of his work.
!omparative Study of 4ifferent #layers in the Market ?= Analysis of the !omparison $esearch Methodology +acts and +indings Analysis and %nterpretation !onclusion $ecommendation and Suggestions Appendi7 Bibliography ?> >A >; >@ :A< ::A ::@
FINANCIAL ADVISORS3
5
.-
'ven though one of the most significant factors in our life is the state of our personal finances, we rarely spend time on managing them since unlike businesses. The reason being, we are not accountable to any one for our personal financial goals and results. As a result we tend to get careless in our financial matters. % know we all understand the importance of savings but let us not get confused between savings and investment. Mere savings Fputting aside a portion of earningsG do not insure or guarantee achievement of future financial goals.
The financial planner helps identify various ta7able and non8ta7able investments. This is not a comprehensive list of services. They may differ from one financial management company to another. "ne can select the services according to their re2uirements, be it personal or professional. A financial planner work begins with a consultation with the client, from whom the planner obtains information on the clientCs finances and financial goals. The planner then develops a comprehensive financial plan that identifies problem areas, makes recommendations for improvement, and selects appropriate investments compatible with the clientCs goals, attitude toward risk, and e7pectation or need for a return on the investment. +inancial institutions usually meet with established clients to update them on potential investments and to determine whether the clients have been through any life changesHsuch as marriage, disability, or retirementHthat might affect their financial goals. +inding clients and building a customer base is one of the most important of a financial plannerCs job, because referrals from satisfied clients are an important source of new business. Many institutions also contact potential clients by giving seminars or lectures or meet clients through business and social contacts.
0(2 N
I -olistic in outlookE !+#s consider all circumstances, family needs, goals, values, and aspirations, while making recommendations. I #rofessionalsE !+#s protect privacy, strive to maintain the highest ethical standards and continually enhance skills and credentials through continuing education. I 'ducational in natureE !+#s guide one through options and e7plain the clearly to help make the best choices. I !ommitted to successE -olistic financial planning is a process, not an event, and commit to adjusting plan as life goals change. .2
.3
now assess your Jrisk profileC. This is just a way to see what level of risk youCre comfortable with. %t would depend on your age and your family circumstances. *2 T)"8? F(n8n1(8? S)?%"()n$+ 3 A planner has a Jbig pictureC vision and is able to see the inter8linkages of all your goals, e7penses and investments. ;2 T# B8?8n1(n; A1"+ 3 A plannerCs responsibility doesnCt, however, end with your buying a product. -e still has to hand8hold you, for instance, when the stock market tanks or tops. %mprudent investors tend to buy when the market is high and sell in a slump. The planner educates you on the merits of a long8term approach and regular investing and helps you rebalance your portfolio.
12 F(n8n1(8? P?8nn(n;3
J+inancial planningC is the process of charting out the money course of your life. %tCs like having a financial roadmap that guides your every step till you pass on the baton to the ne7t generation. %n other words, it is a process in which an individual sets long8term financial goals through investments, ta7 planning, asset allocation, risk management, retirement planning and estate planning. Most of us approach our financial lives like the disorgani0ed traveler who gets to his destination eventually and perhaps even enjoys the rough ride. De think we have a clear roadmap in mind, but our financial lives are marked by ad8hoc decisions and capitulation to the temptations of the flavors of the financial season.
.4
investing your money, the goal is always to put your money to work so it earns you an additional profit. 'ven though this is a simple idea, itLs the most important concept in the current scenario to understand.
.2
.3
Such securities are arguably the best means of preserving principal while receiving a specified rate of return. The safest investments are usually found in the money market and include such securities as Treasury bills FT8billsG, certificates of deposit, commercial paper
.4
or bankersL acceptance slips3 or in the fi7ed income FbondG market in the form of municipal and other government bonds, and in corporate bonds.
0((2 In1)-owever, the safest investments are also the ones that are likely to have the lowest rate of income return, or yield. %nvestors must inevitably sacrifice a degree of safety if they want to increase their yields. This is the inverse relationship between safety and yieldE as yield increases, safety generally goes down, and vice versa.
effective ta7 minimi0ation strategy. By far, ta78saving is the most compelling reason for investors to set aside money for the long term.
2-
2.
I 4ebt Market I Bonds I Mutual +unds I '2uity Market I %nsurance I !ash I Nold I $eal 'state I -ome )oans
22
S#)!"3T !- O&"()n$+
They are good for short term goals, you can look at li2uid funds, floating rate funds and short8term bank deposits as options for this category of investments. )i2uid funds have retuned around @O post8ta7 returns as compared to @.9O post8ta7 that your one8year >O bank fi7ed deposit gives you. So, if you have funds for investment for over a period of one year, it is better to go in for bank deposits. 82 F(7 d M8"%!(". P?8n 0FMP2+ %f you know e7actly for how much time you need to invest your surplus, a smarter option is to invest in +M#s. They are shorter8tenured debt schemes that buy and hold securities till maturity, thereby eliminating the interest rate risk. Try and opt for +M#s that offer a double inde7ation benefit. +und houses usually launch double8 inde7ation +M#s during the end of the financial year so that they cover two financial year closings.
23
which can be ma7imi0ed to =AO of your basic salary3 the company contributes another :=O. The contribution will yield a return of >O and will be eligible for ta7 benefits under Section >A!. ,2 P%,?(1 P!)'(d n" F%nd 0PPF2+ A withdrawal is permissible every year from the seventh financial year of the date of opening of the account and the amount of withdrawal will be limited to @AO of the balance at credit at the end of the <th year immediately preceding the year in which the amount is withdrawn or at the end of the preceding year whichever is lower. -owever, it doesnCt score too well on li2uidity. ##+ is a great investment if you have age on your side so that you can ma7imi0e the benefit by e7tending the period of holding. 12 N8"()n8? S8'(n;$ C !"(*(18" 0NSC2+ Dhile the interest component gets accrued
Fdeemed to be reinvestedG, it is returned to you along with the principal only on maturity. -ence the returns are both fi7ed and assured. %nvestments up to $s.:,AA,AAA are eligible 24
for deduction from income under Section >A!. -owever interest earnings are fully ta7able. #remature encashment is only allowed under specific circumstances such as death of the holder, forfeiture by the pledge or under courtCs order. d2 K($8n V(98$ P8"!8 0KVP2+ )i2uidity in .&# is available any time after =.9 years from the investment date, but a loss of interest has to be borne on premature li2uidation. The interest earned is fully ta7able as per your ta7 slab rate. 2 P)$" O**(1 T(D R 1%!!(n; D &)$("$ 0POTD2+ *ou can e7it a #"T4 within si7
months of starting one without receiving any interest and if with8drawn after one year then = percentage points are deducted. There are no ta7 benefits in this scheme. *2 P)$" O**(1 M)n"#?. In1)- S1# - 0POMIS2+ #remature withdrawal is permitted if deposit is more than one year old. A deduction of @O is levied from the principal amount if withdrawn prematurely. ;2 S n()! C("(B n$ S8'(n;$ S1# - 0SCS2+ The tenure is @ years and can be e7tended by another ; years. )i2uidity is available after one year but it proves costly as there is a penalty of :.@O of the amount deposited. (o ta7 break and now you need to pay T4S too. #2 B8n9 D &)$("$+ These are fle7ible, li2uid and offer good interest rates today. Make use of the two8in8one savings accounts that banks offer Fsurplus over a specified sum is transferred to a depositG to get a higher return on the money accumulating in your savings account. %n the recent Budget, the benefit of Section >A! was also e7tended to bank deposits, which are kept with scheduled banks for a minimum period of five years. The notification for this is yet to come.
%t is a fi7ed income instrument issued for a period of more than one year with the purpose of raising capital. The central or state government, corporations and similar institutions sell bonds. A bond is generally a promise to repay the principal along with a fi7ed rate of interest on a specified date, called the Maturity 4ate. The main attraction of bonds is their relative safety. %f you are buying bonds from a stable government, your investment is virtually guaranteed, or risk8free. The safety and stability, however, come at a cost. Because there is little risk, there is little potential return. As a result, the rate of return on bonds is generally lower than other securities.
A mutual fund is a body corporate registered with S'B% that pools money from the individuals1corporate investors and invests the same in a variety of different financial instruments or securities such as '2uity Shares, Novernment Securities, Bonds, 4ebentures, etc. The income earned through these investments and the capital appreciations reali0ed are shared by its unit holders in proportion to the number of units owned by them. Thus a Mutual +und is the most suitable investment for the common man as it offers an opportunity to invest in a diversified, professionally managed basket of securities at a relatively low cost. Mutual fund units are issued and redeemed by the Asset Management !ompany FAM!G based on the fundCs net asset value F(A&G, which is determined at the end of each trading session. Mutual funds are considered to be the best investments as on one hand it provides good returns and on the other hand it gives us safety in comparison to other investments avenues.
23
Mutual fund schemes may be classified on the basis of its structure and its investment objective.
B. S"!%1"%!
(E O& n3End d F%nd$ %n an open8ended fund, investors can buy and sell units of the fund, at (A& related prices, at any time, directly from the fund. This is called an open ended fund because the pools of funds is open for additional sales and repurchases. "pen ended funds have to balance the interest of investors who come in, investors who go out and investors who stay invested. ((E C?)$ d3End d F%nd$ A closed ended fund is open for sale to investors for a specific period, after which further sales are closed. Any further transaction for buying the units or repurchasing them, happen in the secondary markets, where closed end funds are listed. %n a closed ended fund, thus, the pool of funds can technically be kept constant. %nvestors in closed end funds receive either certificates or depository receipts, for their holdings in a closed end mutual fund
(((E In" !'8? F%nd$ %nterval funds combine the features of open8ended and close8ended schemes. They are open for sale or redemption during pre8determined intervals at (A& related prices.
24
The aim of income funds is to provide regular and steady income to %nvestors. Such schemes generally invest in fi7ed income securities such as bonds, corporate debentures and Novernment securities. %ncome +unds are ideal for capital Stability and $egular %ncome.
The aim of balanced funds is to provide both growth and regular income. Such schemes periodically distribute a part of their earning and invest both in e2uities and fi7ed income securities in the proportion indicated in their offer documents. ('E M)n . M8!9 " F%nd$ The aim of money market funds is to provide easy li2uidity, preservation of capital and moderate income. These schemes generally invest in safer short8term instruments such as treasury bills, certificates of deposit, commercial paper and inter8bank call money. $eturns on these schemes may fluctuate depending upon the interest rates prevailing in the market.
'E L)8d F%nd$ A )oad +und is one that charges a commission for entry or e7it. That is, each time you buy or sell units in the fund, a commission will be payable. Typically entry and e7it loads range from :O to =O. '(E N)3L)8d F%nd$ A (o8)oad +und is one that does not charge a commission for entry or e7it. That is, no commission is payable on purchase or sale of units in the fund.
O"# ! S1# - $
(E T87 S8'(n; S1# - $ These schemes offer ta7 rebates to the investors under specific provisions of the %ndian %ncome Ta7 laws as the Novernment offers ta7 incentives for investment in specified avenues. %nvestments made in '2uity )inked Savings Schemes F')SSG and #ension Schemes are allowed as deduction u1s >> of the %ncome Ta7 Act, :B9:.
#A$AM'T'$S $eturns Administrative e7p. $isk %nvestment options (etwork )i2uidity Quality of assets %nterest calculation
BA(.S )ow -igh )ow )ess -igh penetration At a cost (ot transparent
M,T,A) +,(4S Better )ow Moderate More )ow but improving Better Transparent
Nuarantee
more stocks and sectors. This helps you diversify your investment risk, so even if something were to go wrong with a stock1industry in your portfolio, other stocks1industries should help you shore up your portfolio.
life is full of dangers, but with insurance, you can at least ensure that you and your dependents donCt suffer. %tCs easier to walk the tightrope if you know there is a safety net. *ou should try and take cover for all insurable
32
life is full of dangers, but with insurance, you can at least ensure that you and your dependents donCt suffer. %tCs easier to walk the tightrope if you know there is a safety net. *ou should try and take cover for all insurable risks. %f you are aware of the major risks and buy the right products, you can cover 2uite a few bases. The major insurable risks are as followsE I )ife I -ealth I %ncome I #rofessional -a0ards I Assets I "utliving Dealth I 4ebt $epayment
A money back plan aims to give you a certain sum of money at regular intervals3 simultaneously it also provides you with life cover. Money back plans are especially useful in case you need money at regular intervals for your childCs education, marriage, etc. 12 Un(" L(n9 d In$%!8n1 P?8n$ 0ULIP$2 ,)%#s basically work like a mutual fund with a life cover thrown in. They invest the premium in market8linked instruments like stocks, corporate bonds and government securities FgsecsG. The basic difference between ,)%#s and traditional insurance plans is that while traditional plans invest mostly in bonds and gsecs, ,)%#sC mandate is to invest a major portion of their corpus in stocks. -owever, investments in ,)%# should be in tune with the individualCs risk appetite. ,)%#s offer fle7ibility to the policy holder K the policy holder can shift his money between e2uity and debt in varying proportions. d2 P n$()n @ R "(! - n" P?8n$ #lanning for retirement is an important e7ercise for any individual. A retirement plan from a life insurance company helps an individual insure his life for a specific sum assured. At the same time, it helps him in accumulating a corpus, which he receives at the time of retirement.
2 End)>- n" P?8n$ %ndividuals with a low risk appetite, who want an insurance cover, which will also give them returns on maturity could consider buying traditional endowment plans. Such plans invest most of their money in specified debt instruments like corporate bonds, government securities FgsecsG and the money market.
depending on the market conditions. -oldings in cash include amount held in savings bank accounts, li2uid funds and short8term fi7ed deposits.
driven by sentiments. All that is re2uired to reverse a price movement is a change in sentiment.
32
33
V($()n
To become a world class Bank
34
35
P!)-)" !$
-4+! is %ndiaLs premier housing finance company and enjoys an impeccable track record in %ndia as well as in international markets. Since its inception in :B??, the !orporation has maintained a consistent and healthy growth in its operations to remain the market leader in mortgages. %ts outstanding loan portfolio covers well over a million dwelling units. -4+! has developed significant e7pertise in retail mortgage loans to different market segments and also has a large corporate client base for its housing related credit facilities. Dith its e7perience in the financial markets, a strong market reputation, large shareholder base and uni2ue consumer franchise, -4+! was ideally positioned to promote a bank in the %ndian environment.
