Description
its a BBA project
A STUDY ON COMPARATIVE ANALYSIS OF VARIOUS FINANCIAL INSTITUTIONS IN THE MARKET
IN ADITYA TRADING SOLUTIONS
By
Esakki Rajeswaran.S
3/29/2013 0|Page
A STUDY ON COMPARATIVE ANALYSIS OF VARIOUS FINANCIAL INSTITUTIONS IN THE MARKET IN ADITYA TRADING SOLUTIONS
Project Report submitted in partial fulfillment of the Requirement for the award of degree of BACHELOR OF BUSINESS ADMINISTRATION UNIVERSITY OF MADRAS
By
Esakki Rajeswaran.S
Register No. 106BU135 Under the guidance of Mr./ Ms.Serena Suman
DEPARTMENT OF BUSINESS ADMINISTRATION MADRASCHRISTIANCOLLEGE (AUTONOMOUS) TAMBARAM EAST, CHENNAI-600059 MARCH 2013
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CERTIFICATE
This is to certify that Esakki Rajeswaran.S has completed her/ his project, on A STUDY ON COMPARATIVE ANALYSIS OF VARIOUS FINANCIAL INSTITUTIONS IN THE MARKET under my guidance. It is his own work fully and to the best of my knowledge and belief that it has not been used for the award of any degrees in this university or anywhere else and I am satisfied with his effort in this connection.
Head of Department
Project guide
Date:
Date:
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VIVA VOCE EXAMINATION
This is to certify that the report on ‘A STUDY ON COMPARATIVE ANALYSIS OF VARIOUS FINANCIAL INSTITUTIONS IN THE MARKET’ submitted by Esakki Rajeswaran.S for partial fulfillment for the Bachelor in Business Administration Degree is a record of research work done by him during the year 2012-2013.This study represents independent work on the part of the candidate.
Internal Examiner
External Examiner
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Declaration
I hereby declare that the internship titled ?A STUDY ON COMPARATIVE ANALYSIS OF VARIOUS FINANCIAL INSTITUTIONS IN THE MARKET? is based on the original work carried out by me under the guidance of Mr. Sathish, HR manager / Admin Manager, Aditya Trading Solutions Ltd and Mr. / Ms.Serena, faculty guide at college, submitted to Madras Christian College in partial fulfillment of the requirement of the course of study.
Esakki Rajeswaran.S
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ACKNOWLEDGEMENT
I would like to express my thanks to SURESH and SATHISH.K of ADITYA TRADING SOLUTIONS for giving me the opportunity to take up this project and helping me in completing the project.
I express my thanks to Dr. R.W. ALEXANDER JESUDASAN, M. Sc., Ph.D., FRES. FAZRA. FMSF, FEAI, FPPAI. principal for allowing me to undertake internship/project work.
I hereby express my sincere thanks to D.ARMSTRONG DOSS, M.B.A., and M.PHIL. Head of the Department, Business Administration, Madras Christian College for his valuable support.
I owe my sincere thanks to my project guide MRS.A.MILLICENT SERENA SUMAN showed infinite interest and helped me at all times with valuable suggestions.
I thank my parents and friends who helped me directly and indirectly in any phase of completion of my project
ESAKKI RAJESWARAN.S
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LIST OF CONTENTS
S. NO
CONTENTS
PAGE NO.
1.
Executive summary
11
2.
Introduction
13
3.
Objectives of the Study
41
4.
Research Methodology
43
5.
Company Profile Review of Literature
49
6.
61
7.
Analysis and Interpretation
66
8.
Findings
86
9.
Suggestions
88
10.
Conclusion
93
11.
Annexure
95
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LIST OF CHARTS
Chart No.
2.1c
CONTENT
Sectors of Financial Institutions
Page No.
15
2.2c
Target of Investment
17
2.3c
Types of Investment
18
2.4c
Annual Returns
18
2.5c
Working of Mutual Fund
20
2.6c
Client Portfolio
23
2.7c
Certified Financial Planner (CFP)
26
2.8c
Personalized Financial Plan
28
2.9c
The Financial Planning Process
31
2.10c
Financial Planning Process
33
2.11c
Players in the Market
35
7.1c
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Objectives behind investment
68
7.2c
Investing in Financial Instruments
69
7.3c
Response on Plan their Investment
70
7.4c
Response on practice of saving money
72
7.5c
Response on saving for Retirement
73
7.6c
Response on age preference to plan for Retirement Response on fundamentally safe form of
74
7.7c
investment
75
7.8c
Response regarding taking Financial Decision
77
7.9c
Response to having an Insurance Policy
78
7.10c
Response for buying an Insurance Policy
79
7.11c
Response on awareness of Financial Advisors
80
7.12c
Response to availing Financial Advisory Services
81
7.13c
Response regarding source of Financial Advisory Response that Customer gets from the Service
83
7.14c
Provider
84
9.1c
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Mode of Financing
91
LIST OF TABLES
Table No.
2.1t
CONTENT
Types of Investment
Page No.
19
2.2t
Difference between Banks and Mutual Funds
25
7.1t
Objectives behind investment
67
7.2t
Investing in Financial Instruments
69
7.3t
Response on Plan their Investment
70
7.4t
Response on practice of saving money
71
7.5t
Response on saving for Retirement
73
7.6t
Response on age preference to plan for Retirement Response on fundamentally safe form of
74
7.7t
investment
75
7.8t
Response regarding taking Financial Decision
76
7.9t
Response to having an Insurance Policy
78
7.10t
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Response for buying an Insurance Policy
79
7.11t
Response on awareness of Financial Advisors
80
7.12t
Response to availing Financial Advisory Services
81
7.13t 7.14t
Response regarding source of Financial Advisory Response that Customer gets from the Service Provider
82
84
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CHAPTER 1 EXECUTIVE SUMMARY
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EXECUTIVE SUMMARY
The project ?Comparative Analysis of various Financial Institutions in the market” was done to gather knowledge and study the 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 Financial Planning in the growing economy. People should come out of the concept of just keeping their money in Savings Account and Fixed Deposits and should concentrate on their financial planning to maximize returns by taking proper guidance from financial planner.
Most of the advisors provide expertise information and knowledge about various financial products, like bonds, mutual funds, insurance, equity market and real estate etc.
The in-depth analysis of the report will help the reader know much more about the investors and financial advisors. Investors having low saving potential, growth of capital acts as a primary objective behind investments. Investors get high level of satisfaction from existing 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.
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CHAPTER 2 INTRODUCTION
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Introduction
FINANCIAL ADVISORS
Planning for a secure financial future is not easy. Yet increasingly, individuals are in charge of their own financial futures. Most are aware that planning is critical, yet don‘t they have time or the expertise to develop a plan and make the needed financial decisions. So there arises a need for Financial Advisors to manage the individual‘s wealth and the whole process of managing this wealth is known as Wealth Management. There are a number of financial advisors offering a diverse portfolio of services to suit different financial requirements of their clients. In order to accomplish the task, these companies provide the assistance of professional financial advisors. These financial advisors help individuals or corporate manage their wealth appropriately through:
(i) Investment Solutions: - The financial planner helps the individuals diversify their portfolio through alternative investment plans, mutual funds, equities, and even save for retirement through annuities.
(ii) Financial Planning: - Financial Planning is an exercise aimed to ensure availability of right amount of money at the right time to meet the individual‘s financial goals. Financial institutions plan individual‘s current expenditures and save for future short-term or long-term goals by analyzing different options available.
(iii) Retirement Planning: - The financial planner guides their clients in planning for their financial requirements after retirement, by helping them to
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identify goals, researching and analyzing different opportunities to secure funds and make investments to suits their needs.
(iv) Wealth Management: - It is a comprehensive service to optimize, protect and manage the financial well-being of an individual, family or corporation. Its basic definition covers advice on loans, investments and insurance to give a broad picture of how individuals should best deploy their financial resources. A broader picture may include tax advice, estate planning, business planning, charity foundations and other financial needs.
2.1c Sectors of Financial Institutions
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Even 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. I know we all understand the importance of savings but let us not get confused between savings and investment. Mere savings (putting aside a portion of earnings) do not insure or guarantee achievement of future financial goals.
Investments The money you earn is partly spent and the rest is saved for meeting future expenses. Instead of keeping the savings idle you may like to use savings in order to get return on it in the future. This is called Investment. In other words, Investment is ?the act of committing money or capital to an endeavor with the expectation of obtaining an additional income or profit.‘
It's actually pretty simple: investing means putting your money to work for you. Essentially, it's a different way to think about how to make money. There are many different ways you can go about making an investment. This includes putting money into stocks, bonds, mutual funds, or real estate (among many other things), or starting your own business. Sometimes people refer to these options as "investment vehicles," which is just another way of saying "a way to invest." Each of these vehicles has positives and negatives, which will be discussed later in the thesis. The point is that it doesn't matter which method you choose for investing your money, the goal is always to put your money to work so it earns you an additional profit. Even though this is a simple idea, it's the most important concept in the current scenario to understand.
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2.2c Target of Investment
Types of Investments There are many ways to invest your money. Of course, to decide which investment vehicles are suitable for you, you need to know their characteristics and why they may be suitable for a particular investing objective. • Debt Market • Bonds • Mutual Funds • Equity Market • Insurance • Cash • Gold • Real Estate • Home Loans
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2.3c Types of Investment
2.4c Annual Returns
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Types of Investments Return Safety Volatility Liquidity Convenienc e Equity Bonds High Moderate Low High High Moderate High Moderat e Co. Debentures Co. FDs Bank Deposits PPF Moderate Moderate Low Moderate Moderate Low High High Moderate Low Low Low Low Low High Moderat e Life Insurance Gold Low Moderate High High Low Moderate Low Moderat e Real Estate Mutual Funds High High Moderate High High Moderate Low High Low High Moderate Gold Low Moderate High High Moderate High
2.1t Types of Investment
Mutual Funds
A mutual fund is a body corporate registered with SEBI that pools money from the individuals/corporate investors and invests the same in a variety of different financial instruments or securities such as Equity Shares, Government Securities, Bonds, Debentures, etc. The income earned through these investments and the capital appreciations realized are shared by its unit holders in proportion to the number of units owned by them. Thus a Mutual Fund is the
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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 Company (AMC) based on the fund‘s net asset value (NAV), 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.
Working of a Mutual Fund -
2.5c Working of Mutual Fund
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b) Types of Mutual Funds
Mutual fund schemes may be classified on the basis of its structure and its investment objective.
By Structure i. Open-Ended Funds In an open-ended fund, investors can buy and sell units of the fund, at NAV 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. Open ended funds have to balance the interest of investors who come in, investors who go out and investors who stay invested.
ii. Closed-Ended Funds 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. In a closed ended fund, thus, the pool of funds can technically be kept constant. Investors in closed end funds receive either certificates or depository receipts, for their holdings in a closed end mutual fund
iii. Interval Funds Interval funds combine the features of open-ended and close-ended schemes. They are open for sale or redemption during pre-determined intervals at NAV related prices.
By investment objective
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i. Growth Funds The aim of growth funds is to provide capital appreciation over the medium to long- term. Such schemes normally invest a majority of their corpus in equities. It has been proven that returns from stocks, have outperformed most other kind of investments held over the long term. Growth schemes are ideal for investors having a long-term outlook seeking growth over a period of time.
ii. Income Funds The aim of income funds is to provide regular and steady income to Investors. Such schemes generally invest in fixed income securities such as bonds, corporate debentures and Government securities. Income Funds are ideal for capital Stability and Regular Income.
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2.6c Client Portfolio
iii. Balanced Funds 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 equities and fixed income securities in the proportion indicated in their offer documents.
iv. Money Market Funds The aim of money market funds is to provide easy liquidity, preservation of capital and moderate income. These schemes generally invest in safer shortterm instruments such as treasury bills, certificates of deposit, commercial paper
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and inter-bank call money. Returns on these schemes may fluctuate depending upon the interest rates prevailing in the market.
v. Load Funds A Load Fund is one that charges a commission for entry or exit. That is, each time you buy or sell units in the fund, a commission will be payable. Typically entry and exit loads range from 1% to 2%.
vi. No-Load Funds A No-Load Fund is one that does not charge a commission for entry or exit. That is, no commission is payable on purchase or sale of units in the fund.
Other Schemes
i. Tax Saving Schemes These schemes offer tax rebates to the investors under specific provisions of the Indian Income Tax laws as the Government offers tax incentives for investment in specified avenues. Investments made in Equity Linked Savings Schemes (ELSS) and Pension Schemes are allowed as deduction u/s 88 of the Income Tax Act, 1961.
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Banks v/s mutual funds PARAMETERS Returns Administrative exp. Risk Investment options Network Liquidity Quality of assets Interest calculation BANKS Low High Low Less High penetration At a cost Not transparent Minimum MUTUAL FUNDS Better Low Moderate More Low but improving Better Transparent balance Everyday
between 10th. & 30th. of every month Guarantee Maximum Rs.1 Lakh on None deposits 2.2t Difference between Banks and Mutual Funds
iv) Equity Equities are often regarded as the best performing asset class vis-à-vis its peers over longer time frames. However equity-oriented investments are also capable of exposing investors to the highest degree of volatility and risk. There are a number of factors, which affect the performance of equities ad studying and understanding all of them on an ongoing basis, can be challenging for most.
Stock markets have always been a draw for investors for their ability to generate wealth over the long-term. Fear, greed and a short-term investment approach act as hurdles that frustrate the investor from achieving his/her investment goals. You need to keep in mind the risk associated with the stocks. You also need to
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diversify your equity portfolio i.e., include more stocks and sectors. This helps you diversify your investment risk, so even if something were to go wrong with a stock/industry in your portfolio, other stocks/industries should help you shore up your portfolio.
CERTIFIED FINANCIAL PLANNERCM A well-qualified financial planner like a Certified Financial Planner (CFP) would work with a person to prepare his plan. A CFP is finance savvy and combines the objectivity and trust, developed through years of experience and expertise in planning one‘s personal finance.
2.7cCertified Financial Planner (CFP)
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CERTIFIED FINANCIAL PLANNERCM
Certification or CFPCM certification is an international program in the field of Financial Planning, wealth management and financial advisory services. Financial Planning is one of the fastest growing careers across the world. Being one of the fastest growing economies, India currently has around 5cr families with investible surplus. Assuming one financial planner is handling approx. 1,000 clients we need at least 50,000 Certified Financial Planners in India immediately. This is set to grow at a faster rate. CFPCMcertification was rated as Gold Standard in Financial Planning by the WALL STREET JOURNAL in the year 2006.
CERTIFIED FINANCIAL PLANNERCM
Certification or CFPCM Certification is a mark of excellence granted to individuals who meet the stringent standards of education, examination, experience and ethics. It is the most prestigious and internationally accepted Financial Planning certification recognized and respected by the global financial community. CFPCM Certification is the highest level of certification in the field of Financial Planning worldwide with over 1,18,245 CFPCM certificants, who are widely respected by consumers, professionals and industry.
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2.8c Personalized Financial Plan
Certification is for financial services professionals, customer relationship Officers, insurance agents, stock brokers, those looking to expand their careers in the financial services business, and graduates who want to be professionally and globally recognized.
