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A REPORT ON

UNDERSTANDING OF SALES
PROCESS

BY

SAKSHI MIDDHA

(10BSP0188)

KARVY PRIVATE WEALTH

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A REPORT

ON

UNDERSTANDING OF SALES PROCESS


By

SAKSHI MIDDHA

(10BSP0188)

At

KARVY PRIVATE WEALTH

A report submitted in partial fulfillment of

the requirements of

PGPM program of

IBS Bangalore

Submission Date

13th May 2011

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Declaration

I Sakshi Middha hereby declare that the project entitled ―Understanding of sales process
submitted to IBS, Gurgaon in partial fulfillment of the requirements of the PGPM Program is an
original and bonafide work done by me.

And also I hereby declare that I have not submitted the project report to any other university for
the award of any degree or diploma.

Sakshi Middha

10BSP0188

13th May, 2010

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Acknowledgement

“Expression of feelings by words makes them less significant when it comes to make
statement of gratitude”

I would like to express my gratitude to all those who gave me the possibility to complete this
interim report. First of all I thank to Mr. Siddharath Arora( AVP Karvy Private Wealth, Delhi)
for his cooperation during this period.

All the Wealth Advisors, OE and IC were always there to provide me the judicious judgment,
logical thinking, procedure and in nut shell everything. Their inspiration and precious guidance
did play a key role to complete my work at ease and well within time. I wish my deepest
gratitude for their support throughout.

I am deeply indebted to my faculty guide Prof. V Sekhar whose help, stimulating suggestions
and encouragements helped me in all the times of research and for writing the final report.

I express my profound sense of respect and deepest gratitude to each and everyone. I thank all
my well-wishers who helped me directly or indirectly in carrying out this work
Date- 13th May
Place- Gurgaon ( Sakshi Middha )

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Abstract

SALES PROCESS

Description of Project in brief : A new relationship at Karvy


Private Wealth starts with:

• Making a call to client , briefing about the company


and the products offered and various services provided
by the company.

• Introductory Meeting: Wealth Advisors fix up


meetings with the respective clients and pitch products
according to the needs of the client.

• Follow up meetings: This is done to sign off the final


plan based on the first meeting held.

This interim reports contains parts as introduction to company, introduction to project,


Organization Structure, steps involved in sales process at KPW, and introduction about the
Operational work.

Introduction to company contains vision, mission , products and services offered by company,
Karvy Private Wealth. Introduction to project is about the objectives, research methodology
and limitations of the project.

The main text contains the theoretical details of sales process and Operational work.

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TABLE OF CONTENTS
i Declaration

ii Acknowledgement

iii Abstract
Table of Contents..........................................................................................................................6
INTRODUCTION........................................................................................................................7
1.1 About the Company.................................................................................................7
Company – KARVY PRIVATE WEALTH.............................................................................7
Karvy was started by a group of 5 Charted Accountants in 1979. The Partners decided to
offer, other than the audited services, Value added services to the existing portfolio of
the client. .....................................................................................................................7
KARVY PRIVATE WEALTH (KPW) the Wealth Management arm of the KARVY Group. Karvy
is a 25 year old financial services company, which operates multiple businesses – stock
broking, registry and transfer of shares, depository participants, insurance broking,
mutual fund distribution and commodity broking. KPW provides a spectrum of
innovative solutions to privileged individuals like you who need comprehensive and
reliable wealth management solutions to manage their hard-earned wealth efficiently.7
1.1.1Vision.....................................................................................................................7
1.1.2 mission.................................................................................................................7
1.1.3 objective...............................................................................................................7
1.1.4 Approach to Private Wealth Building....................................................................8

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INTRODUCTION

1.1 ABOUT THE COMPANY


Company – KARVY PRIVATE WEALTH
Karvy was started by a group of 5 Charted Accountants in 1979. The Partners decided to offer,
other than the audited services, Value added services to the existing portfolio of the
client.

KARVY PRIVATE WEALTH (KPW) the Wealth Management arm of the KARVY Group.
Karvy is a 25 year old financial services company, which operates multiple businesses –
stock broking, registry and transfer of shares, depository participants, insurance broking,
mutual fund distribution and commodity broking. KPW provides a spectrum of
innovative solutions to privileged individuals like you who need comprehensive and
reliable wealth management solutions to manage their hard-earned wealth efficiently.

1.1.1VISION
The vision of the company is to become the most trusted, admired and preferred brand in every
industry they operate. They envision being the industry leader in our business segments.

1.1.2 MISSION
The company mission is to provide high quality and disciplined approach towards our
businesses. We find ways to develop and deliver consistently high quality and reliable services to
our clients and customers based on their needs and aspirations.

1.1.3 OBJECTIVE
• To become India’s leading financial portals in order to provide online consumer
finance services to people across India

• To provide financial services in the field of real estate, media, business solutions,
and education.

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• To become a successful in the field of financial service.

1.1.4 APPROACH TO PRIVATE WEALTH BUILDING

Karvy Private Wealth provides end-to-end integrated wealth advice, tailor-made to suit the
specific needs of the client. It follows a 4-step process to build the wealth. These steps ensure
that the client’s portfolio consists of products that give the edge and ensures that all the goals that
he/she has planned for himself and his family are easily met.

Karvy Private Wealth’s 4-step approach to building your Private Wealth:

• Review of your current investment

• Developing your Wealth plan

• Executing your Wealth plan

• Reporting and reviewing your Wealth Status

• Tax saving investment is also recommended

1.1.5 Products and Services Offered by KPW

Karvy Private Wealth offers the wide array of products and services, providing clients a variety
of options through a single contact. One can choose to invest in equities, debt, commodities,
structured products, art investments, real estate investments, gold, mutual funds or insurance.

Karvy Private Wealth has a product that has been chosen to strengthen the portfolio of the client
and providing value added to his/her existing portfolio.

Equity Investment

Karvy Private Wealth offers the option of purchasing equities to build the portfolio or to avail of
its comprehensive trading solutions in the cash and F&O segments, with online and offline
facility. The broad equity investment strategies are derived from understanding individual client
profiles, his needs, risk taking ability and return expectations.

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Portfolio Clean Up:

It offers comprehensive evaluation and clean-up of the existing equity portfolio. Through this the
client will be provided with a model equity portfolio and will ensure better returns.

PMS and NDPMS: Investing in equities requires time, knowledge and constantly monitoring the
market. In Discretionary Portfolio Management Service (PMS) Karvy invest on the behalf of the
client and provide expert advice to manage their investment. While in NDPMS the investor is
always consulted and informed of all investment decisions, giving him total control of the
portfolio.

Debt Investment:

It offers comprehensive solutions in the fixed income segment. Karvy’s in house team of
analysts guides the client with tailor made products according to the needs of the client.

Fixed Deposits:

It helps to choose the best fixed-deposits of Banks, Companies and Non-Banking Finance
Companies (NBFC) after thorough research on the same. It also helps in execution of other
government schemes based on the requirements.

National Savings Certificate:

National Savings Certificate, issued by Government of India is a popular assured return tax
saving instrument, which is very safe. NSC acts as an instrument for long term savings. It assists
in complete execution of this.

