SUMMER INTERNSHIP PROJECT REPORT

ON
“ROLE OF FINANCIAL PLANNING IN WEALTH CREATION ”

A report submitted to
SCHOOL OF BUSINESS MANAGEMENT
GOVERNMENT COLLEGE DHARAMSHALA
as a partial fulfillment of Full time
Submitted by
NITISH SHARMA

UNDER THE GUIDANCE OF:-

Mr. SUNIL DUTT
BRANCH MANAGER
NJ INDIA INVEST,PVT. LTD
 CERTIFICATE OF ORIGINALITY

I hereby declare that this summer internship project is my own work and That, to the best of my
Knowledge and belief, it reproduces no material Previously published or written that has been
accepted for the reward of Any other degree, except where due acknowledgment has been made in
the text.

(Signature)
Nitish Sharma
 ACKNOWLEDGEMENT

Any accomplishment requires the effort of many people and this work is no different. I have been
fortunate enough to get the help and guidance from many people. It is pleasure to acknowledge
them though still it is inadequate appreciation for their contribution.
I would not have accomplished this journey without the help, guidance and support of certain
people who acted as guides and friends along the way. I would like to express my deepest and
sincere thanks to my industry mentor Mr. Sunil Dutt (Branch Manager) and Mr. Mukeshwar Lal
(Unit Manager) for his invaluable guidance and help for his support. This project could not be
complete without the support and guidance.
 EXECUTIVE SUMMARY

This project report presents a study on “Role of financial planning in wealth creation”.
This project has been prepared as part of summer training in NJ India Invest Pvt. Ltd. NJ
India Invest Pvt. Ltd is a national distributor of mutual funds. It sells mutual funds with the
help of sub-brokers or advisers. The study done tries to analyze the role of financial
planning in wealth creation.The Project gave me a great learning experience and at the same
time it gave me enough scope to implement my anarchically skills. The company involved
me in calling insurance advisers and acclaiming to associate with the company as a Mutual
fund advisers for this purpose around 1500 calls were made along with visiting LICs. For
the purpose of conducting this study a survey was done on Insurance Advisers & Mutual
Fund Brokers. The survey consisted of questions related to mutual funds which not only
tested their knowledge on MFs but also brought forward the fact if they were keen to sell
MFs. The survey took response of 100 respondents which mainly consisted of insurance
advisers. The research problem basically tries to focus on way by which conversion rate
could
 LIST OF CONTENT

Topics Page No.

Acknowledgement 3

Executive summary 4

Company Profile 6-14

Introduction to financial planning 15-42

Research Methodology 43-48

Data interpretation & Analysis 49-47

Findings 48

Recommendation 49

Conclusion 50

Bibliography 51

Annexure 52-54

INTRODUCTION
About the company

NJ India Invest Pvt. Ltd. is one of the leading advisers and distributors of financial products and
services in India. Established in year 1994, NJ has over a decade of rich exposure in financial
investments space and portfolio advisory services. From a humble beginning, NJ over the years has
evolved out to be a professionally managed, quality conscious and customer focused financial /
investment advisory & distribution firm. The strength of NJ lies in the strong domain knowledge in
investment consultancy and the delivery of sustainable value to clients with support from cutting-
edge technology platform, developed in-house by NJ. It offers a 360 comprehensive business
platform with unmatched IT solutions, empowering them to set the best practice standards and
deliver real value to their customers. NJ India Invest believes in
 having single window, multiple solutions that are integrated for simplicity and sapience

 making innovations, accessions, value-additions, a constant process

 providing customers with solutions for tomorrow which will keep them above the curve,
today

NJ had over INR 10,000 crores of mutual fund assets under advice with a wide presence in over
100+ locations in 21 states in India. The numbers are reflections of the trust, commitment and value
that NJ shares with its clients. NJ continues to innovate and challenge its own processes and
systems on constant basis to emerge more convinced. NJ continues to expand the scope and depth
of its offerings, making apt use of technological support..

NJ India Invest basically works to earn its profit in the form of commission they receive from the
investment which is done on behalf of their ARN (AMFI Registration Number). ARN is a no given
by the AMFI to the sellers of mutual funds in order to identify them and speed up the process of
commission release. Higher the amount of investment done through their ARN more will be the
profit. NJ is not into direct selling of MFs. It sells MFs indirectly through Mutual Fund advisers/
agents whom recruits and trains in selling mutual funds. All the investment brought by these
advisors is done through the ARN of the company. NJ also charges a yearly fee from these advisors
for providing them technical support so that they can

Vision:
To be the leader in our field of business through,
Total Customer Satisfaction
 Commitment to Excellence
Determination to Succeed with strict adherence to compliance
Successful Wealth Creation of our Customers
Mission:
Ensure creation of the desired value for our customers, employees and associates, through constant
improvement, innovation and commitment to service & quality. To provide solutions which meet
expectations and maintain high professional & ethical standards along with the adherence to the
service commitments.

PROMOTERS

Mr. Neeraj Choksi & Mr. Jignesh Desai are two first generation entrepreneurs who began the

journey of ‘NJ’ in 1994. The promoters of the NJ Group friends since their college years and the

bond between Mr. Neeraj & Mr. Jignesh have been instrumental in the success of NJ.

Our Businesses
The NJ Wealth Advisors network is among India’s largest and most successful network of advisors
in the financial services industry. The NJ Wealth Advisory platform is a comprehensive, 360
Platform offering end to end solutions, required for a successful wealth advisory practice.

Technology Support
A Complete Online Business Management Desk with extensive MIS reports and administrative
tools to enable you effectively Manage, Monitor & Control your business through Partner Desk.
 You do not need to maintain back-office records and reports with yourself
 You do not need to maintain records of the investments done by your clients
 You can centrally manage your NJ Services, Send Queries etc
 You can effectively use reports / tools to improve your services to your clients & develop
your business.
 You can smartly manage & monitor your business and concentrate on business growth
backed by disciplined business decisions.

Sales Support

Every NJ Funds network partner is provided with a Relationship Manager who remains in touch
with him on a regular basis to provide all necessary information and support. Your requirement in
terms of sales material, application forms etc would be taken care of by our sales team. Apart from
regular sales support on a daily basis NJ does:

 Regular sales meet of your client

 Regular partner meet by inviting an industry expert to gain market insight.
 Doing joint calls for you whenever required
 Doing sales planning and setting up sales process for your sales staff

Marketing Support

Marketing your services and products is another important aspect of growing your business.
Building your brand in the market is very important in today’s competitive world. NJ understands
this need and provides marketing support through NJ print shop. NJ print shop provides multiple
branding materials which you can order through your partner desk. A dedicated Marketing platform
to add an edge to your Advisory Business. NJ Print Shop offers wide range of marketing material
for your business with excellent features.
  Co – branded – Project your Brand / Company
 Professionally designed
 Quality / excellent content from NJ Marketing
 Ready Printed – Door step Delivered
 Distinguishing factor - Get Ahead
 Available in many regional languages

Training Support

Developing soft skills in financial advisory industry is not optional but necessity as client
relationship is at the core of business. At NJ we truly believe in this fact and they to provide all
necessary training support.
Continuous enhancement and up gradation of one’s skills & knowledge are the needs of the hour.
NJ Gurukul emerged as an idea to bridge the gap that existed in meeting the needs of Financial
Advisors for continued training and education.

1. Exclusively Designed Quality Training Modules

2. Training at every level of business / knowledge
3. NJ Gurukul is registered EP for CFP

Research Support

Our competent research team adds significant value to our advisory by providing regular product,
schemes and market updates. Our research team, on a regular basis does detailed analysis and study
of different mutual funds schemes available in the market and come out with list of recommended
schemes. This ‘ready reckoner’ of schemes helps our partners to pick and choose a particular
scheme for their investors.
The research team does:
 In depth analysis of schemes performance
 Investment philosophy of the scheme
 Due diligence of AMC
  Practices followed by fund management exam of AMC
 Service standards
 Creditworthiness of trustees
 Regular publications:
➢ Monthly magazine 'FUNDZ WATCH‘
➢ Weekly reports
➢ Daily market update
➢ Daily MF track and much more...

 Research reports : Recommendations, market insight, analyses etc.

 Ongoing interaction through product training, Fund Manager Meets etc.
 Launch Presentations of all prominent products of various Mutual Funds

Customer Support

Solving all your client’s investment related queries is just a phone call away as our customer care
executives remain available to answer and solve your queries. NJ platform also provides you
facility to submit your queries online at your Partner desk platform and you can keep track of status
of your query. Single Contact Point for All Queries available to All Advisors in India

 Trained Executives for Time-Bound solving of Queries

 All India Toll Free Number - 1800 233 0155
 Facility to submit Queries and track latest status Online
 Centralized query handling across all Products.
 Query Module / Access to Customer Care
 Instant service for Account Statement (Soft Copy – via e-mail)
  Investment philosophy of the scheme
 Due diligence of AMC
 Practices followed by fund management exam of AMC
 Service standards
 Creditworthiness of trustees
 Regular publications:
➢ Monthly magazine 'FUNDZ WATCH‘
➢ Weekly reports
➢ Daily market update
➢ Daily MF track and much more...

 Research reports : Recommendations, market insight, analyses etc.

 Ongoing interaction through product training, Fund Manager Meets etc.
 Launch Presentations of all prominent products of various Mutual Funds

NJ Portfolio Management Services

NJ has ventured in asset management business with NJ Advisory Services Pvt. Ltd., a group
company, launching its discretionary PMS products.

At the Heart of NJ Advisory Services is the idea to provide customers with solutions that give them
the freedom from active management of investment while having an assurance that we would be
doing so in the best possible manner. Our conviction, matched by our passion and expertise, is all
about ensuring the peace of mind of the investors. The PMS products currently offered are aimed at
meeting investor’s need for successful long term wealth creation by following strategies that control
risk and optimize returns in a mutual fund portfolio.

NJ Advisory Services leverages upon with its rich experience in portfolio management with in-
depth knowledge & expertise in mutual funds. The decisions on mutual fund portfolio also combine
results of time tested proprietary research models, extensive due- diligence of fund houses,
interactions with fund managers & internal risk controls. The defined Processes and smart use of
technology further ensures that the investors are offered with quality portfolio management and
administrative services, ensuring a complete peace of mind.

NJ Realty

The NJ Realty venture offers an integrated service model offering end-to-end services to various
stake-holders in realty program management & execution. The idea is to associate with
stakeholders and engage actively in various stages of program management, viz. market survey,
legal due diligence, land acquisition, planning & execution of projects and managing sales &
distribution through NJ Wealth Advisors Network.
Managing realty programs is a lengthy process replete with many challenges right from program
identification to marketing. As a developer, investor or land owner, one may be keen to execute
realty projects, but may not be equipped with the right skill-sets, contacts, experience and/or know-
how for the undertaking. This is where NJ Realty can associate and help in shaping up the realty
programs. NJ Realty has acquired considerable experience in program management and is also
currently engaged in multiple programs playing diverse roles.

At the heart of NJ Realty is the philosophy of sustainability and preservation of environment. Going
beyond words, NJ Realty seeks to keep environment as one of the focal points in it's real estate
business.

NJ Insurance Brokers
NJ Insurance Brokers Pvt. Ltd., a licensed insurance broker by IRDA, seeks to provide customers
with comprehensive solutions catering to their insurance needs.
At the heart of NJ Insurance is the strong vision for continued financial well-being for customers -
individuals and families, regardless of any circumstances. The key is to offer 'right' advice which is
unbiased and customer centric and encompasses the right risk to insure, the right coverage, the right
product and at the right time. The idea to offer clients with comprehensive solutions extends further
to cover quality claim settlement and other services.
NJ Insurance leverages from the rich experience of NJ group in financial planning and investment
management for customers. NJ Insurance Brokers has appointed Certified Insurance Advisors
(CIAs) who work with customers in identifying, fulfilling & managing their insurance needs. NJ
offers a comprehensive basket of products both in life & non-life insurance space and makes
exhaustive use of technology to deliver great value to customers.

NJ Global Wealth Advisory

NJ Global Invest (Ltd.) is a new venture wherein NJ seeks to offer a Global Wealth Advisory
platform to advisors for offshore funds across the globe.
The vision at Global Wealth Advisory platform is to offer a single window for investment
opportunities across the globe to customers. The idea is to bring to customers a wide range of
offshore fund schemes (domiciled in Mauritius, Luxembourg, Dublin and other jurisdictions),
through advisors on the Global Wealth Advisory platform. NJ Global Invest seeks to provide a
offshore fund distribution platform & offshore Portfolio Advisory services under a B2B distribution
model. NJ Global Invest also desires to offer comprehensive order routing and trade settlement
facility with support services of client reporting & fees settlement.
NJ Global Invest is a venture that leverages from rich experience & success of financial products
advisory & distribution business in India. Incorporated in Mauritius, NJ Global Invest is set up an
offshore fund distribution company and is a licensed 'Investment Dealer (Full Service Dealer,
excluding underwriting)" by FSC, Mauritius.

NJ Technologies
NJ Technologies is a latest venture by NJ wherein we aim to provide quality technology solutions
to businesses in a wide range of domains.
NJ started its journey in technology with the start of Fin logic Technologies (India) Pvt. Ltd., a
group company, in year 2000. The idea then was to develop software applications to support the
growing (financial services) distribution business and manage the IT infrastructure. Over the years,
the captive IT team, gained strong domain expertise and skills in diverse areas and technology
domains. Today, Fin logic team boasts of over 250* employees with skills & rich experience in
product development, software testing, infrastructure management, R&D, project management &
information security. The entire NJ Group's internal systems and infrastructure is managed by Fin
logic which also has developed many state-of-the arts, proprietary applications that power NJ's
businesses.
NJ Gurukul
Started in year 2007, NJ Gurukul today offers a very wide range of training programs across India
in all major cities.
NJ Gurukul is about a vision that aspires to nurture the young talent in India and to transform them
into individuals with knowledge & skills for employment and enterprise.NJ Gurukul today, is a
leading provider of training programs in the financial services industry. NJ Gurukul offers a wide
range of training programs by way of part / full time classroom sessions being conducted at
multiple locations across India.
The NJ Gurukul has a Board of Trainers with over 35* well qualified, professional trainers
empanelled across India for delivering training programs. Within a short time, NJ Gurukul has
trained over 30,000* participants in over 50 locations across India. NJ Gurukul is an authorized
Education Provider (EP) with FPSB India to deliver training for the prestigious Certified Financial
Planner - CFPCM Certification. NJ Gurukul is also among-est the largest trainers of Mutual Fund
Distributors in India.
Key Training Programs:
a) Mutual Fund Distributors Certification by NISM for prospective NJ Wealth Advisors
b) Certified Financial Planner (CFPCM) Certification by FPSB India
c) Certified Personal Financial Advisor (CPFA) Certification by NISM
Products: English4all – a distance learning / home kit for English language
 Introduction

FINANCIAL PLANNING

A Distributor/Agent is expected to give unbiased and appropriate investment advice

to a potential investor. Appropriate investment decisions, however, require proper
planning of the financial situation of the investor. A financial planner is needed to
help the investor do adequate financial planning, before he decides on where to invest
his funds. Financial Planning forms, therefore, the basis of genuine investment
advice.

Each one of us needs “finance” at various stages of our life, and needs to ensure that
we have the money available at the right time, when needed. We may need money at
the time of marriage of a daughter or son, and we need it then, not later. Or at the
time of a medical emergency, and again at that time, as later the money will not help.
Or money will be needed simply at the time of retirement. In other words, we need
finance at different times for different goals. Buying a house, providing for a child’s
education and marriage or for retirement are all examples of goals in life that can be
measured in monetary terms.

Personal financial needs are of two types- protection and investment. An earning
member providing for his family to have continued income after his death is an
example of a protection need. Providing for the marriage expenses of a daughter is an
example of an investment need.
Financial Planning is an exercise aimed at identifying all the financial needs of an
individual, translating the needs into monetarily measurable goals at different types
in the future, and planning the financial investments that will allow the individual to
provide for and satisfy the future financial needs and achieve his life’s goals.

The objective of financial planning is to ensure that the right amount of money is
available in the right hands at the right point in the future to achieve an individual’s
financial goals. Successful financial planning makes a considerable contribution to
the sum total of human happiness. Financial planning is a process that helps a person
work out where he or she is now, what he/she may need in the future and what he/she
must do to reach the defined goals. The process involves gathering relevant financial
information, setting life goals, examining the person’s current financial status and
coming up with the strategy or plan for how the person can meet his/her goals given
the person’s current situation and future plans.

Some personal finance software packages, magazines or self-help books can help a
person do his own financial planning. However, an individual may decide to seek
help from a professional financial planner if the individual:
 Needs expertise he or she does not possess in certain areas of his finances. For
example, a planner can help a person evaluate the level of risk in his/her
existing investment portfolio and revise it suitably;
 Does not feel he/she has the time to spare to do one’s own financial planning;
 Knows that he/she needs to improve his/her current financial situation but
doesn’t know where to start
 Feels that a professional advisor could help him improve on how he/she is
currently managing the personal finances;
 Has an immediate need such as a major illness, or unexpected life event such
as an inheritance, or
  Wants to get a professional opinion about a self-developed financial plan.

Scope of Financial Planning

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.
Child Education Planning
Planning for the higher education of client’s child through proper planning.

FINANCIAL ADVISOR
A Financial Planner is someone who uses the financial planning process to help
another person determine how to meet his or her life goals. The key function of a
financial planner is to help people identify their financial planning needs, their
present priorities and the products that are most suitable to meet their needs. The
financial planner normally possesses detailed knowledge of a wide range of financial
planning tools and products, but the planner’s major role is to help clients choose the
best products for each need. The planner can take a “big picture” view of a client’s
financial situation and make financial planning recommendations that are right for
the client.

The planner can look at all of client’s needs including budgeting and saving, taxes,
investments, insurance and retirement planning. Or, the planner may work with his
client on a single financial issue but within the context of his overall situation. This
big approach to a client’s financial goals sets the planner apart from other financial
advisors, like tax advisors and insurance agents, who may have been trained to focus
on a particular area of a person’s financial life.

Types of Financial Advisor

We can distinguish Financial Advisor as per their work. Some of them are as follows:
-
Financial Analyst
Personal Finance Planner
Wealth Manager
Financial Analyst
Financial analysts assess the economic performance of companies and industries for
firms and institutions with money to invest. Also called securities analysts and
investment analysts, they work for investment banks, insurance companies, mutual
and pension funds, securities firms, the business media, and other businesses, helping
them make investment decisions or recommendations. Financial analysts read
company financial statements and analyze commodity prices, sales, costs, expenses,
and tax rates in order to determine a company’s value and to project its future
earnings. They often meet with company officials to gain a better insight into the
firm’s prospects and to determine its managerial effectiveness.
Financial analysts can usually be divided into two basic types: those who work on the
buy side and those who work on the sell side. Analysts on the buy side work for
companies that have a great deal of money to invest. These companies, called
institutional investors, include mutual funds, hedge funds, insurance companies,
independent money managers, and charitable organizations, such as universities and
hospitals, with large endowments.
Buy side financial analysts work to devise investment strategies for a company’s
portfolio. Conversely, analysts on the sell side help securities dealers to sell their
products. These companies include investment banks and securities firms. The
business media also hire financial advisors that are supposed to be impartial, and as
such occupy a role somewhere in the middle.
Financial analysts generally focus on a specific industry, region, or type of product.
For example, an analyst may focus on the utilities industry, Latin America, or the
options market. Firms with larger research departments may divide the work even
further so their analysts can maintain sharp focus. Within their areas of specialty,
analysts assess current trends in business practices, products, and competition. They
must keep abreast of new regulations or policies that may affect the investments they
are watching and monitor the economy to determine its effect on earnings. Some
experienced analysts called portfolio managers supervise a team of analysts and help
guide a company in selecting the right mix of products, industries, and regions for
their investment portfolio.
Others who manage mutual funds or hedge funds perform a similar role and are
generally called fund managers. Other analysts, called risk managers, analyze
portfolio decisions and determine how to maximize profits through diversification
and hedging.
Some financial analysts, called ratings analysts, evaluate the ability of companies or
governments that issue bonds to repay their debts. On the basis of their evaluation, a
management team assigns a rating to a company’s or government’s bonds, which
helps them to decide whether to include them in a portfolio. Other financial analysts
perform budget, cost, and credit analysis as part of their responsibilities.
Financial analysts use spreadsheet and statistical software packages to analyze
financial data, spot trends, and develop forecasts. Analysts also use the data they find
to measure the financial risks associated with making a particular investment
decision. On the basis of their results, they write reports and make presentations,
usually with recommendations to buy or sell particular investments.
Personal Financial Advisor

Personal financial advisors assess the financial needs of individuals. Advisors use
their knowledge of investments, tax laws, and insurance to recommend financial
options to individuals. They help them to identify and plan to meet short- and long-
term goals. Planners help clients with retirement and estate planning, funding the
college education of children, and general investment choices. Many also provide tax
advice or sell life insurance. Although most planners offer advice on a wide range of
topics, some specialize in areas such as retirement and estate planning or risk
management.
Personal financial advisors usually work with many clients, and they often must find
their own customers. Many personal financial advisors spend a great deal of their
time making sales calls and marketing their services. Many advisors also meet
potential clients by giving seminars or lectures or through business and social
contacts. Finding clients and building a customer base is one of the most important
aspects of becoming successful as a financial advisor.
Financial advisors begin work with a client by setting up a consultation. This is
usually an in-person meeting where the advisor obtains as much information as
possible about the client’s finances and goals. The advisor then develops a
comprehensive financial plan that identifies problem areas, makes recommendations
for improvement, and selects appropriate investments compatible with the client’s
goals, attitude toward risk, and expectation or need for a return on the investment.
Sometimes this plan is written, but more often it is in the form of verbal advice.
Financial advisors usually meet with established clients at least once a year to update
them on potential investments and adjust their financial plan to any life changes—
such as marriage, disability, or retirement. Financial advisors also answer clients’
questions regarding changes in benefit plans or the consequences of a change in their
jobs or careers. Financial planners must educate their clients about risks and various
possible scenarios so that the clients don’t harbor unrealistic expectations.
Most personal financial advisors buy and sell financial products, such as securities
and life insurance. Fees and commissions from the purchase and sale of securities
and life insurance plans are one of the major sources of income for most personal
financial advisors.

Wealth Manager

Wealth managers are personal financial advisors who work for people who have a lot
of money to invest. While most investors are simply saving for retirement or their
children’s college education, these individuals have large amounts of capital and
often use the returns on their investments as a major source of income. Because they
have so much capital, these clients resemble institutional investors and approach
investing differently from the general public.
Private bankers manage portfolios for these individuals using the resources of the
bank, including teams of financial analysts, accountants, lawyers, and other
professionals. Private bankers sell these services to wealthy individuals, generally
spending most of their time working with a small number of clients. Unlike most
personal financial advisors, private bankers meet with their clients regularly to keep
them abreast of financial matters; they often have the responsibility of directly
managing customers’ finances.

What Financial Advisors Do?

Most financial advisors want to look at your whole financial picture – all your
income and liabilities. They want a complete picture of where you are financially so
they can draw a map from where you are to where you want to go. Here are some of
the benefits of using a financial advisor:

A) The Big Picture – A financial advisor will develop a comprehensive profile of

your financial status. This profile will identify areas of strengths and weakness.

B) An Unemotional Assessment – The financial advisor will give you an

unemotional assessment of what needs to be done. Money is an emotional topic for
many people, which often leads to bad decisions.

C) Allocate Resources – It is likely you have competing priorities, such as sending

the kids to college while building a retirement fund. A financial advisor can help you
allocate resources so both goals receive the appropriate share of dollars.

D) Minimize Taxes – Most investment decisions carry some type of short or long-
term tax implication. Your adviser can help you shape your investments in a manner
that keeps taxes to a minimum and more of your Rupees invested.
Defining personal financial decisions

The main function of the Financial Planner is to define the financial decisions of a
personnel. Personal financial planning is broadly defined as a process of determining
an individual's financial goals, purposes in life and life's priorities, and after
considering his resources, risk profile and current lifestyle, to detail a balanced and
realistic plan to meet those goals. The individual's goals are used as guideposts to
map a course of action on 'what needs to be done' to reach those goals.
Alongside the data gathering exercise, the purpose of each goal is determined to
ensure that the goal is meaningful in the context of the individual's situation. Through
a process of careful analysis, these goals are subjected to a reality check by
considering the individual's current and future resources available to achieve them. In
the process, the constraints and obstacles to these goals are noted. The information
will be used later to determine if there are sufficient resources available to get to
these goals, and what other things need to be considered in the process. If the
resources are insufficient or absent to meet any of the goals, the particular goal will
be adjusted to a more realistic level or will be replaced with a new goal.
Planning often requires consideration of self-constraints in postponing some
enjoyment today for the sake of the future. To be effective, the plan should consider
the individual's current lifestyle so that the 'pain' in postponing current pleasures is
bearable over the term of the plan. In times where current sacrifices are involved, the
plan should help ensure that the pursuit of the goal will continue. A plan should
consider the importance of each goal and should prioritize each goal. Many financial
plans fail because these practical points were not sufficiently considered.

The Benefits of Financial Planning

It may be necessary for a person to save for many years to create adequate income in
the retirement phase. Certain financial products and techniques can help reduce the
amount of tax one has to pay. It is important that financial plans are tax efficient. The
simplest financial plans may mean little more than making contributions into a
suitable financial product. The most complex plans will involve detailed knowledge
of law, taxation and investment principles. Amidst this complex environment for an
investor, financial planning provides direction and meaning to financial decisions. It
allows one to understand how each financial decision one makes affects other areas
of one’s finances. For example, buying a particular investment product might help
one save adequately to finance his/her child’s higher education or it may provide
enough for a comfortable retirement. By viewing each financial decision as part of a
whole, one can consider its short and long-term effects on one’s life goals. One can
also adapt more easily to changes in life and feel more secure that one’s goals are on
track.

A Financial Planner also has many benefits:

 Ability to establish long-term relationships: A financial planner is not just

selling products, but is instead taking responsibility for the financial well being
of his clients. With such an approach, it is easy to build lasting relationships,
unlike in a transaction-oriented, product selling approach where a customer has
to be found anew for every fresh investment. Also, the financial planner ideally
links his own rewards and fees to the client’s financial success and the
achievement of their financial goals. On the other hand, a seller of products
makes the commission regardless of how well or not the client fares, so the
client may find it difficult to consider such a product sales-person as his guide.
 Ability to build a profitable business: By offering value-added services, the
financial planner takes the emphasis away from price and is able to retain
enough to build a profitable business. Clearly, clients are less likely to ask for a
rebate if they perceive good advice and value being offered to them. If one
 does not offer such advice, then it is merely a commodity service where there
is intense competition, difficulty in retention and narrow margins.

Overall, being a financial planner can be satisfying in many ways. By helping clients
lead more rewarding and happier lives and by pointing the right direction for them,
one not only earns their trust and friendship, but also a deep sense of fulfillment of
having made a positive impact on their lives. After all, financial health is linked to
and is the foundation for emotional, physical and spiritual health and gives a sense of
security and accomplishment to the client. If they are to fulfill their goals, they are
highly likely to share their success with their advisors who have helped them achieve
this financial well-being.
In summary, investment advisory activity is rich in content, full of challengers, high
on responsibilities and generous in rewards. If one puts in the efforts, respects the
responsibilities and deals with the challenges, the rewards are there to reap.

The Financial Planning Process

Financial Planning involves advising clients on how to manage their finances and
investments so as to achieve their financial goals. A financial planner assimilates the
aspirations of the clients and draws a road map to make them a reality.