Financial Planning is one of the fastest-growing professions across the world and Financial Planners are the most sought after professionals by a fast growing working population that earns well, and needs expert handling of their finances. The opportunities are aplenty with Banks, Financial Planning outfits, Wealth Managers, life Insurers, Accounting Firms, Stock brokers seeking professionals with such expertise. Financial Planners offer expert opinions on issues related to retirement planning, estate planning, tax planning, investment planning, insurance planning, financial management of small businesses and trusts, stock
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brokering, debt and risk analysis. Needless to say a career as a Financial Planner can prove both challenging and rewarding. Recognizing Financial Planning‘s occupational benefits, there are many surveys that indicate a career in Financial Planning as the top career choice worldwide. Most Financial Planners enjoy relatively low stress, have a high earning potential and enjoy a high degree of workplace autonomy. The personal satisfaction element cannot be underestimated. Very often, independent Financial Planners find that people are just overwhelmed and need direction, so it‘s their job to listen, understand their situation and offer some options that will help them. It gives them satisfaction to help people do better, not just with their finances but with blending the financial side with the other sides of clients‘ lives so that they can achieve their goals. • Enhanced career and employment opportunities in Financial Services Sector. • Personal satisfaction in knowing you have earned the profession‘s highest standard and met the global benchmark. • Satisfied clients who appreciate the comprehensive approach to Financial Planning and extend long term relationships and referrals. • Your expertise and credibility as a qualified professional is instantly communicated. • More revenue streams by increasing your product and service offering to your clients. • Enhanced Social Status by joining the league of professionals. • Recognition in over 23 countries across the world. • Opportunities to showcase your knowledge on Financial Planning & Advising through various media vehicles.
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Financial Planners may earn in any of the following three ways:
1) A Planner can be paid by a salary from the company for which the Planner works; by fees based on an hourly rate, a flat rate, or on a percentage of the assets and/or income.
2) By commissions paid by a third party from the products sold to clients to carry out the Financial Planning recommendations.
3) By a combination of fees and commissions whereby fees are charged for the amount of work done to develop Financial Planning 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 Financial Planners in India. But surely over a period of time the clear trend is towards a fee-only model like other professions, i.e. medicine, law, accountancy, etc.
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2.9c The Financial Planning Process
Financial Planning Standards Board India (FPSB India) offers the Certified FINANCIAL PLANNER CM certification or CFPCM certification Program. FPSB India is the sole licensing body that awards CFPCM certification in India through an agreement with us based FPSB, ltd. The mission of FPSB India is to help benefit the public by granting the CFPCM certification and upholding it as the recognized standard of excellence for Personal Financial Planning. CFPCM certification is awarded by affiliate organizations of FPSB, ltd. in their respective countries of operation. Kindly note FPSB India‘s authorized Education Providers are only training and administrative entities authorized by FPSB India and not the CFPCM certification awarding bodies. FPSB India reserves the rights of awarding and relinquishing CFPCM certification as per the certification policies.
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Financial Planning Standards Board India (FPSB India) is a Public – Private enterprise and a Professional Standards Setting body that proactively guides the development and promotion of standards for Financial Planning professionals to benefit the public in the country. FPSB India closely works with all the stakeholders‘ viz. the Government, the regulators, the Industries/Associations, the Corporations, the Media and the General Public to achieve its objectives. It is a Professional Certification organization, part of leading Global Confederation established by prominent financial service corporations with an objective to professionalize the concept of Financial Planning in India. FPSB India is supported by 50 Financial Services organizations in the country as its Charter Members.
Yes, currently CFP certification is offered and recognized in 23 countries including Australia, Austria, Brazil, Canada, China, Chinese Taipei, France, Germany, Hong Kong, Indonesia, Ireland, Japan, Malaysia, New Zealand, Netherlands, republic of Korea, Singapore, South Africa, Switzerland, Thailand, United Kingdom and United States of America. FPSB, ltd. enters into licensing and affiliation agreements with non-profit organizations (or their equivalent) around the world that allows the organizations to establish and operate the CFP certification program in a country or region. FPSB Affiliates who meet and maintain FPSB‘s affiliation criteria of high standards are authorized to administer the CFP certification program on behalf of FPSB in a country or region. FPSB India is one of the Affiliates of FPSB, ltd.CFP certification undertaken in any of the affiliate country is recognized globally and governed by cross border policy usage. GLOBAL COUNT OF CFP CERTIFICANTS (as in December 2008)Country/Region No. of CFP Certificants
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2.10c Financial Planning Process To benefit the public, FPSB regulates how CFP professionals use FPSB‘s CFP or Certified Financial Planner marks outside the borders of the country or region in which they first received CFP certification. Incidental Use FPSB permits incidental use of the CFP marks by CFP professionals outside the country or region of their initial certification.
Incidental use consists of displays of the CFP marks in/on: • Articles published in a new country or region. • Business cards or brochures distributed while traveling abroad. • Websites targeted toward stakeholders in the country or region of initial certification that are viewable outside the area‘s borders.
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Cross-Border Use
If an individual wishes to hold himself or herself out as a CFP professional or use the CFP marks outside his or her country or region of initial certification for anything other than incidental use, the CFP professional can pursue one of two options:
1. Cross-Border Certification: An individual using the CFP marks in more than one country or region can become cross-border certified by obtaining CFP certification from the FPSB Affiliate in the new country or region and abiding by the certification renewal requirements of both FPSB Affiliates. Once the CFP professional has completed the process, he or she can identify himself or herself as a CFP professional in those territories as well.
2. Restricted Use of the CFP Marks: If an individual does not want to/cannot become certified in a new territory, he or she can always communicate the fact that he or she has obtained CFP certification in the country or region of initial certification.
The kinds of services Financial Institutions offer can vary widely. Some institutions assess every aspect of one‘s financial life, including saving, investments, insurance, taxes, retirement, and estate planning and help one develop a detailed strategy or plan for meeting all financial goals.
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The major players in the market are as follows: • YES Bank • Citibank • UTI Bank Limited • HSBC Bank • HDFC Bank Limited • Bajaj Capital • Religare Enterprises Limited
2.11c Players in the Market
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YES BANK
YES BANK has been conceived in the spirit of professional entrepreneurship, with an unstinted commitment to establish a high quality, technology driven, state-of-the-art private Indian Bank catering to ?Emerging India‘.
The vast banking experience of the Promoters, RanaKapoor and Ashok Kapur who have a collective financial stake of 38.62% has been strengthened by the financial support of Rabobank Nederland to provide YES BANK a strong foundation of enduring financial trust. YES BANK looks to offer comprehensive banking and financial solutions. Which is why, they have inducted top quality Human Capital across all the banking functions, including Corporate & Institutional Banking, Financial Markets, Investment Banking, Business & Transactional Banking and Retail Banking & Wealth Management.
Service Offerings a) Mutual Funds b) Portfolio Management Services c) GOI Bonds d) Tax Saving Bonds e) Subscription to IPOs f) Life Insurance g) General Insurance
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CITIBANK
Citigroup in India Citigroup is the single largest foreign direct investor in the financial services industry in India. Committed to India for over 100 years, Citigroup considers itself a local bank with an international perspective backed by the largest global network. With a staff strength of over 15,000, Citigroup 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 1,000 large corporate, over 22,000 small and medium enterprises and over 5.5 million retail customers. A pioneer in consumer banking, Citibank was the first to introduce credit cards, focused consumer lending programs and electronic banking in India. Today, the Citibank network comprises of 39 bank branches across 27 cities and over 400 CitiCard Banking centers–which combine ATMs and self-service phone and Internet banking— offering CitiGold wealth management, credit cards, mortgage services, Auto Loans, Personal Loans, Suvidha and NRI Services. Through CitiFinancial, Citigroup offers consumer finance services in the country.
Service Offerings a) Mutual Funds b) Tax Advisory Services c) Real Estate Advisory Services d) Art Advisory Services e) Insurance Services
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UTI BANK LTD
UTI Bank was the first of the new private banks to have begun operations in 1994, after the Government of India allowed new private banks to be established. The Bank today is capitalized to the extent of Rs. 280.12 Crores with the public holding (other than promoters) at 72.43 %. Presently the Bank has a very wide network of more than 450 branch offices and Extension Counters. The Bank has strengths in both retail and corporate banking and is committed to adopting the best industry practices internationally in order to achieve excellence.
Service Offerings by Capital Market a) Equity Market Content b) Mutual Funds Content c) Commodity Market
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HSBC Bank
The antecedents of the HSBC Group in India can be traced back to October 1853 when the Mercantile Bank of India, London and China was founded in Bombay (now Mumbai). The acquisition in 1959 by The Hong Kong and Shanghai Banking Corporation Limited of the Mercantile Bank was a decisive factor in laying the foundation for today's HSBC Group. HSBC in India is proud to have retained the Group's pioneering streak by being an active partner in the development of the Indian banking industry - even giving India its first ATM way back in 1987. The organization‘s adaptability, resilience and commitment to its customers have further enabled it to survive through turbulent times and prosper through good times over the past 150 years.
Service Offerings a) Financial Planning Services b) Mutual Funds c) Insurance
Religare Religare Enterprises Limited was promoted by the promoters of Ranbaxy Laboratories Limited and it was originally incorporated as ?Vajreshwari Cosmetics Private Limited? on January 30, 1984. The name of the company was changed to ?Religare Enterprises Private Limited? on January 10, 2006. Religare Enterprises Limited (REL), is one of the leading integrated financial services groups of India. REL‘s businesses are broadly clubbed across three key verticals, the Retail, Institutional and Wealth spectrums, catering to a diverse and wide base of clients.
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REL offers a multitude of investment options and a diverse bouquet of financial services and has a pan India reach in more than 1550 locations across more than 460 cities and towns.
f) Bajaj Capital Bajaj Capital is one of India‘s leading Financial Services companies offering Free Advice on Investments, Insurance, Tax Saving, Retirement Planning, Financial Planning, Children‘s Future Planning and other services. They are also SEBI-approved Category I Merchant Bankers. Today, Bajaj Capital is a one of the largest financial planning and investment advisory companies in India, 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. In addition, they also provide investment assistance by helping clients complete all the formalities, and help them keep regular track of their investments.
ii) Service Offerings a) Mutual Funds b) Taxation Advice c) Bonds d) Post Office Schemes e) Estate Planning f) Insurance g) Financial Planning h) Retirement Planning
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CHAPTER 3 RESEARCH OBJECTIVES
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OBJECTIVES OF THE STUDY
PRIMARY OBJECTIVE
The primary objective of the study is to create awareness among investors about financial institutions in the market
SECONDARY OBJECTIVE ? To find out the growth of financial institutions ? To recommend investors trading in banking institutions ? To understand market sentiment and use appropriate strategy ? To identify the probable profit or loss regions
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CHAPTER 4 RESEARCH METHODOLOGY
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Title of the Study Comparative analysis of various financial institutions in the market.
Objective of Study To study the prospects of various financial products provided by different financial institutions in the market. People should come out of the concept of just keeping their money in Savings Account and Fixed Deposits and should concentrate on their financial planning to maximize returns by taking proper guidance from financial planner.
Type of Research This project is more of an exploratory research with more of qualitative analysis than quantitative. 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 Chennai. (Members [customers & sub-brokers] of Aditya Trading Solutions from Adayar,Alwarpet, Nungambakkam, Sowcarpet)
The research methodology adopted was both Primary and Secondary. Primary 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 individual‘s wealth. Questionnaire was designed to as certain the investor‘s behavior as well as to depict the future prospects and growth momentum of the wealth management industry.
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Sample Size and method of selecting sample
Data Collection Methods & Instruments The instrument for data collection was a structured questionnaire targeted towards people who do investments. This questionnaire was designed to know the investment psyche of a person while investing in the financial products.
The statistical tool that used in the research is Percentage analysis
The mode of communication was informal & friendly conversation, which does not limit discussion within a well-defined boundary.
Data Collection Sources i) Primary Research Research was done to get a detail overview of the wealth management industry and study the need for financial planner in the current scenario. Questionnaire was designed to study the investment psyche of a person, their practice on saving, different investment options available and the need of financial institutions to manage individual‘s wealth. This project is mainly based on first hand observation in the market, the way financial planning functions, scope of financial planning and the need of a certified financial planner.
ii) Questionnaire Design A structured questionnaire was designed covering both open and close ended questions, to study the perception of people regarding investment avenues and the concept of financial planner. {Specimen of the questionnaire is attached in ANNEXURE}.
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iii) Secondary Research Various sources of information were collected for attaining clarity on the prospects of wealth management industry and the various financial institutions in the market. The source also includes basic investment objectives and the various types of investment avenues open to an individual.
However the following sources were considered for information gathering: • Companies websites • Articles and reports available on the web • News papers like Economics Times and Investment Insurance Magazines • Various other sources mentioned in the references, in BIBILOGRAPHY
i) Population considered for research
Sample Details 100 people belonging to different fields, who do investment, were asked to fill the questionnaire, on the basis of which an attempt is made to study the prospects of Financial Planning 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 equal chance of being sampled.
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Personal Information: • Sex Ratio: From the total 100 respondents 15 were females and 85 were males.
Persons Male Female
Ratio 85 15
Sex Ratio of Samples
Males Females
a) Scope of Study ? There exist a potential growth in the wealth management industry and thus this project authenticates the feasibility of financial institutions in the market. ? Expanding needs and proliferation of financial products are making it difficult for individuals to invest without planning. Most are aware that planning is critical; yet don‘t have the time or the expertise to develop a plan & therefore the role of Financial Planner comes in picture.
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b) Limitation of the Study ? The scope of the research was limited to top 7 wealth management companies, namely YES Bank, Citibank, UTI Bank, HSBC Bank, HDFC Bank, Bajaj Capital and Religare Enterprises Limited. ? The sample area was primarily in Chennai. And accordingly the response is presumed to represent whole of India.
? The sample size comprised of 100 respondents from different fields and income group, and their responses are presumed to represent the wealth management mark ? 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. ? The disadvantages exists in the area of data collection, study was carried on from historical data, and not on current data
? All strike prices may not be active at all time. Even a specific strike price may not be active at all time.
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CHAPTER 5 COMPANY PROFILE
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COMPANY PROFILE
Aditya Trading Solutions Private Limited (ATS) are a full spectrum INVESTMENT MANAGEMENT house specializing in online commodity trading. We are one of the earliest members of MCX and pioneers of online commodity broking in TAMILNADU. ATS is promoted by young and dynamic entrepreneurs who have years of proven experience in international derivative markets like NYMEX and worked with several FORTUNE 500 companies. We are the largest online commodity Trading Company in Tamilnadu. Our Client base consists of a long list of satisfied institutional and retail client base broking.
ATS ranked as Number 1Member of MCX in Tamilnadu by trading volumes. We are clocking a turnover of Rs 380 crore daily trading volumes. We hold 15% of market share in Tamil Nadu in MCX. We have 29 branches and ever growing number of satisfied & profitable franchisees and sub brokers (presently183) in 4 states of south India. ATS is best known in the industry for providing personalized efficient, timely, transparent and cost effective trading & investment services to all our clients and sub brokers. We ATS is of firm belief that our franchisees are our partners and we will strive to do all we can to make you profitable and successful. Mission
To provide cost effective Trading, Investment & Risk Management solutions to our ever increasing client base in a professional and ethical way.
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ATS offer you following services
?
Trading & investment access to MCX, NCDEX, NSE, SSE & Currency futures
? ? ? ?
Physical Delivery of commodities Price risk management & Hedging Wealth management with capital protection Research & investment advisory
24 X 7 online back office
When you are a client of ATS you never have to worry about not knowing your account status. You can access your Trading/Accounts statement anytime, anyplace at your convenience with help of our 24 X 7 online back office software.
Online Trading Platform
ATS provide you online trading software to help you place your orders at the click of a button. We ensure that the entire process right from opening your account to placing an order online is as simple and hassle free as possible.
Research Guidance
ATS provide you with highly successful Trading/Investment calls to enhance your profitability. Our research will guide you in making informed decisions which will make your WEALTH GROW.
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Risk Management Risk management is at the core of our very existence. There is no margin for any error here. With the help of modern technology and some hard nuts in the risk management room we have been able to keep the risks of our business to the bare minimum. Our comfort to expand geographically comes from the fact that our risk management is clinical. Our strict adherence to systems ensures that our clients and stakeholders can have their quota of the much-need peaceful sleep.
Research on your mobile Imagine how profitable you can be if critical research calls are available to you on time, We at ATS deliver trading calls to your mobile through SMS on time, every time.
Personalized service
ATS understand that each of our clients have unique set of trading requirements. We customize our service package to suit your trading needs.
