CLIENT PROFILING

Aleena Merin George

WMB15
junior research analyst
 CLIENT PROFILING
It is a process of understanding the details pertaining to the client in order to make
the most efficient plan and have successful executions of the plan Clients are
segregated into various classes based on the person’s feasibility on certain features.
The clients are categorised into
➢ Life cycle
➢ Income and wealth level
➢ Residential status
➢ Attitude
➢ Trade profile
➢ Structure of investment

1. Life cycle
The lifecycle approach to financial planning places all of a client's financial
activity into distinct time periods, or stages, with retirement acting as the final
phase in the financial lifecycle. It can be classified into:
I. Accumulation phase: It is the beginning of the career. Individual’s net-
worth is very small/negative
II. Preservation phase: It is the middle of his career. Having tangible
assets(home) reasonable base of financial assets.
III. Distribution phase: It is in his retirement phase. Investments become
principal source of income in this step.
ACCUMULATION PHASE:
➢ RISK CAPACITY: High
➢ RETURN EXPECTATION: Low
➢ GOAL: Planning to start a family, saving to purchase a home and paying
down college debt
➢ INVESTABLE CORPUS: small amount
➢ RISK PROFILE: aggressive
➢ INVESTMENT HORIZON: Long term
➢ Individual’s net-worth is very small/negative
➢ Spending exceeds his/her income
➢ Individuals expect larger future income
PRESERVATION PHASE:
➢ Individuals are covered with insurance by this time.
➢ Having tangible assets(home) reasonable base of financial assets.
➢ Preservation of capital acquires some importance
➢ RISK CAPACITY: low
➢ RETURN EXPECTATION: High
➢ GOAL: paying for your children’s education, Properly managing debt in
this stage can play a big role in securing your retirement.
➢ INVESTABLE CORPUS: higher amount
➢ INVESTMENT HORIZON: Long term
➢ RISK PROFILE: Moderate
DISTRIBUTION PHASE:
➢ RISK CAPACITY: Very low
➢ RETURN EXPECTATION: High
➢ GOAL: Retirement
➢ INVESTABLE CORPUS: medium amount
➢ INVESTMENT HORIZON: Short term
➢ RISK PROFILE: Conservative

2. INCOME AND WEALTH LEVEL

It determines the financial status of the client.
I. Retail investor- investor who can invest up to Rs2 lakh
II. Affluent investor: Individuals with an investable surplus of Rs 25 lakhs to
Rs 2 crores are called sub-HNWI or affluent investors.
III. High net worth investor: A high net worth individual (HNWI) refers to an
individual with a net worth more than Rs 2 crores investable capital
IV. Ultra-high net worth investor: Individuals who have assets worth 200
crores and above.
1. RETAIL INVESTORS:
➢ RISK CAPACITY: low
➢ RETURN EXPECTATION: medium
➢ GOAL: Education, career
➢ INVESTABLE CORPUS: Small amount
➢ INVESTMENT HORIZON: LONG TERM
➢ RISK PROFILE: Aggressive
 2. AFFLUENT INVESTORS:
➢ RISK CAPACITY: Medium
➢ RETURN EXPECTATION: medium
➢ GOAL: Family, retirement, assets
➢ INVESTABLE CORPUS: comparatively high amount than retail investors
➢ INVESTMENT HORIZON: LONG TERM
RISK PROFILE: Aggressive
3. HIGH NET WORTH INVESTORS
➢ RISK CAPACITY: High
➢ RETURN EXPECTATION: High
➢ GOAL: Family, retirement, assets, investment
➢ INVESTABLE CORPUS: high
➢ INVESTMENT HORIZON: LONG TERM
➢ RISK PROFILE: Moderate
4. ULTRA- HIGH NET WORTH INVESTORS
➢ RISK CAPACITY: Very High
➢ RETURN EXPECTATION: High
➢ GOAL: investment, profit
➢ INVESTABLE CORPUS: high
➢ INVESTMENT HORIZON: short term
➢ RISK PROFILE: Conservative
3.RESIDENTIAL STATUS:
It refers to the location of the investors.
I. Residential investors: Investor live within the country in which they invest
II. Non-residential investors: Investors live outside the country in which they
invest.
RESIDENTIAL INVESTOR:
➢ RISK CAPACITY: High
➢ RETURN EXPECTATION: medium
➢ GOAL: investment, profit, retirement
➢ INVESTABLE CORPUS: small/high amount
➢ INVESTMENT HORIZON: short/ long term
➢ RISK PROFILE: Aggressive
NON-RESIDENTIAL INVESTORS:
➢ RISK CAPACITY: High
➢ RETURN EXPECTATION: medium
 ➢ GOAL: investment, profit, retirement
➢ INVESTABLE CORPUS: high amount
➢ INVESTMENT HORIZON: short/ long term
➢ RISK PROFILE: Aggressive
4.ATTITUDE
I. Conservative: Conservative risk profile refers to a significantly low-risk
aptitude.
II. Moderate: Moderate risk-takers usually strive to strike a balance between
returns and risk.
III. Aggressive: This risk-profile exhibits the most willingness for withstanding
market volatilities in the expectation of earning exponential returns.
Conservative:
➢ RISK CAPACITY: Low
➢ RETURN EXPECTATION: medium
➢ GOAL: education, career retirement
➢ INVESTABLE CORPUS: medium amount
➢ INVESTMENT HORIZON: short term
Moderate:
➢ RISK CAPACITY: medium
➢ RETURN EXPECTATION: medium
➢ GOAL: education, career retirement, wealth creation
➢ INVESTABLE CORPUS: medium amount
➢ INVESTMENT HORIZON: short term
Aggressive:
➢ RISK CAPACITY: high
➢ RETURN EXPECTATION: high
➢ GOAL: healthy asset-liability balance, and sometimes young individuals
with sufficient disposable income
➢ INVESTABLE CORPUS: high amount
➢ INVESTMENT HORIZON: long term
 5. TRADE PROFILE
It defines an individual's preferences in investment decisions
I. VALUE INVESTORS: Value investors that involves buying
securities that appear under-priced by some form of fundamental
analysis.
II. SYSTEMATIC INVESTORS: Invest regularly equal amount in the
various options available
III. LEVERAGE INVESTORS: Leveraged investing is a technique that
seeks higher investment profits by using borrowed money.
VALUE INVESTORS:
➢ RISK CAPACITY: low
➢ RETURN EXPECTATION: High
➢ GOAL: investment, profit, retirement
➢ INVESTABLE CORPUS: medium amount
➢ INVESTMENT HORIZON: long term
➢ RISK PROFILE: Conservative
SYSTEMATIC INVESTORS:
➢ RISK CAPACITY: moderate
➢ RETURN EXPECTATION: moderate
➢ GOAL: investment, profit, retirement
➢ INVESTABLE CORPUS: medium amount
➢ INVESTMENT HORIZON: long term
➢ RISK PROFILE: moderate
LEVERAGE INVESTORS:
➢ RISK CAPACITY: high
➢ RETURN EXPECTATION: high
➢ GOAL: investment, profit, retirement, return the borrowing
➢ INVESTABLE CORPUS: high amount
➢ INVESTMENT HORIZON: short term
➢ RISK PROFILE: aggressive
6. STRUCTURE OF INVESTMENT:
I. DOMESTIC INSTITUTIONAL INVESTORS: DIIs invest in financial
assets and securities of their home country. They use pooled funds to trade
 in securities and assets. These investments are are influenced by political and
economic trends in the country.
II. FOREIGN INSTITUTIONAL INVESTORS: A foreign institutional
investor (FII) is an investor or investment fund investing in a country
outside of the one in which it is registered or headquartered. The term foreign
institutional investor is probably most commonly used in India, where it
refers to outside entities investing in the nation's financial markets.
III. RETAIL INVESTORS: A retail investor, also known as an individual
investor, is a non-professional investor who buys and sells securities or funds
that contain a basket of securities
IV. HINDU UNDIVIDED FAMILY: HUF means Hindu Undivided Family.
You can save taxes by creating a family unit and pooling in assets to form a
HUF. HUF is taxed separately from its members. A Hindu family can come
together and form a HUF.
V. NON-INSTITUTIONAL INVESTORS: non-institutional, investors are,
by definition, any investors that are not institutional investors
I. DOMESTIC INSTITUTIONAL INVESTORS
➢ RISK CAPACITY: Moderate to high
➢ RETURN EXPECTATION: high
➢ GOAL: investment, profit, retirement, return the borrowing
➢ INVESTABLE CORPUS: high amount
➢ INVESTMENT HORIZON: long term
FOREIGN INSTITUTIONAL INVESTORS
➢ RISK CAPACITY: Moderate to high
➢ RETURN EXPECTATION: high
➢ GOAL: investment, profit, retirement, return the borrowing
➢ INVESTABLE CORPUS: high amount
➢ INVESTMENT HORIZON: short term