CFS-US Defined Process

The financial planning process was first formalized by the Certified Financial
Planner- Board of Standards (USA). The process consists of the following six broad
steps:

4. Establishing and Defining the Client-Planner Relationship.

5. Gathering Client Data, Defining Client Goals.
6. Analyzing and Evaluating a Client’s Financial Status.
 7. Developing and Presenting Financial Planning Recommendations and/or
Options.
8. Implementing the Financial Planning Recommendations.
9. Monitoring the financial planning recommendations.

Financial Planning Process in Practice

The process has been generally described in the above six steps. Let us see in some
more depth how an Indian financial planner ought to use the process.

Step 1: Establish and define the Relationship with the Client:

The financial planner should clearly explain or document the services to be provided
to a client and define both his and the client’s responsibilities. This will cover the
information required from the client, how decisions will be made, and frequency of
portfolio review. The planner should explain fully how he will be paid and by whom.
The client and the planner should agree on how long the professional relationship
should last and on how decisions will be made.

Step 2: Define the Client’s Goals:

Get the client to talk about their goals in life and what’s important about money to
them. For each financial need, such as retirement or children’s education or
purchasing a home, it is best to clearly write down what amount(s) will be required
and when they will be required. This is also the phase where trust and confidence
starts to develop, as the clients begin to realize that the advisor is not looking to just
sell products but cares deeply about their financial well-being.

Step 3: Gather and Analyze Data, Assess the Current Resources and Future
Income Potential of the Client
The financial planner should ask for information about the client’s financial situation.
The client and the planner should mutually define the client’s personal and financial
goals, understand the time frame for results and discuss, if relevant, how a client feels
about risk. The financial planner should gather all the necessary documents before
giving the client the advice the client seeks.

From the data, try to construct a current balance sheet of all the client’s assets (what
he/she owns in terms of fixed and financial assets), and his/her liabilities (what
he/she owns in the form of loans and debts). As the next step, generate an income
statement with projections of (i) cash inflows from salary, professional fees, and
receipts from investments and other sources, and (ii) outflows or expenses including
regular monthly as well as non-recurring expenses. From this, the ongoing
investment surplus or deficit may be computed, which in turn will determine the
financial planner’s investment strategies for his clients.

For the financial planner to analyze a client’s information and determine what the
planner must do to meet the client’s goals, he must also ask for the client’s current
insurance coverage, investments or tax strategies.

Step 4: Determine and shape the Risk Tolerance level of the Client.

Ask questions about how much of a loss the client can withstand, and for how long
he can accept his investment being below the principal value. Point out to them that
higher the investor’s risk tolerance, the greater is the potential for him/her to earn
higher returns. In other words, if the client is willing to deal with the downside and
can wait a few years for the returns to materialize, then he/she can expect a higher
return from their investment portfolio over time. Therefore, it must be ensured that
risk is never spoken of in isolation; it must be discussed always in the context of
higher returns for greater risk. When this is done, then the client’s responses on risk
become more balanced and meaningful.

While advising clients on how to deal with the risks relating to investments, the
financial planner should sometimes shape or alter the client’s attitudes to risk. This is
especially relevant n those cases where:

 The client’s degree of risk-taking keeps changing with market conditions:

Frequently, a client’s attitude towards risk keeps changing at different phases
of the market cycle and it usually works against his interest. The pattern is that
clients become risk-taking after stock/bond markets have risen, and they
become risk-averse after stock/bond markets have fallen, whereas it should
actually be the other way round. The classic mistake investors make is that “in
bull markets, they become blind to the risk and in bear markets, they become
blind to the opportunities”. The financial planner needs to be aware of this, and
bring balance and perspective to the client during all phases of the cycle, so as
to temper these swings between elation and dejection.

 The client’s attitude towards risk is not consistent with their resource
availability and financial goals: Often, clients want to opt only for very
conservative investments with low rates of return, but their current resources
and future money requirements are such that such low yielding investments
can never earn enough to bridge the gap. In such cases, the financial planner
should show these return calculations to their clients and explain to them that
they need to bear more risk/ cut down current expenditure/ scale down their
future requirements, if they are to achieve their future financial goals.

As a final advice, it’s best to write down the likely future behavior of the client’s
choice of investments, that the client made these investments with full awareness and
knowledge of the interim risks and that the client has resolved to remain focused on
his long-term goals. After this, if there happens to be an interim decline and the client
panics or finds fault with the financial planner, then this can be referred to in order to
reassure the client and to remind him to ignore these short-term developments and
wait for the markets to revive.

Step 5: Ascertain the Client’s Tax Situation

Ultimately, what matters to a client is post-tax returns. Given that clients are in
different tax brackets and situations and given that some investments have tax
advantages associated with them, a detailed analysis of a client’s tax paying pattern is
required to ensure that correct investments are being recommended.

Step 6: Recommend the Appropriate Asset Allocation, and Specific Investments

The financial planner can now offer financial planning recommendations that address
the client’s goals, based on the information the client has provided. The planner
should go over the recommendations with the client to help him/her understand them,
so that he/she can make informed decisions. The planner should also listen to the
client’s concerns and revise the recommendations as appropriate.

Asset allocation is the critical decision, and the essence of what all financial planning
comes down to. The purpose of ascertaining the client’s goals, his resources, his risk
tolerance and tax situation is simply to recommend the most appropriate asset
allocation and investment strategy for the client.

The financial planner must evaluate all the client’s existing assets (both fixed and
financial) and liabilities, and recommend in what asset classes and in what proportion
the clients should distribute their investments. After the asset allocation has been
decided upon (for instance, 60% diversified equity, 30 % income, 10% liquid), the
financial planner should recommend the appropriate investment options which
conform to this asset allocation and whose risk-return profiles are appropriate for the
client.

Step 7: Executing the Plan and Making the Client Invest

After the asset allocation and specific investments have been decided upon, the client
must then execute the plan. Before executing the plan, the client and the planner
should agree on how the recommendations will be carried out. The planner must
carry out the recommendations or serve as the client’s “coach,” coordinating the
whole process with the client and other professionals such as lawyers or
stockbrokers. If the plan alls for the client to liquidate some of his existing
investments, and if the financial advisor should help the client, the planner will help
with the process of liquidation.

If the plan requires a systematic investment program to be implemented, the client

and the planner should agree on who will monitor the client’s progress towards the
client’s goals. If the planner in charge of the process, he should report to the client
periodically to review the situation and adjust the commendations as needed, as the
client’s life changes.

Step 8: Reviewing Progress and Portfolio Rebalancing.

Once every 3 to 6 months, the financial planner should meet with the client to review
the progress and perform an active, ongoing evaluation of results. During these
meetings, the planner should evaluate whether the investment strategy needs to be
refined, which could happen if:
 The client’s future needs or current resources have changed
  The investment climate and financial markets have experienced a climatic
change
 The client’s personal situation has changed in a significant way, on account of
a personal or financial event.

THE BASIS OF FINANCIAL PLANNING- LIFE CYCLE AND WEALTH

CYCLE STAGES

The Life Cycle Stage Guide

The need for Financial Planning persists throughout the whole life of an individual.
Most people have at least one unsatisfied need at any time. Most people will have
both financial protection and investment needs simultaneously throughout life.
However, the priorities of these financial needs change as people grow older and
their personal circumstances change. To appreciate how these changes come about,
financial planners use the Life Cycle Stage Guide.
The life cycle of any individual can be typically sub-divided into the following
stages:
 Childhood Stage
 Young Unmarried Stage
 Young Married Stage
 Young Married with Children Stage
 Married with Older Children Stage
 Post-family/Pre-retirement Stage
 Retirement Stage
The age at which each stage of the life cycle starts may vary from one individual to
another, but in our society most people would fall into a standard cycle. Associated
with each stage is a certain income level. We earn different amounts of income at
different stages in life. If we superimpose the stages on the typical income graph of a
salaried employee or a self -employed person, it will help in understanding how
financial planning priorities, and the ability to fund them, change with each stage in
the life cycle.

Childhood Stage

Childhood is a period of dependency that usually lasts until children finish their full-
time education. The children's financial needs are met by parents or other relatives.
Most of the basic requirements of children will be met from the income of parents or
relatives. However, most people who want to give their children more privileged
opportunities will have to start investing money for this purpose when their children
are still young.

Hence, the main need for children may be to invest cash gifts to provide a lump sum
when they are adults. The parents or guardians make even these arrangements until
the children reach adulthood.

Young Unmarried Stage

With the end of childhood, most young people pass through a stage when they
depend to an extent on their parents before full independence. If they are single with
no dependents, they have little need for life assurance products. Normally, the main
protection need of a young single person in work is to protect his or her earnings
against disability resulting from injury or long-term sickness. Young unmarried
persons will also have considerable investment needs. They may wish to invest in
equities as they have a longer time horizon and as a result a higher risk appetite. They
may also wish to take out a long term saving plan. It is never too early to start
contributing to a pension scheme, which will provide an income on retirement; the
earlier the scheme starts the lower the annual cost will be.

However, most young people will have relatively low incomes and cannot afford to
devote large amounts to financial planning. Also, the young person may already have
more urgent short term needs, such as saving up to marry and establish a home. Thus,
money should normally be devoted to long-term plans only when adequate short-
term savings have been set aside.

Young Married Stage

The needs of young people may change considerably as soon as they marry.
Immediately, a young couple becomes interdependent with a shared responsibility for
the achievement of future goals. Both partners may work and contribute to the family
income or only one may be in paid employment with the other looking after the
family home.

d) Where both partners work, they have two incomes to meet the burden of their

costs. Although each of them will often still be fairly low on the earnings scale,
they should have sufficient surplus funds to meet their most important financial
planning needs. Since the couple depends on two incomes, the loss of one income
would be a serious blow to their domestic economy. The priority need is therefore
to protect each of their incomes against loss through disability resulting from
injury or long term sickness. Further, if a partner dies, life assurance to replace at
least part of the income of the deceased partner may be advisable. It is also very
important to create an emergency fund before committing much money to long-
term plans. The purpose of the emergency fund is to provide a store of money to
meet urgent and unexpected expenditure such as urgently required house or car
repairs or enough money to live on in the event of a few weeks' unemployment.
 Once a sufficient emergency fund has been set aside, our young couple can
consider longer-term investment plans to fund pensions or other personal
aspirations.

e) If only one of the two partners earns the family living, their financial planning

priorities will be different. The death of the wage earner would deprive the non-
working partner of family income and therefore there is a need for life assurance
on the earning member's life. The sum assured should be sufficient to replace a
large part of their earnings, possibly for the rest of the surviving partner’s life.
Also, with only one working partner, the need to start pension provision early is
greater, should the money be available to pay for it.

Married with Young Children Stage

The arrival of children very quickly changes the financial situation of any young
couple. This is a difficult stage as expenditure is rising at a faster rate than income.
This will reduce the money available to spend on financial planning but the
protection needs of the family will increase greatly. A substantial life assurance on
the wage earner's life is now absolutely necessary. Precisely how much cover is
needed will depend on the family's standard of living and the age at which children
are expected to complete their education. If the mother returns to work, the total life
assurance on both their lives should be divided between them in proportion to the
contribution of each to the family budget. Even in our society, which has a strong
tradition of family care for unfortunate relatives, the availability of insurance money
will help to reduce the financial burden.