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Products service:
EQUITY & DERIVATIVES Equity and derivatives go hand in hand as they help maximize return and minimize risk at the same time! ATS clients are assisted in protecting the downside risk to their portfolio using appropriate combination of options. Our advisory is skilled to help you in maximizing your gains from your existing corpus using numerous strategies based on the direction and intensity of the views. ATS ensures that you get the one of the finest trading experiences through: An experienced and qualified team of Equity professionals offering unbiased advice on equity investment decisions. All members having immense experience and each of them being professionally certified by the National Stock Exchange. A high level of personalized and confidential service. Constant monitoring of client portfolio so that the returns are maximized and the risks are minimized Secure, integrated broking system Powerful Research & Analytics ATS has a great retail network, with its presence through more than 150 branches across more than 10 states. This means, you can walk into any of these branches and get in touch with our highly skilled and dedicated staff to get the best services. COMMODITIES Commodities are now an asset class! For those who want to diversify their portfolios beyond shares, bonds and real estate, commodities are an excellent option. Commodities are one of the easiest investment avenues to understand as they are based on the fundamentals of demand and supply. Historically, prices in commodities futures have been less volatile compared with equity and bonds, thus providing an efficient portfolio diversification option.
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ATS helps investors understand the risks and advantages of trading in commodities futures before take they take the big leap. It provides clients with an effective platform to participate and trade in Commodities with both the leading Commodity Exchanges of the country. ATS commodity services are a class apart and the following features differentiate our services from others: Professionally qualified analysts with rich industry experience Research on Agro Commodities, Precious Metals, Base Metals, Energy products and Polymers Market watch for MCX and NCDEX with BSE / NSE Streaming quotes and live updates Relationship management desk Educating clients on commodities futures market DEPOSITORY ATS is a depository participant with Central Depository Services (India) Limited (CDSL) and uses the latest in technology to deliver DP Services in a hassle free, secure and transparent environment. There are two main reasons why you should use ATS‘s DP services: ATS ensures that its clients focus on investment and trading decisions rather than the drudgery of operational and transactional processes. ATS offers a risk free, prompt and efficient depository process. Depository Services provided by ATS include: Account Opening Dematerialisation Rematerialisation Account Transfer Nomination Pledging
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INSTITUTIONAL SERVICES Dedicated institutional desks at Mumbai and Chennai cater to our rapidly growing Institutional clientele, which include FIIs, Mutual Funds, Banks, Insurance Companies, Corporate clients and Overseas Corporate Bodies With our dedicated and superior quality service to our clients, ATS is being recognized as the broker of choice among various institutional investors Some of our esteemed clients include: Allsec Technologies Limited Videsh Sanchar Nigam Limited Power Trading Co Limited Star Health and Allied Insurance Indian Overseas Bank Ramakrishna Mission NRI SERVICES The NRI Services' Department is an exclusive arm of ATS dedicated to impart professional advice to NRIs the world over. Our exclusive singlewindow NRI Services‘ Department integrates and simplifies multiple processes into one - opening of NRI bank account, demat account and trading account NRI‘s, NRO‘s (Non-Resident of Indian Origin) and OCB‘s (Overseas Corporate Bodies) can now exploit multiple opportunities to profit from India's NRIfriendly investment environment and a booming Indian economy ATS enables all operations from trading to settlement in an absolutely hasslefree manner Pro-activeness right from opening necessary accounts to advising tax payments on capital gains. Prompt response to queries or step by step guiding through a business process.
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INVESTMENT ADVISORY ATS has a dedicated team of professionals handling the investment advisory services of the firm. These experts use their knowledge of investments, tax laws, and insurance to recommend financial options to clients in accordance with their short-term and long-term goals. Some of the issues that the specialists address are general investments, retirement planning, tax planning and child education & welfare planning. Our certified Investment Advisory Managers strive to understand each individual client‘s needs, risk profiles and investment goals to provide the best advice. Apart from advising, they help clients build and track their investments. They also regularly monitor, report and recommend changes based on the performance of the portfolio. Investment Advisory helps you in the following ways: Provides you with the information to make fruitful and timely financial decisions. Helps you understand how each financial decision other areas of your finances. Aids you in assessing the level of risk that is suited to your lifestyle and financial situation. Facilitates you to manage your finances based on the goals that you are looking to achieve. Facilitates you to manage your finances based on the goals that you are looking to achieve.
We offer advice on and help invest in the following products: Mutual Funds Insurance - Life & Non - Life Bonds Deposits IPO‘s Small Savings Instruments
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RESEARCH Our primary strengths lie in research and operational efficiency. The day-to-day operations are managed by some of the best professionals in the industry having in-depth understanding of underlying market trends and sound business practices The Research Team comprises of competent professionals with vast experience, insightful analytical abilities and high standards of integrity. Some of our research reports are as below: Economic Outlook and Updates Sector & Company Reports Technical Recommendations Daily Market Report Daily Technical Outlook Reports on New Fund Offerings Weekly analysis of mutual funds – Fund Focus Weekly debt report: Debt Dose Monthly Newsletter - ATS Investment Flash Monthly 4 Pager - ATS WealthWise
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Branches
Tamil Nadu
ADYAR No.3k, 3rd Floor, Vantage Plaza, No.1, L B Road, (Near Adyar Bus Depo), Thiruvanmiyur, Chennai – 41
NUNGAMBAKKAM No.25, G9, Gems Court, Khader Nawaz Khan Road, Chennai – 06
ALWARPET #4, Shop No.15 & 16, Lady Desika Road, Mylapore, Chennai – 04
SOWCARPET 3rd Floor, NSC Bose Road, Sowcarpet, Chennai – 79.
COIMBATORE 163 B , 3Rd Floor, Uday Enclave , Venkatachalam Road, R.S.Puram West, Coimbatore – 641002 ERODE No.408, 4th Floor, Sakthi Super Market, Perundurai Road, Erode ? 638011
MADURAI No.16 & 17, KVR Arcade, A R Plaza, North Veli Street, Madurai – 01
SALEM 96/3, Capital tower, 2nd Floor peramanur main road, Four Roads, Salem – 636007
TIRUPUR TRICHY No 11, J.K. towers Second floor, No-20,J C Towers, Karur Bye Pass Road, Binny Compound Second Street,Kumaran Trichy - 620018 Road, Landmark : Near fish Market, Tirupur– 1 COIMBATORE Ahuja Towers,2nd Floor, T V Samy Road,(WEST),RS Puram, Landmark: Above Raymonds Showroom Coiombatore - 641002
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Kerala
COCHIN 29/1307 E Harishree Building S A Road Vytilla (Post), Cochin, Kerala - 682019.
TRIVANDRUM TC 25/3472 (2), URRA76, Near BSNL Bhavan, Uppalam Road, Trivandrum, Kerala – 695001
Andhra Pradesh
HYDERABAD VISHAKAPATNAM 1-8-388/2A, 1st floor, Door no-47-1-115,samsung plaza building Bhagyalakshmi Building, Near Water 4 thfloor,opp to shankarmattam, Tank, Dwarkanagar Prakash Nagar, Opp. to Airport, Begumpet, Vishakapatnam-530016 Secunderabad – 500016
Karnataka
BANGALORE No.553/A, 1st floor, 9th A Main Road, Indira Nagar, 1st Stage, Bangalore – 560038
BANGALORE No.623, 2nd Floor, Avenue Road, Near Kamath Hotel, Bangalore – 560002
MANGALORE Essel Tower, #9, 5th Floor, Bunts Hostel Circle, Mangalore – 575003 Rajasthan
JAIPUR No.342 & 343, 3rd Floor, Saraogi Mansion, M I Road, Jaipur – 302001
UDAIPUR No.101 & 102, 1st Floor, Akruti Complex, 4, New Fatehpura, Udaipur – 313001
BHILWARA No.19, 2nd floor, S K Plaza, Pur Road, Bhilwara, Rajasthan - 311001 59 | P a g e
JODHPUR NO 316-317 Modi Arcade.3rd Floor, Near Bombay Motor Circle, Jodhpur342001
VAISHALI NAGAR F-104 Gautammarg,Signature tower VaishaliNagar,Jaipur - 302012.
BIKANER E 37 Khajanchi Market, Bikaner-334001
Uttar Pradesh
KANPUR No.505, 15/63, Krishna Tower, Opp. Green Park, Civil Lines, Kanpur – 208001
SAHARANPUR LGF-06 parsvnath plaza court road, saharanpur,kanpur – 247001
Madhya Pradesh
NEEMUCH MANDSAUR 38/1, Ashok Marg, Near Mission Hospital, Tirupati Plaza" 1st floor, Neemuch, Madhya Pradesh – 458441 opp. SamratHotal, Railway Station Road, Mandsaur (M.P.) INDORE 308,3rdfloor, milindamanor,opp central mall , RNT Marg,indore – 452001
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CHAPTER 6 REVIEW OF LITERATURE
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a) Financial Feasibility Financial 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 expect unbiased advise on the entire spectrum of personal finance and thereby adding value to the investor‘s current portfolio and potential savings. The statistics regarding the investments are discussed below so as to show the trend of various factors in the Indian economy.
i) Growing Economy The anticipated growth rate of 6 - 7 percent in 2008-09, acknowledges the momentum of development in the Indian 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. India is the world‘s second most populous country with a little over 1 billion people and the 10th in terms of economic size, representing around 6% of world GDP. The impact of 15 years of economic reform finally appears to have kicked in and allowed India to emerge as an attractive investment destination in the global arena India, with an anticipated growth rate of 6 to 7 % for the year 2008-09, supported by robust growth in the Indian 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 Indian market
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i)
Strong Financial Market
India's financial markets have undergone rapid changes since the country embarked on a program of economic reforms in 1991. They have embraced technology, seen a substantial increase in the variety and volume of transactions, and witnessed the emergence of new securities and new instruments. India witnesses growing number of venture capitalist bank which do not hesitate in investing in new projects and bear high risk with the entrepreneur. Therefore, the financial market scenario in India is conducive for procurement of funds for launching the business magazine in the market.
ii)
Inflation
Inflation is moving at around 4% and the savings account is giving an interest of 3.5% 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.
b) Market Feasibility Marketing feasibility involves determining the prospects of financial advisors in the growing economy like India. The study includes assessing the need of financial institutions to achieve all the individual‘s financial goals and keeping these goals in mind how do they recommend certain investment options in the market in order to provide value additions to individual‘s current portfolio & savings potential.
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For assessing the satisfaction level of investors who are availing financial advisory services, the performance of the current players in the markets will be studied and their strength and weakness will be analyzed, if the investor‘s satisfaction level from the current advisor is less, then greater will be the feasibility of prospects of financial advisors in the Indian market.
After analyzing the response, marketing feasibility exist on the basis of following discoveries.
1. Growth of Capital is the Major Objective behind Investments It was observed that 46.3% of the respondents do investments for achieving growth of capital i.e. revenue maximization. Safety of capital was considered secondary objective behind investments as only 15.7% 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, IPO, post-office schemes, secondary markets, etc
2. Low saving Potential Out of the total sample, around 48% of the respondents said that they try to save money which depicts low saving potential among the Indian investors. They are not in the habit of saving on a regular basis as it was observed that only 29.7% always save some portion of their take home salary. The financial advisor should promote regular savings among the investors so as to open various investment channels for them to fetch good returns.
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3. Investors taking Financial Decisions Independently Investors are taking their financial decisions independently without doing any financial planning which reflects the need for financial advisors who will take note of and record all the financial goals and will simultaneously work out the money value for each of the goals. Additionally, financial advisors can also set aside some money for contingencies – medical and other emergencies in liquid form and invest the rest in diversified portfolio so that the risk gets distributed.
4. High Awareness of Financial Advisors in the Indian Market Majority of the investors i.e. 78% of the respondents were aware about the concept of financial advisors but among them, very few investors have actually gone for availing these services which shows lack of trust and confidence in the services provided by the financial advisors in the eyes of general public. The financial advisors should find out the deficiencies and flaws in the current services being provided to the investors and attempt at suggesting ways and means to remedy the same.
5. High Level of Satisfaction from Existing Financial Advisors Majority of the investors were very satisfied with the services provided by the existing service providers which primarily include Citibank, HDFC Bank, HSBC Bank, etc.
Thus it becomes evident that the satisfaction level of the investors is high from the existing advisors and thereby validates the prospects of financial advisors in the Indian market.
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CHAPTER 7 ANALYSIS AND INTERPRETATION
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Given below are the graphical representations of the responses received on questions asked through the questionnaire. The interpretation derived and the model adopted will be explained in detail in the later part of the report. On asking the following questions, the replies were received accordingly:
1. What is your objective behind investments?
Objective Behind Investment Growth of Capital Tax Minimization Safety of Capital Retirement Liquidity Beating Inflation Others
No of Respondents (in %) 46.28 14.05 15.7 14.88 2.48 3.31 3.31
7.1t Objectives behind investment
Inference: Investing is a conscious decision to set money aside for a long enough periods in an avenue that suits your risk profile. The questionnaire asked the respondents to reveal their objective behind investments, majority of the respondents disclosed growth of capital as their prime objective while safety of capital stands secondary. This response reflects the investor willingness to take calculated risks for growth of their capital
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No of Respondents (in %)
Growth of Capital Tax Minimization Safety of Capital Retirement Liquidity Beating Inflation Others
7.1c Objectives behind Investment
The research has highlighted that growth of capital is the most important factor which they consider wile investing as evident by the response wherein 46.3% of the respondents voted for the same. However, it can also be seen that 15.7% 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. Liquidity is the least important factor as only 2.5% 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 liquidity should have the minimum focus.
In our sample, inflation has only been given 3.3% 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.
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2. Since when are you investing in financial instruments?
The respondents were asked as from when they have started investing in financial instrument so as to ascertain the average period of experience of an investor in the market.
Months
No of Respondents (in %)
Less than 3 months 3 to 6 month 6 to 8 months 8 to 12 months More than 12 months
10.84 13.25 9.64 18.07 48.19
7.2t Investing in Financial Instruments
60
No of Respondents (in %)
50 40 30 20 10 0 Less than 3 months 3 to 6 month 6 to 8 months Months 8 to 12 months More than 12 months Series1
7.2c Investing in Financial Instruments
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The responses were then graphically which indicates that majority of the investors i.e. 48.2% of the respondents have been investing for more than 12 months and signifies that the responses revealed are from experienced and qualified investors which adds to the credibility and reliability of the research.
3. Do you plan your investments?
Opinion of Respondents
No of Respondents (in %)
Yes No
84 16 7.3t Response on Plan their Investment
Response on Plan their Investment
Yes No
7.3t Response on Plan their Investment Inference : On analyzing the response 84% of the persons plan their investments while only 16% take investment decisions on ad hoc basis.
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To evaluate the level of importance the investor gives on detailed financial planning to arise in their investment decision, the respondents were asked to reveal whether their investments are result of a careful planning or it‘s 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 don‘t have the time or the expertise to develop a plan and make the needed financial decisions.
4. What is your practice on saving money?
Opinion of Respondents Don‘t believe in Savings High Expenses Try to Save Always Save Some Others
No of Respondents (in %) 1.98 19.8 47.52 29.7 .99
7.4t Response on practice of saving money
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Response on practice of saving money
No of Respondents (in%)
50 40 30 Series1 20 10 0 Don’t believe in High Expenses Savings Try to Save Always Save Some Others
Opinion of Respondents
7.4c Response on practice of saving money
Inference : To determine the saving habits of the investors, the questionnaire enquired the respondents as about their practice of savings. The greater the inclination of saving the more will be the funds available for investment. Around 47.5% of the respondents try to save from their income, while only 29.7% of the respondents always make an effort to save some part of their income. Only 2% of the respondents don‘t believe in savings, which substantiate high importance of savings in Indian households. However, it was also observed that majority of the women respondents had high inclination for savings and try to save the maximum out of their available income.
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5. How much thought have you given to saving for retirement?