RETAIL INVESTORS
➢ RISK CAPACITY: low
➢ RETURN EXPECTATION: medium
 ➢ GOAL: investment, profit, retirement, return the borrowing
➢ INVESTABLE CORPUS: medium amount
➢ INVESTMENT HORIZON: short term
certain risky, complex investments.
HINDU UNDIVIDED FAMILY
➢ RISK CAPACITY: Moderate
➢ RETURN EXPECTATION: high
➢ GOAL: investment, profit, retirement, return the borrowing
➢ INVESTABLE CORPUS: high amount
➢ INVESTMENT HORIZON: long term
NON-INSTITUTIONAL INVESTORS
➢ RISK CAPACITY: Moderate to high
➢ RETURN EXPECTATION: high
➢ GOAL: investment, profit, retirement, return the borrowing
➢ INVESTABLE CORPUS: high amount
➢ INVESTMENT HORIZON: long term

Banking Industry “Indian Scenario”

As per the Reserve Bank of India (RBI), India’s banking sector is sufficiently
capitalised and well-regulated. The financial and economic conditions in the
country are far superior to any other country in the world. Credit, market, and
liquidity risk studies suggest that Indian banks are generally resilient and have
withstood the global downturn well. Indian banking industry has recently
witnessed the roll out of innovative banking models like payments and small
finance banks. RBI’s new measures may go a long way in helping the restructuring
of the domestic banking industry. The digital payments system in India has
evolved the most among 25 countries with India’s Immediate Payment Service
(IMPS) being the only system at level five in the Faster Payments Innovation Index
(FPII). The Indian banking system consists of 12 public sector banks, 22 private
sector banks, 46 foreign banks, 56 regional rural banks, 1485 urban cooperative
banks and 96,000 rural cooperative banks in addition to cooperative credit
institutions. As of September 2020, the total number of ATMs in India increased
to 210,049 and is further expected to increase to 407,000 by 2021. Asset of public
sector banks stood at Rs. 107.83 lakh crore (US$ 1.52 trillion) in FY20. During
FY16-FY20, bank credit grew at a CAGR of 3.57%. As of FY20, total credit
extended surged to US$ 1,698.97 billion. During FY16-FY20, deposits grew at a
CAGR of 13.93% and reached US$ 1.93 trillion by FY20. Credit to non-food
industries stood at Rs. 103.46 trillion (US$ 1.40 trillion) as of November 20, 2020.
Portfolio Creation: