Wealth Management Sector An Analysis Of Existing And Potential Market

Ankit kanungo (MBA-III SEM), In Partial Fulfillment for Degree of
Master of Business Administration during the year 2008-09




It is a matter of great satisfaction and pleasure to present this report on Analysis of Wealth Management taking Axis bank as basis. I take this opportunity to owe my thanks to all those involved in my training. This project report could not have been completed without the guidance of our COORDINATOR - MBA, Dr. SHEELA SRIVASTVA & project guide Dr. AMIT DIWIDI. Their timely help & encouragement helped me to complete this project successfully. I thank Mrs. VINEET AGRAWAL (VICE PRESIDENTHR) for giving me opportunity to work at AXiS BANK, as a FINANCE TRAINEE. I am thankful to Ms. PAMPA GHOSH (MANAGER – WEALTH MANAGEMENT) and MR. SAURABH TRIPATHI (DGM, WEALTH MANAGEMENT) for their encouragement and able guidance at every stage of my training work. I express my gratitude towards staff of WEALTH MANAGEMENT DEPARTMENT -AXIS BANK, those who have helped me directly or indirectly in completing the training.




(Manager) Wealth Management Department School

FACULTY Dr. Amit Diwidi
(Prof.) Amity Business







Page No

1 2 3 4 5 6

Executive Summary Objective & Scope of Project Company Profile Theoretical Background** Projections Bibliography


1. INTRODUCTION 2. CONCEPT OF WEALTH MANAGEMENT • Wealth Management Range • Key Elements of Wealth Management Services • Key Challenge Area 3 Solution Framework 4. Wealth Management – An Emerging Sector 5. Core Elements of Wealth Management • Packaged at various levels     Advisory Investment Processing (transaction oriented) Custody, Safekeeping and Asset Servicing End-to-end Investment Lifecycle Management Services

• Key function areas  Financial Planning


 Client Profiling  Investment Objective  Portfolio Strategy Definition / Asset Allocation  Defining Portfolio Strategies and Portfolio Modeling  Determination of Portfolio Constituents and Allocation of Assets

 Strategy Implementation  Portfolio Management  Portfolio Administration  Performance Evaluation and Analytics  Strategy Review and Alignment  Recalibration of Portfolio Strategy  Rebalancing, Reallocation and Divestment of Assets 6. Key Challenge Areas • • • • • • • • Highly Personalized and Customized Services. Personal relationship driving the business. Evolving Client Profile. Client Involvement Level. Passion Investment (Philanthropy and Social Responsibility). Limited Leveraging Capabilities of Technology (as an enabler). Technical Architecture and Technology Investment. Intricate Knowledge of Cross-functional Domain.


7. Solution Framework • • • • • • Quality of Service Level Universal Service Offering Investment in People Processes Price not a True Differentiator Unconventional Delivery Channel and Communication Flexibility of Technical Architecture


8. SERVICES PROVIDED BY WEALTH MANAGEMENT INSTITUTIONS • Custodian Services • Trust Services • Retirement Plan Services 9. ADVANTAGES AND LIMITATIONS 10. Consumer Point Of View : Wealth Management • PMS vs Wealth manager and fund manager. • Is PMS for you? • How to choose a PMS.

Investment philosophy.

• Scheme benchmarks. • Minimum investment.
• • •

Returns. Frequency of disclosure. Broking house.

• Cost structure.

• Assets under management (AUM).

11. CONCEPT OF ASSET CLASSES • Asset Mix • • List Of Different Asset Class  Fixed Deposits  Merits and Demerits  Interest rates on FDs


 Effective Return

       

Open-end fund Exchange-traded funds Equity funds Capitalization Bond funds Money market funds Funds of funds Hedge funds

Equity investment

 Direct holdings and pooled funds
Commodities Market  ART FUND

 Diversified portfolio  Tie-ups with galleries

REAL ESTATE FUND  Insurance Product  General Insurance  Unit Linked Insurance Plan (ULIP)  Structured Product

 Composition
 Risks 


 Factors influencing the gold price
 gold becomes desirable in times of


 Bank failures  Low or negative real interest rates  War, invasion, looting, crisis

Currency  Portfolio composition of currency



• Religare Wealth Management











• ICICI Wealth Management  INTRODUCTION  PRODUCTS  ASSET CLASSES USED  ASSET SIZE  INVESTMENT PHILSPOHY 13. AXIS BANK & WEALTH MANAGEMENT • Procedure for entertaining a client in AXIS BANK • Coustmer Profiling at Axis Bank     Upto 30 years of age 30-45 years of age 45-60 years of age over 60 years

• •

Position of India in Wealth Management Risk aversion of Indian customers






Axis Bank Wealth Management provides discretionary wealth management service, in which wealth managers give recommendations to customers and invest according to customer discretion. My Project is the study of Wealth Management Sector,An Analysis Of Existing And Potential Market.

The study was conducted at the main branch of AXIS BANK,CP,NEW DELHI. The project was of 6 weeks duration.
During the project I had taken the guidance of Wealth managers & staff to collect the data, & also made use of Company’s various reports. The data collected were then compiled, tabulated and analyzed. Apart from objectives, Some of the points which is considered in this topic to make project report more comprehend are :1. What a customer expects from a wealth management service provider. 2. Solution framework for wealth management. 3. Key Challenge Areas. 4. Core Elements of Wealth Management Services.


1) Through the past results, to identify the potential of wealth management sector. 2) Understanding company’s procedure in wealth management department. 3) To know the comparative position of the companies offering wealth management services. 4) To have a general notion on different asset classes available in financial market. 5) To have a conceptualized view on wealth mangagment services.


Axis 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 was promoted jointly by the Administrator of the specified undertaking of the Unit Trust of India (UTI - I), Life Insurance Corporation of India (LIC) and General Insurance Corporation of India (GIC) and other four PSU insurance companies, i.e. National Insurance Company Ltd., The New India Assurance Company Ltd., The Oriental Insurance Company Ltd. and United India Insurance Company Ltd. The Bank today is capitalized to the extent of Rs. 358.56 crores with the public holding (other than promoters) at 57.60%. The Bank’s Registered Office is at Ahmedabad and its Central Office is located at Mumbai. Presently, the Bank has a very wide network of more than 701 branch offices and Extension Counters. The Bank has a network of over 2854 ATMs providing 24 hrs a day banking convenience to its customers. This is one of the largest ATM networks in the country. 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.


Theoretical Background
The term Wealth management also now a days having very

importance. So many Banking companies are engaged in the business of Wealth management. The premier insurance industry is now booming because so many bankers are also adopting and playing safe in the business of insurance the term called is Bancassurance. Now a days Wealth Management has very craze in the business world. In a survey it was found that India had 100,000 miolliners day end of year 2006 is now grow up by 21% from a year earlier (Asia pacific Wealth report). Wealth management services area in financial sector has been witnessing more attention during last couple of years. Capgemini Merrill Lynch Wealth Report 2007 cites number of HNWIs globally to be around 9.5 million with wealth held by them totaling to US$37.2 trillion in year 2006. Value of wealth held by HNWIs represents an increase of around 11.4% since 2005. Considering long-term high value business proposition, number of banks and niche players has started offering full range of wealth management services targeted to HNWIs and emerging affluents. While growing volume of premium services to affluent clients becomes the key driver for most of the service provider firms, many unique elements inherent to wealth management services requires completely different service offering model than the existing model for transactional services. Greatly accustomed in offering commoditized financial services so far, demand of unconventional form of service model poses a big challenge in charting growth path for these wealth management firms.



The term Wealth management formed with two words Wealth & Management. The Meaning of Management They have already seen in the steering introduction. The meaning of Wealth is – Funds, Assets, investments and cash it means the term Wealth management deft with funds Asset, instrument, cash and any other item of similar nature. While defining Wealth Management They have to think in planned manner. “Wealth Management is an all inclusive set of strategies that aims to grow, manage, protect and distribute assets in a much planned systematic and integrated manner”.


The Indian market has been segmented by Wealth management service providers into five categories, namely:
• • • • •

Ultra-high net worth, or Ultra-HNW (in excess of US$30 million), will have a total population of 10,500 households by 2012. Super high net worth (between US$10 and $30 million) will have a total population of 42,000 households by 2012. High net worth (between US$1 million and $10 million) will have a total population of 320,000 by 2012. Super affluent (between US$125,000 and $1 million) will have a total population of 350,000 households by 2012. Mass affluent (between US$25,000 and $125,000) will have a total population of 1.8 million households by 2012.

Mass market (between US$5,000 and $25,000) will have a total population of 39 million households by 2012. The range of Wealth management can be expressed by this exhibit chart.






* Deposit based A/c

comfort * Comfort A/c with credit limit * Gold Card

* Premium A/c * Platinum Card




Liquidity Management (Cash Mgt)

* Credit cards * * * Money Near Overnight Market Money & money Fixed Market Income Fund A/c* * * Top Flagship portfolio* portfolio* * Top Flagship Titan * portfolio* portfolio* Overnight Near

* Platinum Card money Market A/c Fund Plus portfolio portfolio Fund* Money Market & Fixed Income Fund Money ZINS Top Flagship

* ZINS Plus * *

* Special Investments
Wealth Formation (Savings Plans)

* Titan portfolio

portfolio* Titan portfolio Absolute Holding Modular Individual and Wealth Wealth Premium Return Private Portfolio Equities Management Management Portfolio

* Capital formation benefit funds * *

Wealth Optimization (Lump Investment) sum

* *

* Titan Portfolio

Key Elements of Wealth Management Services Wealth management services involve fiduciary responsibilities in providing professional investment advice and investment management services to a client. Depending on the mandate of the services given to the Wealth Manager, wealth management services could be packaged at various levels: a) Advisory b) Investment Processing (transaction oriented) c) Custody, Safekeeping and Asset Servicing d) End-to-end Investment Lifecycle Management

Wealth management services comprises of following key function areas of:
(a) (b) Financial Planning Portfolio Strategy Definition/ Asset Allocation / Strategy Implementation


© (d)

Portfolio Management –Administration, Performance Evaluation and Analytics Strategy Review and Modification.



Key Challenge Area Wealth management firms face many challenges in formulating winning services offering meeting the client needs. Some of key challenges faced by wealth management firms are: 1. Highly Personalized and Customized Services 2. Personal relationship driving the business 3. Evolving Client Profile 4. Client Involvement Level 5. Passion Investment (Philanthropy and Social Responsibility) 6. Limited Leveraging Capabilities of Technology(as an enabler) 7. Technical Architecture and Technology Investment 8. Intricate Knowledge of Cross-functional Domain

Solution Frame work A HNWI client expects exclusiveness in services and key to success for a firm lies in offering exclusiveness in services delivery (high quality services on most personalized basis), going beyond client expectations. A solution framework with considered inclusion of following key elements would help firms in meeting and exceeding client needs towards sustainable business growth: 1. Quality of Service Level: Highly focused around client needs, a broad framework of service offering would be revolving around: Anticipate, Analyze, Advice, Act and Monitor cycle. 2. Universal Service Offering 3. Investment in People Processes 4. Price not a True Differentiator 5. Unconventional Delivery Channel and Communication 6. Flexibility of Technical Architecture: Against the background of lack of clarity on business model and involved process, A loosely oriented technical architecture with optionality and mix of Build – Buy – Integrate components would be considered as a good beginning point. To meet the information technology requirements, a firm has several alternatives (or combination of alternatives) to consider: • Integrated solution approach: Developing in-house applications to meet end-to-end new business requirements. • Service Bureau /ASP Model: Information technology service providers offering integrated end-to-end processing infrastructure and services including core of business processes of wealth management.


Stand-alone commercial software product/solutions: Pre-packaged solutions that can be focused to specific part of services or provide comprehensive end-to-end processing.


To provide enough resilience and high business relevance, any of the considered option and associated technical structure should keep due provisions for the following key elements: • Rule based processing to manage complex business rules and service definitions. • Client profile / data management to cater a profile driven solution offering. • Complex decision support and client oriented analytics. • Flexibility to incorporate manual processing interfaces in applications.


Wealth Management – An Emerging Sector

Wealth management services area in financial sector, hitherto used to be the preserve of some top multinational banks and financial firms- offering exclusive services to a select few, has been witnessing more attention during last couple of years. A booming economy, rising stock prices and an increase in income and spending power have brought sharp focus on this sector. With an increasing population of High Net worth Individuals (HNWIs)1, the unsaid tagline of earlier days “Don’t call us. We’ll call you (if you are that wealthy!)” seems to be completed altered in recent times. Considering long-term high value business proposition, number of banks, financial firms and niche players has started offering full range of wealth management services targeted to HNWIs and emerging affluents. As per recently published Capgemini Merrill Lynch Wealth Report 2007, number of HNWIs around the world and value of their assets has been continuously rising. Number of HNWIs globally is estimated to be around 9.5 million in year 2006, an increase of over 8.35% over previous year. HNWI wealth totals US$37.2 trillion, representing an increase of around 11.4% since 2005. As per report, number of HNWIs in India is increasingly growing – at a rate higher than other region of world. Number of HNWIs in India is estimated to be around 100,000 in year 2006 - an increase of over 20.5% over previous year. Though, in absolute terms the above number appears pretty miniscule (if we compare that with the number of retail investors in India2), however, in terms of value it really makes a really huge sum of serviceable investment3. While growing volume of premium services to affluent clients becomes the key driver for most of the service provider firms, many unique elements inherent to wealth management services requires completely different service offering model than the existing model for transactional services. To meet the client service expectations accurately, servicing model and framework has to be deeply oriented with high level of client satisfaction. It is not a surprise that many of successful firms in wealth management sector draw lessons from successful service leaders from hospitality, entertainment and retailing industries, to learn the trick of enhanced client satisfaction. Greatly accustomed in offering commoditized financial services so far, demand of unconventional form of service model poses a big challenge in charting growth path for these wealth management firms.


Core Elements of Wealth Management Services
In most basic sense, wealth management services involve fiduciary responsibilities investment in providing professional services to investment advice and funds management Institutions,

(Pension/mutual/Hedge), corporations, trusts as well as HNWIs. In the present context of our discussion,we would keep our focus limited to HNWIs. Some of analogous terms used for wealth management could be considered as Portfolio Management, Investment Management and many times Fund Management or Asset Management. •

Depending on the mandate of the services given to the Wealth Manager, wealth management services could be Packaged

at various levels

a) Advisory Wealth manger’s role is limited to the extent of providing guidance on investment / financial planning and tax advisory, based on client profile. Investment decisions are solely taken by the client, as per his /her own judgment. b) Investment Processing (transaction oriented) Client engages wealth manager to execute specific transaction or set of transactions. Investment planning, decision and further management remain vested with the client. c) Custody, Safekeeping and Asset Servicing Client is responsible for investment planning, decision and execution. Wealth manager is entrusted with management, administration and oversight of investment process. d) End-to-end Investment Lifecycle Management Wealth manager owns the whole gamut of investment planning, decision, execution and management, on behalf of the client. He is mandated to make financial planning, implement investment decisions and manage the investment


throughout its life .Wealth management services comprises of following Key a) b) c) d) e)

function areas : Financial Planning Portfolio Strategy Definition / Asset Allocation Strategy Implementation Portfolio Management Strategy Review and Alignment


Financial Planning
 Client Profiling

Client profiling takes in account multitude of behavioural, demographic and investment characteristics of a client that would determine each client’s wealth management requirements. Some of key characteristics to be evaluated for defining client’s investment objective are: • Current and future Income level • Family and life events • Risk appetite / tolerance • Taxability status • Investment horizon • Asset Preference /restriction • Cash flow expectations • Religious belief (non investment in sin sector like - alcohol, tobacco, gambling firms, or compliant with Sharia laws) • Behavioural History (Pattern of past investment decisions) • Level of client’s engagement in investment management (active / passive) • Present investment holding and asset mix


 Investment Objective Based on the client profile, investment expectations and financial goals of the client could be clearly outlined. Defining investment objectives helps to identify investment options to be considered for evaluation. Investment objective for most of the investors could be generally considered amongst the following: • Current Income • Growth (Capital Appreciation) • Tax Efficiency (Tax Harvesting) • Capital Preservation (often preferred by elderly people to make sure they don’t outlive their money.)

b)Portfolio Strategy Definition / Asset Allocation
Defining Portfolio Strategies and Portfolio Modeling

After establishing investment objectives, a broad framework for harnessing possible investment opportunities is formulated. This framework would factor for risk-return tradeoff of considered options, investment horizon and provide a clear blueprint for investment direction. Investment strategy helps in forming broad level envisioning of asset class (Securities, Forex, Commodity, Real State, Reference and Indices, Art/Antique and Lifestyle Assets (Car, Boat,Aircraft)), market, geography, sector and industry. Each of these asset classes is to be comprehensively evaluated for inclusion in portfolio model, in view of defined investment objectives. While defining the strategy, consideration of client preference or avoidance for specific asset class, risk tolerance, religious beliefs is the key element, which would come into picture. Thus, for a client with a belief of avoidance of investment in sin industries (alcohol, tobacco, gambling etc.) is to be duly taken care of. Likewise, for a client looking for Shariacompliant investment, strategy formulation should consider investment options meeting with the client expectations.

Determination of Portfolio Constituents and Allocation of Assets


Guided with the investment strategy, constituents in portfolio model are determined, which would directly and efficiently contribute towards client’s investment objectives. Thus, a broad level investment guidance of – “investment in fixed income in emerging market” would further determine classification within Fixed Income such as Govt. or corporate bonds, fixed or variable rate bonds, Long or short maturity bonds, Deep discounted or Par bonds, Asset backed or other debt variants. Return profile, risk sensitivity and co-relation of constituents within portfolio model would help to determine the size (weightage) of each individual constituent in the portfolio.

c) Strategy Implementation Having decided the portfolio constituents and its composition, transactions to acquire specific instruments and identified asset class is initiated. As acquisition cost would be having bearing on overall performance of the portfolio, many times process of asset acquisition may be spread over a period of time to take care of market movement and acquire the asset at favourable price range. d) Portfolio Management
Portfolio Administration

Portfolio Administration involves handling of investment processes and asset servicing. This would also require tax management, portfolio accounting, fee administration, client reporting, document management and general administration relating with portfolio and client. This function would involve back office administration and custodial services to manage transaction processes (trading and settlement) - interfacing with brokers/dealers/agents, Fund managers, Custodians, Cash Agent and many other market intermediaries.
Performance Evaluation and Analytics

Performance evaluation of the portfolio is an ongoing process. Portfolio return is continuously monitored and analyzed with respect to defined portfolio objectives. Analysis dimension could be varied – simple and complex. These may include absolute return, relative return (in comparison to chosen benchmark), trend, pattern, cost impact, tax impact, concentration, lost opportunity and other form of sensitivity and what-if analysis. Any deviation of portfolio performance observed during performance evaluation would lead to strategy review and any possible alignment of portfolio strategy.


e)Strategy Review and Alignment
Recalibration of Portfolio Strategy

Based on performance evaluation and future outlook of the investment, portfolio strategy is evaluated on periodic basis. To keep it aligned with the defined investment objectives, portfolio strategy is suitably re-calibrated from time to time. Many times, review of portfolio strategy would be necessitated due to change in client profile or expectations.
Rebalancing, Reallocation and Divestment of Assets

Any re-calibration of strategy and consequent change in portfolio model would require rebalancing of the assets in portfolio. This would be achieved through rebalancing the asset (divesting over-allocated part and acquiring under allocated), relocation (from one sector the other or from one instrument to other instrument in the same class) or complete divestment.


Key Challenge Areas

While immense business potentiality of this emerging sector is a driving point for most of the firms, they face many challenges in formulating winning services offering meeting the client needs. In the following section, we would briefly take a look on the key challenges area in the present context. • Highly Personalized and Customized Services Unlike other stream of financial services, mostly being transactional / commoditized in nature, wealth management services require client specific solution and service offering. No one solution exactly meets the needs of other client. In a situation of highly personalized and customized nature of service offering, developing any form of generic service model does not support growth of the business. • Personal relationship driving the business To meet client expectation of personal attention, mode of communication in wealth management services tends to be highly personalized. Thus, the conventional grids of communication, such as call centre, data centre does not fit well. Success of wealth management services heavily draws on personal interaction with the dedicated relationship manager, who takes care of whole investment management lifecycle for bunch of clients on one-to-one basis. This essentially requires service firm to invest heavily in human processes to groom and retain a team on competent relationship managers with cross functional skills. • Evolving Client Profile The biggest challenge in providing wealth management service offering is to factor and reckon the evolving nature of client profile, in terms of investment objective, time horizon, risk appetite and so on. Thus, a service model developed for a particular client cannot remain static over a period of time. Any service model has to be flexible enough to consider the dynamic nature of client profile and expectations arising out of it. • Client Involvement Level


The conventional adage – the more money you have, more effort is needed to manage it – proves to be otherwise in case of HNWIs. Generally, client involvement in managing the finance remains on the lower side. This brings onus of managing the whole gamut of investment and due performance single-handedly on the shoulders of investment manager.


Passion Investment (Philanthropy and Social Responsibility)

In the recent years a trend has been observed that bulk of investments by HNWIs has been directed towards passion investments (art, antique, jewellery, coins, unique assets, luxury), philanthropy and social/community causes. As per World Wealth report, 11% of HNW investors worldwide contributed to philanthropic causes with a contribution over 7% of their wealth in year 2006. Ultra-HNWIs contribution was even more - 17% of Ultra-HNW investors that gave to philanthropy contributed over 10% of their wealth. In total, this equates to more than US$285 billion globally. Against this backdrop, new breed of HNWIs expect to strategically manage the wealth and personal resources allocated to philanthropy purpose, in order to maximize its impact. This demands a relationship manager not just to be a passive financial advisor rather a passionate partner sharing interest and inclination of the associated client. • Limited Leveraging Capabilities of Technology (as an enabler) In the recent times, we have witnessed technology a key enabler to help business to expand its market reach with reduced cost of services offering. Online banking and online trading/brokerage services are the best examples in this regard. Technology leveraging has helped services firm to achieve universal proliferation of market with substantially reducing transaction cost. As business rules and service definitions to guide the applications tends to be quite composite in wealth management services, leveraging the capabilities of technology to meet the business requirement may not be highly feasible in the initial years. • Technical Architecture and Technology Investment As business architecture is still evolving, a proven basis of resilient technical architecture and framework to support the emerging business greatly remains missing. In absence of this framework, any investment commitment towards application development / system implementation would be fraught with severe risk. • Intricate Knowledge of Cross-functional Domain By very nature of wealth management, it not just involves matters of plain vanilla finance but has intricate relationship with many elements of domestic / international law, taxation and regulatory norms. In order to provide sound investment


guidance, a relationship manager is required to have intricate knowledge of domestic/cross-border finance, accounting, legal and taxation subjects.


Solution Framework

Generic services offering model is going to draw big blank in case of wealth management services. A HNWI client expects exclusiveness in services in a normal manner. In highly competitive market, key to success for a firm lies in offering exclusiveness in services delivery (high quality services on most personalized basis), going beyond the client expectations. A solution framework with considered inclusion of following key elements would help firms in meeting and exceeding client needs towards sustainable business growth. • Quality of Service Level Quality of service level provided by the service provider firm would the key determinant of growth and success in client acquisition, client satisfaction and client retention aspects. In a sense, service offering could be developed in the form of partnership with the client based on trust and integrity, where the relationship manager remains highly responsive to client sensitivities and expectations. Without over-emphasizing, a satisfied client would provide multitude of opportunities of growth of business – through deepening the relationship, direct / indirect referencing as well as cross selling of products. In the other situation of deficiency in service level, he would not hesitate to move the business to another firm. This keeps strong emphasis on continued engagement with the client on the aspects of client expectation and servicing, rather than showing extra attention only during the period of client acquisition. Focused around client needs, a broad framework of service offering during whole lifecycle of client investment management would be revolving around: Anticipate, Analyze, Advice, Act and Monitor cycle.



Universal Service Offering

To meet the client needs in holistic manner, product and service offering range of the firm should be wide enough to cover the investment spectrum across its lifecycle. In an ideal situation, a client would expect to deal with a single firm to get complete range of investment management services. However, for various business considerations of the service provider firm, in many situations it may not be a viable proposition to offer those services. While universal service offering with assortment of services under single umbrella is not attainable in house, it could be achieved through active partnership and affiliation. But, due consideration is required that quality of service level provided by partners/affiliates does not get compromised in any manner. Any shortcoming in service quality, even if caused by partner/affiliate’s services, would be ultimately impairing client satisfaction towards the firm. • Investment in People Processes As relationship manager remains the face of the firm to a client, success of the firm would be greatly dependent on the skills, drive and enthusiasm of relationship managers (to take an extra mile), while bonding and dealing with any of client issues. This aspect is more challenging than as it appears. This necessitates transformation of organizational philosophy towards its people and people processes contributing to business success. Firms would be required to invest heavily in human processes to attract, groom and retain a motivated team of relationship managers, who will make the real difference between winning and losing the game. • Price not a True Differentiator Pricing as a key differentiator to distinct the service offering from one firm to other may not be highly relevant in case of wealth management services. Focused on performance and quality of service, pricing in isolation will not make much meaning to service seeking clients. Client would always value the pricing from the quality of services received. He will certainly not mind paying extra, if he finds services offered to him meeting and exceeding his expectations. • Unconventional Delivery Channel and Communication Delivery channel for service content and mode of communication has to be greatly customized – aligned with the client-desired vehicles. This would require a process of


continuous re-inventing and re-defining the grid of delivery and communication channels to meet client expectations. Impact of technological advancements and its interplay on service delivery and communication method would certainly be an equally challenging aspect to be factored in, while designing such strategies.


Flexibility of Technical Architecture

While business potential appears to be quite high, existing business architecture still does not provide any sound basis to formulate technical roadmap. Added to that, dynamic characteristics of client profile bring an increased challenge in drawing a firm implementation blueprint. In the given situation, any big-bang commitment towards technical implementation plan would not be a wise idea. A prudent approach would be to get started on modular basis with progressive integration of functional components in order of its functional significance. Gaining insight and confidence around the business processes, this could be gradually scaled over the period of time. To meet the information technology requirements, a firm has several alternatives (or combination of alternatives) to consider: a) Integrated solution approach: Developing in-house applications to meet end-to-end new business requirements. These applications are based on existing technology architecture of the firm and are closely integrated with the existing service models. It would be a least preferred choice in the current situation, on count of cost, time, lack of clarity and complexity of solution. b) Service Bureau /ASP Model: A recent trend has been witnessed in the solution provider’s landscape. Many of information techno service providers have come out with novel solution for investment management / investment processing platform in the form of service bureau / ASP. This platform provides integrated end-to-end processing infrastructure and services including core of business processes of wealth management. On the part of a wealth management firm, paying agreed charges to service bureau provider, option of service bureau completely eliminates the requirement of ongoing resource commitment and cost of maintaining information technology infrastructure. While total cost of owning may be the key motivating point for a wealth management firm to adopt service bureau model, the key consideration of providing high quality of service level with enhanced responsiveness may not be adequately answered. c) Stand-alone commercial software product/solutions: Prepackaged solutions that can be focused to specific part of services or provide comprehensive end-to-end processing. These can be


deployed independently or could be integrated with existing systems. Cost, customization and integration difficulties would be the challenging points. A loosely oriented technical architecture with optionality and mix of Build – Buy – Integrate components would be considered as a good beginning point. To provide enough resilience and high business relevance, any of the considered option and associated structure should keep due provisions for the following key elements: • Considering the complexity of business processes and involved business rules, rule based processing would be the core of processing. • Client profile acquires many new dimensions with plethora of attributes. Client data is required to be appropriately managed (aggregate / segregate) to build a profile driven solution offering. • Decision support and client oriented analytics acquire more importance. • Applications should provide adequate flexibility to incorporate manual processing interfaces.



Custodian Services

(A) Securities Safekeeping (B) Income collection from Securities (C) Settlement of Securities trades as directed (D) Payment of fund when directed (E) Timely settlement delivery

(2) Trust Services
(A) Charitable Trust (B) Revocable Trust (C) Irrevocable life Insurance Trust (D) Special Need Trust (E) Institutional Trust

(3) Retirement Plan Services
(A) IRA’s Custodian Or Trustee (B) Defined Benefit Plans (C) Defined Contribution Plans




Wealth Management Practice Orientation Overview

• •

Product Expert: Handles high-volume transactions involving sophisticated products or asset classes, such as foreign exchange derivatives. Investment Broker: Handles transactions involving basic asset classes, such as equities, fixed income and options.

Investment Managers:

• •

Investment Advisor: Offers strategic investment planning, as well as playing a handson role in constructing, reviewing and rebalancing client portfolios. Relationship Manager: Establishes and nurtures client relationships, delegating portfolio management to internal or external managers.

Wealth Planners:

• •

Wealth Planner: Offers holistic advice in accordance with client’s finances and short/long-term goals, such as real estate, retirement and generational wealth transfer. Personal CFO: Aspires to provide quasi family-office services, often acting in a lead discretionary role coordinating with the client’s other trusted advisors.


The significance of these practice-model categories is that each reflects a different advisory approach, borne of a different perspective. While some firms claim to have a single practice orientation, many actually use multiple models in and across regions—and often leverage different models within their core markets to capitalize on the strengths of individual advisors. As they move into new markets, firms can create or exacerbate friction among the different advisory approaches they use. Importantly, practice orientations need not be mutually exclusive, but the mix of intra-firm practice models does need to be consciously managed.


The following are the advantages of

Wealth management concept.
1) Helpful In Tax Planning : The Wealth management

professional always shows the good path to the customers and provide the service of tax planning. How to minimize the tax and save more money? 2) Helpful In Selection of Investment Strategy: Another

advantage from the customer point of view is with the help of WM Professional the customer can easily know the investment strategy and analyze risk and return. 3) Helpful In Estate Management: With the help of Wealth

management professional They can also manage their estate. Estate management is a task to provide objective administration of their funds tailored to aim in responsible distribution and protection of their overall estate. 4) Helpful in forward looking: They can say planning, that

recognizes as Their estate grows and changes occurs They require some team of professionals who help us in future planning.



Helpful for Indian Economy: Banks which are engaged in business of WM earning revenues from the foreign countries i.e. outsourcing for economy


1. WM Reduces The Scope Of Management: Though They all know that management has existence at all levels of life and society but the term Wealth management only related with the higher level means rich people, and is not having any plans and provisions for poor and lower and middle level of society. 2. Chances of Fraud: Another demerit or limitation of the WM

concept is it is not showing the actual position. The customer doesn’t know about the things going on with using his Wealth and there may be chances of forgery and fraud with customers. 3. Actual Picture VS Inflation: What is the actual position of market they don’t know because every thing is done by some WM professionals. So they can not assume Their position in the market that also results in inflation because economy is unknown about the actual state. There may be chance that the customers are in risk but they are showing the false return and vice-versa.


Consumer Point Of View : Wealth Management
Technically, PMS can be defined as hybrid service provided by portfolio managers, which includes customised stock and mutual fund investing. Portfolio managers can be of two kinds, discretionary or non-discretionary. Discretionary portfolio managers manage the funds of clients independently on their own accord, while the latter manage the funds according to their clients’ direction. Any person who is registered with Securities and Exchange Board of India (Sebi) as a portfolio manager is allowed to offer PMS. A list of these entities can be found at

PMS vs Wealth manager and fund manager.
PMS is completely different from priority banking and Wealth management. Priority banking or Wealth management is the umbrella of products while PMS is a product. So if priority banking and Wealth management is a grocery shop then PMS is a specific grocery. Priority banking is usually offered to premiere customers who have a relationship manager appointed, who would advice you on your investments across the products offered by the bank like insurance, and investment linked products (mutual funds, bonds and unit linked insurance plan). Mutual funds and PMS differ on the degree of customization, minimum investment and on the fee structure. Minimum investment required for PMS is more than mutual fund. Unlike PMS, there is no concept of profit sharing in mutual funds. Also, the level of customization of your investments is higher in PMS.

Is PMS for you?
PMS is for those people who don’t have the time or the expertise to do enough research to take informed investment decisions. If you have the required time and expertise, then you don’t need these services. Also, SEBI has prescribed a minimum of Rs 5 lakh investment for PMS, which means the service is not for small and medium investors. Risks involved. Though PMS is a good option for managing your Wealth, it is not entirely without risk or pain. B.D. Sabu, executive director, Pylon Engineers (India), had opted for Kotak’s PMS services. “Though the relationship manager told me about the commissions and brokerage fees, he did no promise any cut-off or absolute number when asked about returns. The market was moving up when I invested and my money grew to about one and half times. But when the market


tumbled suddenly, my earnings fell substantially.” He adds, “The company churned the portfolio frequently, which gave them two-way profit on each transaction, as brokerage and profit sharing.” Sabu now feels it is better to understand the market and invest on your own. He withdrew his investments after 14 months, even though he got returns of 25 per cent. Outlook Money tried unsuccessfully to get a response from Kotak Securities on this episode.

How to choose a PMS
Investment philosophy.
Akhilesh Singh, business head, Emkay Wealth, says, “The most important factor is to understand the fund manager’s investment philosophy and strategy, which must align with the investor’s objectives.” Singh adds, “Some portfolio managers structure long-term portfolios, while some prefer to actively churn the portfolio for higher short-term returns, which adds to the overall cost and tax liability.” HSBC, for instance, has a product called Strategic, which is for the long term, while Angel’s Bluechip is for medium to longterm investors. Scheme benchmarks. Make sure that the portfolio is benchmarked to an appropriate index. This helps measure the performance of the scheme and the portfolio manager. Benchmarks are important also as profit-sharing is linked to the performance of the portfolio above the benchmark. So, an aggressive portfolio benchmarked to a low-return index will mean higher over-the-benchmark returns. This means that you will have to share a larger portion of your profit. The wrong benchmark distorts the performance of the fund. Minimum investment.There are many portfolio managers whose thresholds are much higher than the Sebimandated minimum of Rs 5 lakh. Choose a scheme that fits the size of your portfolio. Returns. It is difficult to judge a scheme’s performance based on returns, as it may vary from the returns of an investor. Also, depending on the time of entry, an investor’s returns may vary from that of others. Before signing the contract, make sure your portfolio manager has a fair record of surpassing the returns from the benchmark index for numerous years. I.V. Subramaniam, CEO and chief investment officer, Quantum Advisors, says: “The performance should be judged over long periods of time during both high and low market levels. There should not be any survivor bias. This happens when an investor withdraws a portfolio due to bad performance, or a


portfolio manager removes a portfolio to show the performance numbers of only good portfolios.”

Cost structure.
Portfolio managers usually have two kinds of charges— management fee, which is fixed, and profit sharing, which is variable. You can also pay a fully fixed fee. Further, if the portfolio is churned frequently, it adds to the cost due to higher tax and brokerage. On each transaction you pay brokerage and short-term gains tax of 20 per cent. Management fee ranges from scheme to scheme. You could opt for a higher performance-linked charge as it puts pressure on the fund manager to perform better as he has a share in the profits.

Frequency of disclosure.
This varies from firm to firm, and largely depends on the agreement between the investor and the company. Most NAVs are disclosed daily, but you can opt for a company that also discloses portfolios daily. Broking house. If the broker is internal, it may be possible that your portfolio is churned frequently. Usually, asset management companies have external brokers, while some, such as Religare, have both external as Well as internal broking. Assets under management (AUM).Though higher AUMs do not guarantee higher returns, it remains an important factor. A low AUM could be an indicator of poor performance. They believe that Rs 100 core AUM is a healthy floor.

Asset mix is the allocation of a portfolio between asset classes, it balances return and risk. Returns are a combination of the income from an investment and the price appreciation over the period. Risk is usually proxied by the “standard deviation” of returns, how much the return changes about the long-term average. List Of Different Asset Class 1. Fixed deposit


2. Mutual Fund 3. Equity 4 Commodities 5. Art Fund 6. Real-Estate Fund 7. Insurance product 8. Structured product 9. Gold 10.Currency 11.Oil

Fixed Deposits FDs, are the most popular today. With FDs you deposit a lump sum of money for a fixed period ranging from a few weeks to a few years and earn a pre-determined rate of interest. FDs are offered by both banks and companies though putting your money with the latter is generally considered riskier. Merits and Demerits The main advantage is that FDs from reputed banks are a very safe investment because such banks are carefully regulated by the Reserve Bank of India, RBI, the banking regulator in India. Note that company FDs isn’t as safe as bank FDs because if the company goes bankrupt you may lose your money. Make sure you check the credit rating of a company before investing in its FDs. You should be especially wary of companies which offer interest rates significantly higher than the average to attract your money. The other advantage of FDs is that you have the option of receiving regular income through the interest payments that are made every


month or quarter. This option is especially useful for retirees.On the flip side, a fixed deposit won’t give you the same returns that you may get in the stock markets. For instance a stock-portfolio may rise 20-30 per cent in a good year whereas a fixed deposit typically earns only 710 per cent. A fixed deposit also doesn’t offer protection against inflation. If inflation rises steeply during the maturity of the FD your inflation adjusted return will fall. The rate of interest on FDs varies according to the maturity with longer deposits generally earning a higher interest rate. Interest paid on a fixed deposit is paid either monthly or quarterly according to the investor’s choice. So if you invest Rs 3 lakhs in a one year fixed deposit which pays 8 per cent you can earn Rs 2,000 of interest every month or Rs 6,000 of interest every quarter.

Interest rates on FDs
The rate of interest on FDs varies according to the maturity with longer deposits generally earning a higher interest rate. Here are the interest rates offered by ICICI Bank on their FDs. Note that FDs vary quite a bit from bank to bank so you should search around before investing. Interest paid on a fixed deposit is paid either monthly or quarterly according to the investor’s choice. So if you invest Rs 3 lakhs in a one year fixed deposit which pays 8 per cent you can earn Rs 2,000 of interest every month or Rs 6,000 of interest every quarter.

Effective Return


Before you invest in FDs you need to understand the concept of effective return which is higher than the rate of interest on the FD. Effective return is relevant if you choose to reinvest your interest every year which means that you will be earning compound interest.



A mutual fund is a professionally managed firm of collective

investments that collects money from many investors and puts it in


stocks, bonds, short-term money market instruments, and/or other securities.[1] The fund manager, also known as portfolio manager, invests and trades the fund’s underlying securities, realizing capital gains or losses and passing any proceeds to the individual investors. Currently, the worldwide value of all mutual funds totals more than $26 trillion.

Since 1940, there have been three basic types of investment companies in the United States: open-end funds, also known in the US as mutual funds; unit investment trusts (UITs); and closed-end funds. Similar funds also operate in Canada. However, in the rest of the world, mutual fund is used as a generic term for various types of collective investment vehicles, such as unit trusts, open-ended investment (UCITS). companies (OEICs), unitized insurance funds, and undertakings for collective investments in transferable securities

Types of mutual funds
Open-end fund The term mutual fund is the common name for what is classified as an open-end investment company by the SEC. Being open-ended means that, at the end of every day, the fund issues new shares to investors and buys back shares from investors wishing to leave the fund. Mutual funds must be structured as corporations or trusts, such as business trusts, and any corporation or trust will be classified by the SEC as an investment company if it issues securities and primarily invest in non-government securities. An investment company will be classified by the SEC as an open-end investment company if they do


not issue undivided interests in specified securities (the defining characteristic of unit investment trusts or UITs) and if they issue redeemable securities. Registered investment companies that are not UITs or open-end investment companies are closed-end funds. Neither UITs nor closed-end funds are mutual funds (as that term is used in the US).

Exchange-traded funds
A relatively recent innovation, the exchange-traded fund or ETF, is often structured as an open-end investment company. ETFs combine characteristics of both mutual funds and closed-end funds. ETFs are traded throughout the day on a stock exchange, just like closed-end funds, but at prices generally approximating the ETF’s net asset value. Most ETFs are index funds and track stock market indexes. Shares are issued or redeemed by institutional investors in large blocks (typically of 50,000). Most investors purchase and sell shares through brokers in market transactions. Because the institutional investors normally purchase and redeem in in kind transactions, ETFs are more efficient than traditional mutual funds (which are continuously issuing and redeeming securities and, to effect such transactions, continually buying and selling securities and maintaining liquidity positions) and therefore tend to have loTheyr expenses.

Equity funds
Equity funds, which consist mainly of stock investments, are the most common type of mutual fund. Equity funds hold 50 percent of all amounts invested in mutual funds in the United States.Often equity funds focus investments on particular strategies and certain types of issuers.


• Capitalization
Fund managers and other investment professionals have varying definitions of mid-cap, and large-cap ranges. The following ranges are used by Russell Indexes: [7]
• • • •

Russell Microcap Index - micro-cap ($54.8 - 539.5 million) Russell 2000 Index - small-cap ($182.6 million - 1.8 billion) Russell Midcap Index - mid-cap ($1.8 - 13.7 billion) Russell 1000 Index - large-cap ($1.8 - 386.9 billion)

Bond funds
Bond funds account for 18% of mutual fund asse Types of bond funds include term funds, which have a fixed set of time (short-, medium-, or long-term) before they mature. Municipal bond funds generally have loTheyr returns, but have tax advantages and loTheyr risk. High-yield bond funds invest in corporate bonds, including high-yield or junk bonds. With the potential for high yield, these bonds also come with greater risk.

Money market funds
Money market funds hold 26% of mutual fund assets in the United States. Money market funds entail the least risk, as Well as loTheyr rates of return. Unlike certificates of deposit (CDs), money market shares are liquid and redeemable at any time. The interest rate quoted by money market funds is known as the 7 Day SEC Yield.

Funds of funds


Are mutual funds which invest in other underlying mutual funds (i.e., they are funds comprised of other funds). The funds at the underlying level are typically funds which an investor can invest in individually. A fund of funds will typically charge a management fee which is smaller than that of a normal fund because it is considered a fee charged for asset allocation services. The fees charged at the underlying fund level do not pass through the statement of operations, but are usually disclosed in the fund’s annual report, prospectus, or statement of additional information. The fund should be evaluated on the combination of the fund-level expenses and underlying fund expenses, as these both reduce the return to the investor. Most FoFs invest in affiliated funds (i.e., mutual funds managed by the same advisor), although some invest in funds managed by other (unaffiliated) advisors. The cost associated with investing in an unaffiliated underlying fund is most often higher than investing in an affiliated underlying because of the investment management research involved in investing in fund advised by a different advisor. Recently, FoFs have been classified into those that are actively managed (in which the investment advisor reallocates frequently among the underlying funds in order to adjust to changing market conditions) and those that are passively managed (the investment advisor allocates assets on the basis of on an allocation model which is rebalanced on a regular basis). The design of FoFs is structured in such a way as to provide a ready mix of mutual funds for investors who are unable to or unwilling to determine their own asset allocation model. Fund companies such as TIAA-CREF, American Century Investments, Vanguard, and Fidelity have also entered this market to provide investors with these options and take the “guess work” out of selecting funds. The allocation mixes


usually vary by the time the investor would like to retire: 2020, 2030, 2050, etc. The more distant the target retirement date, the more aggressive the asset mix.

Hedge funds
Hedge funds in the United States are pooled investment funds with loose SEC regulation and should not be confused with mutual funds. Some hedge fund managers are required to register with SEC as investment advisers under the Investment Advisers Act. The Act does not require an adviser to follow or avoid any particular investment strategies, nor does it require or prohibit specific investments. Hedge funds typically charge a management fee of 1% or more, plus a “performance fee” of 20% of the hedge fund’s profits. There may be a “lock-up” period, during which an investor cannot cash in shares. A variation of the hedge strategy is the 130-30 fund for individual investors.

Latest Asset Under Management for all Mutual Fund houses, sales & redemption figures..
Amount in Rs. Crores


Mutual Fund Name




Asset Under Management
As on Corpus As on Corpus Net inc/dec in


ABN AMRO Mutual 368 Fund 926.894 AIG Investment Mutual Fund -932.63 Benchmark Fund -656.276 Birla Mutual Fund -3980.64 BOB Mutual Fund -10.968 Canara Mutual Fund -208.72 DBS Fund 149.42 Deutsche Fund 744 DSP Merrill Lynch 226 Mutual 199 Chola Mutual 78 Robeco 59 22 348 Mutual 12 Global 54 Group

Jun 2008

30, 6,993.19

May 2008

31, 6,066.30

Jun 2008

30, 3,206.23

May 2008

31, 4,138.86

Feb 2008

29, 4,954.72

Jan 2008

31, 5,611.00

Jun 2008

30, 37,446.00 May 2008

31, 41,426.64

Jun 2008

30, 53.86

May 2008

31, 64.83

Jun 2008

30, 3,913.65

May 2008

30, 4,122.37

Jun 2008

30, 2,249.56

May 2008

30, 2,100.14

Apr 2008

30, 12,740.00 Mar 2008

31, 11,996.00

Feb 2008

29, 19,940.40 Jan 2008

31, 19,136.00

Mutual Fund 804.396 Escorts Mutual Fund 26.491 Fidelity Mutual Fund -1044.72 Franklin -3802.607 Templeton 241 39 38

Mar 2008

31, 173.42

Feb 2008

29, 146.93

May 2008

31, 7,898.64

Apr 2008

30, 8,943.36

Mar 2008

31, 25,621.97 Feb 2008

29, 29,424.58



* indicates currently in operation

Amount in Rs. Crores

No. of new schemes Category launched during month
New Existing Total Total as on as 2008 on Inflow/ schemes schemes May 31 Apr 30 , Outflow , 2008



Asset Management




Bank Sponsored

0 4

0 1328

63987 23914

63987 25242

56330 19680

90719 18649

86736 16136

3983 2513

C Institutions

Private Sector & Joint Venture : Indian Predominantly D Foreign Predominantly Indian Grand (B+C+D) Total 12 8 16 40 2832 1105 3979 9244 145600 51912 123265 408678 148432 154833 53017 53263 190170 172571 17599 73525 82697 -9172

127244 126730 417922 410836

192744 180667 12077 565807 538807 27000




Equity investment
Generally refers to the buying and holding of shares of stock on a stock market by individuals and funds in anticipation of income from dividends and capital gain as the value of the stock rises. It also sometimes refers to the acquisition of equity (ownership) participation in a private (unlisted) company or a startup (a company being created or newly created). When the investment is in infant companies, it is referred to as venture capital investing and is generally understood to be higher risk than investment in listed going-concern situations. Direct holdings and pooled funds The equities held by private individuals are often held via mutual funds or other forms of pooled investment vehicle, many of which have quoted prices that are listed in financial newspapers or magazines; the mutual funds are typically managed by prominent fund management firms (e.g. Fidelity Investments or The Vanguard Group). Such holdings allow individual investors to obtain the diversification of the fund(s) and to obtain the skill of the professional fund managers in charge of the fund(s). An alternative, usually employed by large private investors and pension funds, is to hold shares directly;in the institutional environment many clients that own portfolios have what are called segregated funds as opposed to, or in addition to, the pooled e.g. mutual fund alternative.


Commodities Market


Commodity markets are markets where raw or primary products are exchanged. These raw commodities are traded on regulated commodities exchanges, in which they are bought and sold in standardized contracts. This article focuses on the history and current debates regarding global commodity markets. It covers physical product (food, metals, electricity) markets but not the ways that services, including those of governments, nor investment, nor debt, can be seen as a commodity. Articles on reinsurance markets, stock markets, bond markets and currency markets cover those concerns separately and in more depth. One focus of this article is the relationship between simple commodity money and the more complex instruments offered in the commodity markets.

Wealth management now includes art, real estate investments. WITH prices of paintings rising 10 times in the last two years, three new financial entities have launched ‘art advisory’ services as part of Wealth management services. While Citibank has been providing art advisory services like art insurance, art storage and using art as a tradable collateral for some time, the recent surge in prices has driven Yes Bank, ABN Amro and Dawnay Day to start this service. The works of M.F. Hussain, Jatin Das or Anjolie Ela Menon are sought after by art lovers not only for their aesthethic value but also as an asset. Art galleries are involved in art valuations, i.e. mapping the pricing history of an artist or research on art.


Art is now being treated as an investment and high net worth individuals are prompting banks to look at alternative asset classes, such as art or real estate, for investment as a part of Wealth management products.

Diversified portfolio
Individuals looking at alternative investments rather than the usual investments in equity-related products. “Investments in alternative asset classes give clients a diversified portfolio across a variety of asset classes,” Yes Bank is expected to launch a Wealth management service that will offer investment in real estate, art and jeWellery. It expects to kickstart the real estate service during this fiscal. “The bank is planning tie-ups with real estate consultant agencies. The service will largely cater to non-resident Indians seeking opportunities to invest in real estate in the country,”.

Tie-ups with galleries
In the art segment, tie-up with art galleries. “Contemporary Indian art will be at focus. The hiring specialists in the field for advisory,” High networth individuals in India are increasingly looking at contemporary Indian art as a good investment. With the advent of private art funds and galleries, art is becoming an emerging asset class. ABN Amro advises clients on investment in art. However, the execution depends on the client in conjunction with experts in the field.


It is difficult to generalise. The majority of clients begin with an investment of around 4-5 per cent of their portfolio,” targets customers with Rs 2-2.5 crore threshold for investment. According to the banks, some clients also invest in these asset classes to minimise risk because they are looking at protecting their capital. Investment in these asset classes requires a review of client’s age, personal ability to take risk and most importantly, client’s interest. What percentage of assets would be allocated to alternative assets would depend on the client’s interest and ability to take risk.

India Real Estate Fund is a significant component of the Indian realty market flooded with Indian and foreign financial institutions. The growing increase in the industrial, commercial and residential projects have boosted the real estate market in India. This has thrown open unlimited scope for the incoming of the India Real Estate Funds. The profits have encouraged financial assistance from not only domestic funds but also lured many foreign investors to participate in the India Real Estate Fund. The cooperating assistance from the government has further

encouraged liquidity flow into the India real estate market sector. The foreign contributions in the India Real Estate Fund have been witnessing a steady rise of 40%-45% per year. The domestic financial institutions have also build up their investments like their foreign counterparts. This combined participations from both along with contributions of the corporate houses has accelerated the growth of India Real Estate Fund.


Leading India Real Estate Fund:
Some of the leading India Real Estate Fund are : 1. HDFC Property Fund- HDFC India Real Estate Fund (HI-REF), the first scheme HDFC Property Fund, invest in all the stages of the real estate projects. 2. DHFL Venture Capital FundDHFL Venture Capital Fund,

promoted by Dewan Housing, has a focus on developing properties rather than investing in real estate. 3. Kshitij Venture Capital Fund - Kshitij Venture Capital Fund, a group venture of Pantaloon Retail India Ltd., will be deploying funds exclusively in developing malls specially in western and southern India. 4. 5. • India Advantage Fund (ICICI) Kotak Mahindra Realty Fund India Real Estate Mutual Fund:

The further involvement of the real estate mutual funds have improved the quality of the construction practices. The 10th Five-Year Plan has proposed that Securities and Exchange Board of India would regulate the India real estate mutual funds.


Real Estate Investment Trusts:

The primary difference between Real Estate Investment Trusts and a mutual fund is that investments made in the former are traded in real estate stocks and not invested in company stocks moreover they provides a heavier liquidity than the mutual funds. • India Real Estate Foreign Funds-

The significant international investments in the India Real Estate Fund are like: 1.Warburg Pincus 2.Blackstone Group 3.Broadstreet 4.Morgan Stanley Real Estate Fund 5.Columbia Endowment Fund 6.Hines 7.Tishman Speyer 8.Sam Zell’s Equity International


Insurance Product


The modern concept of insurance practices in India started during the British rule in 1818 when Oriental Life Insurance Company was established in Calcutta. India became independent from British rule in 1946, and by 1956 the insurance sector was nationalized, with the Life Insurance Corporation of India created by combining almost 245 private life insurance companies; 107 private non-life companies combined in 1973 to form the General Insurance Corporation. But since the very purpose of nationalizing the insurance sector got sidelined due to the monopolistic power it enjoyed, coupled with the bureaucratic mindset of LIC and GIC, insurance again was opened to private players in 1999. During 2000-2006, almost 15 life and 13 nonlife private insurance players (mostly joint ventures between Indian and foreign players) started operations in India, indicating the willingness of foreign institutional investors to enter the Indian insurance sector. But through all these major changes the actual impact was felt only in major urban areas, while the vast majority of the rural population was excluded from the insurance sector. Around the world, scholars and financial experts believe that in the next 5 to 10 years, India and China are going to be the targets for insurance companies. So far, most of the insurance companies in India are not actively tapping the huge potential of the rural markets. Unless the rural markets are given priority consideration, all predictions about future insurance industry potential in India are going to be distant dreams. The present insurance business is not even able to penetrate 20%?30% of the total population of 1.095 billion, and the projected population figure by 2025 will be approximately 1.501 billion. The order of the day will be to refocus on micro insurance in India to capture the huge potential of rural customers Unit Linked Insurance Plan (ULIP) provides for life insurance where the policy value at any time varies according to the value of the underlying assets at the time.


ULIP is life insurance solution that provides for the benefits of protection and flexibility in investment. The investment is denoted as units and is represented by the value that it has attained called as Net Asset Value (NAV). ULIP came into play in the 1960s and is popular in many countries in the world. The reason that is attributed to the wide spread popularity of ULIP is because of the transparency and the flexibility which it offers. As times progressed the plans Theyre also successfully mapped along with life insurance need to retirement planning. In today’s times, ULIP provides solutions for insurance planning, financial needs, financial planning for children’s marriage planning also can be done with this.

Structured Product
A structured product is generally a pre-packaged investment strategy which is based on derivatives, such as a single security, a basket of securities, options, indices, commodities, debt issuances and/or foreign currencies, and to a lesser extent, swaps. The variety of products just described is demonstrative of the fact that there is no single, uniform definition of a structured product. A feature of some structured products is a “principal guarantee” function which offers protection of principal if held to maturity. For example, an investor invests 100 dollars, the issuer simply invests in a risk free bond which has sufficient interest to grow to 100 after the 5 year period. This bond might cost 80 dollars today and after 5 years it will grow to 100 dollars. With the leftover funds the issuer purchases the options and swaps needed to perform whatever the investment strategy is. Theoretically an investor can just do this themselves, but the costs and


transaction volume requirements of many options and swaps are beyond many individual investors. As such, structured products were created to meet specific needs that cannot be met from the standardized financial instruments available in the markets. Structured products can be used as an alternative to a direct investment, as part of the asset allocation process to reduce risk exposure of a portfolio, or to utilize the current market trend. Composition Structured products are usually issued by investment banks or affiliates thereof. They have a fixed maturity, and have two components: a note and a derivative. The derivative component is often an option. The note provides for periodic interest payments to the investor at a predetermined rate, and the derivative component provides for the payment at maturity. Some products use the derivative component as a put option written by the investor that gives the buyer of the put option the right to sell to the investor the security or securities at a predetermined price. Other products use the derivative component to provide for a call option written by the investor that gives the buyer of the call option the right to buy the security or securities from the investor at a predetermined price.


Risks The risks associated with many structured products, especially those products that present risks of loss of principal due to market movements, are similar to those risks involved with options. The potential for serious risks involved with options trading are wellestablished, and as a result of those risks customers must be explicitly approved for options trading.

Factors influencing the gold price Today, like all investments and commodities, the price of gold is ultimately driven by supply and demand, including hoarding and disposal. Unlike most other commodities, the hoarding and disposal plays a much bigger role in affecting the price, because most of the gold ever mined still exists and is potentially able to come on to the market for the right price. Given the huge quantity of hoarded gold, compared to the annual production, the price of gold is mainly affected by changes in sentiment, rather than changes in annual production. According to the World Gold Council, annual mine production of gold over the last few years has been close to 2,500 tonnes. About 3,000 tonnes goes into jewelry or industrial/dental production, and around 500 tonnes goes to retail investors and exchange traded gold funds. This translates to an annual demand for gold to be 1000 tonnes in excess over mine production which has come from central bank sales and other disposal.


Central banks and the International Monetary Fund play an important role in the gold price. At the end of 2004 central banks and official organizations held 19 percent of all above-ground gold as official gold reserves. The Washington Agreement on Gold (WAG), which dates from September 1999, limits gold sales by its members (Europe, United States, Japan, Australia, Bank for International Settlements and the International Monetary Fund) to less than 400 tonnes a year. European central banks, such as the Bank of England and Swiss National Bank, have been key sellers of gold over this period. Although central banks do not generally announce gold purchases in advance, some, such as Russia, have expressed interest in growing their gold reserves again as of late 2005. In early 2006, China, which only holds 1.3% of its reserves in gold, announced that it was looking for ways to improve the returns on its official reserves. Many bulls hope that this signals that China might reposition more of its holdings into gold in line with other Central Banks. In general, gold becomes more desirable in times of:
Bank failures

When dollars were fully convertible into gold, both were regarded as money. However, most people preferred to carry around paper banknotes rather than the somewhat heavier and less divisible gold coins. If people feared their bank would fail, a bank run might have been the result. This is what happened in the USA during the Great Depression of the 1930s, leading President Roosevelt to impose a national emergency and to outlaw the holding of gold by US citizens known as Executive Order 6102 which has since been ended.
Low or negative real interest rates

If the return on bonds, equities and real estate is not adequately compensating for risk and inflation then the demand for gold and other alternative investments such as commodities increases. An example of this is the period of Stagflation that occurred during the 1970s and which led to an economic bubble forming in precious metals.
War, invasion, looting, crisis


In times of national crisis, people fear that their assets may be seized and that the currency may become worthless. They see gold as a solid asset which will always buy food or transportation. Thus in times of great uncertainty, particularly when war is feared, the demand for gold rises.


Currency The modern hedge fund manager’s liberal tongue-in-cheek definition is: “If it moves up and down independently, then it’s an asset class.” While currencies surely do a lot of moving up and down, they also stand out for other reasons: • The global foreign-exchange (FX) market can be considered by far the largest marketplace in the world, not only geographically but also with reference to trading volume. The daily turnover is growing constantly and has long ago surpassed the $1 trillion mark: forty times the size of world trade. • An important difference between currencies and other markets is that currency prices allow us to analyse also their reciprocal values. A falling dollar/yen is synonymous with a rising yen because the dollar can be expressed in yen and, vice versa, the yen in dollars. By comparison, the dollar is never measured in units, as the Dow Jones for example. • • For the same reason the expression ‘short sale’ – so much maligned in equity trading – does not exist in currency trading because the short sale of a currency is equivalent to a purchase of the other currency. For similar reasons, the currency market cannot suffer a ‘crash’ (such as the stock market crashes of 1929 or 1987) through which the wealth of all market participants dwindles. In the currency market eachloss is matched by an equivalent gain of the counter-party. Another unique feature of the currency market is that it is active without interruption ‘round-the-clock’.


Portfolio composition of currency Modern portfolio theory postulates that relative risk can be reduced by diversification into at least six or more components. This is not necessarily true for currency portfolios. Most delivering percentage returns. The index serves as a proxy for available currency manager portfolio returns in general and has the added benefit of being uncorrelated to returns of other asset classes. Low correlation, liquidity and transparency are good enough reasons for currencies to be considered a prime candidate for inclusion in any investment portfolio.




Companies Providing Wealth Management Services

Kotak securities

is handling Wealth management department with a name of Kotak portfolio management.

• • • • • • • •

GEMS Portfolio Origin Select Portfolio Select Optima Klassic Portfolio - Flexi Investguard Portfolio Core Portfolio NRI

They are providing above products according to the customer requirement. The above products are varying to high risk customers to low risk customers with a time origin of investment .They have a separate service for NRI asset management service.

• • • • •

Direct Equity Mutual funds Structured products Insurance products Fixed deposits.


Asset Size

It is also one of the largest, with Assets Under Management of over Rs. 3300 Crores.

Our mission is to provide clients with wealth management services that result in a performance that meets or exceeds their investment goals. Exposing our clients to undue risk is contrary to this mission. We believe that the tools of Modern Portfolio Theory empower us with a methodology for building superior investment portfolios. This has been tested in all types of market conditions for decades and has consistently protected investor wealth from the perils of nondiversification.

Morgan Stanley
Morgan Stanley is a leading global financial services firm providing a wide range of investment banking, securities, investment management and Wealth management services. The Firm’s employees serve clients worldwide including corporations, governments, institutions and individuals from more than 600 offices in 33 countries Mutual Fund has a unique investment team model, best described as a ‘Community of Boutiques’, which aims to ensure that each investment strategy is managed by a dedicated team with specific experience in that strategy. Morgan Stanley which has been active in the country since 1993 and is seeking to develop an integrated platform in India, which encompasses the full range of businesses the Firm conducts globally.



Large Cap Growth Equity with Sridhar Sivaram and Amay Hattangadi as Lead Portfolio Managers.

• •

Multi/Mid cap Equity with Jayesh Gandhi as Lead Portfolio Manager. Multi-Strategy with Navneet Munot as Lead Portfolio Manager. Morgan Stanley A.C.E. (Across Capitalisations Equity) Fund, an open-ended equity scheme managed by Jayesh Gandhi, was launched in February, 2008 as the first fund open ended offering of Morgan Stanley Mutual Fund in India.

• • • • Mutual funds Structured products Insurance products Fixed deposits.

Asset size
The India Magnum Fund, an offshore fund set up in 1989, marked the entry of Morgan Stanley in the Indian market. In 1994, Morgan Stanley launched its first domestic fund, Morgan Stanley Growth Fund (MSGF). As of December 31, 2007, Morgan Stanley Rs 4380 crores in assets under management. Morgan Stanley Investment Management, together with its investment advisory affiliates, has nearly 1000 investment professionals around the world and approximately US$577 billion in assets under


management or supervision as of February 29, 2008. By leveraging its global ‘community of boutiques’ structure and the strength of Morgan Stanley, MSIM strives to provide outstanding long-term investment performance, service and a comprehensive suite of investment management solutions to a diverse client base, which includes governments, institutions, corporations and individuals.


we use a strict value-investment methodology. We believe this to be the best way to generate consistently strong returns, whilst minimizing risks for our clients. Value Investing has outperformed the stock markets consistently for more than 80 years. It is a very researchintensive discipline and eschews future projections, focusing instead on what is the intrinsic value of a company today. Wealth Management runs focused portfolios comprising 15-25 stocks. We are only interested in the best value companies in the entire market. Our goal is to find companies that offer a substantial ‘Margin of Safety’, which both reduces the risk of losses, whilst allowing for superior returns.

Moti Lal Oswal Wealth Management

In today’s complex financial environment, investors have unique needs which are derived from their risk appetite and financial goals. But regardless of this, every investor seeks to maximize his returns on investments without capital erosion. While there are many investment avenues such as fixed deposits, income funds, bonds, equities etc…. It is a proven fact that Equities as an asset class typically tend to outperform all other asset classes over the long run. Investing in equities, require knowledge, time and a right mind-set. Equity as an asset class also requires constant monitoring may not be possible for you to give the necessary time, given your other commitments. They recognize this, and manage your investments professionally to achieve specific investment objectives, and not to forget, relieving you from the day to day hassles which investment require.



• • •

Value Portfolio Bull’s Eye Portfolio Next Trillion Dollar Opportunity Portfolio


• • • • •

Direct Equity Mutual funds Structured products Insurance products Fixed deposits


Asset Size
Motilal Oswal Securities Ltd brings with more than 2 decades of experience & expertise in equity research and stock broking. They are one of the leading portfolio service providers, with asset under management worth Rs. 590 Crores

Investment philosophy
We have established a disciplined and dynamic investment process that is rooted in the premise that asset allocation and investment style diversification consistent are the most returns critical with determinants acceptable in achieving of risk. investment levels

Our investment process is solid and consistent at its core, yet dynamic in its application. The premise, as outlined above, remains constant. At the same time, we continually update its application for the most current economic climate so as to keep our investment recommendations up-to-date and relevant. Additionally, when applied to each client’s portfolio, the process accommodates that client’s specific situation, time horizon, risk tolerance, and other factors so that the result is a truly customized portfolio.


Religare Wealth Management
INTRODUCTION Wealth Spectrum • Portfolio management • Art Intiative • Priority Client Equity Service

In The continuous endeavour to provide the best of the product and services to the clients, it The Religare and Macquarie are now 50:50 Joint venture partners in the newly created entity Religare Macquarie Wealth Management Limited. The new entity is testimony to Religare’s firm commitment to all its businesses wherein, it believes in offering nothing short of the very best to its clients and the end consumers. In order to do so, it believes in creating and delivering value by either going solo or by leveraging relevant and meaningful partnerships with global majors and domain specialists. They believe that this joint venture with Macquarie is a marriage of strengths that combines the sharp understanding, insights and execution capabilities of Religare in the Indian context with the global expertise of Macquarie. The new brand for the venture-Religare Macquarie Private Wealth shall strive to proactively manage their Wealth and is hungry and keen to bring about a much needed refreshingly different paradigm shift in the Indian market place.


Religare Macquarie Private Wealth shall draw strength and its core essence from the values of Religare’s “Diligence” and Macquarie’s “Forward Thinking”.

• • • • • •

Panther Tortoise • Leo Panther Elephant Caterpillar

The Panther portfolio aims to achieve higher returns by taking aggressive positions across sectors and market capitalizations. It is suitable for the “High Risk High Return” investor with a strategy to invest across sectors and take advantage of various market conditions.


The Tortoise portfolio aims to achieve growth in the portfolio value over a period of time by way of careful and judicious investment in fundamentally sound companies having good prospects. The scheme is suitable for the “Medium Risk Medium Return” investor with a strategy to invest in companies which have consistency in earnings, growth and financial performance.


The Elephant portfolio aims to generate steady returns over a longer period by investing in Securities selected only from BSE 100 and NSE


100 index. This plan is suitable for the “Low Risk Low Return” investor with a strategy to invest in blue chip companies, as these companies have steady performance and reduce liquidity risk in the market.


The Caterpillar portfolio aims to achieve capital appreciation over a long period of time by investing in a diversified portfolio. This scheme is suitable for investors with a high risk appetite. The investment strategy would be to invest in scrips which are poised to get a rerating either because of change in business, potential fancy for a particular sector in the coming years/months, business diversification leading to a better operating performance, stocks in their early stages of an upturn or for those which are in sectors currently ignored by the market.


Leo is aimed at retail customers and structured to provide medium to long-term capital appreciation by investing in stocks across the market capitalization range. This scheme is a mix of moderate and aggressive investment strategies. Its aim is to have a balanced portfolio comprising selected investments from both Tortoise and Panther. Exposure to Derivatives is taken within permissible regulatory limits.


• • • • • • Equities (Including International) Debts Commodities Structured Products Emerging Investment Classes. Religare Arts Initiative (RAI)

Religare Arts Initiative (RAI) The Indian arts Industry is currently valued as one of the growing industries of the world market. Art prices in India are escalating every year. The Religare Arts Initiative is a venture of Religare Enterprises Limited with a view to provide a quality platform and infrastructure for Arts. This initiative has been envisioned as a true champion “for the cause of arts”. The RAI will provide a platform for artists of all ages, genres, and statures. They are already in the process of creating a transparent and highly rich infrastructure that would involve cataloguing, documentation, art research, and the development of an art aesthetic on an institutional basis. RAI will work closely with the Indian art and design schools on the issues such as the curriculum and resources to bring them into the same quality domain as their international counterparts. RAI’s envisaged activities include building infrastructure for arts, creation of an arts awareness program, creation of spaces / canvases


for the artists, creation of International quality Gallery Spaces, providing Art Advisory Services and much more.

Rs. 410 cr.

Investment Philosophy
They believe that investors are better served by a disciplined investment approach, which combines an understanding of the goals and objectives of the investor with a fine tuned strategy backed by research.

Stock specific selection procedure based on fundamental research for making sound investment decisions.

Focus on minimizing investment risk by following rigorous valuation disciplines. Capital preservation. Selling discipline and use of Derivatives to control volatility.

• •


Standard chartered

Priority Banking – personalised Wealth management program at Standard Chartered Bank. It is their endeav their to be the Right Partner in all their personal and business ventures. That’s why Priority Banking has been tailored to offer you the highest level of service, appropriate to your unique requirements and status.

PRODUCTS : Excel Banking

In today’s fast moving, technology-driven world, you need your bank to keep pace with your banking needs. That’s why you need Excel Banking - a much personalised Wealth management service that has been designed to help you make the most of your money, without taking up most of your time.

With the services of their personal Relationship Manager customer can access complete Wealth management solutions, from routine banking and transaction management to more complex investment services and insurance advisory services.

What’s more, you also get fee waivers on premium savings and current accounts and preferred pricing on a range of complementary banking products and services.


Here are the unique features of Excel Banking:
• • • • • • • •

Access to a personal Relationship Manager Exclusive privileges such as a free gold card, free debit cards and discounts on lockers, demat accounts and overdraft against term deposits Free multi-city cheque book for current account and savings account holders Express cheque collection and national clearing speed service Free demat account Extended branch hour for easier and quick transactions Redirection of interest into any account specified by you Phone Banking and ATM facilities for 24 hour access

Parivaar Account
Parivaar is a unique Wealth Management Solution from Standard Chartered Bank that offers your family flexibility, convenience and essential tools for Wealth accumulation and preservation. Parivaar is much more than a regular Savings Account. It allows you maintain your individual identity while allowing you to tap your family’s financial strength. Here are some of the features of the Parivaar savings account : • Your family can maintain individual savings accounts with the benefit of clubbing balances in grouped accounts. • Anytime, anywhere access to accounts through ATMs, Phone Banking and Online Banking. • Globally valid ATM-cum-debit card can be used at 3,26,000 merchant outlets in India and 14 million outlets worldwide.


• • •

Equities Debts Mutual funds.


• •

Commodities Structured Products


Wealth Management Department has asset under management is Rs.710 Cr.



We have developed a different and more focused approach to wealth management. Understanding that wealth means different things to different people, we believe that no one is better placed to help you acquire wealth and grow it, use and enjoy it, protect it and pass it on. Our appreciation that every investor is complex and different and can have complex needs, has led us to our development of a highly innovative new approach that we call our investment philosophy. We believe it radically improves the management of private client investments. Our investment philosophy uses sophisticated profiling and portfolio construction techniques to aim for investments that deliver marketleading performance in the way you want, because while performance is key, it is performance that suits you that really matters. Performance that reflects your attitudes and personality and gives you the confidence and reassurance to make decisions with clarity and speed.

ABN AMRO NRI Services, under the aegis of Van Gogh preferred banking brings to you a personalized and comprehensive solution through Their exclusive Wealth Management Services. They will help you preserve and enhance your Wealth generated in India and abroad with a range of exclusive Investment and Insurance solutions. ABN AMRO Asset Management is the separately organised investment management division of ABN AMRO Bank. ABN AMRO Asset Management is headquartered in London and Amsterdam with other main units in Atlanta, Chicago, Hong Kong and Singapore. It has significant experience in managing money for over 2000 institutional clients including central banks, pension funds, insurance companies and other institutions. In addition to managing funds for institutional clients, ABN AMRO Asset Management offers tailored


investment management services to private clients. It employs 2000 people worldwide in over 30 countries, with portfolio managers and analysts located around the world. All investment products benefit from the valuable sourrce of local expertise, while portfolios are often managed locally. This local knowledge is used as input for international co-ordination of the investment policy. ABN AMRO Asset Management’s approach to full-service investment management underlines Their commitment to longterm client relationships. They believe that excellence can only be achieved when investment performance and risk management are combined with high-quality client servicing. Their goal is to add value by offering risk-controlled outperformance in the context of specific benchmarks and investment horizons of their investors.



INVESTMENT SERVICES : They recognize financial needs vary and there is no “one-size-fits all” approach. ABN AMRO Investment Services brings to you an unmatched blend of personalized services and an array of innovative and exclusive products suited for each of your investment needs. Whether you are in India or abroad, They extend Their hand of partnership as your trusted financial advisors. Their expert Investment Counselors ensure that your individual risk profile is drawn so that They can cater to your specific and precise investment needs. Optimal asset allocation among a wide range of investment products helps to create a portfolio best suited to your requirements and preferences, while maintaining the best balance between risk and return

INSURANCE SERVICES : Being away from India
doesn’t mean you have to compromise the safety and security of your loved ones. In fact, your savings from your time overseas can easily be channelised to meet your family’s needs for today and in the future. ABN AMRO Insurance Services brings to you an unrivalled combination of steady returns with minimum risk. Your insurance plans will provide your family the added financial security in case of an unforeseen exigency. These investment cum protection plans can help you create Wealth for funding your long term needs like education and marriages of your children and creating your retirement corpus. They offer you a world of choice in insurance that can be customized to meet your individual needs.

Expertise In All Asset Classes As a global, full-service investment manager, they offer their broad customer base capabilities in all major asset classes, and a spectrum of products including both fundamentally driven investment approaches and more quantitative investment processes. ABN AMRO Asset Management has significant experience in managing money for consumers as well as for institutional clients including central banks, pension funds, insurance companies and other institutions.


US $40.40cr

Our investment philosophy takes root in the belief that fundamental research as an investment process yields returns and hence we lay emphasis on company specific research. The underlying principles that help us formulate the investment process: Investments are made in ‘businesses‘? and not ‘companies‘?; the latter is just an avenue. Companies (within that business) that can generate returns on capital in excess of their cost of capital over a business cycle are preferred. Earnings growth of a company is the prime driver and over a period of time the stock price of the company shall be a slave of the same. Hence, investments in stocks are to be made at reasonable valuations. Own companies that can generate longterm, sustainable earnings, managed by qualified professionals capable of executing a well conceived strategic plan

HSBC Financial Planning Services
your portfolio can be managed in a fully discretionary manner from a selection of ‘Best of Breed’ third party panel of Portfolio Management Service providers. The main objective is to help you to preserve your wealth in line with your investment objectives. Inflation, falling interest rates and fluctuating market conditions require you to plan your finances carefully. Celebrate important occasions in the future by managing your Wealth Well now. HSBC’s Financial Planning Services offer assistance to secure your future. Their Financial Planning Services are available for existing HSBC customers and are free of cost. Launched in India in November 2002, HSBC Investments manages assets of over INR 10,684 crores, spread across 21


schemes and plans under the HSBC Mutual Fund umbrella, as of end August 2006. HSBC Investments has also soft-launched HSBC Alpha Account, the Portfolio Management services (PMS) Business to manage wealth for High Net worth Individuals. Currently, the PMS business offers two product baskets, namely, the


• •

Signature Portfolio Strategic Portfolio.


Traditional investments :
Direct Equity Advisory : Customized advice on direct equity
portfolios based on your risk profile and specific requirements. The proposition, backed by comprehensive in-house research, entails building portfolios with fresh funds or restructuring legacy portfolios to provide better risk adjusted returns.

Mutual Funds : Our open architecture philosophy and ‘Best of Breed’
selection of debt and equity mutual funds allows you to buy the top performing mutual funds available in the market. Non - traditional Investments :

Structured Products : Combinations of derivatives and financial
instruments create structures that have significant risk/return features that may not be otherwise available in the marketplace. Structured products are designed to provide investors with highly targeted investments tied to their specific risk profiles, return requirements and market expectations.

Real Estate Venture Funds : To provide you with diversification avenues
which reduce the overall portfolio risk, we seek to bring to you opportunities in real estate space through venture capital funds available in the market.

Globally, the Group Investment Business currently manages and distributes assets over US $ 297 billion worldwide, at the close of May 2006. Assets, which range from retail mutual funds and money market funds to lifecycle products to portfolios for private clients and institutions.



Need-based sales approach with innovation Our team works to suggest financial solutions based on your risk appetite, profile and needs. Using customer insight, we have developed a financial planning tool. It analyses and generates a comprehensive financial plan based on your existing financial position, expected future cash flows, inflation and identified financial objectives. Our Relationship Managers extensively use this tool to do financial planning for you taking into account your long-term objectives and / or medium to short term requirements. For consistent and uniform delivery of financial planning as per the defined customer need centric process, there is a dedicated, independent Sales Quality team to conduct regular quality checks close to the point-of-sale.

White-listed funds
The concept of white listed funds lies in the bank’s open architecture model, which lays emphasis on meritocracy. We carefully look at various products available in the market and after thorough due diligence select product providers / schemes which adequately correspond to the needs of our customers. White listed funds are selected based on various proprietary models that are used for intense quantitative analysis. These funds help our clients build a long-term portfolio and in achieving long-term financial goals.

Technology is a potent weapon
For consistency in the manner in which our Relationship Managers identify customer needs and suggest suitable solutions, we extensively leverage technology to support our sales process. Our indigenously developed systems like Wealth Management System, Financial Planning System and Customer Relationship Management System have been built basis customer insights. We constantly look at evolving these systems to address sales process requirements arising out of dynamically changing market conditions and customer needs. We therefore treat technology as a vital ally in executing our philosophy of customer need centricity in a structured and uniform fashion.

Sharing the knowledge
We frequently organise wealth management events and investment seminars, where you can interact with investment experts and fund managers. This provides us a platform to know and understand the market and economic developments and trends.


Citi Bank

Citi has the largest footprint among wealth managers in the Asia Pacific with more than 20 offices across the region. Over 2,000 wealth management professionals, including 600-plus private bankers, financial advisors and investment specialists, serve 6000 high net worth individuals and families, including half of all billionaires in Asia ex-Japan. Citi Global Wealth Management is a top-tier global wealth manager providing some of the best institutional capabilities available today. Serving both private and institutional clients, Citi Global Wealth Management taps the strength and resources of Citigroup to maximize value and service. The Global Wealth Management division at Citi comprises three of the most respected brands in wealth management:

• • •

Citi Private Bank Citi Smith Barney Citi Investment Research.






Art advisory services :-

In today’s market, art presents an attractive investment option. To assist you with advice on various art investments, or to help you in buying or selling art, Citigold has tied up with a


reputed art house, Osians - Connoisseurs of Art Private Limited. Osians is based in Mumbai and possesses the expertise, archival infrastructure and professional capacity to systematically cohere various sTheirces of knowledge and provide select Citigold clients objective information on purchasing, preserving, valuing and selling art for seasoned connoisseur and emerging collectors. Citigold together with Osians will now help you strengthen your investments in art by providing you the following services: • Documentation and Archiving • Authentication, Certification and Valuation • Preservation and Restoration • Insurance and Custodial Services. • Publication and Design Services • Art and Cultural Events Management • Corporate Gifting • Museum and Collection Building Services. • Estate Planning

Citi bank Time Deposits

• • • • •

Deposits held in units of Rs. 1000 for easy liquidity. Flexible tenures from 15 days to 5 years. Overdraft facility of up to 90% against your deposit to fund another investment opportunity. Automatic roll over facility to renew your deposit when it matures. An exclusive set of structured products like market linked products.


Citi bank is investing customers portfolio according to which stage of life they are :• • • • Young adult Married and yet to have kids Parent with young kids. Parent with settled child.


And according to expenses they are thinking of :• • • • Buying a house Going on a holiday Getting married Going abroad

In India ICICI bank is a very Well known banks in the field of Wealth management. ICICI Bank will float subsidiary for the purpose of WM activities in Canada & other market even as ICICI has rolled out ICICI Group Global Private Clients for those with net worth of $ 1 million or more. ICICI GCPC launched their business in Dubai very recently in the month of April-08 and caught 2500 clients. They are going to add another 1000 high network clients this year. ICICI Bank is using the services of global players like Merrill Lynch, City group, and UBS for catching the clients for Wealth Management business. ICICI Bank and its subsidiaries are engaged in the development of various attractive products (services) for the clients with net worth of $ 1 million. The eyes of ICICI Group Global Pvt. Clients on the rising number of dollar millionaires at present they are 100,000 in number in few year the number will definitely increase. India’s No.2 lender banker ICICI expects to sustain the 70% growth in its private Wealth management


business. ICICI has 150,000 customers with investible surplus of at least Rs. 10 lakhs equity, real estate and private equity is driving the private banking business in India. India has market of Wealth management about $ 600 billion.

N.A Asset classes used ONLINE TRADING : They also bring to you the best value for money through competitively priced brokerage charges for online share trading services from With a 3-in-1 account consisting of a trading account, ICICI Bank savings account and demat account, you can stay connected to the market at all times. To add to this, They give you waiver on the account opening charges too! With a 3-in-1 account consisting of trading, ICICI Bank account and demat account, you can enjoy: • Competitive priced brokerage rates • Reduced account opening charges • Online share trading services MUTUAL FUNDS : They offer you advice on the entire universe of mutual funds. So be it equity funds, where you look for growth and capital appreciation or debt funds for capital preservation, They can help you select the right mix to suit you. Choose from an array of more than 15 fund houses with innumerable schemes. Customised Products • Structured Products : Their Structured Product offerings are tailor-made to suit your investment objective and risk appetite. Their services include Portfolio Management Services and specially designed products that are Equity or Index-linked in nature. • Alternate Asset Products : They offer products which complement your existing investments eg. Art Funds, Private Equity Funding, Realty Funds. So, if you’re looking beyond the stock market, you’ll find us there too! Life and General Insurance Asset SIZE

Rs.1230 Cr.


INVESTMENT PHILOSPHY Our approach emphasizes a
globally diversified investment strategy designed to provide above average performance, at below average risk.

One of India’s leading private sector banker Axis bank also combined with Banque Privee Edmond de Rothschild Europe based Wealth management expertise institution & is going to make new standard for the NRI’s Wealth management. The LCF Rothschild group has based its reputation in the area of Wealth management on its big banking experience. Actually the institution is engaged in the task of providing financial advise to the Europe’s leading families, Government and various corporations for the last ‘7’ generations. The Axis Bank 5th largest bank by market capitalization in India provides payroll services to over 12000 corporates across 2.8 million salary accounts. The market capitalization of Axis Bank was 235 million in the last year 2007 is engaged in the business of Wealth management, with its international presence in Dubai, Singapore Hong Kong, Shanghai and so on.


Asset Size

Rs.181.20 Cr.


Procedure for entertaining a client in AXIS


1. Any customer who has a portfolio having more than 30 lakhs can request for wealth Bank. 2. After the request of customer the wealth mangment relationship manager will meet the customer and make a view about his risk taking ability according to his current financial position and future needs. 3. The customer has to fill a risk profilier form,details of which is interpreted in a software called “mohar” by which the analyst will come to know the actual risk taking ability of customer. 4. Documentation :- The customer has to make available the following documents to the Bank :a. Pan card Copy b. 8 Photographs c. One Address Proof 5. The client has to open four accounts with the Axis Bank :a. Wealth Saving Account :- This account is used to park all the money of the customer which must be 30 lakhs or more than that . b. Demat Account :- This is used to park all the assets in electronic form of the customer . management services at any branch of Axis



Trading Account :- This account is used to buy or purachase the asset in a electronic way.


Wealth Account :- This account is opened in the mohar software to handle the portfolio of the customer.

6. The whole 30 lakh or more is not invested in a lumpsum but it is invested in trenches in a period of 4 months. 7. The service provided by the Axis Bank is a Non- Discretionary type of service, in which the decision of investing money is taken with customer recommendation. 8. All the transaction done for the customer either sell or purchase of the asset classes is done fully electronically through “Mohar” software. 9.Charges :- 1% Annual Charges on equity portfoilio + 0.75 % brokerage either sell No charges on mutual or buy . fund portfolio .(Asset management

Companies gives 2.5% commission to Axis Bank on investing client money in their mutual fund. ) Asset management Companies charges 2.25 % only on purchase of mutual fund directly to the customer without any involvement of the Axis Bank.