Opinion of Respondents Some A Lot Very Little None
No of Respondents (in %) 47 18 18 17
7.5t Response on Savings for Retirement
Response on Savings for Retirement
Some A Lot Very Little None
7.5c Response on Savings for Retirement Inference : 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. Its called inflation, which 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 quantity of goods. On analyzing the level of importance the respondents give on saving for retirement, majority i.e. 47% of the respondents give some importance while only 18% give a lot of importance to saving for retirement. This depicts non serious attitude of Indians while planning for their retirement.
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6. When do you consider one should start planning for retirement?
Opinion of Respondents
No of Respondents (in %)
Below 30 31 – 40 41 – 50 Above 50
35.79 22.11 22.11 20 7.6t Response on age preference to plan for retirement
Response on age preference to plan for retirement
Below 30 31- 40 41 - 50 Above 50
7.6c Response on age preference to plan for retirement Inference : If you start planning for retirement early on, you can bridge the gap between what you have in your hand today and what you would like to have when you retire. What to keep in mind while saving for retirement depends a lot on our age and how much money you are willing to set aside every month. If you begin saving for retirement early on in your life, you can set aside smaller amounts.
Planning for retirement in early age of employment is depicted on analyzing the responses as 35.8% start planning below the age of 30 years, while 42.1% of the respondents feel, the ideal age to be above 40 years.
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7. What do you feel is considered to be the ‘fundamentally safe’ form of investment?
Opinion of Respondents
No of Respondents (in %)
Bank Deposit Property Postal Deposit Gold Insurance Bonds Mutual Fund Equity
14.37 35.33 7.78 3.59 15.57 12.57 7.19 2.99
7.7t Response on fundamentally safe form of investment
Response on fundamently safe form of investment
No of Respondents (in%)
40 35 30 25 20 15 10 5 0 Bank Deposit Property Postal Deposit Gold Insurance Bonds Mutual Fund Equity
Series1
Opinion of Respondents
7.7c Response on fundamentally safe form of investment
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Inference: On enquiring from the respondent about what are the fundamental secure forms of investments, 35.4% of the respondents feel that investing in property is the safest form of investment followed by Insurance. The least secured form of investment as revealed by respondents is investment in equity as secondary market is subject to huge volatility & uncertainty. It 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 experiencing a major climb in the property prices. About 14.4% of the respondents feel that Bank deposits is also the safe form of investments as it gives assured returns on the sum invested.
8. How do you take financial decisions?
Opinion of Respondents Independently Friends Broker CA Bank Financial Advisor Others
No of Respondents (in %) 48 28 1 7 1 11 4
7.8t Response regarding taking financial decisions
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Response regarding taking financial decisions
No of Respondents (in%)
60 50 40 30 20 10 0
In de pe nd en tly Ad vis or ds Br ok er Fr ien Ot he rs Ba nk CA
Series1
Opinion of Respondents
7.8c Response regarding taking financial decisions Inference: An individual‘s decision has a vital role to play in achieving investment objectives and thereby making investments in a systematic manner. Decisions can make or break investment avenues as wrong decisions would merely lead to wrong investments resulting in major loss. On enquiring from the respondents about how they take their financial decisions, majority of the respondents take their financial decisions independently which depicts they are not taking any advisory services from financial experts. There are majority of respondents who feel that they can handle their portfolio on their own and hence make their own decisions regarding investments.
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Fi
na nc ial
9. Do you have any Insurance Policy?
Opinion of Respondents Yes No
No of Respondents (in %) 75 25
7.9t Response to having an insurance policy
Response to having an insurance policy
Yes No
7.9c Response to having an insurance policy Inference : Life is full of dangers, but with insurance, you can at least ensure that you and your dependents don‘t suffer. The purpose of buying insurance is to protect your dependants from any financial difficulties in your absence. It helps individuals in providing them with the twin benefits of insuring themselves while at the same time acting as a compulsory savings instrument to take care of their future needs.
The research has highlighted that majority of the respondents are availing insurance policy which signifies that people are much aware about the advantages with an insurance policy which can cover their life as well as prove to be as a savings instrument.
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Around 75% of the respondents do have insurance policy, while 25% of the respondents are still not availing this type of investment.
10. If yes, why did you buy an Insurance Policy?
Opinion of Respondents
No of Respondents (in %)
For Saving Tax For Savings For Security Against Death Others
28 31 34 7 7.10t Response for buying an Insurance policy
Response for buying an insurance policy
No of Respondents (in%)
40 30 20 10 0 For Saving Tax For Savings For Security Against Death Others Series1
Opinion of Respondents
7.10c Response for buying an Insurance policy Inference: On enquiring from the respondents about why they bought insurance policy, majority of the respondents bought insurance as a security against death which depicts people have ensured that their dependents don‘t suffer in case of any
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uncertainty as life insurance indemnifies the nominees in case of an eventuality to the insured. By having insurance policy, the financial future of the nominees is secured in the absence of the person insured. Of the respondents who possessed insurance, 34% of the respondents had purchased insurance mainly as a security against death while 31% had bought it primarily as a savings product. Over 7% of the respondents purchased insurance as a word-of-mouth due to high demand of the product and it was also observed that around 28% of the respondents bought insurance to save tax.
11. Are you aware about the concept of Financial Advisors?
Opinion of Respondents Yes No
No of Respondents (in %) 78 22
7.11t Response on awareness of Financial Advisors
Response on awareness of financial advisors
Yes No
7.11c Response on awareness of Financial Advisors Inference : There are a number of financial advisors offering a diverse portfolio of services to suit different financial requirements of the individuals. In order to accomplish the task, these companies provide the assistance of professional financial
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advisors. The advisors educate individuals on the merits of a long-term approach and regular investing and help to rebalance their portfolio.
On analyzing the response 78% of the respondents were aware about financial advisors while around 22% of the respondents were still not aware about professional financial advisors which depicts there lays a scope to penetrate these people and inform them regarding the services offered by various financial institutions.
12. Do you currently avail financial advisor services/private banking services?
Opinion of Respondents Yes No
No of Respondents (in %) 34 66
7.12t Response to availing Financial advisory services
Response to availing financial advisory services
Yes No
7.12c Response to availing Financial advisory services Inference: 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 Indian market.
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Individuals are earning and paying high taxes thus ignoring the taxation benefits, which they can avail by proper computation of taxes. Individuals usually rely on Chartered Accountants leaving behind the fact that they are experts in Accounting and not in wealth management so there is a need for Financial Advisors. Hence, there is a requirement for one stop shop for all the financial needs of an individual.
According to the response, it can be seen that 66% of the respondents are not availing any financial advisory services while only 34% are taking financial advisory services. Thus there‘s much scope left for the financial management companies to target these large number of people who are totally unaware about the whole concept.
13. If yes, from whom?
Opinion of Respondents
No of Respondents (in %)
Citi Bank HDFC Bank Allegro Advisors Bajaj Capital HSBC Bank Yes Bank Religare Others
73.33 36.67 20 13.33 16.67 10 3.33 33.33 7.13t Response regarding source of financial advisory
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Response regarding source of financial advisory
80 70
No of respondents (in%)
60 50 40 30 20 10 0 Citi Bank HDFC Bank Allegro Advisors Bajaj Capital HSBC Bank Yes Bank Religare Others Series1
Opinion of respondents
7.13c Response regarding source of financial advisory Inference : To find out the various companies from where the investors get financial advisory services & make their decisions regarding investments. This would reveal the preference the respondents have for different companies.
On analyzing the response, 73.33% of the respondents were primarily availing financial advisors services from Citibank and when they were asked the reason behind, they replied Citibank provides free advisory services and has got a strong brand name. Secondly 36% of the respondents were taking financial advisory services from HDFC Bank followed by others which include UTI Bank, SBI, ICICI Bank, etc which catered around 33.3% of the total sample.
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14. What are the products you are getting from your service provider?
Opinion of Respondents Mutual Fund IPO Equity Post Office Schemes Insurance Property Tax Planning Loan Administration Gold Art
No of Respondents (in %) 14.63 8.13 8.13 11.38 21.95 7.32 11.38 9.76 4.07 2.44 0.81
7.14t Response you getting from the service provider
No. of Respondents
Mutual Fund IPO Equity Post Office Schemes Insurance Property Tax Planning Loan Administration Gold Art
7.14c Response you get from the service provider
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Inference : According to our response, around 22% of the respondents are availing advices on insurance products followed by mutual funds which hold 14.6% of the total sample. This depicts there is a huge demand for insurance in the Indian economy as compared to other financial instruments. It can also be inferred that individuals have started taking advises regarding tax planning and loans restructuring.
Insurance products followed by mutual funds which hold 14.6% of the total sample. This depicts there is a huge demand for insurance in the Indian economy as compared to other financial instruments. It can also be inferred that individuals have started taking advises regarding tax planning and loans restructuring.
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CHAPTER 8 FACTS AND FINDINGS
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? It 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 (Citibank, UTI Bank, HSBC) earn commission if the customer purchases mutual funds, insurance, from it. The broking company earns brokerage if the client purchases RBI bonds etc or if he does any equity trading. The bank only charges marginal fees on the custodial services. ? However, HDFC Bank - instead of asking customers to bring in a specific amount of funds - charges customers on various types of services it offers. The management of wealth depends on the customer's risk appetite, his investment objectives. Once these are understood, the bank sends a written investment proposal on what the bank thinks the portfolio should be. ? Taxation advisory is given by very few players like Bajaj Capital, UTI Bank. Various banks have a tie-up model with different insurance and mutual fund companies like Citibank has with Birla so Citibank will only sell Birla insurance to their clients irrespective of the fact whether the product meets the client‘s financial goals. Allegro is one player which takes care of loan restructuring. Commodity trading is only being handled by Religare as a separate product as SEBI have not yet allowed commodity trading to be a part of wealth advisory services. ? However banks cannot offer portfolio management services to customers. This means that a customer cannot give money to a private banker and ask the RM to invest on his behalf in different financial products. This service can be offered only by entities other than a bank such as Religare, Bajaj Capital, etc. A banker therefore will have to call every time and get a written confirmation from the client before any deal is done.
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CHAPTER 9 RECOMMENDATION AND SUGGESTIONS
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? On studying the peculiarities of the wealth management industry and analyzing the responses of the investors on their perception and expectation from a financial advisor, the following points are recommended which a general financial advisor should consider while approaching the people. ? India is seeing a maturing financial environment. Interest rates have fallen and unlike in the past, options to attract savings exist through a spate of financial products and services that have differing risk/growth and asset accretion propositions. It 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. ? While this is becoming a universally undeniable desire, the fact is that some people don‘t have the knowledge and inclination to understand the financial markets and others don‘t 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.
a) Unbiased Advisory
Investment Advisory Services are in this business of managing the assets of individuals and corporations. However, 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 frequent reviews of investment decisions made to ensure that portfolios are in line with what was planned.
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b) Certified Financial Planner
Financial planning is a new animal in the Indian market. The big thing to happen is the coming to India of the Certified Financial Planner (CFP) mark, owned by the Board of Standards in the US and licensed out to non-profit associations in 18 countries, including the US, Canada, Australia and the UK. Leading financial players–asset management companies, banks, mutual funds and insurance companies, forms these associations. Another player in this space is the NSE‘s Certification of Financial Markets (NCFM), an arm of the National Stock Exchange that tests and certifies insurance and mutual fund agents.
A third institution, the Association of Mutual Funds (AMFI), 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 ad-hoc approach to a planned one.
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9.1c Financing Mode
9.2c Investment Risk Pyramid
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c) Financial Planning Should Be Encouraged
It is a process in which an individual sets long-term financial goals through investments, tax planning, asset allocation, risk management, retirement planning and estate planning. Most of us approach our financial lives like the disorganized traveler who gets to his destination eventually and perhaps even enjoys the rough ride. We think we have a clear roadmap in mind, but our financial lives are marked by ad-hoc decisions and capitulation to the temptations of the flavors of the financial season.
One of the myths regarding financial planning is that only rich individuals and HNIs can undertake this. This perception exists because most players in the market target these people, as they are very profitable customers. However, anyone can use financial planning. In fact, individuals should use effective financial planning to build their wealth over the years.
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CHAPTER 10 CONCLUSION
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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. Feasibility of financial institutions can be studied by both financial feasibility and marketing feasibility.
Test of Hypothesis & Conclusion ? As it could be seen from the above research that investors are having low saving potential, growth of capital acts as a primary objective behind investments, investors taking financial decisions independently, high level of satisfaction from existing 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 hypothesis holds true that there exist a potential growth in the wealth management industry which represents huge prospects of financial advisors in the growing economy like India. ? To conclude, the above research substantiates both financial and marketing feasibility for the prospects of financial advisors in the Indian market.
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CHAPTER 11
Annexure
APPENDIX: QUESTIONNAIRE
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QUESTIONARE
on COMPARATIVE ANALYSIS OF VARIOUS FINANCIAL INSTITUTIONS IN THE MARKET
Occupation: ___________________________
Sex: ____________
Annual Income: ___________________________ City: _____________
1. What is your objective behind investments? (a) Safety of Capital (c) Beating Inflation (e) Liquidity (b) Retirement (d) Tax Minimization (f) Growth of Capital - Returns
(g) Others (please specify) ________________________________
2. Since when are you investing in financial instruments? (a) Less than 3 months (c) 6 months – 8 months (e) More than 12 months (b) 3 months – 6 months (d) 8 months – 12 months (f) Others (please specify) ____________
3. Do you plan your investments? (a) Yes (b) No, why_______________________
4. What is your practice on saving money? (a) I don‘t believe in saving. (b) I‘d like to save, but my expenses & financial commitments do not permit me. (c) I try to save whenever & wherever possible. (d) I always save some percentage of my take-home salary without exception. (e) Others (please specify) ________________________________
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5. How much thought have you given to saving for retirement? (a) Very little (c) A lot (b) Some (d) None
6. When do you prefer one should start planning for retirement? (a) Under 30 (c) 41 – 50 (b) 31 – 40 (d) Above 50
7. What do you feel is considered to be the ?fundamentally safe‘ form of investment? (a) Bank deposits (c) Postal deposits (e) Life insurance policies (g) Mutual funds (b) Property/Land (d) Gold (f) Government bonds (h) Equity/Shares
(i) Others (please specify) ________________________________
8. How do you take financial decisions? (a) Independently (c) Broker (e) Advise from a Bank (b) Advise from friends / relatives (d) Advise from a Chartered Accountant (f) Financial Advisors
(g) Others (please specify) ________________________________
9. Do you have any Insurance Policy? (a) Yes (b) No
10. If yes, why did you buy an Insurance Policy? (a) As a means of saving (c) For security against death
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(b) As a means of saving tax (d) Others (please specify) ___________
11. Are you aware about the concept of Financial Advisors? (a) Yes (b) No
12. Do you currently avail financial advisor services/private banking services? (a) Yes (b) No, why ____________________
13. If yes, from whom? (a) Citibank (c) Allegro Capital Advisors (e) HSBC Bank (g) Religare (b) HDFC Bank (d) Bajaj Capital (f) YES Bank (h) others (please specify) ____________
14. What are the products you are getting from your service provider? (a) Mutual Funds (c) Secondary Market (e) Insurance (g) Tax Planning (i) Administrative Services (k) Art/Paintings (b) Initial Public Offer (IPO) (d) Post Office Schemes/Debt (f) Real Estate/Property (h) Loans (j) Gold (l) Others (please specify) ____________
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BIBLIOGRAPHY
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The following companies and association‘s web sites were referred while collecting information used in the research.
1. Internet Source ?http://www.adityatrading.com ?http://www.yesbank.in ?http://www.citibank.co.in ?http://www.utibank.com ?http://www.hsbc.co.in ?http://www.religarewealthcare.com ?http://www.hdfcbank.com ?http://www.bajajcapital.com ?http://www.online.citibank.co.in
2. Material Source ? Aditya Trading Solutions Pvt Ltd ?
For more details please contact Esakki Rajeswaran.S E-mail id: [email protected] 100 | P a g e mobile no: +91-9840770106
doc_983057903.docx
its a BBA project
A STUDY ON COMPARATIVE ANALYSIS OF VARIOUS FINANCIAL INSTITUTIONS IN THE MARKET
IN ADITYA TRADING SOLUTIONS
By
Esakki Rajeswaran.S
3/29/2013 0|Page
A STUDY ON COMPARATIVE ANALYSIS OF VARIOUS FINANCIAL INSTITUTIONS IN THE MARKET IN ADITYA TRADING SOLUTIONS
Project Report submitted in partial fulfillment of the Requirement for the award of degree of BACHELOR OF BUSINESS ADMINISTRATION UNIVERSITY OF MADRAS
By
Esakki Rajeswaran.S
Register No. 106BU135 Under the guidance of Mr./ Ms.Serena Suman
DEPARTMENT OF BUSINESS ADMINISTRATION MADRASCHRISTIANCOLLEGE (AUTONOMOUS) TAMBARAM EAST, CHENNAI-600059 MARCH 2013
1|Page
CERTIFICATE
This is to certify that Esakki Rajeswaran.S has completed her/ his project, on A STUDY ON COMPARATIVE ANALYSIS OF VARIOUS FINANCIAL INSTITUTIONS IN THE MARKET under my guidance. It is his own work fully and to the best of my knowledge and belief that it has not been used for the award of any degrees in this university or anywhere else and I am satisfied with his effort in this connection.
Head of Department
Project guide
Date:
Date:
2|Page
VIVA VOCE EXAMINATION
This is to certify that the report on ‘A STUDY ON COMPARATIVE ANALYSIS OF VARIOUS FINANCIAL INSTITUTIONS IN THE MARKET’ submitted by Esakki Rajeswaran.S for partial fulfillment for the Bachelor in Business Administration Degree is a record of research work done by him during the year 2012-2013.This study represents independent work on the part of the candidate.
Internal Examiner
External Examiner
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Declaration
I hereby declare that the internship titled ?A STUDY ON COMPARATIVE ANALYSIS OF VARIOUS FINANCIAL INSTITUTIONS IN THE MARKET? is based on the original work carried out by me under the guidance of Mr. Sathish, HR manager / Admin Manager, Aditya Trading Solutions Ltd and Mr. / Ms.Serena, faculty guide at college, submitted to Madras Christian College in partial fulfillment of the requirement of the course of study.
Esakki Rajeswaran.S
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ACKNOWLEDGEMENT
I would like to express my thanks to SURESH and SATHISH.K of ADITYA TRADING SOLUTIONS for giving me the opportunity to take up this project and helping me in completing the project.
I express my thanks to Dr. R.W. ALEXANDER JESUDASAN, M. Sc., Ph.D., FRES. FAZRA. FMSF, FEAI, FPPAI. principal for allowing me to undertake internship/project work.
I hereby express my sincere thanks to D.ARMSTRONG DOSS, M.B.A., and M.PHIL. Head of the Department, Business Administration, Madras Christian College for his valuable support.
I owe my sincere thanks to my project guide MRS.A.MILLICENT SERENA SUMAN showed infinite interest and helped me at all times with valuable suggestions.
I thank my parents and friends who helped me directly and indirectly in any phase of completion of my project
ESAKKI RAJESWARAN.S
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LIST OF CONTENTS
S. NO
CONTENTS
PAGE NO.
1.
Executive summary
11
2.
Introduction
13
3.
Objectives of the Study
41
4.
Research Methodology
43
5.
Company Profile Review of Literature
49
6.
61
7.
Analysis and Interpretation
66
8.
Findings
86
9.
Suggestions
88
10.
Conclusion
93
11.
Annexure
95
6|Page
LIST OF CHARTS
Chart No.
2.1c
CONTENT
Sectors of Financial Institutions
Page No.
15
2.2c
Target of Investment
17
2.3c
Types of Investment
18
2.4c
Annual Returns
18
2.5c
Working of Mutual Fund
20
2.6c
Client Portfolio
23
2.7c
Certified Financial Planner (CFP)
26
2.8c
Personalized Financial Plan
28
2.9c
The Financial Planning Process
31
2.10c
Financial Planning Process
33
2.11c
Players in the Market
35
7.1c
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Objectives behind investment
68
7.2c
Investing in Financial Instruments
69
7.3c
Response on Plan their Investment
70
7.4c
Response on practice of saving money
72
7.5c
Response on saving for Retirement
73
7.6c
Response on age preference to plan for Retirement Response on fundamentally safe form of
74
7.7c
investment
75
7.8c
Response regarding taking Financial Decision
77
7.9c
Response to having an Insurance Policy
78
7.10c
Response for buying an Insurance Policy
79
7.11c
Response on awareness of Financial Advisors
80
7.12c
Response to availing Financial Advisory Services
81
7.13c
Response regarding source of Financial Advisory Response that Customer gets from the Service
83
7.14c
Provider
84
9.1c
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Mode of Financing
91
LIST OF TABLES
Table No.
2.1t
CONTENT
Types of Investment
Page No.
19
2.2t
Difference between Banks and Mutual Funds
25
7.1t
Objectives behind investment
67
7.2t
Investing in Financial Instruments
69
7.3t
Response on Plan their Investment
70
7.4t
Response on practice of saving money
71
7.5t
Response on saving for Retirement
73
7.6t
Response on age preference to plan for Retirement Response on fundamentally safe form of
74
7.7t
investment
75
7.8t
Response regarding taking Financial Decision
76
7.9t
Response to having an Insurance Policy
78
7.10t
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Response for buying an Insurance Policy
79
7.11t
Response on awareness of Financial Advisors
80
7.12t
Response to availing Financial Advisory Services
81
7.13t 7.14t
Response regarding source of Financial Advisory Response that Customer gets from the Service Provider
82
84
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CHAPTER 1 EXECUTIVE SUMMARY
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EXECUTIVE SUMMARY
The project ?Comparative Analysis of various Financial Institutions in the market” was done to gather knowledge and study the 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 Financial Planning in the growing economy. People should come out of the concept of just keeping their money in Savings Account and Fixed Deposits and should concentrate on their financial planning to maximize returns by taking proper guidance from financial planner.
Most of the advisors provide expertise information and knowledge about various financial products, like bonds, mutual funds, insurance, equity market and real estate etc.
The in-depth analysis of the report will help the reader know much more about the investors and financial advisors. Investors having low saving potential, growth of capital acts as a primary objective behind investments. Investors get high level of satisfaction from existing 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.
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CHAPTER 2 INTRODUCTION
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Introduction
FINANCIAL ADVISORS
Planning for a secure financial future is not easy. Yet increasingly, individuals are in charge of their own financial futures. Most are aware that planning is critical, yet don‘t they have time or the expertise to develop a plan and make the needed financial decisions. So there arises a need for Financial Advisors to manage the individual‘s wealth and the whole process of managing this wealth is known as Wealth Management. There are a number of financial advisors offering a diverse portfolio of services to suit different financial requirements of their clients. In order to accomplish the task, these companies provide the assistance of professional financial advisors. These financial advisors help individuals or corporate manage their wealth appropriately through:
(i) Investment Solutions: - The financial planner helps the individuals diversify their portfolio through alternative investment plans, mutual funds, equities, and even save for retirement through annuities.
(ii) Financial Planning: - Financial Planning is an exercise aimed to ensure availability of right amount of money at the right time to meet the individual‘s financial goals. Financial institutions plan individual‘s current expenditures and save for future short-term or long-term goals by analyzing different options available.
(iii) Retirement Planning: - The financial planner guides their clients in planning for their financial requirements after retirement, by helping them to
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identify goals, researching and analyzing different opportunities to secure funds and make investments to suits their needs.
(iv) Wealth Management: - It is a comprehensive service to optimize, protect and manage the financial well-being of an individual, family or corporation. Its basic definition covers advice on loans, investments and insurance to give a broad picture of how individuals should best deploy their financial resources. A broader picture may include tax advice, estate planning, business planning, charity foundations and other financial needs.
2.1c Sectors of Financial Institutions
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Even 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. I know we all understand the importance of savings but let us not get confused between savings and investment. Mere savings (putting aside a portion of earnings) do not insure or guarantee achievement of future financial goals.
Investments The money you earn is partly spent and the rest is saved for meeting future expenses. Instead of keeping the savings idle you may like to use savings in order to get return on it in the future. This is called Investment. In other words, Investment is ?the act of committing money or capital to an endeavor with the expectation of obtaining an additional income or profit.‘
It's actually pretty simple: investing means putting your money to work for you. Essentially, it's a different way to think about how to make money. There are many different ways you can go about making an investment. This includes putting money into stocks, bonds, mutual funds, or real estate (among many other things), or starting your own business. Sometimes people refer to these options as "investment vehicles," which is just another way of saying "a way to invest." Each of these vehicles has positives and negatives, which will be discussed later in the thesis. The point is that it doesn't matter which method you choose for investing your money, the goal is always to put your money to work so it earns you an additional profit. Even though this is a simple idea, it's the most important concept in the current scenario to understand.
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2.2c Target of Investment
Types of Investments There are many ways to invest your money. Of course, to decide which investment vehicles are suitable for you, you need to know their characteristics and why they may be suitable for a particular investing objective. • Debt Market • Bonds • Mutual Funds • Equity Market • Insurance • Cash • Gold • Real Estate • Home Loans
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2.3c Types of Investment
2.4c Annual Returns
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Types of Investments Return Safety Volatility Liquidity Convenienc e Equity Bonds High Moderate Low High High Moderate High Moderat e Co. Debentures Co. FDs Bank Deposits PPF Moderate Moderate Low Moderate Moderate Low High High Moderate Low Low Low Low Low High Moderat e Life Insurance Gold Low Moderate High High Low Moderate Low Moderat e Real Estate Mutual Funds High High Moderate High High Moderate Low High Low High Moderate Gold Low Moderate High High Moderate High
2.1t Types of Investment
Mutual Funds
A mutual fund is a body corporate registered with SEBI that pools money from the individuals/corporate investors and invests the same in a variety of different financial instruments or securities such as Equity Shares, Government Securities, Bonds, Debentures, etc. The income earned through these investments and the capital appreciations realized are shared by its unit holders in proportion to the number of units owned by them. Thus a Mutual Fund is the
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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 Company (AMC) based on the fund‘s net asset value (NAV), 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.
Working of a Mutual Fund -
2.5c Working of Mutual Fund
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b) Types of Mutual Funds
Mutual fund schemes may be classified on the basis of its structure and its investment objective.
By Structure i. Open-Ended Funds In an open-ended fund, investors can buy and sell units of the fund, at NAV 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. Open ended funds have to balance the interest of investors who come in, investors who go out and investors who stay invested.
ii. Closed-Ended Funds 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. In a closed ended fund, thus, the pool of funds can technically be kept constant. Investors in closed end funds receive either certificates or depository receipts, for their holdings in a closed end mutual fund
iii. Interval Funds Interval funds combine the features of open-ended and close-ended schemes. They are open for sale or redemption during pre-determined intervals at NAV related prices.
By investment objective
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i. Growth Funds The aim of growth funds is to provide capital appreciation over the medium to long- term. Such schemes normally invest a majority of their corpus in equities. It has been proven that returns from stocks, have outperformed most other kind of investments held over the long term. Growth schemes are ideal for investors having a long-term outlook seeking growth over a period of time.
ii. Income Funds The aim of income funds is to provide regular and steady income to Investors. Such schemes generally invest in fixed income securities such as bonds, corporate debentures and Government securities. Income Funds are ideal for capital Stability and Regular Income.
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2.6c Client Portfolio
iii. Balanced Funds 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 equities and fixed income securities in the proportion indicated in their offer documents.
iv. Money Market Funds The aim of money market funds is to provide easy liquidity, preservation of capital and moderate income. These schemes generally invest in safer shortterm instruments such as treasury bills, certificates of deposit, commercial paper
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and inter-bank call money. Returns on these schemes may fluctuate depending upon the interest rates prevailing in the market.
v. Load Funds A Load Fund is one that charges a commission for entry or exit. That is, each time you buy or sell units in the fund, a commission will be payable. Typically entry and exit loads range from 1% to 2%.
vi. No-Load Funds A No-Load Fund is one that does not charge a commission for entry or exit. That is, no commission is payable on purchase or sale of units in the fund.
Other Schemes
i. Tax Saving Schemes These schemes offer tax rebates to the investors under specific provisions of the Indian Income Tax laws as the Government offers tax incentives for investment in specified avenues. Investments made in Equity Linked Savings Schemes (ELSS) and Pension Schemes are allowed as deduction u/s 88 of the Income Tax Act, 1961.
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Banks v/s mutual funds PARAMETERS Returns Administrative exp. Risk Investment options Network Liquidity Quality of assets Interest calculation BANKS Low High Low Less High penetration At a cost Not transparent Minimum MUTUAL FUNDS Better Low Moderate More Low but improving Better Transparent balance Everyday
between 10th. & 30th. of every month Guarantee Maximum Rs.1 Lakh on None deposits 2.2t Difference between Banks and Mutual Funds
iv) Equity Equities are often regarded as the best performing asset class vis-à-vis its peers over longer time frames. However equity-oriented investments are also capable of exposing investors to the highest degree of volatility and risk. There are a number of factors, which affect the performance of equities ad studying and understanding all of them on an ongoing basis, can be challenging for most.
Stock markets have always been a draw for investors for their ability to generate wealth over the long-term. Fear, greed and a short-term investment approach act as hurdles that frustrate the investor from achieving his/her investment goals. You need to keep in mind the risk associated with the stocks. You also need to
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diversify your equity portfolio i.e., include more stocks and sectors. This helps you diversify your investment risk, so even if something were to go wrong with a stock/industry in your portfolio, other stocks/industries should help you shore up your portfolio.
CERTIFIED FINANCIAL PLANNERCM A well-qualified financial planner like a Certified Financial Planner (CFP) would work with a person to prepare his plan. A CFP is finance savvy and combines the objectivity and trust, developed through years of experience and expertise in planning one‘s personal finance.
2.7cCertified Financial Planner (CFP)
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CERTIFIED FINANCIAL PLANNERCM
Certification or CFPCM certification is an international program in the field of Financial Planning, wealth management and financial advisory services. Financial Planning is one of the fastest growing careers across the world. Being one of the fastest growing economies, India currently has around 5cr families with investible surplus. Assuming one financial planner is handling approx. 1,000 clients we need at least 50,000 Certified Financial Planners in India immediately. This is set to grow at a faster rate. CFPCMcertification was rated as Gold Standard in Financial Planning by the WALL STREET JOURNAL in the year 2006.
CERTIFIED FINANCIAL PLANNERCM
Certification or CFPCM Certification is a mark of excellence granted to individuals who meet the stringent standards of education, examination, experience and ethics. It is the most prestigious and internationally accepted Financial Planning certification recognized and respected by the global financial community. CFPCM Certification is the highest level of certification in the field of Financial Planning worldwide with over 1,18,245 CFPCM certificants, who are widely respected by consumers, professionals and industry.
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2.8c Personalized Financial Plan
Certification is for financial services professionals, customer relationship Officers, insurance agents, stock brokers, those looking to expand their careers in the financial services business, and graduates who want to be professionally and globally recognized.
Financial Planning is one of the fastest-growing professions across the world and Financial Planners are the most sought after professionals by a fast growing working population that earns well, and needs expert handling of their finances. The opportunities are aplenty with Banks, Financial Planning outfits, Wealth Managers, life Insurers, Accounting Firms, Stock brokers seeking professionals with such expertise. Financial Planners offer expert opinions on issues related to retirement planning, estate planning, tax planning, investment planning, insurance planning, financial management of small businesses and trusts, stock
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brokering, debt and risk analysis. Needless to say a career as a Financial Planner can prove both challenging and rewarding. Recognizing Financial Planning‘s occupational benefits, there are many surveys that indicate a career in Financial Planning as the top career choice worldwide. Most Financial Planners enjoy relatively low stress, have a high earning potential and enjoy a high degree of workplace autonomy. The personal satisfaction element cannot be underestimated. Very often, independent Financial Planners find that people are just overwhelmed and need direction, so it‘s their job to listen, understand their situation and offer some options that will help them. It gives them satisfaction to help people do better, not just with their finances but with blending the financial side with the other sides of clients‘ lives so that they can achieve their goals. • Enhanced career and employment opportunities in Financial Services Sector. • Personal satisfaction in knowing you have earned the profession‘s highest standard and met the global benchmark. • Satisfied clients who appreciate the comprehensive approach to Financial Planning and extend long term relationships and referrals. • Your expertise and credibility as a qualified professional is instantly communicated. • More revenue streams by increasing your product and service offering to your clients. • Enhanced Social Status by joining the league of professionals. • Recognition in over 23 countries across the world. • Opportunities to showcase your knowledge on Financial Planning & Advising through various media vehicles.
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Financial Planners may earn in any of the following three ways:
1) A Planner can be paid by a salary from the company for which the Planner works; by fees based on an hourly rate, a flat rate, or on a percentage of the assets and/or income.
2) By commissions paid by a third party from the products sold to clients to carry out the Financial Planning recommendations.
3) By a combination of fees and commissions whereby fees are charged for the amount of work done to develop Financial Planning 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 Financial Planners in India. But surely over a period of time the clear trend is towards a fee-only model like other professions, i.e. medicine, law, accountancy, etc.
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2.9c The Financial Planning Process
Financial Planning Standards Board India (FPSB India) offers the Certified FINANCIAL PLANNER CM certification or CFPCM certification Program. FPSB India is the sole licensing body that awards CFPCM certification in India through an agreement with us based FPSB, ltd. The mission of FPSB India is to help benefit the public by granting the CFPCM certification and upholding it as the recognized standard of excellence for Personal Financial Planning. CFPCM certification is awarded by affiliate organizations of FPSB, ltd. in their respective countries of operation. Kindly note FPSB India‘s authorized Education Providers are only training and administrative entities authorized by FPSB India and not the CFPCM certification awarding bodies. FPSB India reserves the rights of awarding and relinquishing CFPCM certification as per the certification policies.
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Financial Planning Standards Board India (FPSB India) is a Public – Private enterprise and a Professional Standards Setting body that proactively guides the development and promotion of standards for Financial Planning professionals to benefit the public in the country. FPSB India closely works with all the stakeholders‘ viz. the Government, the regulators, the Industries/Associations, the Corporations, the Media and the General Public to achieve its objectives. It is a Professional Certification organization, part of leading Global Confederation established by prominent financial service corporations with an objective to professionalize the concept of Financial Planning in India. FPSB India is supported by 50 Financial Services organizations in the country as its Charter Members.
Yes, currently CFP certification is offered and recognized in 23 countries including Australia, Austria, Brazil, Canada, China, Chinese Taipei, France, Germany, Hong Kong, Indonesia, Ireland, Japan, Malaysia, New Zealand, Netherlands, republic of Korea, Singapore, South Africa, Switzerland, Thailand, United Kingdom and United States of America. FPSB, ltd. enters into licensing and affiliation agreements with non-profit organizations (or their equivalent) around the world that allows the organizations to establish and operate the CFP certification program in a country or region. FPSB Affiliates who meet and maintain FPSB‘s affiliation criteria of high standards are authorized to administer the CFP certification program on behalf of FPSB in a country or region. FPSB India is one of the Affiliates of FPSB, ltd.CFP certification undertaken in any of the affiliate country is recognized globally and governed by cross border policy usage. GLOBAL COUNT OF CFP CERTIFICANTS (as in December 2008)Country/Region No. of CFP Certificants
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2.10c Financial Planning Process To benefit the public, FPSB regulates how CFP professionals use FPSB‘s CFP or Certified Financial Planner marks outside the borders of the country or region in which they first received CFP certification. Incidental Use FPSB permits incidental use of the CFP marks by CFP professionals outside the country or region of their initial certification.
Incidental use consists of displays of the CFP marks in/on: • Articles published in a new country or region. • Business cards or brochures distributed while traveling abroad. • Websites targeted toward stakeholders in the country or region of initial certification that are viewable outside the area‘s borders.
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Cross-Border Use
If an individual wishes to hold himself or herself out as a CFP professional or use the CFP marks outside his or her country or region of initial certification for anything other than incidental use, the CFP professional can pursue one of two options:
1. Cross-Border Certification: An individual using the CFP marks in more than one country or region can become cross-border certified by obtaining CFP certification from the FPSB Affiliate in the new country or region and abiding by the certification renewal requirements of both FPSB Affiliates. Once the CFP professional has completed the process, he or she can identify himself or herself as a CFP professional in those territories as well.
2. Restricted Use of the CFP Marks: If an individual does not want to/cannot become certified in a new territory, he or she can always communicate the fact that he or she has obtained CFP certification in the country or region of initial certification.
The kinds of services Financial Institutions offer can vary widely. Some institutions assess every aspect of one‘s financial life, including saving, investments, insurance, taxes, retirement, and estate planning and help one develop a detailed strategy or plan for meeting all financial goals.
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The major players in the market are as follows: • YES Bank • Citibank • UTI Bank Limited • HSBC Bank • HDFC Bank Limited • Bajaj Capital • Religare Enterprises Limited
2.11c Players in the Market
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YES BANK
YES BANK has been conceived in the spirit of professional entrepreneurship, with an unstinted commitment to establish a high quality, technology driven, state-of-the-art private Indian Bank catering to ?Emerging India‘.
The vast banking experience of the Promoters, RanaKapoor and Ashok Kapur who have a collective financial stake of 38.62% has been strengthened by the financial support of Rabobank Nederland to provide YES BANK a strong foundation of enduring financial trust. YES BANK looks to offer comprehensive banking and financial solutions. Which is why, they have inducted top quality Human Capital across all the banking functions, including Corporate & Institutional Banking, Financial Markets, Investment Banking, Business & Transactional Banking and Retail Banking & Wealth Management.
Service Offerings a) Mutual Funds b) Portfolio Management Services c) GOI Bonds d) Tax Saving Bonds e) Subscription to IPOs f) Life Insurance g) General Insurance
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CITIBANK
Citigroup in India Citigroup is the single largest foreign direct investor in the financial services industry in India. Committed to India for over 100 years, Citigroup considers itself a local bank with an international perspective backed by the largest global network. With a staff strength of over 15,000, Citigroup 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 1,000 large corporate, over 22,000 small and medium enterprises and over 5.5 million retail customers. A pioneer in consumer banking, Citibank was the first to introduce credit cards, focused consumer lending programs and electronic banking in India. Today, the Citibank network comprises of 39 bank branches across 27 cities and over 400 CitiCard Banking centers–which combine ATMs and self-service phone and Internet banking— offering CitiGold wealth management, credit cards, mortgage services, Auto Loans, Personal Loans, Suvidha and NRI Services. Through CitiFinancial, Citigroup offers consumer finance services in the country.
Service Offerings a) Mutual Funds b) Tax Advisory Services c) Real Estate Advisory Services d) Art Advisory Services e) Insurance Services
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UTI BANK LTD
UTI Bank was the first of the new private banks to have begun operations in 1994, after the Government of India allowed new private banks to be established. The Bank today is capitalized to the extent of Rs. 280.12 Crores with the public holding (other than promoters) at 72.43 %. Presently the Bank has a very wide network of more than 450 branch offices and Extension Counters. The Bank has strengths in both retail and corporate banking and is committed to adopting the best industry practices internationally in order to achieve excellence.
Service Offerings by Capital Market a) Equity Market Content b) Mutual Funds Content c) Commodity Market
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HSBC Bank
The antecedents of the HSBC Group in India can be traced back to October 1853 when the Mercantile Bank of India, London and China was founded in Bombay (now Mumbai). The acquisition in 1959 by The Hong Kong and Shanghai Banking Corporation Limited of the Mercantile Bank was a decisive factor in laying the foundation for today's HSBC Group. HSBC in India is proud to have retained the Group's pioneering streak by being an active partner in the development of the Indian banking industry - even giving India its first ATM way back in 1987. The organization‘s adaptability, resilience and commitment to its customers have further enabled it to survive through turbulent times and prosper through good times over the past 150 years.
Service Offerings a) Financial Planning Services b) Mutual Funds c) Insurance
Religare Religare Enterprises Limited was promoted by the promoters of Ranbaxy Laboratories Limited and it was originally incorporated as ?Vajreshwari Cosmetics Private Limited? on January 30, 1984. The name of the company was changed to ?Religare Enterprises Private Limited? on January 10, 2006. Religare Enterprises Limited (REL), is one of the leading integrated financial services groups of India. REL‘s businesses are broadly clubbed across three key verticals, the Retail, Institutional and Wealth spectrums, catering to a diverse and wide base of clients.
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REL offers a multitude of investment options and a diverse bouquet of financial services and has a pan India reach in more than 1550 locations across more than 460 cities and towns.
f) Bajaj Capital Bajaj Capital is one of India‘s leading Financial Services companies offering Free Advice on Investments, Insurance, Tax Saving, Retirement Planning, Financial Planning, Children‘s Future Planning and other services. They are also SEBI-approved Category I Merchant Bankers. Today, Bajaj Capital is a one of the largest financial planning and investment advisory companies in India, 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. In addition, they also provide investment assistance by helping clients complete all the formalities, and help them keep regular track of their investments.
ii) Service Offerings a) Mutual Funds b) Taxation Advice c) Bonds d) Post Office Schemes e) Estate Planning f) Insurance g) Financial Planning h) Retirement Planning
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CHAPTER 3 RESEARCH OBJECTIVES
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OBJECTIVES OF THE STUDY
PRIMARY OBJECTIVE
The primary objective of the study is to create awareness among investors about financial institutions in the market
SECONDARY OBJECTIVE ? To find out the growth of financial institutions ? To recommend investors trading in banking institutions ? To understand market sentiment and use appropriate strategy ? To identify the probable profit or loss regions
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CHAPTER 4 RESEARCH METHODOLOGY
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Title of the Study Comparative analysis of various financial institutions in the market.
Objective of Study To study the prospects of various financial products provided by different financial institutions in the market. People should come out of the concept of just keeping their money in Savings Account and Fixed Deposits and should concentrate on their financial planning to maximize returns by taking proper guidance from financial planner.
Type of Research This project is more of an exploratory research with more of qualitative analysis than quantitative. 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 Chennai. (Members [customers & sub-brokers] of Aditya Trading Solutions from Adayar,Alwarpet, Nungambakkam, Sowcarpet)
The research methodology adopted was both Primary and Secondary. Primary 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 individual‘s wealth. Questionnaire was designed to as certain the investor‘s behavior as well as to depict the future prospects and growth momentum of the wealth management industry.
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Sample Size and method of selecting sample
Data Collection Methods & Instruments The instrument for data collection was a structured questionnaire targeted towards people who do investments. This questionnaire was designed to know the investment psyche of a person while investing in the financial products.
The statistical tool that used in the research is Percentage analysis
The mode of communication was informal & friendly conversation, which does not limit discussion within a well-defined boundary.
Data Collection Sources i) Primary Research Research was done to get a detail overview of the wealth management industry and study the need for financial planner in the current scenario. Questionnaire was designed to study the investment psyche of a person, their practice on saving, different investment options available and the need of financial institutions to manage individual‘s wealth. This project is mainly based on first hand observation in the market, the way financial planning functions, scope of financial planning and the need of a certified financial planner.
ii) Questionnaire Design A structured questionnaire was designed covering both open and close ended questions, to study the perception of people regarding investment avenues and the concept of financial planner. {Specimen of the questionnaire is attached in ANNEXURE}.
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iii) Secondary Research Various sources of information were collected for attaining clarity on the prospects of wealth management industry and the various financial institutions in the market. The source also includes basic investment objectives and the various types of investment avenues open to an individual.
However the following sources were considered for information gathering: • Companies websites • Articles and reports available on the web • News papers like Economics Times and Investment Insurance Magazines • Various other sources mentioned in the references, in BIBILOGRAPHY
i) Population considered for research
Sample Details 100 people belonging to different fields, who do investment, were asked to fill the questionnaire, on the basis of which an attempt is made to study the prospects of Financial Planning 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 equal chance of being sampled.
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Personal Information: • Sex Ratio: From the total 100 respondents 15 were females and 85 were males.
Persons Male Female
Ratio 85 15
Sex Ratio of Samples
Males Females
a) Scope of Study ? There exist a potential growth in the wealth management industry and thus this project authenticates the feasibility of financial institutions in the market. ? Expanding needs and proliferation of financial products are making it difficult for individuals to invest without planning. Most are aware that planning is critical; yet don‘t have the time or the expertise to develop a plan & therefore the role of Financial Planner comes in picture.
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b) Limitation of the Study ? The scope of the research was limited to top 7 wealth management companies, namely YES Bank, Citibank, UTI Bank, HSBC Bank, HDFC Bank, Bajaj Capital and Religare Enterprises Limited. ? The sample area was primarily in Chennai. And accordingly the response is presumed to represent whole of India.
? The sample size comprised of 100 respondents from different fields and income group, and their responses are presumed to represent the wealth management mark ? 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. ? The disadvantages exists in the area of data collection, study was carried on from historical data, and not on current data
? All strike prices may not be active at all time. Even a specific strike price may not be active at all time.
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CHAPTER 5 COMPANY PROFILE
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COMPANY PROFILE
Aditya Trading Solutions Private Limited (ATS) are a full spectrum INVESTMENT MANAGEMENT house specializing in online commodity trading. We are one of the earliest members of MCX and pioneers of online commodity broking in TAMILNADU. ATS is promoted by young and dynamic entrepreneurs who have years of proven experience in international derivative markets like NYMEX and worked with several FORTUNE 500 companies. We are the largest online commodity Trading Company in Tamilnadu. Our Client base consists of a long list of satisfied institutional and retail client base broking.
ATS ranked as Number 1Member of MCX in Tamilnadu by trading volumes. We are clocking a turnover of Rs 380 crore daily trading volumes. We hold 15% of market share in Tamil Nadu in MCX. We have 29 branches and ever growing number of satisfied & profitable franchisees and sub brokers (presently183) in 4 states of south India. ATS is best known in the industry for providing personalized efficient, timely, transparent and cost effective trading & investment services to all our clients and sub brokers. We ATS is of firm belief that our franchisees are our partners and we will strive to do all we can to make you profitable and successful. Mission
To provide cost effective Trading, Investment & Risk Management solutions to our ever increasing client base in a professional and ethical way.
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ATS offer you following services
?
Trading & investment access to MCX, NCDEX, NSE, SSE & Currency futures
? ? ? ?
Physical Delivery of commodities Price risk management & Hedging Wealth management with capital protection Research & investment advisory
24 X 7 online back office
When you are a client of ATS you never have to worry about not knowing your account status. You can access your Trading/Accounts statement anytime, anyplace at your convenience with help of our 24 X 7 online back office software.
Online Trading Platform
ATS provide you online trading software to help you place your orders at the click of a button. We ensure that the entire process right from opening your account to placing an order online is as simple and hassle free as possible.
Research Guidance
ATS provide you with highly successful Trading/Investment calls to enhance your profitability. Our research will guide you in making informed decisions which will make your WEALTH GROW.
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Risk Management Risk management is at the core of our very existence. There is no margin for any error here. With the help of modern technology and some hard nuts in the risk management room we have been able to keep the risks of our business to the bare minimum. Our comfort to expand geographically comes from the fact that our risk management is clinical. Our strict adherence to systems ensures that our clients and stakeholders can have their quota of the much-need peaceful sleep.
Research on your mobile Imagine how profitable you can be if critical research calls are available to you on time, We at ATS deliver trading calls to your mobile through SMS on time, every time.
Personalized service
ATS understand that each of our clients have unique set of trading requirements. We customize our service package to suit your trading needs.
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Products service:
EQUITY & DERIVATIVES Equity and derivatives go hand in hand as they help maximize return and minimize risk at the same time! ATS clients are assisted in protecting the downside risk to their portfolio using appropriate combination of options. Our advisory is skilled to help you in maximizing your gains from your existing corpus using numerous strategies based on the direction and intensity of the views. ATS ensures that you get the one of the finest trading experiences through: An experienced and qualified team of Equity professionals offering unbiased advice on equity investment decisions. All members having immense experience and each of them being professionally certified by the National Stock Exchange. A high level of personalized and confidential service. Constant monitoring of client portfolio so that the returns are maximized and the risks are minimized Secure, integrated broking system Powerful Research & Analytics ATS has a great retail network, with its presence through more than 150 branches across more than 10 states. This means, you can walk into any of these branches and get in touch with our highly skilled and dedicated staff to get the best services. COMMODITIES Commodities are now an asset class! For those who want to diversify their portfolios beyond shares, bonds and real estate, commodities are an excellent option. Commodities are one of the easiest investment avenues to understand as they are based on the fundamentals of demand and supply. Historically, prices in commodities futures have been less volatile compared with equity and bonds, thus providing an efficient portfolio diversification option.
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ATS helps investors understand the risks and advantages of trading in commodities futures before take they take the big leap. It provides clients with an effective platform to participate and trade in Commodities with both the leading Commodity Exchanges of the country. ATS commodity services are a class apart and the following features differentiate our services from others: Professionally qualified analysts with rich industry experience Research on Agro Commodities, Precious Metals, Base Metals, Energy products and Polymers Market watch for MCX and NCDEX with BSE / NSE Streaming quotes and live updates Relationship management desk Educating clients on commodities futures market DEPOSITORY ATS is a depository participant with Central Depository Services (India) Limited (CDSL) and uses the latest in technology to deliver DP Services in a hassle free, secure and transparent environment. There are two main reasons why you should use ATS‘s DP services: ATS ensures that its clients focus on investment and trading decisions rather than the drudgery of operational and transactional processes. ATS offers a risk free, prompt and efficient depository process. Depository Services provided by ATS include: Account Opening Dematerialisation Rematerialisation Account Transfer Nomination Pledging
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INSTITUTIONAL SERVICES Dedicated institutional desks at Mumbai and Chennai cater to our rapidly growing Institutional clientele, which include FIIs, Mutual Funds, Banks, Insurance Companies, Corporate clients and Overseas Corporate Bodies With our dedicated and superior quality service to our clients, ATS is being recognized as the broker of choice among various institutional investors Some of our esteemed clients include: Allsec Technologies Limited Videsh Sanchar Nigam Limited Power Trading Co Limited Star Health and Allied Insurance Indian Overseas Bank Ramakrishna Mission NRI SERVICES The NRI Services' Department is an exclusive arm of ATS dedicated to impart professional advice to NRIs the world over. Our exclusive singlewindow NRI Services‘ Department integrates and simplifies multiple processes into one - opening of NRI bank account, demat account and trading account NRI‘s, NRO‘s (Non-Resident of Indian Origin) and OCB‘s (Overseas Corporate Bodies) can now exploit multiple opportunities to profit from India's NRIfriendly investment environment and a booming Indian economy ATS enables all operations from trading to settlement in an absolutely hasslefree manner Pro-activeness right from opening necessary accounts to advising tax payments on capital gains. Prompt response to queries or step by step guiding through a business process.
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INVESTMENT ADVISORY ATS has a dedicated team of professionals handling the investment advisory services of the firm. These experts use their knowledge of investments, tax laws, and insurance to recommend financial options to clients in accordance with their short-term and long-term goals. Some of the issues that the specialists address are general investments, retirement planning, tax planning and child education & welfare planning. Our certified Investment Advisory Managers strive to understand each individual client‘s needs, risk profiles and investment goals to provide the best advice. Apart from advising, they help clients build and track their investments. They also regularly monitor, report and recommend changes based on the performance of the portfolio. Investment Advisory helps you in the following ways: Provides you with the information to make fruitful and timely financial decisions. Helps you understand how each financial decision other areas of your finances. Aids you in assessing the level of risk that is suited to your lifestyle and financial situation. Facilitates you to manage your finances based on the goals that you are looking to achieve. Facilitates you to manage your finances based on the goals that you are looking to achieve.
We offer advice on and help invest in the following products: Mutual Funds Insurance - Life & Non - Life Bonds Deposits IPO‘s Small Savings Instruments
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RESEARCH Our primary strengths lie in research and operational efficiency. The day-to-day operations are managed by some of the best professionals in the industry having in-depth understanding of underlying market trends and sound business practices The Research Team comprises of competent professionals with vast experience, insightful analytical abilities and high standards of integrity. Some of our research reports are as below: Economic Outlook and Updates Sector & Company Reports Technical Recommendations Daily Market Report Daily Technical Outlook Reports on New Fund Offerings Weekly analysis of mutual funds – Fund Focus Weekly debt report: Debt Dose Monthly Newsletter - ATS Investment Flash Monthly 4 Pager - ATS WealthWise
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Branches
Tamil Nadu
ADYAR No.3k, 3rd Floor, Vantage Plaza, No.1, L B Road, (Near Adyar Bus Depo), Thiruvanmiyur, Chennai – 41
NUNGAMBAKKAM No.25, G9, Gems Court, Khader Nawaz Khan Road, Chennai – 06
ALWARPET #4, Shop No.15 & 16, Lady Desika Road, Mylapore, Chennai – 04
SOWCARPET 3rd Floor, NSC Bose Road, Sowcarpet, Chennai – 79.
COIMBATORE 163 B , 3Rd Floor, Uday Enclave , Venkatachalam Road, R.S.Puram West, Coimbatore – 641002 ERODE No.408, 4th Floor, Sakthi Super Market, Perundurai Road, Erode ? 638011
MADURAI No.16 & 17, KVR Arcade, A R Plaza, North Veli Street, Madurai – 01
SALEM 96/3, Capital tower, 2nd Floor peramanur main road, Four Roads, Salem – 636007
TIRUPUR TRICHY No 11, J.K. towers Second floor, No-20,J C Towers, Karur Bye Pass Road, Binny Compound Second Street,Kumaran Trichy - 620018 Road, Landmark : Near fish Market, Tirupur– 1 COIMBATORE Ahuja Towers,2nd Floor, T V Samy Road,(WEST),RS Puram, Landmark: Above Raymonds Showroom Coiombatore - 641002
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Kerala
COCHIN 29/1307 E Harishree Building S A Road Vytilla (Post), Cochin, Kerala - 682019.
TRIVANDRUM TC 25/3472 (2), URRA76, Near BSNL Bhavan, Uppalam Road, Trivandrum, Kerala – 695001
Andhra Pradesh
HYDERABAD VISHAKAPATNAM 1-8-388/2A, 1st floor, Door no-47-1-115,samsung plaza building Bhagyalakshmi Building, Near Water 4 thfloor,opp to shankarmattam, Tank, Dwarkanagar Prakash Nagar, Opp. to Airport, Begumpet, Vishakapatnam-530016 Secunderabad – 500016
Karnataka
BANGALORE No.553/A, 1st floor, 9th A Main Road, Indira Nagar, 1st Stage, Bangalore – 560038
BANGALORE No.623, 2nd Floor, Avenue Road, Near Kamath Hotel, Bangalore – 560002
MANGALORE Essel Tower, #9, 5th Floor, Bunts Hostel Circle, Mangalore – 575003 Rajasthan
JAIPUR No.342 & 343, 3rd Floor, Saraogi Mansion, M I Road, Jaipur – 302001
UDAIPUR No.101 & 102, 1st Floor, Akruti Complex, 4, New Fatehpura, Udaipur – 313001
BHILWARA No.19, 2nd floor, S K Plaza, Pur Road, Bhilwara, Rajasthan - 311001 59 | P a g e
JODHPUR NO 316-317 Modi Arcade.3rd Floor, Near Bombay Motor Circle, Jodhpur342001
VAISHALI NAGAR F-104 Gautammarg,Signature tower VaishaliNagar,Jaipur - 302012.
BIKANER E 37 Khajanchi Market, Bikaner-334001
Uttar Pradesh
KANPUR No.505, 15/63, Krishna Tower, Opp. Green Park, Civil Lines, Kanpur – 208001
SAHARANPUR LGF-06 parsvnath plaza court road, saharanpur,kanpur – 247001
Madhya Pradesh
NEEMUCH MANDSAUR 38/1, Ashok Marg, Near Mission Hospital, Tirupati Plaza" 1st floor, Neemuch, Madhya Pradesh – 458441 opp. SamratHotal, Railway Station Road, Mandsaur (M.P.) INDORE 308,3rdfloor, milindamanor,opp central mall , RNT Marg,indore – 452001
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CHAPTER 6 REVIEW OF LITERATURE
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a) Financial Feasibility Financial 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 expect unbiased advise on the entire spectrum of personal finance and thereby adding value to the investor‘s current portfolio and potential savings. The statistics regarding the investments are discussed below so as to show the trend of various factors in the Indian economy.
i) Growing Economy The anticipated growth rate of 6 - 7 percent in 2008-09, acknowledges the momentum of development in the Indian 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. India is the world‘s second most populous country with a little over 1 billion people and the 10th in terms of economic size, representing around 6% of world GDP. The impact of 15 years of economic reform finally appears to have kicked in and allowed India to emerge as an attractive investment destination in the global arena India, with an anticipated growth rate of 6 to 7 % for the year 2008-09, supported by robust growth in the Indian 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 Indian market
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i)
Strong Financial Market
India's financial markets have undergone rapid changes since the country embarked on a program of economic reforms in 1991. They have embraced technology, seen a substantial increase in the variety and volume of transactions, and witnessed the emergence of new securities and new instruments. India witnesses growing number of venture capitalist bank which do not hesitate in investing in new projects and bear high risk with the entrepreneur. Therefore, the financial market scenario in India is conducive for procurement of funds for launching the business magazine in the market.
ii)
Inflation
Inflation is moving at around 4% and the savings account is giving an interest of 3.5% 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.
b) Market Feasibility Marketing feasibility involves determining the prospects of financial advisors in the growing economy like India. The study includes assessing the need of financial institutions to achieve all the individual‘s financial goals and keeping these goals in mind how do they recommend certain investment options in the market in order to provide value additions to individual‘s current portfolio & savings potential.
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For assessing the satisfaction level of investors who are availing financial advisory services, the performance of the current players in the markets will be studied and their strength and weakness will be analyzed, if the investor‘s satisfaction level from the current advisor is less, then greater will be the feasibility of prospects of financial advisors in the Indian market.
After analyzing the response, marketing feasibility exist on the basis of following discoveries.
1. Growth of Capital is the Major Objective behind Investments It was observed that 46.3% of the respondents do investments for achieving growth of capital i.e. revenue maximization. Safety of capital was considered secondary objective behind investments as only 15.7% 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, IPO, post-office schemes, secondary markets, etc
2. Low saving Potential Out of the total sample, around 48% of the respondents said that they try to save money which depicts low saving potential among the Indian investors. They are not in the habit of saving on a regular basis as it was observed that only 29.7% always save some portion of their take home salary. The financial advisor should promote regular savings among the investors so as to open various investment channels for them to fetch good returns.
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3. Investors taking Financial Decisions Independently Investors are taking their financial decisions independently without doing any financial planning which reflects the need for financial advisors who will take note of and record all the financial goals and will simultaneously work out the money value for each of the goals. Additionally, financial advisors can also set aside some money for contingencies – medical and other emergencies in liquid form and invest the rest in diversified portfolio so that the risk gets distributed.
4. High Awareness of Financial Advisors in the Indian Market Majority of the investors i.e. 78% of the respondents were aware about the concept of financial advisors but among them, very few investors have actually gone for availing these services which shows lack of trust and confidence in the services provided by the financial advisors in the eyes of general public. The financial advisors should find out the deficiencies and flaws in the current services being provided to the investors and attempt at suggesting ways and means to remedy the same.
5. High Level of Satisfaction from Existing Financial Advisors Majority of the investors were very satisfied with the services provided by the existing service providers which primarily include Citibank, HDFC Bank, HSBC Bank, etc.
Thus it becomes evident that the satisfaction level of the investors is high from the existing advisors and thereby validates the prospects of financial advisors in the Indian market.
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CHAPTER 7 ANALYSIS AND INTERPRETATION
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Given below are the graphical representations of the responses received on questions asked through the questionnaire. The interpretation derived and the model adopted will be explained in detail in the later part of the report. On asking the following questions, the replies were received accordingly:
1. What is your objective behind investments?
Objective Behind Investment Growth of Capital Tax Minimization Safety of Capital Retirement Liquidity Beating Inflation Others
No of Respondents (in %) 46.28 14.05 15.7 14.88 2.48 3.31 3.31
7.1t Objectives behind investment
Inference: Investing is a conscious decision to set money aside for a long enough periods in an avenue that suits your risk profile. The questionnaire asked the respondents to reveal their objective behind investments, majority of the respondents disclosed growth of capital as their prime objective while safety of capital stands secondary. This response reflects the investor willingness to take calculated risks for growth of their capital
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No of Respondents (in %)
Growth of Capital Tax Minimization Safety of Capital Retirement Liquidity Beating Inflation Others
7.1c Objectives behind Investment
The research has highlighted that growth of capital is the most important factor which they consider wile investing as evident by the response wherein 46.3% of the respondents voted for the same. However, it can also be seen that 15.7% 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. Liquidity is the least important factor as only 2.5% 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 liquidity should have the minimum focus.
In our sample, inflation has only been given 3.3% 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.
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2. Since when are you investing in financial instruments?
The respondents were asked as from when they have started investing in financial instrument so as to ascertain the average period of experience of an investor in the market.
Months
No of Respondents (in %)
Less than 3 months 3 to 6 month 6 to 8 months 8 to 12 months More than 12 months
10.84 13.25 9.64 18.07 48.19
7.2t Investing in Financial Instruments
60
No of Respondents (in %)
50 40 30 20 10 0 Less than 3 months 3 to 6 month 6 to 8 months Months 8 to 12 months More than 12 months Series1
7.2c Investing in Financial Instruments
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The responses were then graphically which indicates that majority of the investors i.e. 48.2% of the respondents have been investing for more than 12 months and signifies that the responses revealed are from experienced and qualified investors which adds to the credibility and reliability of the research.
3. Do you plan your investments?
Opinion of Respondents
No of Respondents (in %)
Yes No
84 16 7.3t Response on Plan their Investment
Response on Plan their Investment
Yes No
7.3t Response on Plan their Investment Inference : On analyzing the response 84% of the persons plan their investments while only 16% take investment decisions on ad hoc basis.
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To evaluate the level of importance the investor gives on detailed financial planning to arise in their investment decision, the respondents were asked to reveal whether their investments are result of a careful planning or it‘s 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 don‘t have the time or the expertise to develop a plan and make the needed financial decisions.
4. What is your practice on saving money?
Opinion of Respondents Don‘t believe in Savings High Expenses Try to Save Always Save Some Others
No of Respondents (in %) 1.98 19.8 47.52 29.7 .99
7.4t Response on practice of saving money
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Response on practice of saving money
No of Respondents (in%)
50 40 30 Series1 20 10 0 Don’t believe in High Expenses Savings Try to Save Always Save Some Others
Opinion of Respondents
7.4c Response on practice of saving money
Inference : To determine the saving habits of the investors, the questionnaire enquired the respondents as about their practice of savings. The greater the inclination of saving the more will be the funds available for investment. Around 47.5% of the respondents try to save from their income, while only 29.7% of the respondents always make an effort to save some part of their income. Only 2% of the respondents don‘t believe in savings, which substantiate high importance of savings in Indian households. However, it was also observed that majority of the women respondents had high inclination for savings and try to save the maximum out of their available income.
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5. How much thought have you given to saving for retirement?
Opinion of Respondents Some A Lot Very Little None
No of Respondents (in %) 47 18 18 17
7.5t Response on Savings for Retirement
Response on Savings for Retirement
Some A Lot Very Little None
7.5c Response on Savings for Retirement Inference : 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. Its called inflation, which 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 quantity of goods. On analyzing the level of importance the respondents give on saving for retirement, majority i.e. 47% of the respondents give some importance while only 18% give a lot of importance to saving for retirement. This depicts non serious attitude of Indians while planning for their retirement.
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6. When do you consider one should start planning for retirement?
Opinion of Respondents
No of Respondents (in %)
Below 30 31 – 40 41 – 50 Above 50
35.79 22.11 22.11 20 7.6t Response on age preference to plan for retirement
Response on age preference to plan for retirement
Below 30 31- 40 41 - 50 Above 50
7.6c Response on age preference to plan for retirement Inference : If you start planning for retirement early on, you can bridge the gap between what you have in your hand today and what you would like to have when you retire. What to keep in mind while saving for retirement depends a lot on our age and how much money you are willing to set aside every month. If you begin saving for retirement early on in your life, you can set aside smaller amounts.
Planning for retirement in early age of employment is depicted on analyzing the responses as 35.8% start planning below the age of 30 years, while 42.1% of the respondents feel, the ideal age to be above 40 years.
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7. What do you feel is considered to be the ‘fundamentally safe’ form of investment?
Opinion of Respondents
No of Respondents (in %)
Bank Deposit Property Postal Deposit Gold Insurance Bonds Mutual Fund Equity
14.37 35.33 7.78 3.59 15.57 12.57 7.19 2.99
7.7t Response on fundamentally safe form of investment
Response on fundamently safe form of investment
No of Respondents (in%)
40 35 30 25 20 15 10 5 0 Bank Deposit Property Postal Deposit Gold Insurance Bonds Mutual Fund Equity
Series1
Opinion of Respondents
7.7c Response on fundamentally safe form of investment
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Inference: On enquiring from the respondent about what are the fundamental secure forms of investments, 35.4% of the respondents feel that investing in property is the safest form of investment followed by Insurance. The least secured form of investment as revealed by respondents is investment in equity as secondary market is subject to huge volatility & uncertainty. It 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 experiencing a major climb in the property prices. About 14.4% of the respondents feel that Bank deposits is also the safe form of investments as it gives assured returns on the sum invested.
8. How do you take financial decisions?
Opinion of Respondents Independently Friends Broker CA Bank Financial Advisor Others
No of Respondents (in %) 48 28 1 7 1 11 4
7.8t Response regarding taking financial decisions
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Response regarding taking financial decisions
No of Respondents (in%)
60 50 40 30 20 10 0
In de pe nd en tly Ad vis or ds Br ok er Fr ien Ot he rs Ba nk CA
Series1
Opinion of Respondents
7.8c Response regarding taking financial decisions Inference: An individual‘s decision has a vital role to play in achieving investment objectives and thereby making investments in a systematic manner. Decisions can make or break investment avenues as wrong decisions would merely lead to wrong investments resulting in major loss. On enquiring from the respondents about how they take their financial decisions, majority of the respondents take their financial decisions independently which depicts they are not taking any advisory services from financial experts. There are majority of respondents who feel that they can handle their portfolio on their own and hence make their own decisions regarding investments.
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Fi
na nc ial
9. Do you have any Insurance Policy?
Opinion of Respondents Yes No
No of Respondents (in %) 75 25
7.9t Response to having an insurance policy
Response to having an insurance policy
Yes No
7.9c Response to having an insurance policy Inference : Life is full of dangers, but with insurance, you can at least ensure that you and your dependents don‘t suffer. The purpose of buying insurance is to protect your dependants from any financial difficulties in your absence. It helps individuals in providing them with the twin benefits of insuring themselves while at the same time acting as a compulsory savings instrument to take care of their future needs.
The research has highlighted that majority of the respondents are availing insurance policy which signifies that people are much aware about the advantages with an insurance policy which can cover their life as well as prove to be as a savings instrument.
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Around 75% of the respondents do have insurance policy, while 25% of the respondents are still not availing this type of investment.
10. If yes, why did you buy an Insurance Policy?
Opinion of Respondents
No of Respondents (in %)
For Saving Tax For Savings For Security Against Death Others
28 31 34 7 7.10t Response for buying an Insurance policy
Response for buying an insurance policy
No of Respondents (in%)
40 30 20 10 0 For Saving Tax For Savings For Security Against Death Others Series1
Opinion of Respondents
7.10c Response for buying an Insurance policy Inference: On enquiring from the respondents about why they bought insurance policy, majority of the respondents bought insurance as a security against death which depicts people have ensured that their dependents don‘t suffer in case of any
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uncertainty as life insurance indemnifies the nominees in case of an eventuality to the insured. By having insurance policy, the financial future of the nominees is secured in the absence of the person insured. Of the respondents who possessed insurance, 34% of the respondents had purchased insurance mainly as a security against death while 31% had bought it primarily as a savings product. Over 7% of the respondents purchased insurance as a word-of-mouth due to high demand of the product and it was also observed that around 28% of the respondents bought insurance to save tax.
11. Are you aware about the concept of Financial Advisors?
Opinion of Respondents Yes No
No of Respondents (in %) 78 22
7.11t Response on awareness of Financial Advisors
Response on awareness of financial advisors
Yes No
7.11c Response on awareness of Financial Advisors Inference : There are a number of financial advisors offering a diverse portfolio of services to suit different financial requirements of the individuals. In order to accomplish the task, these companies provide the assistance of professional financial
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advisors. The advisors educate individuals on the merits of a long-term approach and regular investing and help to rebalance their portfolio.
On analyzing the response 78% of the respondents were aware about financial advisors while around 22% of the respondents were still not aware about professional financial advisors which depicts there lays a scope to penetrate these people and inform them regarding the services offered by various financial institutions.
12. Do you currently avail financial advisor services/private banking services?
Opinion of Respondents Yes No
No of Respondents (in %) 34 66
7.12t Response to availing Financial advisory services
Response to availing financial advisory services
Yes No
7.12c Response to availing Financial advisory services Inference: 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 Indian market.
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Individuals are earning and paying high taxes thus ignoring the taxation benefits, which they can avail by proper computation of taxes. Individuals usually rely on Chartered Accountants leaving behind the fact that they are experts in Accounting and not in wealth management so there is a need for Financial Advisors. Hence, there is a requirement for one stop shop for all the financial needs of an individual.
According to the response, it can be seen that 66% of the respondents are not availing any financial advisory services while only 34% are taking financial advisory services. Thus there‘s much scope left for the financial management companies to target these large number of people who are totally unaware about the whole concept.
13. If yes, from whom?
Opinion of Respondents
No of Respondents (in %)
Citi Bank HDFC Bank Allegro Advisors Bajaj Capital HSBC Bank Yes Bank Religare Others
73.33 36.67 20 13.33 16.67 10 3.33 33.33 7.13t Response regarding source of financial advisory
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Response regarding source of financial advisory
80 70
No of respondents (in%)
60 50 40 30 20 10 0 Citi Bank HDFC Bank Allegro Advisors Bajaj Capital HSBC Bank Yes Bank Religare Others Series1
Opinion of respondents
7.13c Response regarding source of financial advisory Inference : To find out the various companies from where the investors get financial advisory services & make their decisions regarding investments. This would reveal the preference the respondents have for different companies.
On analyzing the response, 73.33% of the respondents were primarily availing financial advisors services from Citibank and when they were asked the reason behind, they replied Citibank provides free advisory services and has got a strong brand name. Secondly 36% of the respondents were taking financial advisory services from HDFC Bank followed by others which include UTI Bank, SBI, ICICI Bank, etc which catered around 33.3% of the total sample.
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14. What are the products you are getting from your service provider?
Opinion of Respondents Mutual Fund IPO Equity Post Office Schemes Insurance Property Tax Planning Loan Administration Gold Art
No of Respondents (in %) 14.63 8.13 8.13 11.38 21.95 7.32 11.38 9.76 4.07 2.44 0.81
7.14t Response you getting from the service provider
No. of Respondents
Mutual Fund IPO Equity Post Office Schemes Insurance Property Tax Planning Loan Administration Gold Art
7.14c Response you get from the service provider
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Inference : According to our response, around 22% of the respondents are availing advices on insurance products followed by mutual funds which hold 14.6% of the total sample. This depicts there is a huge demand for insurance in the Indian economy as compared to other financial instruments. It can also be inferred that individuals have started taking advises regarding tax planning and loans restructuring.
Insurance products followed by mutual funds which hold 14.6% of the total sample. This depicts there is a huge demand for insurance in the Indian economy as compared to other financial instruments. It can also be inferred that individuals have started taking advises regarding tax planning and loans restructuring.
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CHAPTER 8 FACTS AND FINDINGS
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? It 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 (Citibank, UTI Bank, HSBC) earn commission if the customer purchases mutual funds, insurance, from it. The broking company earns brokerage if the client purchases RBI bonds etc or if he does any equity trading. The bank only charges marginal fees on the custodial services. ? However, HDFC Bank - instead of asking customers to bring in a specific amount of funds - charges customers on various types of services it offers. The management of wealth depends on the customer's risk appetite, his investment objectives. Once these are understood, the bank sends a written investment proposal on what the bank thinks the portfolio should be. ? Taxation advisory is given by very few players like Bajaj Capital, UTI Bank. Various banks have a tie-up model with different insurance and mutual fund companies like Citibank has with Birla so Citibank will only sell Birla insurance to their clients irrespective of the fact whether the product meets the client‘s financial goals. Allegro is one player which takes care of loan restructuring. Commodity trading is only being handled by Religare as a separate product as SEBI have not yet allowed commodity trading to be a part of wealth advisory services. ? However banks cannot offer portfolio management services to customers. This means that a customer cannot give money to a private banker and ask the RM to invest on his behalf in different financial products. This service can be offered only by entities other than a bank such as Religare, Bajaj Capital, etc. A banker therefore will have to call every time and get a written confirmation from the client before any deal is done.
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CHAPTER 9 RECOMMENDATION AND SUGGESTIONS
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? On studying the peculiarities of the wealth management industry and analyzing the responses of the investors on their perception and expectation from a financial advisor, the following points are recommended which a general financial advisor should consider while approaching the people. ? India is seeing a maturing financial environment. Interest rates have fallen and unlike in the past, options to attract savings exist through a spate of financial products and services that have differing risk/growth and asset accretion propositions. It 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. ? While this is becoming a universally undeniable desire, the fact is that some people don‘t have the knowledge and inclination to understand the financial markets and others don‘t 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.
a) Unbiased Advisory
Investment Advisory Services are in this business of managing the assets of individuals and corporations. However, 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 frequent reviews of investment decisions made to ensure that portfolios are in line with what was planned.
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b) Certified Financial Planner
Financial planning is a new animal in the Indian market. The big thing to happen is the coming to India of the Certified Financial Planner (CFP) mark, owned by the Board of Standards in the US and licensed out to non-profit associations in 18 countries, including the US, Canada, Australia and the UK. Leading financial players–asset management companies, banks, mutual funds and insurance companies, forms these associations. Another player in this space is the NSE‘s Certification of Financial Markets (NCFM), an arm of the National Stock Exchange that tests and certifies insurance and mutual fund agents.
A third institution, the Association of Mutual Funds (AMFI), 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 ad-hoc approach to a planned one.
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9.1c Financing Mode
9.2c Investment Risk Pyramid
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c) Financial Planning Should Be Encouraged
It is a process in which an individual sets long-term financial goals through investments, tax planning, asset allocation, risk management, retirement planning and estate planning. Most of us approach our financial lives like the disorganized traveler who gets to his destination eventually and perhaps even enjoys the rough ride. We think we have a clear roadmap in mind, but our financial lives are marked by ad-hoc decisions and capitulation to the temptations of the flavors of the financial season.
One of the myths regarding financial planning is that only rich individuals and HNIs can undertake this. This perception exists because most players in the market target these people, as they are very profitable customers. However, anyone can use financial planning. In fact, individuals should use effective financial planning to build their wealth over the years.
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CHAPTER 10 CONCLUSION
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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. Feasibility of financial institutions can be studied by both financial feasibility and marketing feasibility.
Test of Hypothesis & Conclusion ? As it could be seen from the above research that investors are having low saving potential, growth of capital acts as a primary objective behind investments, investors taking financial decisions independently, high level of satisfaction from existing 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 hypothesis holds true that there exist a potential growth in the wealth management industry which represents huge prospects of financial advisors in the growing economy like India. ? To conclude, the above research substantiates both financial and marketing feasibility for the prospects of financial advisors in the Indian market.
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CHAPTER 11
Annexure
APPENDIX: QUESTIONNAIRE
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QUESTIONARE
on COMPARATIVE ANALYSIS OF VARIOUS FINANCIAL INSTITUTIONS IN THE MARKET
Occupation: ___________________________
Sex: ____________
Annual Income: ___________________________ City: _____________
1. What is your objective behind investments? (a) Safety of Capital (c) Beating Inflation (e) Liquidity (b) Retirement (d) Tax Minimization (f) Growth of Capital - Returns
(g) Others (please specify) ________________________________
2. Since when are you investing in financial instruments? (a) Less than 3 months (c) 6 months – 8 months (e) More than 12 months (b) 3 months – 6 months (d) 8 months – 12 months (f) Others (please specify) ____________
3. Do you plan your investments? (a) Yes (b) No, why_______________________
4. What is your practice on saving money? (a) I don‘t believe in saving. (b) I‘d like to save, but my expenses & financial commitments do not permit me. (c) I try to save whenever & wherever possible. (d) I always save some percentage of my take-home salary without exception. (e) Others (please specify) ________________________________
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5. How much thought have you given to saving for retirement? (a) Very little (c) A lot (b) Some (d) None
6. When do you prefer one should start planning for retirement? (a) Under 30 (c) 41 – 50 (b) 31 – 40 (d) Above 50
7. What do you feel is considered to be the ?fundamentally safe‘ form of investment? (a) Bank deposits (c) Postal deposits (e) Life insurance policies (g) Mutual funds (b) Property/Land (d) Gold (f) Government bonds (h) Equity/Shares
(i) Others (please specify) ________________________________
8. How do you take financial decisions? (a) Independently (c) Broker (e) Advise from a Bank (b) Advise from friends / relatives (d) Advise from a Chartered Accountant (f) Financial Advisors
(g) Others (please specify) ________________________________
9. Do you have any Insurance Policy? (a) Yes (b) No
10. If yes, why did you buy an Insurance Policy? (a) As a means of saving (c) For security against death
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(b) As a means of saving tax (d) Others (please specify) ___________
11. Are you aware about the concept of Financial Advisors? (a) Yes (b) No
12. Do you currently avail financial advisor services/private banking services? (a) Yes (b) No, why ____________________
13. If yes, from whom? (a) Citibank (c) Allegro Capital Advisors (e) HSBC Bank (g) Religare (b) HDFC Bank (d) Bajaj Capital (f) YES Bank (h) others (please specify) ____________
14. What are the products you are getting from your service provider? (a) Mutual Funds (c) Secondary Market (e) Insurance (g) Tax Planning (i) Administrative Services (k) Art/Paintings (b) Initial Public Offer (IPO) (d) Post Office Schemes/Debt (f) Real Estate/Property (h) Loans (j) Gold (l) Others (please specify) ____________
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BIBLIOGRAPHY
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The following companies and association‘s web sites were referred while collecting information used in the research.
1. Internet Source ?http://www.adityatrading.com ?http://www.yesbank.in ?http://www.citibank.co.in ?http://www.utibank.com ?http://www.hsbc.co.in ?http://www.religarewealthcare.com ?http://www.hdfcbank.com ?http://www.bajajcapital.com ?http://www.online.citibank.co.in
2. Material Source ? Aditya Trading Solutions Pvt Ltd ?
For more details please contact Esakki Rajeswaran.S E-mail id: [email protected] 100 | P a g e mobile no: +91-9840770106
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