B%$(n $$ *)1%$
-4+! BankLs mission is to be a Dorld8!lass %ndian Bank. The objective is to build sound customer franchises across distinct businesses so as to be the preferred provider of banking services for target retail and wholesale customer segments, and to achieve healthy growth in profitability, consistent with the bankLs risk appetite. The bank is committed to 4-
maintain the highest level of ethical standards, professional integrity, corporate governance and regulatory compliance. -4+! BankLs business philosophy is based on four core values 8 "perational '7cellence, !ustomer +ocus, #roduct )eadership and #eople.
C8&("8? S"!%1"%!
As on ;:st March, =AAB the authorised share capital of -4+! Bank is $s. @@A crore. The paid8up capital as on the said date is $s. <=@, ;>,<:,ABA18 F <=,@;,><,:AB e2uity shares of $s :A18 eachG. The -4+! Nroup holds :B.;>O of the BankLs e2uity and about :?.?A O of the e2uity is held by the A4S 4epository Fin respect of the bankLs American 4epository Shares FA4SG %ssueG. =?.9B O of the e2uity is held by +oreign %nstitutional %nvestors F+%%sG and the Bank has about @,<>,??< shareholders. The shares are listed on the BoBBAy Stock '7change )imited and The (ational Stock '7change of %ndia )imited. The BankLs American 4epository Shares F A4S G are listed on the (ew *ork Stock '7change F(*S'G under the symbol L-4BL and the BankLs Nlobal 4epository $eceipts FN4$sG are listed on )u7embourg Stock '7change under %S%( (o ,S<A<:@+=AA=.
4.
%n a milestone transaction in the %ndian banking industry, Times Bank )imited Fanother new private sector bank promoted by Bennett, !oleman P !o. 1 Times NroupG was merged with -4+! Bank )td., effective +ebruary =9, =AAA. This was the first merger of two private banks in the (ew Neneration #rivate Sector Banks. As per the scheme of amalgamation approved by the shareholders of both banks and the $eserve Bank of %ndia, shareholders of Times Bank received : share of -4+! Bank for every @.?@ shares of Times Bank.
D($"!(,%"()n n ">)!9
-4+! Bank is head2uartered in MuBBAi. The Bank at present has an enviable network of over :<:= branches spread over @=> cities across %ndia. All branches are linked on an online real8time basis. !ustomers in over @AA locations are also serviced through Telephone Banking. The BankLs e7pansion plans take into account the need to have a presence in all major industrial and commercial centers where its corporate customers are located as well as the need to build a strong retail customer base for both deposits and loan products. Being a clearing1settlement bank to various leading stock e7changes, the Bank has branches in the centers where the (S'1BS' have a strong and active member base. The Bank also has a network of about over ;=B@ networked ATMs across these cities. Moreover, -4+! BankLs ATM network can be accessed by all domestic and international &isa1Master!ard, &isa 'lectron1Maestro, #lus1!irrus and American '7press !redit1!harge cardholder
42
The Bank also has a network of about over ;=B@ networked ATMs across these cities. Moreover, -4+! BankLs ATM network can be accessed by all domestic and international &isa1Master!ard, &isa 'lectron1Maestro, #lus1!irrus and American '7press !redit1!harge cardholders.
43
44
A well82ualified financial planner like a !ertified +inancial #lanner F!+#G would work with a person to prepare his plan. A !+# is finance savvy and combines the objectivity and trust, developed through years of e7perience and e7pertise in planning oneCs personal finance.
CERTIFIED FINANCIAL PLANNERCM certification or !+#!Mcertification is an international program in the field of +inancial #lanning, wealth management and financial advisory services.+inancial #lanning is one of the fastest growing careers across the world. Being one of the fastest growing economies,%ndia currently has around @ crore families with investible surplus. Assuming one financial planner is handling appro7. :,AAA lients we need at least @A,AAA !ertified+inancial #lanners in %ndia immediately. This is set to grow at a faster rate. !+#!Mcertification was rated as Nold Standard in +inancial #lanning by the DAll StreeT 45
SournAl in the year =AA9. CERTIFIED FINANCIAL PLANNERCM certification or !+#!M!ertification is a mark of e7cellence granted to individuals whomeetthe stringent standards of education, e7amination, e7perience and ethics. %t is themost prestigious and internationally accepted +inancial #lanning certification recogni0ed and respected by the global financial community. !+#!M !ertification is the highest level of certification in the field of +inancial #lanning worldwide with over :,:>,=<@ !+#!M certificants, who are widely respected by consumers, professionals and industry.
certification is for financial services professionals, customer relationship officers, insurance agents, stock brokers, those looking to e7pand their careers in the financial services business, and graduates who want to be professionally and globally recogni0ed.
42
+inancial #lanning is one of the fastest8growing professions across the world and +inancial #lanners are the most sought after professionals by a fast growing working population that earns well, and needs e7pert handling of their finances. The opportunities are aplenty with Banks, +inancial #lanning outfits, Dealth Managers, life %nsurers, Accounting +irms, Stock brokers seeking professionals with such e7pertise. +inancial #lanners offer e7pert opinions on issues related to retirement planning, estate planning, ta7 planning, investment planning, insurance planning, financial management of small businesses and trusts, stock brokering, debt and risk analysis. needless to say a career as a +inancial #lanner can prove both challenging and rewarding. recogni0ing +inancial #lanningCs occupational benefits, there are many surveys that indicate a career in +inancial #lanning as the top career choice worldwide. Most
+inancial #lanners enjoy relatively low stress, have a high earning potential and enjoy a high degree of workplace autonomy. The personal satisfaction element cannot be underestimated. &ery often, independent +inancial #lanners find that people are just overwhelmed and need direction, so itCs their job to listen, understand their situation and offer some options that will help them. %t gives them satisfaction to help people do better, not just with their finances but with blending the financial side with the other sides of clientsC lives so that they can achieve their goals.
I enhanced career and employment opportunities in +inancial Services Sector. I #ersonal satisfaction in knowing you have earned the professionCs highest standard and met the global benchmark. I Satisfied clients who appreciate the comprehensive approach to +inancial #lanning and e7tend long term relationships and referrals. I *our e7pertise and credibility as a 2ualified professional is instantly communicated. I More revenue streams by increasing your product and service offering to your clients. I enhanced Social Status by joining the league of professionals. I recognition in over =; countries across the world. I opportunities to showcase your knowledge on +inancial #lanning P Advising 43
through various media vehicles. +inancial #lanners may earn in any of the following three waysE :G A #lanner can be paid by a salary from the company for which the #lanner works3 by fees based on an hourly rate, a flat rate, or on a percentage of the assets and1or income. =G By commissions paid by a third party from the products sold to clients to carry out the +inancial #lanning recommendations. ;G By a combination of fees and commissions whereby fees are charged for the amount of work done to develop +inancial #lanning recommendations and commissions are received from any product sold. As the profession is in its nascent stage various models are being tried and tested by the +inancial #lanners in %ndia. But surely over a period of time the clear trend is towards a fee8only model like other professions, i.e. medicine, law, accountancy, etc.
44
+inancial #lanning Standards Board %ndia F+#SB %ndiaG offers the !erT%+%e4 +%(A(!%A) #)A(('$!Mcertification or !+#!M certification #rogram. +#SB %ndia is the sole licensing body that awards !+#!M certification in %ndia through an agreement with uS based +#SB, ltd. The mission of +#SB %ndia is to help benefit the public by granting the !+#!Mcertification and upholding it as the recogni0ed standard of e7cellence for #ersonal +inancial #lanning. !+#!M certification is awarded by affiliate organi0ations of +#SB, ltd. in their respective countries of operation. .indly note +#SB %ndiaCs authori0ed 'ducation #roviders are only training and administrative entities authori0ed by +#SB %ndia and not the !+#!M certification awarding bodies. +#SB %ndia reserves the rights of awarding and relin2uishing !+#!M certification as per the certification policies. +inancial #lanning Standards Board %ndia F+#SB %ndiaG is a #ublic K #rivate enterprise and a #rofessional Standards Setting body that proactively guides the development and promotion of standards for +inancial #lanning professionals to benefit the public in the country. +#SB %ndia closely works with all the stakeholdersC vi0. the Novernment, the regulators, the %ndustries1Associations, the !orporations, the Media and the Neneral #ublic to achieve its objectives. %t is a #rofessional !ertification organi0ation, part of leading Nlobal !onfederation established by prominent financial service corporations with an objective to professionali0e the concept of +inancial #lanning in %ndia. +#SB %ndia is supported by @A +inancial Services organi0ations in the country as its !harter Members.
*es, currently !+# certification is offered and recogni0ed in =; countries including Australia, Austria, Bra0il, !anada, !hina, !hinese Taipei, +rance, Nermany, -ong .ong, %ndonesia, %reland, Sapan, Malaysia, new Tealand, netherland, republic of .orea, Singapore, South Africa, Swit0erland, Thailand, united .ingdom and united States of America. +#SB, ltd. enters into licensing and affiliation agreements with non8profit organi0ations For their e2uivalentG around the world that allows the organi0ations to establish and operate the !+# certification program in a country or region. +#SB Affiliates who meet and maintain +#SBCs affiliation criteria of high 45
standards are authori0ed to administer the !+# certification program on behalf of +#SB in a country or region. +#SB %ndia is one of the Affiliates of +#SB, ltd. !+# certification undertaken in any of the affiliate country is recogni0ed globally and governed by cross border policy usage. N)"BA) !",(T "+ !+# !'$T%+%!A(TS Fas in 4ecember =AA>G !ountry1$egion (o. of !+# !ertificants
To benefit the public, +#SB regulates how !+# professionals use +#SBCs !+# or 5-
!erT%+%e4 +%nAn!%Al #lAnner marks outside the borders of the country or region in which they first received !+# certification.%ncidental ,se+#SB permits incidental use of the !+# marks by !+# professionals outside the country or region of their initial certification. %ncidental use consists of displays of the !+# marks in1onE I articles published in a new country or region. I business cards or brochures distributed while traveling abroad. I websites targeted toward stakeholders in the country or region of initial certification that are viewable outside the areaCs borders. !ross8Border ,se %f an individual wishes to hold himself or herself out as a !+# professional or use the !+# marks outside his or her country or region of initial certification for anything other than incidental use, the !+# professional can pursue one of two optionsE :. !ross8Border !ertificationE An individual using the !+# marks in more than one country or region can become cross8border certified by obtaining !+# certification from the +#SB Affiliate in the new country or region and abiding by the certification renewal re2uirements of both +#SB Affiliates. once the !+# professional has completed the process, he or she can identify himself or herself as a !+# professional in those territories as well. =. $estricted ,se of the !+# MarksE %f an individual does not want to1cannot become certified in a new territory, he or she can always communicate the fact that he or she has obtained !+# certification in the country or region of initial certification.
5.
The kinds of services +inancial %nstitutions offer can vary widely. Some institutions assess every aspect of oneCs financial life, including saving, investments, insurance, ta7es, retirement, and estate planning and help one develop a detailed strategy or plan for meeting all financial goals. The major players in the market are as followsE I *'S Bank I !itibank I ,T% Bank )imited I -SB! Bank I -4+! Bank )imited I Bajaj !apital I $eligare 'nterprises )imited
52
*'S BA(. looks to offer comprehensive banking and financial solutions. Dhich is why, they have inducted top 2uality -uman !apital across all the banking functions, including !orporate P %nstitutional Banking, +inancial Markets, %nvestment Banking, Business P Transactional Banking and $etail Banking P Dealth Management.
*'S BA(. provides the entire suite of life insurance products, ranging from risk protection to investment8related unit linked products, for individuals, groups or select employees. gG Neneral %nsurance *'S BA(. has partnered with Bajaj Allian0 Neneral %nsurance !o to distribute their (on )ife %nsurance products to our clients.
55
,2 CITIBANK (2 In"!)d%1"()n
!itigroup in %ndia !itigroup is the single largest foreign direct investor in the financial services industry in %ndia. !ommitted to %ndia for over :AA years, !itigroup considers itself a local bank with an international perspective backed by the largest global network. Dith a staff strength of over :@,AAA, !itigroup has consolidated its position as the most innovative and comprehensive financial products and services provider in the country, and today has a customer base of over :,AAA large corporate, over ==,AAA small and medium enterprises and over @.@ million retail customers. A pioneer in consumer banking, !itibank was the first to introduce credit cards, focused consumer lending programs and electronic banking in %ndia. Today, the !itibank network comprises of ;B bank branches across =? cities and over <AA !iti!ard Banking centersKwhich combine ATMs and self8service phone and %nternet bankingHoffering !itiNold wealth management, credit cards, mortgage services, 52
Auto )oans, #ersonal )oans, Suvidha and ($% Services. Through !iti+inancial, !itigroup offers consumer finance services in the country.
53
dG Art Advisory Services %n todayLs market, art presents an attractive investment option. To assist the clients with advice on various art investments, or to help them in buying or selling art, !itiNold has tied up with a reputed art gallery, Apparao Nalleries. eG %nsurance Services %n todayLs market, insurance presents an attractive investment option. To assist the clients with advice on various insurance policies, or to help them in purchasing insurance, !itiNold has tied up with Birla.
54
cG !ommodity Market !ommodities Market is growing in %ndia and !apital Market offers following screens pertaining to !ommodity MarketE I !ommodity prices 'nd of the day for all the e7changesE o Nainers P )osers o Top Traded &alue o Advance 4ecline I Scrolling ticker for Spot P +uture prices P Net Quote button. I !ommodity news is also updated on daily basis
bG Mutual +unds ,se the proven e7pertise and insights of the worldLs local bank for your investments. De offer you investment options in funds that meet our selection criteria and fit your re2uirements, helping you create and increase your wealth potential in the long8term scenario. cG %nsurance *ou have probably planned your life with great care, working slowly and steadily towards fulfilling your dreams and ambitions. ,nfortunately you have no control over certain natural and man8made events that may overturn your plans. As you change so do your insurance needs. The insurance solution that is relevant to you today may be very different to the solution you re2uire years from now. %t is therefore critical for you to identify protection needs that are pertinent to you and your circumstances.
2.
2 R ?(;8! (2 In"!)d%1"()n
$eligare 'nterprises )imited was promoted by the promoters of $anba7y )aboratories )imited and it was originally incorporated as &ajreshwari !osmetics #rivate )imited/ on Sanuary ;A, :B><. The name of the company was changed to $eligare 'nterprises #rivate )imited/ on Sanuary :A, =AA9. $eligare 'nterprises )imited F$')G, is one of the leading integrated financial services groups of %ndia. $')Cs businesses are broadly clubbed across three key verticals, the $etail, %nstitutional and Dealth spectrums, catering to a diverse and wide base of clients. $') offers a multitude of investment options and a diverse bou2uet of financial services and has a pan %ndia reach in more than :@@A locations across more than <9A cities and towns.
Bajaj !apital is one of %ndiaCs leading +inancial Services companies offering +ree Advice on %nvestments, %nsurance, Ta7 Saving, $etirement #lanning, +inancial #lanning, !hildrenCs +uture #lanning and other services. They are also S'B%8approved !ategory % Merchant Bankers. Today, Bajaj !apital is a one of the largest financial planning and investment advisory companies in %ndia, with a strong presence all over the country. They offer a comprehensive range of services including financial planning and investment advice, and the entire gamut of financial instruments and investment products of almost all major companies, both public and private. %n addition, they also provide investment assistance by helping clients complete all the formalities, and help them keep regular track of their investments. 22
I %nsurance #lanningE To protect yourself, your family and your assets I !hildrenLs +uture #lanningE To give your children a financially secure future I $etirement #lanningE Because retirement is a time to rela7, not to get worried
24
I Team of e7perienced advisors Allegro !apital is a comprehensive %nvestment Bank that comes with years of e7pertise in offering financial solutions and advisory services across the corporate world. Allegro !apital Advisors has offices located in key metros across %ndia. "ur teams of financial advisors and specialists have the local knowledge, contacts and awareness to create optimum solutions that meet our clientLs financial ambitions. Niving our clients the global local advantage, we have broadened our reach to =@ major cities and towns of %ndia and established strategic alliances with several renowned advisory houses and institutions, internationally.
25
22
23
M8(n *%n1"()n$ )* IDBI IDBI ($ ' $" d >("# "# ! $&)n$(,(?(". )* 1)3)!d(n8"(n; "# >)!9(n; )* (n$"("%"()n$ n;8; d (n *(n8n1(n;= &!)-)"(n; 8nd d ' ?)&(n; (nd%$"!( $E I" #8$ ')?' d 8n 8&&!)&!(8" - 1#8n($- *)! "#($ &%!&)$ E IDBI 8?$) %nd !"89 $@$%&&)!"$ >(d 3 !8n;(n; &!)-)"()n8? 81"('("( $ (n1?%d(n; n"! &! n %!$#(& d ' ?)&- n" &!);!8-- $ *)! n > n"! &! n %!$= &!)'($()n )* 1)n$%?"8n1. $ !'(1 $ *)! $-8?? 8nd - d(%- n" !&!($ $= %&;!8d8"()n )* " 1#n)?);. 8nd &!);!8-- $ *)! 1)n)-(1 %&?(*"- n" )* "# %nd !&!('(? ; dE
24
IDBIJ$ !)? 8$ 8 18"8?.$" IDBIJ$ !)? 8$ 8 18"8?.$" ") (nd%$"!(8? d ' ?)&- n" n1)-&8$$ $ 8 >(d $& 1"!%)* 81"('("( $E IDBI 18n *(n8n1 8?? ".& $ )* (nd%$"!(8? 1)n1 !n$ 1)' ! d %nd ! "# &!)'($()n$ )* "# IDBI A1"E 5("# )' ! "#! &)!"*)?()E D ' ?)&- n"8? A1"('("( $ )* IDBI P!)-)"()n8? 81"('("( $ In *%?*(?- n" )* ("$ d ' ?)&- n"8? !)? = "# B8n9 1)n"(n% $ ") & !*)!- 8 >(d !8n; )* &!)-)"()n8? 81"('("( $ ! ?8"(n; ") d ' ?)&- n"8? &!);!8-- $ *)! n > n"! &! n %!$= 1)n$%?"8n1. $ !'(1 $ *)! $-8?? 8nd - d(%- n" !&!($ $ 8nd &!);!8-- $ d $(;n d *)! 811! d(" d ')?%n"8!. 8; n1( $ *)! "# %&?(*"- n" )* "# %nd !&!('(? ; dE T# $ (n1?%d $ ?*3 -&?).- n" 8nd >8; 1)n)-(1 n"! &! n %!$#(& d ' ?)&- n"= d 18d $ )* $ !'(1 ") "# Ind(8n (nd%$"!.= IDBI #8$ ;!)>n $%,$"8n"(8??. (n " !-$ )* $(B )* )& !8"()n$ 8nd
$ 1"()n$ )* $)1( ". "#!)%;# ')?%n"8!. 8; n1( $= $%&&)!" ") S1( n1 8nd T 1#n)?);. En"! &! n %!$J P8!9$= En !;. C)n$ !'8"()n= C)--)n K%8?(". T $"(n; C n"! $ *)! $-8?? (nd%$"!( $E T 1#n(18? C)n$%?"8n1. O!;8n($8"()n$ 5("# 8 '( > ") -89(n; 8'8(?8,? 8" 8 ! 8$)n8,? 1)$"= 1)n$%?"8n1. 8nd 8d'($)!. $ !'(1 $ ") n"! &! n %!$= &8!"(1%?8!?. ") n > 8nd $-8?? n"! &! n %!$= IDBI= (n 1)??8,)!8"()n >("# )"# ! A??3Ind(8 F(n8n1(8? In$"("%"()n$= #8$ $ " %& 8 n ">)!9 )* T 1#n(18? C)n$%?"8n1. O!;8n($8"()n$ 0TCO$2 1)' !(n; "# n"(! 1)%n"!.E TCO$ )** ! d(' !$(*( d $ !'(1 $ ") $-8?? 8nd - d(%- n" !&!($ $ (n "# $ ? 1"()n=
25
*)!-%?8"()n 8nd 8&&!8($8? )* &!): 1"$= "# (! (-&? - n"8"()n 8nd ! '( >E
En"! &! n %!$#(& D ' ?)&- n" In$"("%" R 8?($(n; "#8" n"! &! n %!$#(& d ' ?)&- n" ($ "# 9 . ") (nd%$"!(8? d ' ?)&- n"= IDBI &?8. d 8 &!(- !)? (n $ ""(n; %& )* "# En"! &! n %!$#(& D ' ?)&- n" In$"("%" )* Ind(8 *)! *)$" !(n; n"! &! n %!$#(& (n "# 1)%n"!.E I" #8$ 8?$) $"8,?($# d $(-(?8! (n$"("%" $ (n B(#8!= O!($$8= M8d#.8 P!8d $# 8nd U""8! P!8d $#E IDBI 8?$) 7" nd$ *(n8n1(8? $%&&)!" ") '8!()%$ )!;8n($8"()n$ (n 1)nd%1"(n; $"%d( $ )! $%!' .$ )* ! ? '8n1 ") (nd%$"!(8? d ' ?)&- n"E
3-
CHAPTER 4
3.
Administration Services Brokerage -ouse Target Salaried Audience Business men +inancial #lanning $etirement #lanning !ommodity Trading %nsurance
5 X X X X X 5 )%!
5 5 X X X X 5 Birla
X X X X X X 5 X
X X X X 5 5 X X
X X X X X X 5 Bajaj
X 5
5 X
5 X
5 X
5 X
5 X
33
The investment approach begins by working closely with the clients to identify their long8 term financial goals, risk tolerance and the nature of their e7isting asset base. Additionally, allegro review each clientCs portfolio on an ongoing basis and evaluate possible adjustments in response to economic changes, market trends or client needs. Allegro ensures this highly personali0ed model of service by maintaining amongst the lowest client to advisor ratios in industry. Allegro offers one of the widest range of financial services that covers the spectrum of every need a client may have in managing his or her wealth. "ur services are categori0ed to serve diverse financial needs and the diverse investment strategies that are re2uired to grow a clientCs wealth.
34
The investment approach begins by working closely with the clients to identify their long8 term financial goals, risk tolerance and the nature of their e7isting asset base. Additionally, allegro review each clientCs portfolio on an ongoing basis and evaluate possible adjustments in response to economic changes, market trends or client needs. Allegro ensures this highly personali0ed model of service by maintaining amongst the lowest client to advisor ratios in industry. Allegro offers one of the widest range of financial services that covers the spectrum of every need a client may have in managing his or her wealth. "ur services are categori0ed to serve diverse financial needs and the diverse investment strategies that are re2uired to grow a clientCs wealth. 35
32
%t can be observed from the above Table that most of the financial advisors are not charging any fees for their advisory services i.e. they are giving it free of cost because the banks F!itibank, ,T% Bank, -SB!G earn commission if the customer purchases mutual funds, insurance, from it. The broking company earns brokerage if the client purchases $B% bonds etc or if he does any e2uity trading. The bank only charges marginal fees on the custodial services.
33
-owever, -4+! Bank 8 instead of asking customers to bring in a specific amount of funds 8 charges customers on various types of services it offers. The management of wealth depends on the customerLs risk appetite, his investment objectives. "nce these are understood, the bank sends a written investment proposal on what the bank thinks the portfolio should be.
34
-owever, -4+! Bank do charge clients from $s.;@,AAA a year for tracking portfolio up to $s.;@ lakh and $s.:,AA,AAA for tracking portfolio up to $s.: crore. These services include e2uity8related services along with dedicated advisors. The bank also offers services between $s.:A,AAA and $s.=@,AAA per annum for non8interactive products. The bank, however, waives these fees if it earns money through transactions routed through the bank.
35
Ta7ation advisory is given by very few players like Allegro, Bajaj !apital, ,T% Bank. &arious banks have a tie8up model with different insurance and mutual fund companies like !itibank has with Birla so !itibank will only sell Birla insurance to their clients irrespective of the fact whether the product meets the clientCs financial goals. Allegro is one player which takes care of loan restructuring. !ommodity trading is only being handled by $eligare as a separate product as S'B% have not yet allowed commodity trading to be a part of wealth advisory services.
4-
-owever banks offer portfolio management services to customers. This means that a customer cannot give money to a private banker and ask the $M to invest on his behalf in different financial products. This service can be offered only by entities other than a bank such as $eligare, Allegro Advisors, Bajaj !apital, etc. A banker therefore will have to call every time and get a written confirmation from the client before any deal is done.
4.
42
12 T.& )* R $ 8!1#
This project is more of an e7ploratory research with more of 2ualitative analysis than 2uantitative. The data collection method for this project begins with finding a sample of the population. The population for this project was the various places in Saipur. FSohari Ba0ar, M % $oad, Tonk $oad, Malviya (agar and Shotwara %ndustrial AreaG and at the -4+!slic,cscheme,jaipur. The research methodology adopted was both #rimary and Secondary. #rimary data was collected to study the investment psyche of a person, their practice on saving, investment options available and the need of financial institutions to manage individualCs wealth. Questionnaire was designed to ascertain the investorCs behavior as well as to depict the future prospects and growth momentum of the wealth management industry.
d2 S8-&? S(B 8nd - "#)d )* $ ? 1"(n; $8-&? D8"8 C)?? 1"()n M "#)d$ D In$"!%- n"$
The instrument for data collection was a structured 2uestionnaire targeted towards people who do investments. This 2uestionnaire was designed to know the investment psyche of a person while investing in the financial products. The mode of communication was informal P friendly conversation, which does not limit discussion within a well8defined boundary.
43
#lanning in the market. The sample unit consists of those people who are trading in secondary markets, mutual funds, initial public offer, insurance, debt instruments as they can give the accurate information about financial planning. A sampling frame has been developed so that everyone in the target population has an e2ual chance of being sampled. #ersonal %nformationE I Se7 $atioE +rom the total :AA respondents :@ were females and >@ were males.
$atio >@ :@
S 7 R8"() )* S8-&? $
Males +emales
2 S1)& )* S"%d.
45
There e7ist a potential growth in the wealth management industry and thus this project authenticates the feasibility of financial institutions in the market. '7panding needs and proliferation of financial products are making it difficult for individuals to invest without planning. Most are aware that planning is critical3 yet donCt have the time or the e7pertise to develop a plan P therefore the role of +inancial #lanner comes in picture.
The score allotted by the different respondents on different parameter might not be with the same yardstick, as individuals are subjective in nature as well as the environment round them differs, which play a critical role in building up a perception.
42
43
%t can be observed that most of the financial advisors are not charging any fees for their advisory services i.e. they are giving it free of cost because the banks F!itibank, ,T% Bank, -SB!G earn commission if the customer purchases mutual funds, insurance, from it. The broking company earns brokerage if the client purchases $B% bonds etc or if he does any e2uity trading. The bank only charges marginal fees on the custodial services. -owever, -4+! Bank 8 instead of asking customers to bring in a specific amount of funds 8 charges customers on various types of services it offers. The management of wealth depends on the customerLs risk appetite, his investment objectives. "nce these are understood, the bank sends a written investment proposal on what the bank thinks the portfolio should be. Ta7ation advisory is given by very few players like Bajaj !apital, ,T% Bank. &arious banks have a tie8up model with different insurance and mutual fund companies like !itibank has with Birla so !itibank will only sell Birla insurance to their clients irrespective of the fact whether the product meets the clientCs financial goals. Allegro is one player which takes care of loan restructuring. !ommodity trading is only being handled by $eligare as a separate product as S'B% have not yet allowed commodity trading to be a part of wealth advisory services. -owever banks cannot offer portfolio management services to customers. This means that a customer cannot give money to a private banker and ask the $M to invest on his behalf in different financial products. This service can be offered only by entities other than a bank such as $eligare, Bajaj !apital, etc. A banker therefore will have to call every time and get a written confirmation from the client before any deal is done.
44
45
Niven below are the graphical representations of the responses received on 2uestions asked through the 2uestionnaire. The interpretation derived and the model adopted will be e7plained in detail in the later part of the report. "n asking the following 2uestions, the replies were received accordinglyE
Nrowth of !apital Ta7 Minimi0ation Safety of !apital $etirement )i2uidity Beating %nflation "thers
5-
The research has highlighted that growth of capital is the most important factor which they consider wile investing as evident by the response wherein <9.;O of the respondents voted for the same. -owever, it can also be seen that :@.?O of the investors prefer safety of their capital as their secondary objective which depicts that investors give greater emphasis to the returns and willing to adjust with safety of capital. )i2uidity is the least important factor as only =.@O of the respondents voted for it which signifies that the financial planner should designed the portfolio giving more importance to growth and safety of capital as per individual financial goals while li2uidity should have the minimum focus. %n our sample, inflation has only been given ;.;O of the total sample which reflects that people are still not giving much consideration to inflation even due to a sharp rise in the inflation rate.
5.
9A @A <A ;A =A :A A )ess than ; months ; to 9 month 9 to > months M)n"#$ > to := months More than := months Series:
investments are result of a careful planning or itCs a mere word of mouth. As many individuals follow word of mouth leaving behind the fact that every individual has different financial goals, they tend up in making wrong decisions for their investments. Most are aware that planning is critical, yet donCt have the time or the e7pertise to develop a plan and make the needed financial decisions. "n analy0ing the response ><O of the persons plan their investments while only :9O take investment decisions on ad hoc basis. "pinion of $espondents *es (o (o of $espondents Fin OG >< :9
*es (o
53
To determine the saving habits of the investors, the 2uestionnaire en2uired the respondents as about their practice of savings. The greater the inclination of saving the more will be the funds available for investment. Around <?.@O of the respondents try to save from their income, while only =B.?O of the respondents always make an effort to save some part of their income. "pinion of $espondents 4onCt believe in Savings -igh '7penses Try to Save Always Save Some "thers (o of $espondents Fin OG :.B> :B.> <?.@= =B.? .BB
LEIE H)> -%1# "#)%;#" #8' .)% ;(' n ") $8'(n; *)! ! "(! - n"M
Anyone who will retire needs to plan for it. There is more than one reason to save for retirement. The all important reason is the rising cost of living. %ts called inflation, which
54
simply put, means that purchasing power of money falls over time, so you buy less for the same amount of money or you have to pay more for the same 2uantity of goods. "n analy0ing the level of importance the respondents give on saving for retirement, majority i.e. <?O of the respondents give some importance while only :>O give a lot of importance to saving for retirement. This depicts non serious attitude of %ndians while planning for their retirement. O&(n()n )* R $&)nd n"$ Some A )ot &ery )ittle (one N) )* R $&)nd n"$ 0(n N2 <? :> :> :?
while saving for retirement depends a lot on our age and how much money you are willing to set aside every month. %f you begin saving for retirement early on in your life, you can set aside smaller amounts. #lanning for retirement in early age of employment is depicted on analy0ing the responses as ;@.>O start planning below the age of ;A years, while <=.:O of the respondents feel, the ideal age to be above <A years.
"n en2uiring from the respondent about what are the fundamental secure forms of investments, ;@.<O of the respondents feel that investing in property is the safest form of investment followed by %nsurance. The least secured form of investment as revealed by respondents is investment in e2uity as secondary market is subject to huge volatility P uncertainty. 52
%t can be seen from the response that people are more willing to put their money in property or real estate in spite of the economy e7periencing a major climb in the property prices. About :<.<O of the respondents feel that Bank deposits is also the safe form of investments as it gives assured returns on the sum invested. "pinion of $espondents Bank 4eposit #roperty #ostal 4eposit Nold %nsurance Bonds Mutual +und '2uity (o of $espondents Fin OG :<.;? ;@.;; ?.?> ;.@B :@.@? :=.@? ?.:B =.BB
Series:
Series:
%nd ep
+in an cia l
*es (o
?@ =@
*es (o
Around ?@O of the respondents do have insurance policy, while =@O of the respondents are still not availing this type of investment.
;: ;< ?
.--
*es (o
LE12E D) .)% 1%!! n"?. 8'8(? *(n8n1(8? 8d'($)! $ !'(1 $@&!('8" $ !'(1 $M
,8n9(n;
Majority of the respondents are currently not availing financial advisor services, which reveal the concept of financial advisors is not that much developed in the %ndian market. %ndividuals are earning and paying high ta7es thus ignoring the ta7ation benefits, which they can avail by proper computation of ta7es. %ndividuals usually rely on !hartered Accountants leaving behind the fact that they are e7perts in Accounting and not in wealth management so there is a need for +inancial Advisors. -ence, there is a re2uirement for one stop shop for all the financial needs of an individual. According to the response, it can be seen that 99O of the respondents are not availing any financial advisory services while only ;<O are taking financial advisory services. Thus thereCs much scope left for the financial management companies to target these large number of people who are totally unaware about the whole concept.
(o
99
*es (o
R $&)n$
>A N) )* ! $&)nd n"$ 0(nN2 ?A 9A @A <A ;A =A :A A !iti Bank -4+! Bank
! ;8!d(n; $)%!1
)* *(n8n1(8? 8d'($)!.
Series:
Allegro Advisors
Bajaj !apital
-SB! Bank
*es Bank
$eligare
"thers
LE14E 5#8" 8! "# &!)d%1"$ .)% 8! ; ""(n; *!)- .)%! $ !'(1 &!)'(d !M
According to our response, around ==O of the respondents are availing advices on insurance products followed by mutual funds which hold :<.9O of the total sample. This depicts there is a huge demand for insurance in the %ndian economy as compared to other financial instruments. %t can also be inferred that individuals have started taking advises regarding ta7 planning and loans restructuring. "pinion of $espondents Mutual +und %#" '2uity #ost "ffice Schemes %nsurance #roperty Ta7 #lanning )oan Administration Nold Art (o of $espondents Fin OG :<.9; >.:; >.:; ::.;> =:.B@ ?.;= ::.;> B.?9 <.A? =.<< A.>:
.-3
insurance products followed by mutual funds which hold :<.9O of the total sample. This depicts there is a huge demand for insurance in the %ndian economy as compared to other financial instruments. %t can also be inferred that individuals have started taking advises regarding ta7 planning and loans restructuring.
.-4
.-5
An8?.$($ 8nd In" !&! "8"()n+3 :.=A customers prefer recourse factoring. =. $emaining :A customers prefer non recourse factoring.
.-2
CHAPTER H CONCLUSION
.-3
This part of research paper determines the prospects of financial advisors in the market with relevance to the information derived from analysis of the responses. +easibility of financial institutions can be studied by both financial feasibility and marketing feasibility.
82 F(n8n1(8? F 8$(,(?(".
+inancial feasibility will study the need of financial advisors due to changes in the inflation rate, loans, insurance charges, etc which investors usually ignored so by availing the financial advisory services, one can e7pect unbiased advise on the entire spectrum of personal finance and thereby adding value to the investorCs current portfolio and potential savings. The statistics regarding the investments are discussed below so as to show the trend of various factors in the %ndian economy.
(2 6!)>(n; E1)n)-.
The anticipated growth rate of 9 8 ? percent in =AA>8AB, acknowledges the momentum of development in the %ndian economy. The odds are loaded heavily in favor of a continuation of the growth momentum and a virtuous cycle of growth and savings, that appears to be already underway, is likely to accelerate that pace. %ndia is the worldCs second most populous country with a little over : billion people and the :Ath in terms of economic si0e, representing around 9O of world N4#. The impact of :@ years of economic reform finally appears to have kicked in and allowed %ndia to emerge as an attractive investment destination in the global arena %ndia, with an anticipated growth rate of 9 to ? O for the year =AA>8AB, supported by robust growth in the %ndian industries and service sector would build a strong business scenario which would increase the economic activity in the country, evident from increased employment opportunities and entrepreneurship projects. As wealth management provide investors with commentary, research, and practical ideas that bridge the gap between theory and practice in contemporary global business, it would result in increase in the demand for financial advisors in the country, thereby authenticating the prospects of financial advisors in the %ndian market .-4
(((2 In*?8"()n
%nflation is moving at around <O and the savings account is giving an interest of ;.@O per annum which signifies that inflation is merely eating up the money in the bank account so individuals should come out of just keeping their money in their bank accounts and should invest in the financial instruments to fetch higher returns.
.-5
..-
After analy0ing the response, marketing feasibility e7ist on the basis of following discoveries.
1E 6!)>"# )* C8&("8? ($ "# M8:)! O,: 1"(' , #(nd In' $"- n"$
%t was observed that <9.;O of the respondents do investments for achieving growth of capital i.e. revenue ma7imi0ation. Safety of capital was considered secondary objective behind investments as only :@.?O of the respondents think about their safety of capital i.e. assured returns which reflects that investors are more concerned for growth rather than safety irrespective of their financial goals in life. A financial advisor can take care of all the financial goals in keeping three goals in mind, he can recommend certain investment options ranging from mutual funds, insurance, %#", post8office schemes, secondary markets, etc
deficiencies and flaws in the current services being provided to the investors and attempt at suggesting ways and means to remedy the same.
..2
..3
"n studying the peculiarities of the wealth management industry and analy0ing the responses of the investors on their perception and e7pectation from a financial advisor, the following points are recommended which a general financial advisor should consider while approaching the people. %ndia is seeing a maturing financial environment. %nterest rates have fallen and unlike in the past, options to attract savings e7ist through a spate of financial products and services that have differing risk1growth and asset accretion propositions. %t is becoming increasingly obvious to people that their money, in real terms, would fall in value if they were to keep their money in the bank. And hence the keenness to find out the right avenue that would help grows their savings or assets. Dhile this is becoming a universally undeniable desire, the fact is that some people donCt have the knowledge and inclination to understand the financial markets and others donCt have the time to follow them. This then leads to financial decisions being taken by individuals based on either relationship hearsay or the sales call of a vendor.
82 Un,(8$ d Ad'($)!.
%nvestment Advisory Services are in this business of managing the assets of individuals and corporations. -owever, the distinct model of services should enables the advisors to offer unbiased advise on the entire spectrum of personal finance, keeping the clients interest foremost while doing so. The investment strategies developed across perpetuity should outline a detailed financial plan with fre2uent reviews of investment decisions made to ensure that portfolios are in line with what was planned.
..4
Another player in this space is the (S'Cs !ertification of +inancial Markets F(!+MG, an arm of the (ational Stock '7change that tests and certifies insurance and mutual fund agents. A third institution, the Association of Mutual +unds FAM+%G, is encouraging its agents to morph from distributors to advisors. Apart from the institutions, some individuals and small companies have set up practice anticipating that the market will move from an ad8hoc approach to a planned one.
..5
..2
temptations of the flavors of the financial season. "ne of the myths regarding financial planning is that only rich individuals and -(%s can undertake this. This perception e7ists because most players in the market target these people, as they are very profitable customers. -owever, anyone can use financial planning. %n fact, individuals should use effective financial planning to build their wealth over the years.
..3
..4
(ameE [[[[[[[[[[[[[[[[[[[[[[[[[[[ AgeE [[[[[[[[[[[[[ "ccupationE [[[[[[[[[[[[[[[[[[[[[[[[[[[ Se7E [[[[[[[[[[[[ Annual %ncomeE [[[[[[[[[[[[[[[[[[[[[[[[[[[ !ityE [[[[[[[[[[[[[
:. Dhat is your objective behind investments\ FaG Safety of !apital FbG $etirement FcG Beating %nflation FdG Ta7 Minimi0ation FeG )i2uidity FfG Nrowth of !apital 8 $eturns FgG "thers Fplease specifyG [[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[
=. Since when are you investing in financial instruments\ FaG )ess than ; months FbG ; months K 9 months FcG 9 months K > months FdG > months K := months FeG More than := months FfG "thers Fplease specifyG [[[[[[[[[[[[[[
;. 4o you plan your investments\ FaG *es FbG (o, why [[[[[[[[[[[[[[[[[[[[[[[[[
<. Dhat is your practice on saving money\ FaG % donCt believe in saving. FbG %Cd like to save, but my e7penses P financial commitments do not permit me. FcG % try to save whenever P wherever possible. FdG % always save some percentage of my take8home salary without e7ception. FeG "thers Fplease specifyG [[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[ @. -ow much thought have you given to saving for retirement\ FaG &ery little FbG Some FcG A lot FdG (one
..5
9. Dhen do you prefer one should start planning for retirement\ FaG ,nder ;A FbG ;: K <A FcG <: K @A FdG Above @A
@. Dhat do you feel is considered to be the Jfundamentally safeC form of investment\ FaG Bank deposits FbG #roperty1)and FcG #ostal deposits FdG Nold FeG )ife insurance policies FfG Novernment bonds FgG Mutual funds FhG '2uity1Shares FiG "thers Fplease specifyG [[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[
9. -ow do you take financial decisions\ FaG %ndependently FbG Advise from friends 1 relatives FcG Broker FdG Advise from a !hartered Accountant FeG Advise from a Bank FfG +inancial Advisors FgG "thers Fplease specifyG [[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[
>. %f yes, why did you buy an %nsurance #olicy\ FaG As a means of saving FbG As a means of saving ta7 FcG +or security against death FdG "thers Fplease specifyG [[[[[[[[[[[[[[
B. Are you aware about the concept of +inancial Advisors\ FaG *es FbG (o
.2-
:A. 4o you currently avail financial advisor services1private banking services\ FaG *es FbG (o, why [[[[[[[[[[[[[[[[[[[[[[[[[ ::. %f yes, from whom\ FaG !itibank FbG -4+! Bank FcG Allegro !apital Advisors FdG Bajaj !apital FeG -SB! Bank FfG *'S Bank FgG $eligare FhG others Fplease specifyG [[[[[[[[[[[[[[
:=. Dhat are the products you are getting from your service provider\ FaG Mutual +unds FbG %nitial #ublic "ffer F%#"G FcG Secondary Market FdG #ost "ffice Schemes14ebt FeG %nsurance FfG $eal 'state1#roperty FgG Ta7 #lanning FhG )oans FiG Administrative Services FjG Nold FkG Art1#aintings FlG "thers Fplease specifyG [[[[[[[[[[[[[[
.2.
CHAPTER 12 BIBLIO6RAPHY
.22
The following companies and associationCs web sites were referred while collecting information used in the research. :. %nternet Source I httpE11www.yesbank.in I httpE11www.citibank.co.in1 I httpE11www.utibank.com1 I httpE11www.hsbc.co.in I httpE11www.religarewealthcare.com I httpE11www.hdfcbank.com I httpE11www.bajajcapital.com I httpE11www.online.citibank.co.in
.23