Coustmer Profiling at Axis Bank
Based on different financial needs an average life cycle has been divided into 4 stages of Financial Planning as given below.

 Upto 30 years of age  30-45 years of age  45-60 years of age  over 60 years

• Upto 30 years of age
 General Profile :      Out of college/Professional Course. Junior or Mid level employment. Have had an average work life of 5-8 yrs. Unmarried or recently married. Small family. Nuclear family / Joint family.

 General Characterstics :       Salary surpluses,especially if single or DINK. Minimal family responsibilities Propensity to spend/overspend Find investment/saving as Boring & waste of time. Lack of inclination to invest. Lack of proper information on investment. Do not need regular income from investment.


 Investment Needs :    Repayment of professional studies loan. Plan for tax. Saving for white goods/new vechile. Biggest need is to save enough for a down payment for a house.  Start to build an emergency fund.

   

Recommendation :Negotiate tax-efficient salary. Budget and keep track of expenses. Use credit card prudently. Save regularly and consciously.

 Recommended Investment Style :  Should be an aggressive investor. Should focus on long term capital growth rather than short term capital preservation.  Have a long term investment horizon,as a balance of productive working life is high.  Can invest in high risk, high gain products


Recommended distribution of asset :90 % investments in equity. 10 % investment in debt.

Should start SIP or recurring deposit through auto debit facilities to ensure disciplined and compulsory savings. Should start planning for or at least start thinking about retirement.

 Product Recommendations : If salaried, approximately 24% of basic is necessarily invested in PF and can be supplemented with NSC & PPF.  If self employed/professional, part of the surplus should start for a PPF/Pension plan investment to provide for retrials.  Invest marked equity investment , in equity oriented funds like : o Diversified equity funds(60%) o Sector funds(10%) o Tax saving funds(20%)


• Between 30-45 yrs : General profile :      Married ,usally with children Middle to senior level employees. Have had an average work life of 10-15 yrs. May have dependent parents Usually a personal vehicle owner. Already invested in a home/seriously thinking of investing in a home. General Characteristics :     Surplus funds are limited. Lifestyle expenses go up Children need/expenditure is of prime importance. Household expenses are gradually increasing Realize the need for investment planning but lack time for investment planning.  Investment Needs :   Shelter income from taxes. Plan for children’s higher education Start to build capital for retirement ,if not started already.    Maintain an emergency fund & keep adding to it. Buy a home/service a home loan. Save for holidays/recreation.


 Recommended Investment Style :    Can take medium to high risk. Should continue to focus on capital growth. Investment horizon is still more than 5 yrs. Follow thumb rule of 100 less your age in years as percentage of savings to be invested in equity.    Upto 60% of surplus funds can be invested in equities. 15% of surplus funds in liquid funds. 25% in Bonds/PPF/NSC.

 Product Recommendations : Diversified equity funds,more tilted towards large caps for capital growth for retirement or seed money for home loan.   Build up a direct equity. Invest in children specific mutual funds to provide for children’s higher education needs .    NSC and PPF to balance investments in equity. Tax efficient saving through ELSS. Keep adding to short term floating rate funds and bank FD’s for emergency fund.     Get medical insurance for your dependent parents. Get household contents insured. Get a life insurance against your home loan. Get an accident insurance against any disabilities.

• Between 45-60 yrs.
 General Profile : Usually at the peak of carrer


    

Grown up children. May need take care of dependent children. Retirement is not very distant. Could opt for VRS. May have a inherited portfolio of investments from parents.

General Characterstics :     surplus fund higher than in previous life stage. High outgo on household expenses. Childrens expenses continue to increase. Life style expenses still high. 2-3 major oputflows of money (overseas education/marriage/set up business).   High liquidity is a must. Sensitized to medical and retirement needs.

 Recommendations :  Decide when to reire. Acquire all necessary consumer durables while still to plug future outflows.        Consolidate and continue with wealth creation Start de-riskiking yoyr portfolio. Revisit and revise financial goals. Rebalance your portfolio as per future needs. Medical insurance a must. Pension plans must be started if not done already. Prepare a will.

 Recommended Investment Style : Greater vunerability to risk hence focus on moderate balanced growth.  Shift focus from capital growth to capital preservation.


 

Investment time horizon comes down. Turning point as investment debt now outpaces investment in equity.

 

Up to 40% of surplus funds in equity. Up to 60 % of surplus funds in debt.

 Product recommendation :      Prepay or finish all loans by 55 years of age. Invest in balanced funds or MIP’s Phase out high risk sector funds gradually. Keep investment in well-diversified large cap funds.

Investment in debt should be around NSC & Bonds. Short term deposits and floating rate funds,along with cash or liquid funds should be maintained for liquidity. Consolidate direct equity portfolio:gradually move part of it to high divinded yield stocks. Keep all surplus funds in liquid/floater funds.

• Above 60 years of age
 General profile     Retired/working part time Living in self owned house. Children may be living separately. Dependent parents,needing medical attention,may be part of family.   Could have grand children. Have more leisure time.

 General Characteristics  Income from existing investments,usally the only source of regular income.


Surplus funds usually not available for additional investments. Capital preservation is the primary need. High life expectancy hence present capital has to stretch over a long time. Life style expenses go down. Medical expenses go up.

 

 

 Investment needs.    Regular income needed from investments.

Emergency funds for medical etc. to be liquid and high.    Preservation of wealth. Money for traveling/gifts. Need funds to pursue hobbies to keep busy.

 Recommendation     Monitor expenses to fit into the retirement income. Ensure tax efficiency of returns on investments Explore second careers/part time employment. Check excess liquidity as it needs to reduced returns on investments.  Too much cash should not be kept with oneself in the house,as it may be a risk.  Do maximum purchase transaction through debit cards to avoid the needs of cash withdrawls.  Recommended investment style    Most chaleenging phase of life. Capital preservation of utmost importance. Low risk appetite.








investment.   Investment horizon low. Maximum 15% equity exposure.

 Product Recommendations       Invest in MIP’s and balanced equity funds. Senior citizen’s saving schemes. Post office monthly schemes. FD’s with monthly schemes. RBI Bond Continue with direct equity portfolio with high dividend yield stocks.   Avail all possible tax breaks available to senior citizens Switch some investments from equity to debt and money market products.   Go for systematic withdrawls plans(reverse of SIP). Growth portion of portfolio should be reduced to maintain only enough amount.  Silver health mediclaim.













Position of India in Wealth Management
The wealth management industry in India is experiencing an evolutionary phase of development, according to Celent. With the liberalization of the Indian economy and subsequent growth and prosperity across sectors, the wealth management industry is poised to gain greater traction. Celent segments the Indian wealth management market and looks at trends and opportunities at the provider end. According to the report, India is slated to become a US$1 trillion market (in assets under management) for wealth management providers by 2012, with a target market size of 42 million households In the annual survey done by Cap Gemini, SA and Merrill Lynch it was found that ranks of millionaires grew 6% in the previous year, because the number of richer people grew in India & China where India is competing China. India & China posted the biggest gain in millionaires advancing by 23% & 20% respectively. When They are watching the world wide increase in number of millionaires the facts collected by Cap Gemini, S.A. and Merrill Lynch survey report. India has 23% growth in the last year. The biggest Asian economy China stands on second position with 20%, west Asia 16%, United States 4% and United Kingdom (UK) 2%. So They can understand that there is more opportunities in the Wealth management business in Asia specially in India.

Risk aversion of Indian customers
The repercussions of the mutual fund scandal of the 1990s are still evident. Many Indian retail customers averse to diversifying their asset


base into higher risk classes. To account for this conservative tendency, PFS offerings can be tailored to emphasize the value of a lower-risk investing approach. “New money” mass affluent customers are not accustomed to Wealth management. Most customers are used to obtaining financial services on an as needed basis without much regard to a full view of their financial Well-being. As part of the opportunity to define and develop offerings for India’s emerging HNW population, customers may need an introduction to the concept of private banking (or Wealth management). Shortage of skilled personal financial advisors. To date, the PFS opportunity has been limited to a very small segment of the population, so domestic banks have not generally developed expertise in comprehensive personal financial management. Global banks can take advantage of this gap by leveraging advisory competencies that they have cultivated in other markets, importing that expertise into the Indian market.







Southern Asia :-INDIA,SRILANKA


Wealth managers and private banks are anticipating unprecedented growth over the next three years, according to the latest findings from PricewaterhouseCoopers 2007 Global Private Banking/Wealth Management Survey, with chief executives predicting that, on average, their assets under management will increase at a staggering rate of 30% per annum.

The survey, which captured the views of senior executives of 265 organisations within the global private banking and wealth management industry, highlighted that markets in Asia Pacific and Eastern Europe are expanding the fastest, as organisations rush to service the new wealth creators in these regions. In Asia Pacific, CEOs expect their organisations’ assets under management to grow at an annual rate of 34%. CEOs’ plans for growth include entry into these lucrative markets, including by acquisition. Almost 90% of CEOs feel that there will be at least some, if not significant, consolidation in the industry and more than 50% of CEOs plan to open operations in new countries over the next two years to access new clients.

The survey reveals a period of exceptional opportunities for wealth managers. Buoyed by rising global wealth, wealth managers everywhere are anticipating extremely high rates of profitable growth that have not been seen during probably at any other time. The survey


highlights that this is a time when strategic choices have to be made by chief executives and finite resources have to be focused on serving existing clients as well as supporting highly ambitious growth plans. PricewaterhouseCoopers latest findings also revealed a real

commitment among wealth managers to increase ‘share of wallet’, compared to previous surveys. Share of wallet has emerged as the new key performance indicator, globally as well as in emerging economies like India, as wealth managers seek to become trusted advisers and gain new clients. Currently under 50% of wealth managers hold more than 40% of their clients’ investable wealth but over the next three years this proportion is estimated to increase dramatically to almost 80% of wealth managers holding over 40% of a client’s wealth.







After studying the overall concept of Wealth management we can say that it has various aspects some are favorable and friendly for the economy and some are very dangerous for the economy. According to World Wealth Report 08- Merrill Lynch, Capgemini : The early months of 2008 revealed further complications to the conditions facing the global economy at the end of 2007, heightening uncertainty among investors regarding the nearterm global outlook. Deepening credit market woes threaten growth prospects in key mature markets. However, still-strong fundamentals in emerging markets are likely to sustain high levels of growth—a divergence that will likely impact consumer and business segments and shape policy choices. The balance between emerging market strength and mature market recovery is likely to persist through 2008, with the short-term outlook subject to variability given that aspects of potential risk may still be unknown.

By and large, the global economy has two distinctive obstacles to overcome:
• • Inhibitors to growth in mature markets. High risks of inflation in emerging markets.

These challenges will shape global HNWI growth prospects going forward.



Given 2007 performances and taking into consideration recent developments in world markets, the projection of global HNWI wealth will grow to US$59.1 trillion by 2012, advancing at a rate of 7.7% per year.

This projection is based on several factors:
Recent economic downturns in the United States have been shorter by historical comparison attributed, in part, to increasingly effective monetary policy. Therefore, the current complications are not expected to weigh on growth prospects as heavily as they may have in the past. Similarly, research suggests that emerging markets’ recoveries have outpaced analysts expectations. Moreover, as HNWI portfolios continue to grow more diversified over the long term, spread across international boundaries and asset classes, their investments become increasingly mobile. Thus, as growth in one region or market slows, HNWIs can move freely, reallocating their funds to other areas, often more quickly than the troubled market itself can react and recover. Ultimately, this evolution will make HNWI investments less vulnerable to market downturns.



1.Wealth Management July06 private banking poll-r8 report. 4.ICICI Prudential Asset Management Report. 5. World Wealth Report 2008 - Merrill Lynch, Capgemini. 6. “Year-End Journal, Review January of 2, Markets 2008; & Finance,” Russia The Wall Street



accessed April 2008.

7. The Economist Intelligence Unit, January 2008. 8. Investment Strategy - No.6 August 2006 Societe Generale Asset Management. 9.Goldman Sachs Asia Pacific Report. 10. IBM Business Consulting’s Wealth Management Report.

11. Axis Bank Reports.

Sign up to vote on this title
UsefulNot useful