Post Office Monthly Income Scheme:

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Post Office Monthly Income Scheme offers a safe and sure way to get regular income. This
scheme is meant for investors who want to earn monthly interest on their investments. It is meant
to provide a regular source of income on a long-term basis.

Public Provident Fund:

Public Provident Fund is a savings cum tax saving instrument. It also serves as a retirement
planning tool for many of those who do not have any structured pension plan covering them.

Corporate bonds:

From time to time, it makes available good corporate paper for HNIs to invest in, at attractive
yields. IDFC, IIFCL, Indian Railways, various public sector bank papers, PFC, NABARD, etc
are some of the bonds that KPW has procured for customers.

54EC (Capital gains bonds):

KPW helps in efficient tax planning of any arising capital gains via investments in 54EC bonds
and provide complete execution support.

Alternate Assets:

Structured Products:

Structured products are generally a pre-packaged investment strategy, which is based on


derivatives, such as a single security, a basket of securities, indices, commodities, debt issuances
etc.

Private Equity:

Private equity funds typically make investments in companies not listed on public stock
exchanges. They offer high return opportunities due to their access to dynamic, privately held
companies and their ability to create value in them.

Real Estate:

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Real Estate has long been considered the most tangible source of wealth accumulation. With land
growing increasingly scarce in India, the value of real estate holdings is expected to grow. Apart
from a few bubbles such as the mid-90’s, this has largely been true. KPW helps to choose the
best option in real estate via real estate funds or physical real estate based on the specific needs.

Gold:

Gold is regarded as one of the best hedging tools – be it against inflation, currency, stocks or
fixed income. Gold retains its value in times of hyper inflation and currency weakness. Gold is
known to have a low correlation with other asset classes such as equities and debt and is
considered a safe haven during times of economic crises. It is even regarded as an alternate
currency. Gold protects one’s portfolio from volatility as micro-economic and macro-economic
factors that tend to have significant impact on other asset classes have virtually no or little impact
on gold prices.

Commodities:

Commodity investing can be a potentially rewarding option and can provide the much-needed
diversification on the client’s portfolio needs. Commodity trading provides an ideal asset
allocation, while helping the client to hedge against inflation and buying into a piece of global
demand growth. Commodity exposure can be taken either directly through the commodity
exchange or through various mutual funds with a mandate of investing in commodities.

Managed Futures:

Managed Futures are a form of alternative investment which focus on absolute returns similar to
hedge funds, but with greater regulatory oversight and restriction to trading in only highly liquid
futures. The investment strategy used generally is algorithmic trading focused on trend
following.

Managed Futures are generally managed on the basis of technical analysis and involves going
long or short in futures contracts in areas such as metals, grains, equity indexes and commodities
of all kinds. Currency futures are also commonly traded. Unlike traditional investments,
managed futures can take both long and short positions, allowing you to achieve returns in both
rising and falling markets.

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Art:

Investment in art is a profitable option with the Indian art market multiplying manifold over the
last few years. KPW helps to choose the best art funds, which will maximize the returns.

Mutual Funds:

Depending on the client’s goals, investment horizon and risk profile, Portfolio Restructuring is
carried out based on extensive research across all categories of funds and their performance over
the years, in various market phases.

Insurance:

Insurance also plays a major role in portfolios as a tool for wealth creation and KPW provides
the products of all major life and general insurance companies, research reports on recommended
products, comparisons between products from different providers and news and expert views on
innovative products like key man Insurance, professional indemnity insurance and insurance
coverage for loss of income.

KPW also provides a wide array of products available for NRI customer’s also starting from NRI
trading account (PIS Account ) to Portfolio Management Scheme ( Discretionary And Non
Discretionary both ). Wealth Advisory and Investment Strategy, Comprehensive Financial
planning, Goal Driven Investment, Asset Advisory are some of the service line’s available.

2. Project Proposed:

Understanding of phases involved in sales process right from making a call to the client till the
conversion of client on board.

2.1 Description of the Project:

A new relationship at Karvy Private Wealth starts with:

• Making a call to client, briefing about the company and the products offered and various
services provided by the company. The data can be self generated i.e. wealth Advisors use their

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personal contacts or by the Karvy call center (SPARSH). Wealth Advisors get the lead from the
head office and they respond accordingly.

• Introductory Meeting: Wealth Advisors fix up meetings with the respective clients. In the very
first meeting with the client, Wealth Advisors try to get familiar with him and try to ask about his
investment part. Then after knowing his needs they pitch the products offered by the company
suiting his requirements.

• Follow up meetings: This is done to sign off the final plan based on the first meeting held.

• Operational work: After the conversion of client on board, operational work comes in. In this
Checking of form and documentation is being done ( whether all the necessary documents have
been attached with the form or not), so that to reduce the pendency and activating the client’s
account without making unnecessary delay.

• Investment Counseling: Investment counselors make the financial plans of the client according
to his goals. They analyses the financial health thoroughly and helps to plan the investment to
meet his medium term and long term goals. They also provide recommendations on current
portfolio, help to restructure current loans and give advice on tax optimization.

2.2 Objective of the Project:

• Analysis of whole sales process, to keep a record of no. of meetings held in a particular month,
whether they are from their personal contacts or through the leads given to them, how many got
converted and time involved in conversion of client on board.

• To find out how the judgement is being done by the counselors on the basis of information
given by he client.

• It help to enhance the productivity and coordination between different verticals, so that the
targets could be achieved effectively and efficiently.

2.3 Methodology:

• Interaction with the Wealth Advisors and keeping a record of no. of meetings held and how
many got converted.

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• Going on meetings with the wealth Advisors and listing down all the details about the
particular meeting. This would include: time involved, products pitched, requirements of client,
collaterals used and in case of rejection, the reason for the same.

• Interaction with the Operational executive to know about the documentation required with
different forms and keeping a track of time involved in closure of all the formalities.

• Interaction with the Investment Counselor and knowing the details required in making the
financial plan and the time involved in it.

2.4 Limitations of the study:

• This study is limited to the HNI (High Net worth Individuals) Solutions.

• Moreover, the data is not completely disclosed due to the confidentiality of the company.

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3. Organisation Structure :

CEO: Hrishikesh Parandekar is responsible for the Private Wealth business of KARVY and is
also part of the KARVY Group leadership team.

NATIONAL HEAD: Sunil Mishra, takes care of running the Wealth Management business of
Karvy Private Wealth, wherein he is responsible for managing the teams of Wealth Advisors
across India, and for delivering revenues. In addition, he is also the Chief Marketing & Strategy
Officer for Karvy Private Wealth.

AVP(Associate Vice President): Siddharath Arora looks after the HNI Clients of Karvy Private
Wealth. This is done through a team of Wealth Advisors and BDMs (Business Development
Manager) under him and backed by incisive in-house research of the KARVY group.

WEALTH ADVISORS: Wealth Advisors starts a new relationship with the client and helps to
evolve a Financial / Investment Plan, which is validated and fine-tuned and ends with the
execution of immediate transactions.

BDM: BDMs are responsible for client acquisition. They respond to the leads given to them and
transfers the acquired client to the Wealth Advisors.

OE(Operational Executive): Checking of form and documentation is being done(whether all the
necessary documents have been attached with the form or not), so that to reduce the pendency
and activating the client’s account without making unnecessary delay.

IC(Investment Counselor): Investment counselors make the financial plans of the client
according to his goals. They analyses the financial health thoroughly and helps to plan the
investment to meet his medium term and long term goals. They also provide recommendations
on current portfolio, help to restructure current investment and give advice on tax optimization.

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4. Products and Services of KPW:

4.1 Discretionary Portfolio Management Services(DPMS):

4.1.1 K-SENSIBLE: The K-Sensible is designed for those investors who want steady long-term
capital returns, who have patience to hold their investment over a long term horizon.

Investment Objective: The investment objective of the scheme is to provide capital growth and
benefits of long term investments. Investment would be made in companies which haie a strong
management, quality and growth oriented business.

Asset Allocation: The amount of portfolio invested in equity will be between 0%-100% of the
portfolio and the rest will be invested in Liquid funds or Liquid Bees and can be between 0%-
100% of the portfolio.

Investment in equities will be valued on the closing price of that equity at NSE. In case of any
investment is done on the equities listed in BSE only than the value will be calculated on the
closing price of the equity in BSE

4.1.2 K-Aggressive: K-Aggressive portfolio is designed to provide a balance growth, safety and
returns. This is achieved by investing in well-researched companies and employing a strategy of
systematic profit booking.

Investment Objective: The objective is to provide a balance growth, safety and returns. In the
stock selection process the focus is on companies which qualify in the three key attributes-
Management, Business, and valuation.

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Asset Allocation: The amount of portfolio invested in equity will be between 0%-100% of the
portfolio and the rest will be invested in Liquid funds or Liquid Bees and can be between 0%-
100% of the portfolio.

Investment in equities will be valued on the closing price of that equity at NSE. In case of any
investment is done on the equities listed in BSE only than the value will be calculated on the
closing price of the equity in BSE.

4.1.3 K-Energetic: K- Energetic is designed to provide returns by following an aggressive style


of investing which entails higher risk.

Investment Objective: The investment objective is to provide absolute returns and capital
appreciation. Stock selection criteria continue to focus on Business, Management and Valuation.
However, the style of investment would be aggressive.

Asset Allocation: The amount of portfolio invested in equity will be between 0%-100% of the
portfolio and the rest will be invested in Liquid funds or Liquid Bees and can be between 0%-
100% of the portfolio.

Investment in equities will be valued on the closing price of that equity at NSE. In case of any
investment is done on the equities listed in BSE only than the value will be calculated on the
closing price of the equity in BSE.

4.1.4 Alpha Portfolio:

It is designed for those investors who seek long term capital appreciation from their asset
allocation to equities. The portfolio will invest in stocks across sectors, market capitalization
categories and investment themes.

Investment Objective: The investment objective of the plan is to generate growth of capital and
excess returns over the benchmark index through long term investing. Investment would be made
in companies which have a strong and sustainable business model and are growth oriented.

Asset Allocation: The portfolio will seek to maintain substantially invested in equities or equity
related instruments at all times. The cash in the portfolio may be invested in Liquid Bees or
Liquid Funds.

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Securities: Investment will be made in stocks, Mutual funds and Exchange Traded funds (ETF).
The portfolio will also use derivative instruments-Futures and Options- for hedging and
rebalancing of the portfolio. Derivative Instruments shall. However, not be used in the case of
NRI investors.

4.1.5 Delta Portfolio: The Delta Portfolio is designed for those investors who seek long term
capital appreciation from their asset allocation to equities and debt. The portfolio will invest in
mutual funds across sectors, market capitalization categories and investment themes.

Investment Objective: The investment objective is to generate long term capital appreciation of
wealth through a portfolio of debt and equity related mutual funds which are rebalanced
regularly and the allocation between debt and equity is done on the basis of the risk profile of the
investor(conservative, moderate or aggressive).

Delta –Conservative will be skewed towards debt and shall have a lower allocation towards
equity.

Delta – Moderate will have a balanced allocation towards debt and equity.

Delta-Aggressive will be skewed towards equity and have a lower allocation towards debt.

Asset Allocation: The amount of portfolio invested in Equity related Mutual Fund will be
between 30%-100% of the portfolio. The balance will be invested in debt related mutual funds.
The idle cash will be invested in Liquid Bees and Liquid Funds.

Investment: will be made in Mutual Funds and Exchange Traded funds(ETF). The portfolio will
also use derivative instruments-Futures and Options- for hedging and rebalancing of the
portfolio. Derivative Instruments shall. However, not be used in the case of NRI investors.

Investment in Mutual Funds will be valued at the day end’s NAV. Investment in Futures and
Options used for hedging , shall be valued at actual cash margins paid against F&O contracts,
summed with Mark to Market profit/loss computed on the basis of closing price of such
contracts.

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4.1.6 Omega: The Omega Portfolio is designed for those investors who seek long term capital
appreciation from their asset allocation to equities, debt, gold and other asset classes which are
available through either exchange traded products or through mutual funds.

Investment Objective: The Investment objective is to generate long term capital appreciation of
wealth through a portfolio of debt, equity , gold and ETFs and other asset class which is
available through either exchange traded products or through mutual funds, which is rebalanced
regularly and the allocation amongst the asset class is done on the basis of risk profile of the
investor (Conservative, Moderate and Aggressive)

Omega-Conservative will be skewed towards debt and gold and shall have lower allocation
towards equity.

Omega- Moderate will have a balanced allocation between debt, gold and equity.

Omega- Aggressive will be skewed towards equity and shall have a lower allocation towards
debt and equity.

Asset Allocation:

The amount of portfolio invested in equity will be between 25%-100% of the portfolio.

The amount of portfolio invested in Debt will be between 10%-70% of the portfolio.

The amount of portfolio invested in gold ETFs will be between 0%-20% of the portfolio.

The amount of portfolio invested in other asset classes of Exchange Traded Products or Mutual
Funds will be between 0%-50% of the portfolio.

4.1.7 Theta Portfolio: This portfolio is designed for the investors who seek income and long
term appreciation through a 100% debt portfolio investing in debt mutual funds, bonds and
debentures.

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Investment Objective: The investment objective of the plan is to generate income and long term
appreciation through a 100% debt portfolio investing in debt mutual funds, bonds and
debentures.

Asset Allocation: the amount invested in Debt is 100% of the portfolio.

SECURITIES: Investment will be made in Mutual Funds, ETFs ,Listed and Unlisted Debentures,
and Listed and Unlisted Bonds.

Investment is also made in Rated and Unrated bonds also.

4.2 Non Discretionary:

Non Discretionary portfolio is a portfolio which portfolio manager manages in consultation with
and as per the directions and consent of the client. Under this service, the client decides on their
investment with the portfolio manager only facilitating the execution of the transactions. The
portfolio Manager’s role will not be limited to providing research, structuring of clients’
portfolio, investment advice and guidance and trade execution at client’s request. The portfolio
manager shall execute orders as per the directions received by the client. Periodical statements in
respect of client’s portfolio shall be sent to the respective clients.

4.3 Advisory:

Portfolio manager will provide advisory as per the Regulations, which shall be in the nature of
the investment advice and shall include the responsibility of advising on the portfolio strategy
investment, disinvestment of various stocks of the client’s portfolio, for an agreed fee, entirely at
the client’s risk. The service will be purely of advisory in nature under an agreed fee structure
with the client. It is upto the client whether he wants to accept the recommendations by the
portfolio manager. And Portfolio manager will not be held responsible for any consequence
arising out of acceptance of Portfolio manager’s advice under this service.

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5 Indian Investment Analysis:

The outlook of the world towards India is fast changing. The nation as a whole has been
changing with regard to its economy and financial growth. It is now considered as one of the
fastest growing economies.

5.1 Individual Wealth in India:

The amount of overall wealth in India has been calculated on the basis of the sum of all
investment assets. and does not include Government and Institutional holdings. The total wealth
in India held by individuals is estimated to be Rs.73 lac crores. The detailed break-up is as
follows:

Table 1:Asset-wise break-up of Individual Wealth in India

Asset Amount (in Rs.Crore) Percentage

Direct Equity 22,73,043 31.1%

Fixed Deposits & Bonds 22,16,307 30.3%

Insurance 10,46,145 14.3%

Savings Bonk Deposits 6,75,134 9.2%

Small Savings 5,19,162 7.1%

Provident Fund 2,81,559 3.9%

Mutual Funds 2,77,953 3.8%

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Alternative Assets 18,575 0.3%

Total 73,07,878 100%

In the calculation above only financial assets have been considered and Physical gold and real
estate, which are physical assets have not been considered

5.2 Classification of Individual Wealth according to Key Asset Classes:

Table 2: Classification of Individual Wealth in India according to Key Asset Classes

Name of Asset Amount (in Rs. Crore) Percentage


Equities 24,76,626 33.9%
Debt 48,12,677 65.8%

Alternative Assets 18,575 0.3%


Total 73,07,878 100%

In India, Debt instruments are popular with the investors due to our traditional saving and risk-
averse behaviour. But over the last few years investors have started viewing Equities as a good
investment option, forming 33.9% of Individual Wealth. Investment in Alternative Assets is still
at a nascent stage; therefore it comprises only 0.3% of total Individual Wealth but over the years
it is expected to increase.

5.3 Comparison of Individual Investment in Key Asset classes Globally: \

Table 3: Classification of World Wealth according to Key Asset Classes

Name of Asset Amount (in US $ Percentage


Trilion)
Equities 11.2 35%

Debt 18.5 58%

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Alternative Assets 2.3 7%

The individual HNI wealth across the globe is estimated to grow from US $ 39 trillion in 2009
to US $ 48.5 trillion by 2013* at a growth rate of 5.6%. Hence it may be observed that the
Individual Wealth in India which is estimated to grow at 25% compounded rate will grow at
more than four times the world rate.

A large young educated population, which is open to investing their savings in different financial
assets will be the major contributor to this growth.

5.4 India Rising:

The economy of India is the eleventh largest in the world by nominal value and fourth largest on
Purchasing Power Parity (PPP) basis.

Till 1990, there existed industrial licensing regime in India under which license was required for
starting new companies, for producing new products, expanding productive capacity, laying off
workers or for shutting down. Import of consumer goods, particularly luxuries, was restricted by
means of high tariffs and low quotas or banning some items altogether. In 1991,The government
liberalized the restrictions and moved towards an open economy with greater reliance upon
market forces, a larger role for the private sector including foreign investment, and a
restructuring of the role of government in business.

With the liberalization of its economy, India witnessed tremendous economic growth. Between
2000 and 2005 India's GDP grew at 6-8% annually, in 2006-07 the growth rate was 9.7%. The
GDP for 2007-08 was 9.2%. This figure fell to 6 7% for the year 2008-09. The main reason for
this fall was the global economic downturn that began in the industrialized nations of the world
in 2007.

In 2009 -10, besides the global recession, factors such as sub-normal monsoon also contributed
to the declining economy. In spite of all these negative factors, the economy, posted a
remarkable comeback with the GDP growth rate for 2009-10 stands at 7.2%'. The GDP growth
rate for 2010-11 is .

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The total wealth in India has been found as a sum of investments across the different asset
classes available in the market.

The following financial assets have been considered as part of wealth, whereas physical assets
such as gold and real estate have been excluded.

• Direct Equity

• Mutual Funds

• Insurance

• Fixed deposits $ Bonds

• Saving Bank deposit

• Small Savings

• Provident Fund

• Alternate Assets

5.5 Break Up of Individual’s Wealth Investment:

The Individual’s Total wealth Investment in India is Rs.73 crore in the financial year 2010-2011.
It is derived by adding the key investment areas i.e. Equity, Debt and Alternate Assets.

These Key assets are further divided into the instruments available in India.

5.5.1 I. Direct Equity:

Earlier the Investors used to invest in low risk instruments or fixed income instruments due to
Traditional Savings and Risk Averse behaviour. But over the last few Years Investors have
started investing in the risky profiles such as Equity. Their behaviour is completely changing
with the economic boom and experiencing higher returns in Direct Equities and they are
expecting higher returns. The investment Break Up in Direct Equity is as follows:

Table 4: Overall Direct Equity Break-up

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Investor type % of Market Cap Amount(in Rs.Crore)
Promoter Holdings 28.1% 16,89,755

Institutions ' FII/ QIBs 62.2% 37,36,130

Retail Investors 9.7% 5,83,288

Total 100% 60,09,173

5.5.2 Mutual Funds:

The Mutual fund industry has seen a steady growth over the years. The Assets Under
Management (AUM) for Mutual funds has increased from approximately Rs.1lac crore in 2003
to Rs. 2.83-billion as on March 2011. The bifurcation of the total Individual Wealth invested in
Mutual Funds is as follows :

Table 5: Break-up of Mutual Funds by Underlying Investment

Asset Class Amount (in Rs.Crore)


Equity 1,85,817
Debt 91,144
Cold 992
Total 2,77,953

5.5.3 Insurance:

In this section of the report we shall address wealth in Life Insurance, Pension Funds And
Employees' Deposit Linked Insurance Fund . The total AUM for this is Rs.10.46 lac crores.
Table 6 provides us with the amount of wealth in each of the sub categories under Insurance:

Table 6: Assets in Insurance


Types of Insurance Amount (in Rs. Crore)
Life Insurance 9,40,445

Employees' Pension Fund 98,242


Employees' Deposit 257.458
Linked insurance Fund

Total 10,46,145
A major portion of this asset class' comprises Life Insurance. This can be divided into public
sector insurers and private sector insurers. Life Insurance Corporation of India (LIC) is the only
player in the public sector, whereas the private sector comprises more than 20 companies. The
total of both these sectors will give us the total amount invested in Life Insurance in India.

Only 29% is invested in the private sector, whereas 71% of the AUM of Life Insurance is with
LIC of India. The reason for this can lie that LIC of India has been around for more than 5
decades. The private players followed much later starting from year 2000. The Assets in
Insurance account for 14.32% of the total Individual Wealth in India. This comes third only to
Equity and Fixed deposits in terms of preferred investment instruments. This proves that
investors ensure that the Investable surplus they have is utilized not only to increase their wealth
but also to safeguard themselves and their families.

5.5.4 Fixed Deposits $ Bonds:

Traditionally Investors have invested in Fixed Deposit and it still comprises a major portion of
asset allocation of individual’s Wealth. The asset class of Fixed Deposit and Bonds consists of:

• Bank Fixed Deposits

• Corporate Bonds

• Fixed Deposits with Non Banking Financial Companies.(NBFC’s)

• Fixed Deposits with Residuary Non Banking Companies(RNBC’s)

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Bank Fixed Deposit: Bank Fixed Deposit includes scheduled commercial and co-operative
bank's fixed deposits. The total assets for Scheduled Commercial Bank FDs as on April, 2010 is
Rs.39.24 lac crores of which Rs.20.23 lac crores are the Assets for Scheduled Commercial Bank
FDs held by individuals. The Assets for Scheduled Co-operative Hank FDs in 2007 08 is Rs.
48,585 crores of which Rs.25,045 crores is the wealth held by individuals.

Corporate Fixed Deposits: These are similar to Bank Fixed Deposits except that they are offered
by a company or a corporate. The interest rate that these offer is higher than that of banks, at
times double. Many of the top companies belonging to reputed industrial houses like Tata
Motors, JaiPrakasn Associates, Mahindra & Mahindra Finance, etc. and government
organizations like HUDCO, L1C Housing Finance, etc. are accepting deposits from public.

Non-Banking Financial Company (NBFC): NBFC is a company registered under the Companies
Act, 1956 and is engaged in the business of loans and advances, acquisition of
shares/stocks/bonds/debentures/securities issued by government or local authority or other
securities of marketable nature, leasing, hire-purchase, insurance business, chit business, bul
does ai include any institution whose principal business is that of agriculture activity, industrial
activity, sale/purchase/construction of immovable property. The AUM of Fixed Deposits with
NBFCs is Rs.14,802 crores of which Rs. 7,630 crores is held by individuals.

Residuary Nor Banking Companies : RNBC are non banking institutions receiving deposits
under any scheme arrangement in one lump sum/installments by way of
contributions/subscriptions or by sale of units/certificates/other Instruments. The Assets in FDs
with RNBCs is Rs. 97,082 crores.

Hence, the total wealth in Fixed Deposits in India is Rs. 41.45 lac crores. Of this, the amount
with Individuals is Rs. 22.13 lac crores. Thus, we can say that 53.39% of total wealth in Fixed
Deposits is with individual investors. The chart below shows a break-up of FDs into the source:

Table 7: Distribution of Fixed Deposits


Types of FDs Amount (in Rs Crore)

Bank FDs 20,48,311

Corporate FDs 60,000

NBFC FDs 7,630

RNBl I Ds 97,082 27

Total 22,13,023
We can conclude that investors prefer Bank FDs over the other types of Fixed Deposits probably
because Bank FDs are considered to be more secure. Although Corporate FDs have a much
higher rate of return, they are unsecured investments and come with a greater level of risk.

Fixed Deposits account for 30.28% of the overall Individual Wealth in India. It is a high
proportion as it is the 2nd most preferred investment avenue after Direct Equities. The reason it
accounts for such a high percentage towards the overall wealth is its low risk nature.

5.5.5 Saving Bank Deposit:

The amount of investable surplus that investors have in a savings account with banks will be
addressed in this section. This can be further divided into the type of banks the deposits are with.
These types include Scheduled Commercial Banks and Scheduled Co-operative Banks.

Table 8: Savings Bank Deposits

Bank Type Amount (in Rs.Crore)

Scheduled Commercial Banks 6,70,895

Scheduled Co-operative Banks 4,239

Total 6,75,134

Though the returns are less but still Individuals invest in this asset since ago due to its risk free
and highly liquid nature. The Savings Bank Deposits across India is worth Rs. 6.75 lac crores.

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Savings Bank deposits with individuals account for 9.24% of the overall Individual Wealth in
India.

5.5.6 Small Savings:

Small savings comprise savings made with the Post Office. They include instruments such as
Post Office Time Deposits, Post Office Recurring Deposits, Post Office Savings Accounts, Post
Office Monthly Income Scheme, Kisan Vikas Patra, and National Savings Certificate, etc. It is
one of the most traditional forms of investment in India. The total AUM of Small Savings as on
3Is1 March, 2009 is Rs 5.19 lac crores . Public Provident Fund in the Post Office has not been
considered here as it is being considered as a separate asset class under Provident Fund. The
table below shows the amount invested in different Small Saving Schemes:

Table 9: Small Savings

Scheme Amount (in Rs.Crore)

Post Office Monthly Income Scheme 1,79,270

Kisan V i k a s Patra 1,47,584

Post Office Recurring Deposits 64,822

N a t i o n a l Savings Certificate (NSC) 55,455

Post Office Time Deposits 26,331

Post Office Savings Account 22,217

Senior Citizens' Savings Scheme 20,612

Deposit scheme for R et i ri ng Government 1,244

Employees 1989 / Retiring Employees of P u b l i c Sector

Indira Vikas Patra 1,072

N a t i o n a l Savings Scheme 1992 555

Total 5,19,162

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The Assets in Small Savings contributes 7.10% of the total estimated Individual Wealth in India.
Small savings are a popular choice amongst the smaller investors and are also extensively used
by the rural population as investment avenues

5.5.7 Provident Fund:

Provident Fund (PF) is an investment-cum-tax savings instrument. It has been used traditionally
as a retirement planning tool by individual investors in India. It is an asset class which provides
the investor with the luxury of saving tax and also safeguarding their capital. Provident Fund can
be divided into Employee Provident Fund (EPF) and Public Provident Fund (PPF). EPF is a
retirement benefit scheme that is available to salaried employees. Both the employees and
employer contribute to EPF as a percentage (12% in most cases) of the bash wages, dearness and
retaining allowance, which is remitted to the PF authorities. PPF is a voluntary yearly amount
that an individual deposits with Post Office (PPF with Post Office) or with Banks (PPF with
Banks). Table 12 lists the breakup of all types of PPF accounts.

The total assets in PF as on 31 ' March, 2009 is Rs 2.81 lac crores. The amount of wealth in EPF
is Rs. 2.11 lac crores. The amount of wealth in PPF is Rs.69,882 crores. One of the reasons for
the difference in the AUMs of EPF and PPF is that EPF' is provided by all employers to their
employees and is compulsory in most organizations. Whereas PPF is an investment cum tax
saving option that an investor can opt for. It is not compulsory to have a PPF account. As only
individuals can have a Provident Fund account, the entire amount is considered as the wealth
with individuals.

5.5.8 Alternative Assets:

Investments which are considered outside the traditional asset classes like Equity, Mutual Funds,
Saving and Fixed Deposits, Insurance and other instruments covered earlier are known as
alternative assets. These assets include private equity/venture capital, structured products, real
estate funds, art funds, film funds etc. These alternative assets usually have a larger initial
investment and hence not accessible to general investors.

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5.5.8.1Equity Linked Debentures: Equity Linked Debentures are instruments whose returns on
investment are tied to the equity markets. These are comparatively new in the Indian Market and
are of two types:

• Principal Protected, where the principal amount is fixed while the interest component is
variable and linked to stock market movements;

• Non-Principal Protected instruments are a riskier variant, Where even principal is linked
to market.

5.1.8.2 Private Equity Funds/Venture Capital: Starting and growing a business always requires
capital. There are a number of alternative methods of raising funds. These include the owner or
proprietor's own capital, arranging debt finance or seeking an equity partner, as is the case with
Private Equity and Venture Capital. Private Equity(PE) is a broad term that refers to any type of
non-public ownership equity securities that are not listed on a Public exchange. Private Equity
encompasses both early stage (venture capital) and later stage (buy-out, expansion) investing.

5.1.8.3 Real Estate Funds: Like Mutual Funds, Real Estate funds are founded by a group of real
estate professionals/experts to 'manage' property/real estate for the investor. Investors get the
benefit of diversification across cities and across property - Residential and Commercial, the
introduction of Real Estate Mutual Funds has further ensured large-scale investments in the
Indian real estate market. As of now, the real estate window is open to high net worth
individuals, institutional investors and global investors. The total assets in Real Estate Funds is
Rs. 6,753 crores. The total AUM of Real Estate Funds with individuals is Rs. 1,351 crores.

5.1.8.4 Film Funds: Film Funds mobilize money to invest in movie productions/marketing.
While not all films are successful, the payoffs from those that are successful can be huge. The
fund sets up Special Purpose Vehicles (SPVs) to fund each film project. The revenues from the
film will flow directly into the SPV and will be re-distributed according to the ownership pattern.
The filmmaker too will have a stake in the SPV.

The total amount of wealth in Film Funds amounts to Rs.965 crores . The assets in Film Funds,
considered for the purpose ol this report, to be with individuals is Rs. 482 crores.

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5.1.8.5 Art Funds: An Art Fund works much like a Mutual Fund, the difference being that the
former invests in Art. The funds aim at investing in a diversified portfolio of select works by
leading artists and providing investors with the opportunity to profit from leveraging the fund's
pooled purchasing power. Art funds are a fairly recent phenomenon in India, and are
cumulatively estimated to command AUM of Rs. 239 crore under management.

The table below shows the list of break-up of the amount under each sub category of Alternative
Assets:

Table 10: Alternative Assets

Type of Asset AUM (in Rs. Crore)


Equity-linked Debentures 15,000

Private Equity/Venture Capital 1,503

Real Estate Funds 1,351


Film Funds 482

Art Funds 239

Total 18,575

The total AUM in Alternative Assets is Rs.18,575 crores. This asset class is relatively new in
India and as the initial investment is huge and risk is fairly high, people are still reluctant to
invest in it. But this scenario is expected to change over the next decade as HNIs will look for
different options for portfolio diversification. The investments in Alternative Assets is expected
to grow at a phenomenal rate of 100% over the next three years.

6. Total Wealth In India:

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In accordance with the above figure we have observed that major portion of investment in India
is in Equity and Fixed Deposit. It constitutes 61% of total wealth of india.

7. Individual Wealth In India Vis-à-vis Global Wealth:

Table 11: Comparison of Global & Indian Individual Wealth according to Asset Class

Name of Asset Percentage of Global Wealth Percentage of Indian Wealth

Equities 35% 33.9%

Debt 58% 65.8%

A l t e r n a t i v e Assets 7% 0.3%

From the very beginning, Indians have been investing in Fixed Deposits, Insurance and
depositing money in Savings Deposits, therefore a major percentage of Individual Wealth goes in
debt instruments. But in the past one decade investment in equities has also been on a rise. This
is due to an emerging robust Indian economy with a good GDP growth rate and a promising
growth ahead. Indian economy in the coming years will be driven by robust domestic
consumption, pick-up in exports and more market activity, thus boosting investor's faith in the
markets. As India has a lot of young, working population risk appetite is fairly high. Alternative

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assets are relatively a new asset class. However it has a huge potential and is expected to grow
over the next decade. It has been expected that in the next decade investment in Equity and
Mutual Funds will increase substantially.

8. The Future of India’s wealth:

8.1 Financial Household Savings: Financial Household Savings: Individuals in India


generally have a habit of saving. Consistent GDP growth leads to an increase in Household
Savings, assuming that there is no radical change in consumption/savings pattern of Indian
households. Indian Household Savings rates are amongst the highest in the world. As Household
Savings shoot up, the Financial Household Savings also increase.

The Financial Household Savings lead to an investment across various asset classes Table 15
below lists the projection for the Financial Household savings for the next three years.

Table 12: Financial Household Savings Projection

2010-11 2011-12 2012-13

GDP Growth Rate 8.50% 9.00% 9.00%

Estimated GDP(at current market prices) in Rs. 73,56,946 88,20,979 1,05,76,354

Household Savings(in Rs.) 16,92,098 20,28,82 24,32,561


5
Financial Household Saving (in Rs.) 10,49,101 12,98,448 16,05,490

As can be seen above, over the next three years investment of Household Savings in the form of
financial assets will gradually rise to about Rs. 16 lac crores in 2010-13 and will in turn
contribute to the total Individual Wealth in India.

8.2 Forecast of Individual wealth:

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The robust and growing Indian economy backed by consistent GDP growth is ensuring that the
wealth in India held by individuals increases at a rapid pace. This is on account of both the
existing investments held by individuals growing with the economy as well as additional wealth
invested by individual from the Financial Household Savings on account of higher Household
Savings.

Table 13: Individual Wealth Forecast

(in Rs.Crores) 2010-11 2011-12 2012-13

Individual Wealth - Beginning of the Year 73,07,878 91,60.011 1,14,95,116

Return Generated on Invested Wealth 8,03,032 10,36,658 13,39,928

Financial Household Saving to be invested 10,49,101 12,98,448 16,05,490

Total Individual Wealth - End of the Year 91,60,011 1,14,95,116 1,44,40,534

As can be seen in table 16 above, It is been estimated that the Individual Wealth in India is going
to almost double from the existing Rs.73 lac crore to Rs.144 lac crores by 2012-13 at a
compounded annual growth rate of 25%.

8.3 Key Trends:

We can see a shift from the data above in the way that Individual Wealth in India will be
invested across asset classes by 2012-13. This is due to various factors such as a promising GDP
growth rate, better understanding of newer & better investment avenues. better financial literacy
and a large young educated population.

Table 14: Forecast of Individual Wealth in India according to Key Asset Classes

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Name of Asset Class 2009-10 2012-13

Equities 33.9% 42.9%

Debt 65.8% 56.1%

Alternative Assets 0.3% 1.0%

As can be seen in Table 17, we see a shift towards the Equity based asset classes which will form
42.9% of Individual Wealth by 2012-13. Apart from the traditional direct equity, where
Individual Wealth will also grow along with the growth of high growth sectors such as
infrastructure, capital goods, banking, pharmaceutical & healthcare, we see Exchange Traded
Funds becoming extremely popular and forming a part of an individual's portfolio.

While the investments in Debt asset class instruments would increase by 20% YOY in volume
terms its overall proportion would reduce from the present 65.8% of Individual Wealth in India
to 56.1% in 2012-13. Individuals would broadly continue to Invest in the same debt instruments
as they presently invest in, although the growth in small savings will be limited.

In India, Individuals are under invested in Alternative Assets. With just 0.3% of present wealth
as compared globally which is 7%, It can be seen that there is very huge area of investment in the
next decade. Private Equity, Real Estate(Real Estate Funds and Real estate Trust Investment)
and International Investments becoming extremely popular among HNIs and However, there is
no possibility of popularization of Hedge funds in the next 2-3 years.

9 Sales Process: Sales Process is a systematic approach to selling a product or service. The
ultimate goal of any sales process is to acquire new business for the company and maintaining
good relationship with the clients, which would be helpful for the company in future

36
9.1 Sales Lead: The beginning of every sales process is Sales Lead. The Lead is basically the
contact information about the client which salesperson can use as a basis for investing the client
as a prospect and generating the interest in the products and services offered by the company.
The Wealth Advisors get the lead either through their personal contact or through the Karvy call
center called Sparsh.

9.2 Introductory Meeting: The next step in sales process is the conversion of lead into prospect.
This can be done only in case of these two situation; First, the sales person considers the client as

37
viable to purchase the product and secondly when the client shows interest in the products and
services offered by the company.

For this, the Wealth Advisors fix up the introductory meeting with the client to give a brief idea
about the products and services offered. They try to get familiar with the client and try to learn
his investment ability. They also try to know about hi s current portfolio and his interest
regarding investment. After knowing the basic needs of the client they pitch the product
accordingly. If the client is interested in Advisory then they forward his portfolio to the
investment counselor. ICs recommend him to invest in what kind of stocks and when according
to the market scenario.

9.3 Follow up meeting: The next step is the extension of the formal relationship or proposal of
the purchase of products and services offered. In this step the WA provides the client the specific
applications regarding the products which is best suitable to him according to his needs. This is
done to sign off the final plan based on first meeting held.

9.4 Client on Board: Client on Board means the closure of the sales process. The prospect has
been converted into the client. The closing includes the placement of the first order along with
the acceptance of the proposal and the official signing off the contract. After the closure WA
oversees the fulfillment and tries to meet all the requirements of the client.

9.5 Operational Work: In signing off the contract to meet all the formalities, Operation plays an
important role. It includes documentation of the product offered to the client i.e. filling the form
appropriately and to provide the mandatory documents needed, So as to reduce any unnecessary
delay.

9.6 Investment Counselor: Investment counselors make the financial plans of the client
according to his goals. They analyses the financial health thoroughly and helps to plan the
investment to meet his medium term and long term goals. They also provide recommendations
on current portfolio, help to restructure current investment and give advice on tax optimization.
They also advice the client regarding the stocks they should buy, when they should buy and in
which quantity.

10. Details Regarding Meeting:

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Fresh Meeting:

• Fresh Meeting starts with the introduction between Client and the Wealth Advisor.

• WA tries to get familiar with the client.

• He gives a brief idea about the company and about products and services offered by it.

• He tries to know about the investment pattern of the client and ask for the current
portfolio so that they get an idea about his investment behaviour.

• There can be four frame segment about the investment pattern:

AGGRESSIVE MODERATE

CONSERVATIVE AS PER WA WILL

Aggressive: In this category investor is highly risk taker. He invests majorly in equity segment
and small part as fixed income segment. This assures high return but at the same time high risk
as well.

Moderate: In this category investor invests in both in risky as well as fixed return investment but
in the same proportion. He likes to take risk but not that much as in aggressive.

Conservative: Investor is highly risk averse. He does not invest in risky proposition or invests in
very small proportion.

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As per WA Will: In this category, investor is wholly dependent on WA. He is convinced by the
WA and invest according to him. This is the category which is very simple and easiest for the
WA and they try to take the client into their confidence. They fully trust on WA and leave every
decision on them.

11. Operations: In signing off the contract , Operation plays an important role. It includes
documentation of the product offered to the client i.e. filling the form appropriately and to
provide the mandatory documents needed, So as to reduce any unnecessary delay.

Operational Work also includes the checking of whether all the formalities have been completed
or not. It also takes into account all the mandatory documents i.e.

FINANCIALS:

• 6 Months Bank Statement.

• ITR(Income Tax Returns)/Form 16

ADDRESS PROOF:

• Voter ID/Passport/Bank statement.

BANK PROOF:

• Cancelled Cheque

• Bank Statement

12.1 Process for opening Demat Account:

PMS booklets are of two types i.e. DPMS & NDPMS.

• DPMS & NDPMS forms are further divided into two parts i.e. Individual and Non
Individual .

• DPMS set includes DPMS booklet, Disclosure document, CIF form, Bank form
(currently linked is Axis Bank) & Demat / I Zone.

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• NDPMS set includes NDPMS booklet, Disclosure document, CIF form, Bank form
(currently linked is Axis Bank) & I Zone.

• To highlight types of check list and sign check following is the category wise applicable
details :

41
DPMS NDPMS

Individual DPMS booklet , Disclosure NDPMS booklet , Disclosure


document, CIF form, Axis Bank document, CIF form, Axis Bank
Form (SB) & Individual Demat Form (SB) & I Zone

Non Individual DPMS booklet , Disclosure NDPMS booklet , Disclosure


document, CIF form, Axis Bank document, CIF form, Axis Bank
Form (Current) & Corporate Form (Current) , Corporate Demat
Demat & I Zone Non Individual

NRI DPMS booklet , Disclosure NDPMS booklet , Disclosure


document, CIF form, Axis Bank document, CIF form, Axis Bank
Form's (SB & PIS) & I Zone Form's (SB & PIS) & I Zone

12. Financial Planning:

Financial Planning service analyses the financial health thoroughly and helps to plan the
investment to meet medium term and long term goals.

Steps involved in Financial Planning:

Step 1: Put the Finances in Order

Financial Planning starts with review of overall financial profile and not at investing.

42
Insure the health, life and assets

Family’s life and asset should be insured and protected against events and expenses beyond
one’s control. Appropriate Insurance policy should be bought for medical expenses, life, car and
other important asset classes. The person should also calculate How much insurance policy
should it buy according to his requirements.

Minimize the Expenses:

The expenses should be minimized. They play a very important role in one’s savings. As

Income - Expenses= Savings. Higher the Expenses lesser would be the savings. For eg: Paying
credit cards bill on time would reduce the unnecessary expenses.

Put some money aside for Emergencies

Some amount of money should be deployed against short term investments so that it can be
encashed in case of emergency.

Draw up Savings Plan

Savings should be properly planned. The aim should be to save at least 15% of the Annual
Income.

Step 2: Preparing to invest:

Investment planning is much simpler and more rewarding than one can think. In Investment
Planning the age and income size doesn’t matter.

Identify the Financial Goals:

What are your goals? What are you saving for – A house? Child's education/ marriage? New car?
World tour? Retirement? Quantify this in terms of amount of money needed, and time horizons.

Understand the Risk Profile:

Depending upon Income and earnings. All have different capacity for risk handling. We also
have a different risk tolerance, based on our individual psychological make-up. One should
understand his/her risk profile and plan the portfolio accordingly.

43
Plan the asset allocation

Returns should not be the primary objective; one could end up taking more risk than he/she is
financially/ psychologically capable of. It helps seek expert advice and create a portfolio with the
right spread across asset classes to minimize risk of incurring a loss.

Step 3: Start Investing

Invest as per your needs

If one knows that one will need cash next year (down payment for a house, child’s college fee
etc), opt for a shorter term, low capital risk investment (such as liquid/ gilt/ money market funds,
bank term deposits or top-rated company deposits/ fixed income investment options).

Evaluate your investing skills

Finding the right money manager for your investments is important. Investment Manager should
be chosen by the person to get the right guide for investment.

Financial planning is not about financial expertise and hard work. All it needs is the right
approach and discipline.

12.1 Need for Comprehensive Financial Planning:


Financial Planning is the holistic approach to managing the overall goals. Its key aspects include
risk management, goal setting, asset allocation and retirement planning. . More often, people
assume that expert advice is necessary only for certain investment avenues such as insurance or
retirement planning and the rest would automatically fall in place. However, in today's fast-
changing world, our plans may become obsolete if not updated regularly. The Financial product
market place is labyrinth, making it more difficult for the people to comprehend about numerous
investment options. Wealth Advisors need to provide expert advice to ease these option and for
channelizing their savings in right direction

Financial Planning:

44
The analyses the financial health thoroughly and helps to plan the investment to meet his
medium term and long term goals. They also provide recommendations on current portfolio, help
to restructure current investment and give advice on tax optimization. They also advice the client
regarding the stocks they should buy, when they should buy and in which quantity.

Financial planning is a holistic approach to managing the overall financial life, and its key
aspects include risk management, goal-setting, asset allocation and retirement planning
Effective risk management, therefore, is the first step in the financial planning process. Every
sound financial plan begins with the identification and coverage of potential risks that one may
face at some stage of your life. Risk coverage through insurance ensures that the financial goals
are not derailed and the wealth is preserved over the long-term. Once these risks are
appropriately covered, one will be emboldened to take on bigger decisions in life.

12.2 Need for Risk Management Services:

Risks mentioned here are sudden, significant events that could shake one’s world in the form of
property risks (damage to physical assets due to accidents, breakdowns and natural calamities),
financial risks (theft and burglary), or individual risks (untimely death, critical illness, accidents,
disability and hospitalization). It becomes imperative to plan and financially prepare for these
potential risks and contingencies. Taking insurance cover, therefore, is an important component
of the overall risk management process.

Without proper risk management, therefore, most households end up being under-insured due to
insufficient cover, besides the accumulation of a host of policies ill-matched to the needs.
Similarly, many high net-worth individuals learn the importance of health insurance the hard
way when hospitalization expenses eat away a major chunk of their wealth and derail their
financial goals Through risk management services is to identify, quantify and mitigate the overall
risks through life and general insurance products so that the person and his dependents will be
fully prepared for any eventuality.

12.3 What does Risk Management cover?

• Taking stock of the existing life insurance and general insurance cover.

45
• Evaluating the life cover based on the amount of the dependents would taken care after
taking into consideration of outstanding loans and long-term goals—to maintain their
existing lifestyle in the event of your untimely demise.

Finding out gaps, if any, in your required life cover against the existing cover

• Analysing the general insurance requirement and determining gaps therein. General
insurance includes health, mortgage, home, household and automobile insurance, among
others (which many consider to be unnecessary expenditure)

• Matching suitable products for the needs and implementing the recommendations.

13 Wealth Review and Investment Strategy:

As a person familiar with the success and achievement, everyone is driven by some goals for
himself. Goals may be wanting to own an exotic holiday home or planning of the children’s
education. One’s wealth will be the key to achieving these goals. However to weather the
uncertainties of life and achieve the maximum potential of wealth, everyone need a proper
structure and strategy.

A Wealth Review is the first step in the formulation of that plan. It thoroughly reviews the
current financial situation. Its result is a long term framework that helps you manage your wealth
optimally and a short term view that helps you avoid risks & exploit opportunities.

13.1 What does Wealth Review and Investment Strategy Service cover?

• Investment objective statement

• Detailed review of current investments

• Strategic asset allocation - for better performance and risk management

• Specific investment options in each asset class

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• Tax-optimization strategies

13.2 Steps in the Wealth Review Process


The Wealth Review is a four step process :

13.2.1 Financial Profiling: An important step, this is where we understand your risk profile and
appetite This is also the stage where we determine your goals from your wealth. This step
culminates with the creation of Investment Objective Statement.

13.2.2 Analysis of Existing Portfolio: This step consists of broad portfolio level asset allocation.
Here analysis is being done of all investments at an aggregated asset class level and provide
analytics and conduct deeper research around specific investments.

An analysis of any complex investments will also be done such as concentrated holdings in any
one company or significant real estate holdings etc.

Equities Debt Alternative Assets PE/VC


• Direct equity holdings •Direct Holdings •Commodities •PE Funds
•Mutual Fund holdings •Mutual Fund •Managed futures •VC Funds
•PMS structures •PMS investments
•Structured Products

Real Estate Cash International Gold


•Fund holdings Investments •ETF
• Direct investments •ETF's •Gold Funds
•MPs • Physical Gold

13.2.3 Designing the Portfolio: At this stage a strategic asset allocation is determined. The aim is
to draw the overall picture to arrive at an optimal portfolio allocation.

A sample break-up is given below:

Shown in figure-1 are sample holdings in different classes of investment along with the
suggestions as to what could be the ideal break-up should be. The suggested allocation will
depend upon the objectives and capacity for risk. This analysis is then extended to a sub - asset

47
class level as shown in Figure -2. For example when analysing equities, Firstly, current
allocations to direct equities, various mutual funds and Portfolio Management Services will be
considered. Then looking at the risk appetite and than a more balanced portfolio, that mixes.

13.2.4 The Action Plan: After creating a strategy for the wealth, the next step is execution stage.
For optimal execution an action plan will be created. For even better performance this will be
divided into two broad categories, the Macro Action Plan and the Micro Action Plan, both
dealing with the portfolio at different levels of detail.

13.2.4.1 The Macro Action Plan: Planning the portfolio on a broad, sector based level.

For instance: If the ideal allocation to core funds is 7%, and the current percentage is 5% then

It will be ensured that the portfolio reaches that level – than it will be looked in which sector the
particular person currently over allocated to and switch accordingly.

If the allocation to a sector is optimal but the investments are not diversified then it can be
adjusted accordingly.

13.2.4.2 The Micro Action Plan: Planning that deals with the portfolio at the product level. For
instance moving ahead from the previous example if the person is currently invested in some
poorly performing core fund, then he will be suggested with a better core fund, one that has been
consistently outperforming the market.

Annexure I
No. of meetings held by each Wealth Advisors in the month of February,
March and April
WA 1

48
S.N
o FEB’11 MAR’11 APR’11

1 No of meetings 47 43 48

2 Fresh meetings 23 15 20

3 Follow ups 18 25 28

4 Existing clients 20 21 22

5 Average Calls Per day 2 2 2

6 Average Calls Per Week 0.5 0.5 0.5

7 Average Calls Per Month 45 45 45

WA 2

S.no FEB’11 MAR’11 APR’11

1 No of meetings 44 51 47

2 Fresh meetings 14 13 19

3 Follow ups 17 23 18

4 Existing clients 13 15 10

5 Average Calls Per day 7

6 Average Calls Per Week 50

7 Average Calls Per Month 200

References
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 Websites
 www.karvy.com
 www.karvywealth.com
 www.moneycontrol.com

 Karvy Brochures
 Wealth Advisors
 Operational Executive
 Investment Counselor

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