Service Management

Submitted To: Prof. Shalini Nath Tripathi Faculty JIML (Marketing)

Submitted by: Pankaj Pandey (cft07-094) Prateek Shrivastav (cft07-104) Rahul Tripathi (cft07-118)

Jaipuria institute of management, lucknow

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Portfolio Management Services
ortfolio Management Services (PMS) is an investment portfolio in stocks, fixed income, debt, cash, structured products and other individual securities, managed by a professional money manager that can potentially be tailored to meet specific investment objectives.

When you invest in PMS, you own individual securities unlike a mutual fund investor, who owns units of the entire fund. You have the freedom and flexibility to tailor your portfolio to address personal preferences and financial goals. Although portfolio managers may oversee hundreds of portfolios, your account may be unique.

Investment Management Solutions in PMS can be provided in the following ways: Discretionary Non Discretionary Advisory

Discretionary: Under these services, the choice as well as the timings of the investment decisions rest solely with the Portfolio Manager. Non Discretionary: Under these services, the portfolio manager only suggests the investment ideas. The choice as well as the timings of the investment decisions rest solely with the Investor. However the execution of trade is done by the portfolio manager. Advisory: Under these services, the portfolio manager only suggests the investment ideas. The choice as well as the execution of the investment decisions rest solely with the Investor. In India majority of PMS providers offer Discretionary Services. Who can offer PMS? PMS can be offered only by entities having specific SEBI registration for rendering portfolio management services. Currently in India PMS is offered primarily by asset management companies (AMCs) and brokerage houses.

PMS Business in India The PMS business in India, which was nonexistent till the beginning of the century has emerged strongly as the income levels of Indians have been increasing at a fast pace. More changes can be expected in the sector with more global players entering the market through strategic tie-ups and SEBI being expected to introduce some reforms in the sector.

Positioning of the PMS toward Customer The Investment solutions provided by PMS cater to a niche segment of clients. The clients can be Individuals or Institutions entities with high net worth.

The offerings are usually ideal for investors:
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who are looking to invest in asset classes like equity, fixed income, structured products etc who desire personalized investment solutions who desire long-term wealth creation who appreciate a high level of service

Benefits of services provided by Portfolio Management Services

Professional Management - The service provides professional management of portfolios with the objective of delivering consistent long-term performance while controlling risk. Continuous Monitoring - It is important to recognise that portfolios need to be constantly monitored and periodic changes made to optimise the results. Risk Control - A research team responsible for establishing the client's investment strategy and providing the PMS provider real time information to support it, backs any firm's portfolio managers.

Hassle Free Operation - Portfolio Management Service provider gives the client a customized service. The company takes care of all the administrative aspects of the client's portfolio with a periodic reporting (usually daily) on the overall status of the portfolio and performance.

Flexibility - The Portfolio Manager has fair amount of flexibility in terms of holding cash (can go up to 100% also depending on the market conditions). He can create a reasonable concentration in

the investor portfolios by investing disproportionate amounts in favour of compelling opportunities.

Transparency - PMS provide comprehensive communications and performance reporting. Investors will get regular statements and updates from the firm. Web-enabled access will ensure that client is just a click away from all information relating to his investment. Your account statements will give you a complete picture of which individual securities you hold, as well as the number of shares you own. It will also usually provide:
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the current value of the securities you own; the cost basis of each security; details of account activity (such as purchases, sales and dividends paid out or reinvested); your portfolio's asset allocation; your portfolio's performance in comparison to a benchmark; market commentary from your Portfolio Manager

Customized Advice - PMS give select clients the benefit of tailor made investment advice designed to achieve his financial objectives. It can be structured to automatically exclude investments you may own in another account or investments you would prefer not to own. For example, if you are a long-term employee in a company and you have acquired concentrated stock positions over the years and have become over exposed to few companies’s stock, a separately managed account provides you with the ability to exclude that stock from your portfolio.

Personalized Approach - Some Portfolio Managers may provide a personal investment management service to achieve the client's investment objective. In PMS, you may gain direct personalised access to the professional money managers who actively manage your portfolio. This interaction may come in various different ways including in-person meetings, conference calls, written commentary, etc with the fund management team.

Expectation of Customer from the Portfolio Management Services

Handholding from his portfolio manager than he has been accustomed to from his mutual fund. One can expect to have a relationship manager/ financial advisor through whom he can interact with the fund manager at any time of his choice. One can also expect frequent (maybe monthly) interaction with the portfolio manager to discuss any concerns that he might have. To be updated

on any major changes in asset allocation or in the investment strategy relating to his portfolio. All administrative matters, including operating a bank account and dealing with settlement and depository transactions, will be handled by the PMS.

On handing over one's money, he will receive a user-ID and password from the PMS, which will grant him online access to his portfolio details. He can use these to check back on his portfolio as often as he likes.

Keeping track of capital gains (and losses) for the taxman can be a depressing chore, when one has furiously churned his investments through the year. Opting for PMS will free him of this chore, as a detailed statement of the transactions on his portfolio for tax purposes comes as a part of the package.

7 Ps of Services under PMS
A standard product might not suit the needs of all investors as their needs and profiles differ. Financial Service provided by the PMS Financial planning should cover all areas of the client’s financial needs and should result in the achievement of each of the client's goals. The scope of planning would usually include the following: Risk Management and Insurance Planning Managing cash flow risks through sound risk management and insurance techniques Investment and Planning Issues Planning, creating and managing capital accumulation to generate future capital and cash flows for reinvestment and spending Retirement Planning Planning to ensure financial independence at retirement including 401Ks, IRAs etc. Tax Planning Planning for the reduction of tax liabilities and the freeing-up of cash flows for other purposes Estate Planning Planning for the creation, accumulation, conservation and distribution of assets Cash Flow and Liability Management Maintaining and enhancing personal cash flows through debt and lifestyle management Relationship Management Moving beyond pure product selling to understand and service the core needs of the client Education planning for kids and the family members

PMS is offered in a wide variety of asset classes and investment styles, including large cap, mid cap, small cap, multi cap, value and growth and international asset.

The Service Product Concept under portfolio Management Core benefit: - Alternative source of earning, investment Basic Service: - Return with nominal risk Expected Service: - Best portfolio of investment and high return Augmented Service; - Consultant at home for portfolio management, customized services Potential Service: - help to become Millionaire in short span of time

A financial planner or personal financial planner is a practicing professional who helps people deal with various personal financial issues through proper planning, which includes but is not limited to these major areas: cash flow management, education planning, retirement planning, investment planning, risk management and insurance planning, tax planning, estate planning and business succession planning (for business owners). The work engaged in by this professional is commonly known as personal financial planning. In carrying out the planning function, he is guided by the financial planning process to create a financial plan; a detailed strategy tailored to a client's specific situation, for meeting a client's specific goals. Attributes of a good financial planner.  Sound understanding of the universe of investment products their risk and return attribute s past performance and the behavior of portfolios of asset classes.  Good grounding in tax planning and estate planning.  Ability to convert life-cycles of investors into needs and preferences for financial products.  Organized approach to work and ability to professionally manage ones business.  Ability to understand and work with investors and excellent communication skills

Code of Ethics need to follow
 Code of Ethics of Integrity  Members not to give false or misleading advertisement  Members not to indulge into materially false and misleading promotional activities.  Members not to give impressions that he is representing FPSB while giving his views.  Members not to indulge in any act of dishonesty, deceit, fraud .  Code of Ethics of Objectivity

 All the members to exercise reasonable and prudent professional judgment.  They should act in the interest of the clients.  A statement of compensation in detail disclosing the sources of fee/commission any other benefit received/receivable should be fully disclosed.  Disclosures regarding compensation should be made annually to the ongoing clients.  Code of Ethics of Competence  To keep themselves informed of developments taking place in the field of financial planning area and participate in continuing education program  To offer advice only in those areas where he has competence  The representatives should be appointed on the basis of reasonable and appropriate standards  Code of Ethics of Fairness  The business transaction entered into with the client should be on terms which are fair and reasonable  The member shall clearly disclose to all prospective clients the capacity in which they are able to provide financial planning services  Code of Ethics of Confidentiality  Members shall not reveal or use for their own benefits without the consent of the client, any personally identifiable information  Unless compelled by law or to fulfill a legal obligation, any member who as a member of FPSB, has access to information concerning FPSB, must keep the information confidential.  Code of Ethics of Professionalism  All the members shall show respect for other financial planning professionals.

 All the members should not engage in any conduct that reflects adversely on their integrity and fitness as a member.  All the members shall engage in business for which they are competent and qualified and certificated as required by law.  Code of Ethics of Diligence  To provide services diligently and on a timely basis  In preparing written and oral recommendations to clients, the practitioner shall collect sufficient information to ensure that appropriate advice matching with needs and objectives can be given  Only those recommendations shall be implemented which are suitable for the client and which are agreed upon by the client.  Code of Ethics of Compliance  In all professional activities the practitioner to perform services in accordance with applicable laws, rules, regulations.  The member shall use the marks in compliance with the rules of the FPSB  A member should maintain an effective system of supervision of all representatives’ activities performance, training and recommendations made to the client.

Roles of the Financial Advisor
The Financial Advisor should guide the investor through an ongoing consulting process designed to lead him towards his investing goals and keep his investment strategy on track. This process may include the following:

Setting Goals and Guidelines:The investor along with the Financial Advisor can work together to identify his financial goals and expectations, which can be translated into a long-term investment plan. Determining Asset Allocation:Based on the investor objectives, the Financial Advisor may suggest an asset allocation divided among stocks, fixed income, debt, cash, structured products and other investments and also determine which investment vehicles are most appropriate for the investor. Having a mix of broad asset categories is an important factor in achieving the investor's investment objectives. Selecting Investment Managers and Investment Vehicles: After determining asset allocation, the Financial Advisor may recommend specific portfolio managers who manage assets in a particular style, such as large cap growth, for example. The Financial Advisor's choice of managers is generally based on the manager's investment style and performance history, the professional relationship he or she has developed with the manager and the manager's firm, and a number of other criteria. Managing and Monitoring Investor Accounts: Investors may receive periodic statements detailing their account's holdings and performance. The Financial Advisor may want to meet with the investor to explain the information in these statements and evaluate the performance in light of his goals. If a change is needed, the Financial Advisor can recommend adjustments to help meet investor objectives. Ongoing Personal Service: PMS service may include ongoing communication and frequent contact from the Financial Advisor, in addition to periodic reviews. Also the Financial Advisor may help you put investment performance in the proper perspective, and help you decide whether it may be appropriate to:
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modify your expectations to reflect a changing market; Adjust your risk considerations; or reallocate the assets in your portfolio.

Most Portfolio Managers allow one to choose between a fixed and a performance-linked management fee or a combination. If one opts for the fixed fee, he may pay between 2.50-3.50 per cent of portfolio value; this is usually calculated on a weighted average basis. This fee is apart from the actual expenses like custodian expenses, audit fee, brokerage on transactions etc, which may be charged on accruals. The structure for the performance-linked fee differs across players; usually, apart from a performance-linked fee usually it may include a flat fee.

The portfolio manager also gets to share a percentage of your profit - usually 15-20 percent - earned over and above a threshold level, which may range between 8 per cent and 15 per cent.

Apart from management fees, separate charges will be levied towards brokerage, custodial services and towards meeting tax payments. Usually the fixed fee component is charged on a monthly basis and the variable component is charged on a yearly basis. When one opts for a performance-based fee, the profits are reckoned usually on the basis of "high watermarking". That is, one pays the fee only on the positive returns on his portfolio.

For instance, if one invests Rs. 100 in a PMS and its value appreciates to Rs. 150 at the end of the year, he pays a fee on the profit of Rs. 50. Subsequently, a fee will be levied only on gains over and above the Rs. 150 mark. If the value of his portfolio slumps to Rs. 70, and climbs back to Rs. 110, the Rs. 40 you earn will not be reckoned as profit. You will again be charged a fee only if the value of your portfolio recovers to over Rs. 150, the previous "high watermark."

Process plays a pivotal role; it starts with understanding the customer profile and needs and ends with performance evaluation of the portfolio. The "six step process". The financial planning process consists of the following six steps: Establishing and defining a professional relationship Gathering data, including goals Analysing and evaluating your financial status Developing and presenting financial planning recommendations and/or alternatives Implementing the financial planning recommendations Monitoring the financial planning recommendations







The financial planner should clearly explain or document the services to be provided to you and define both his/her and your responsibilities. The planner should explain fully how he/she will be paid and by whom. You and the planner should agree on how long the professional relationship should last and on how decisions will be made. Gathering data, including goals

The financial planner should ask for information about your financial situation. You and the planner should mutually define your personal and financial goals, understand your time frame for results and discuss, if relevant, how you feel about risk. The financial planner should gather all the necessary documents before giving you the advice you need. Analysing and evaluating your financial status

The financial planner should analyse your information to assess your current situation and determine what you must do to meet your goals. Depending on what services you have asked for, this could include analysing your assets, liabilities and cash flow, current insurance coverage, investments or tax strategies. Developing and presenting financial planning recommendations and/or alternatives

The financial planner should offer financial planning recommendations that address your goals, based on the information you provide. The planner should go over the recommendations with you to help you

understand them so that you can make informed decisions. The planner should also listen to your concerns and revise the recommendations as appropriate. Implementing the financial planning recommendations

You and the planner should agree on how the recommendations will be carried out. The planner may carry out the recommendations or serve as your "coach," coordinating the whole process with you and other professionals such as attorneys or stockbrokers. Monitoring the financial planning recommendations

You and the planner should agree on who will monitor your progress towards your goals. If the planner is in charge of the process, he/she should report to you periodically to review your situation and adjust the recommendations, if needed, as your life changes. Does one necessarily have to invest in cash to open a PMS account? Apart from cash, the client can also hand over an existing portfolio of stocks, bonds or mutual funds to a PMS that could be revamped to suit his profile.However the portfolio manager may at his own sole discretion sell the said existing securities in favour of fresh investments. What are the minimum investment requirements for PMS accounts? A single style PMS usually requires an investment minimum of Rs. 1 crore and above for Equity, Rs. 5 crore and above for Debt, Rs. 20 lacs and above for Structured. investor stay updated on his portfolio's performance? Regular communication from the portfolio management team is an essential tool in keeping the investor and the Financial Advisor informed. Among the tools that are usually provided: periodic performance reporting, monthly investment commentary, and online portfolio information.

Physical Evidence
In providing physical evidence, the service provider's achievements, clearances from regulatory bodies, quality compliance certifications like ISO 9001:2000, past performance, etc. can be used effectively through brochures and displays. Customers in the PMS service attempt to take cues about the service provider's capabilities and the quality of service offered from physical evidence. The major elements of physical evidence include the physical environment, the modes and content of communication, service personnel, the tangible elements accompanying the service and the brand.

The layout of the service centre, atmosphere and aesthetics constitute physical environment. A welldesigned layout, maintenance of appropriate lighting, music and visuals, pleasant and attractive ambiance of the outlet ensure that customers enjoy their service encounter. Placing signboards where needed and displaying the chart of service charges helps customers serve themselves and improves their experience. Service providers should price their services right (neither too high nor too low) to attract customers. Some service providers offer tangibles like books or gifts to improve their relationship with customers. Service providers also need to invest on building the corporate brand, which conveys their image. Brand is another tangible considered by customers before purchasing a service.

Physical evidence can be categorized into two types – peripheral and essential. Essential physical evidence is provided by those tangibles, without which the service cannot be delivered. Peripheral evidence is provided by those tangibles given out by service providers as gifts. The important benefits offered by physical evidence are increased employee productivity, creation of good impression among customers, increased credibility of the service provider, and differentiation from competitors, effective management of service quality and repositioning of services.

Place is also known as channel, distribution, or intermediary. It is the mechanism through which goods and/or services are moved from the manufacturer/ service provider to the user or consumer. There are six basic 'channel' decisions:
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Do we use direct or indirect channels? (e.g. 'direct' to a consumer, 'indirect' via a wholesaler). Single or multiple channels. Cumulative length of the multiple channels. Types of intermediary (see later). Number of intermediaries at each level (e.g. how many retailers in Southern Spain). Which companies as intermediaries to avoid 'intrachannel conflict' (i.e. infighting between local distributors).

Selection Consideration - how do we decide upon a distributor?
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Market segment - the distributor must be familiar with your target consumer and segment. Changes during the product life cycle - different channels can be exploited at different points in the PLC e.g. Foldaway scooters are now available everywhere. Once they were sold via a few specific stores. Producer - distributor fit - Is there a match between their polices, strategies, image, and yours? Look for 'synergy'. Qualification assessment - establish the experience and track record of your intermediary. How much training and support will your distributor require?

Types of Channel Intermediaries. There are many types of intermediaries such as wholesalers, agents, retailers, the Internet, overseas distributors, direct marketing (from manufacturer to user without an intermediary), and many others. The main modes of distribution will be looked at in more detail. 1. Channel Intermediaries - Wholesalers
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They break down 'bulk' into smaller packages for resale by a retailer. They buy from producers and resell to retailers. They take ownership or 'title' to goods whereas agents do not (see below). They provide storage facilities. For example, cheese manufacturers seldom wait for their product to mature. They sell on to a wholesaler that will store it and eventually resell to a retailer. Wholesalers offer reduce the physical contact cost between the producer and consumer e.g. customer service costs, or sales force costs. A wholesaler will often take on the some of the marketing responsibilities. Many produce their own brochures and use their own telesales operations.

2. Channel Intermediaries - Agents

Agents are mainly used in international markets.

An agent will typically secure an order for a producer and will take a commission. They do not tend to take title to the goods. This means that capital is not tied up in goods. However, a 'stockist agent' will hold consignment stock (i.e. will store the stock, but the title will remain with the producer. This approach is used where goods need to get into a market soon after the order is placed e.g. foodstuffs). Agents can be very expensive to train. They are difficult to keep control of due to the physical distances involved. They are difficult to motivate.

3. Channel Intermediaries - Retailers
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Retailers will have a much stronger personal relationship with the consumer. The retailer will hold several other brands and products. A consumer will expect to be exposed to many products. Retailers will often offer credit to the customer e.g. electrical wholesalers, or travel agents. Products and services are promoted and merchandised by the retailer. The retailer will give the final selling price to the product. Retailers often have a strong 'brand' themselves e.g. Ross and Wall-Mart in the USA, and Alisuper, Modelo, and Jumbo in Portugal.

4. Channel Intermediaries - Internet
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The Internet has a geographically disperse market. The main benefit of the Internet is that niche products reach a wider audience e.g. Scottish Salmon direct from an Inverness fishery. There are low barriers low barriers to entry as set up costs are low. Use e-commerce technology (for payment, shopping software, etc) There is a paradigm shift in commerce and consumption which benefits distribution via the Internet

We will promote the firm through these critical marketing components: 1. Leverage referrals from professional contacts and individual clients to make this an integral part of how we conduct business. 2. Enhance our profile within our targeted industries and areas of specialization by increasing our reputation for possessing unique expertise in these areas. 3. Have the expectation that all employees will take on the task of marketing the firm as they approach their other areas of responsibility. We will track, give feedback, and acknowledge efforts, accomplishments, and results from these actions. 4. Continue to use the technology we have, including our in-house computer capabilities and our website. Both possess incredible potential for future differentiation in an increasingly competitive market.

We will focus on getting referrals from:
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major banks credit unions major law firms brokerage firms current clients

Our referrals hinge upon key relationships with other companies in financial and professional services. Often a client will be with their lawyer, banker, stock broker, etc. and realize that they need accounting and financial planning help. Sometimes the professional they are with might want to suggest that they see an accounting firm. By building these marketing relationships we will also build a sales pipeline for new clients. 4.3.1 Advertising We will advertise only in local newspapers and trade magazines, as we want to attract local clients. We are not big enough to spend money on national advertising in national magazines. We will also advertise on "Local" portals online making sure that people always find us when they are looking for an accounting and finance firm in this area. Our website needs to clearly communicate our brand and positioning so that when we drive traffic to it -- it results in leads into our office.

4.3.2 Public Relations It will be important for us to use PR to maintain our image in the community, and to remain known as THE experts in our industry. We will issue Press Releases whenever one of our partners speaks at an

event, or teaches a class. We will also issue press releases when we get big clients on board, assuming we have the client's permission. We will use our PR agency to book interviews related to topics in our industry to continue to build the image of our expertise. We must stay focused in our PR efforts, as we do not want to spend more then a few thousand dollars a month on PR expenses. 4.3.3 Direct Marketing We will send out direct marketing mainly to current clients. We will send out a quarterly tax and financial planning newsletter, as well as tax planning information twice per year. We will use a direct marketing agency to make sure that our mailings look professional and use professional designs and high quality content. 4.4 Web Plan Our website is currently live and working, but needs some revamping, both of content and features. The main focus of our Internet presence is to serve as a permanent, always-accessible information and branding tool for prospective clients, with a secondary goal of providing client-only features. 4.4.1 Website Goals Our website goals are as follows: 1. Convey professional, expert, yet personal brand 2. Communicate with current clients 3. Prospect future clients 4.4.2 Website Marketing Strategy The web site marketing strategy is very simple. We need to have an up-to date very professional website that reflects the brand and image of our company. When a lawyer, or banker or stock broker refers a client to us, we want them to be able to visit us online and get a very good sense of who we are, what we do, and why we are the best. We will do some very basic pay-per-click online advertising in local portals in order to attract clients who are searching for our services. Other then that our website will be used mainly to attract word of mouth referrals and will be used to continue to market and communicate with our existing clients. 4.4.3 Development Requirements Our website is already up and running. We need to have: 1. 2. 3. 4. A client-only secure area where clients can access relevant information to their account We need to be able to send regular newsletters to clients and prospective clients We need to have fresh updated content relevant to our industry We need to revamp our "About the Company" section of our website.

4.5 Service Our business and individual clients judge our competence based on how we treat them. This is their primary - and in many cases their only - measurement of our capabilities. We must ensure that each of our clients will answer positively to these questions:
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Do they act in a professional manner? Do they know who I am? Do they remember my name? Are they genuinely concerned about my best interest? Will they defend their advice and council if needed?

Service blueprinting
A key characteristic of service blueprinting is that it distinguishes between what customers experience “front-stage” and the activities of employees and support processes “backstage,” where customers can’t see them. Between the two lies what is called the line of visibility. Service blueprints clarify the interactions between customers and employees and how these are supported by additional activities and systems backstage. Since blueprints show the interrelationships between employee roles, operational processes, information technology, and customer interactions, they can facilitate the integration of marketing, operations, and human resource management within a firm. Blueprinting also gives managers the opportunity to identify potential fail points in the process where there is a significant risk of things going wrong and diminishing service quality. Knowledge of such fail points enables managers to design procedures to avoid their occurrence or to prepare contingency plan. Points in the process where customers commonly have to wait can also be pinpointed. Standards can then be developed for execution of each activity, including times for completion of a task, maximum wait times in between tasks, and scripts to guide interactions between staff members and customers. A Service Blueprint can help you to simply specify a service. Additionally it can help build teams and spot problems early on. While conventional blueprints are used to map space, Service Blueprints are generally about mapping time. The participatory nature of the blueprinting process is a great way to build teams and share expertise. Service blueprints are living, flexible documents, normally produced collaboratively with as many stakeholders as possible. Traditional blueprints are used to help designers work with manufacturers, architects with builders - in this sense they are about realising the design, and they are produced towards the end of the creative process. Service Blueprints on the other hand are used during the design process, often very early on, to help specify the various components of a service. Service Blueprints are invaluable in the development of new services. As well as helping service providers to coordinate people and resources across time, they are also useful as a participatory project planning and management tool. Service Blueprints can form a shared focus for the various stakeholders responsible for the development and delivery of a new service and collaboratively developing or reviewing a Service Blueprint in a workshop setting can help bring people on board.

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