Once protection needs are taken care of, the family will have to make provisions for
investments. These investment needs could take various forms. The most common
are saving for children's education and marriage. To achieve these objectives for their
children, the parents may have to start investing from the day the first child is born.
Additional investment needs are saving for a house, car, holidays and most
importantly, adequate provision for retirement.

Each year that passes without initiating financial programs to achieve investment
goals makes it harder to achieve these goals. Unfortunately, there is rarely sufficient
money to pay for all the family's protection and investment needs. Difficult choices
have to be made. However, with a young family, protection needs must normally take
priority over investment, leaving investment needs to be funded as soon as possible.
Fortunately, most people become better off as they grow older and this enables them
to keep increasing their contribution to financial planning programs as they advance
in life.

Married with Older Children Stage

By this stage, the parents are approaching mid-career and their incomes would have
usually increased. With improving finances, the family lifestyle will have improved
and become more affluent. The parents* financial planning priorities would also be
changing from available protection needs to investment needs. There are normally
two reasons for investment considerations becoming of paramount importance.
Firstly, the couple may be raising loans or may have raised loans for a house, cars or
children's education. Plans have to be made to service these loans and repay capital.
Perhaps, most importantly, pension provision to provide an income in retirement is
becoming absolutely crucial by this stage. The term to retirement is becoming
shorter. The annual investment required to fund a good pension is growing with every
year of delay. If adequate contributions do not start now, it may become impossible to
build a sufficient fund to buy a pension that maintains the family standard of living.

Post Family/Pre-Retirement Stage

The children may have become financially independent by now and the need to
protect them against the financial consequences of parental death disappears. The
parents may have now reached the peak of their earning power. If they did take out
10- or 20-year investment plans when they were younger, these will now make
capital sums available for them to spend or invest. It is also their last opportunity to
ensure they will have adequate income to preserve their standard of living in
retirement. In this stage, people need to maximize investment into pension products.
At this stage, most people start experiencing some form of sickness or the onset of a
disease. Hence, protection from disability from health related problems increase. On
the life assurance side, one or both partners may still need financial protection against
the effect of the other's death, and this protection may well be needed for the rest of
their lives.

Retirement Stage

Most people would like to maintain the same standard of living in retirement as they
did when they worked. It is a thumb rule that people need an annual retirement
income equal to two-thirds of their final year's income from employment.
Unfortunately, very few people are able to achieve this target. Most are able to
achieve only 20% or less of their pre-retirement earnings. After retirement, the value
of these incomes is often further reduced by inflation. By the time people reach
retirement they fall into one of three categories.
Low pension income and little capital with which to supplement it - There is little a
financial planner can do to help the aged people who have low income and very little
capital. The unfortunate pensioner will have to either continue working to earn a
living or depend on others or the Government for support. The prime need in this
case would be for whatever fixed income can be produced from investments, with
capital fully protected.
Relatively low pension income plus some accumulated capital - These people need to
invest their capital to produce additional income. They cannot afford to take even the
least risk, as this capital will support them for the rest of their lives. Most people will
need an annuity or a regular income plan to meet their expenses.
Sufficient pension income plus substantial assets and capital - These are the fortunate
people who had the foresight to plan early. Their main need would be to preserve the
real value of their investments against inflation. They can afford to apportion some
capital to higher-risk, higher-return investments to pass on accumulated assets to
their children.

Constraints to Financial Planning

There are several constraints people face in financial planning. The foremost among
the constraints is insufficient investible resources. Though people need to start
planning early in life, many individuals have inadequate resources available during
their younger years. Under the circumstances, a monthly budget statement goes a
long way towards achieving the financial discipline necessary to decrease
discretionary expenses and increase savings.

Another constraint lies within financial planning products themselves. There may be
a dearth of appropriate financial products to meet some people's special needs. Or
financial products, especially insurance products, may be available only to people
within given age limits or satisfying health-related criteria.

The two most important constraints on investments to meet predictable needs are
time and risk. Time is important to benefit from the power of compounding by
starting early. Different investments carry different levels of risk. The basic principle
of investing is 'the greater the risk, the greater the reward'. No matter how attractive
the potential returns on speculative investments, they are not for people who cannot
afford to lose money. This is particularly true of the aged who no longer have the
earning capacity to replace their losses.

Although the life cycle model is useful to understand the benefits of financial
planning, it is only a model. It operates on a number of fixed assumptions that may
apply to many but not all situations. Some people's lives do not fit into the life cycle
pattern. Some people will be permanent invalids, others may never marry or set up
home and some, by chance or design, will never have children. In some occupations
people will retire early, much like our cricketers. More common, however, are the life
cycle changes produced by the stress of modern living. Marital breakup is perhaps
the most common of these changes. Divorce is a distortion of the life cycle model
and will result in radically different financial planning needs. We saw earlier that
people need to protect their spouses and families against the possibility of their early
death. Yet early death is itself a distortion of the life cycle pattern creating new needs
for the surviving widows or widowers. Forced early retirement from the job is
another example of a situation that can upset financial planning of an individual,
particularly if he has significant financial obligations.

The Wealth Cycle Guide

While the Life Cycle Guide is a useful approach to financial planning, another
somewhat supplementary approach that many experts recommend is that of The
Wealth Cycle. The Life Cycle approach groups all investors in age groups,
irrespective of their financial condition. In fact, each client is so unique, with a
unique combination of circumstances, resources, attitudes and needs, that any attempt
at grouping them by age has its drawbacks, especially if the attempt is to identify the
one investment strategy that works best for the entire group. Nevertheless, it is useful
to categorize clients, because certain investment strategies have tended to work well
for specific types of client needs. In this regard, the "Wealth Cycle" grouping seems
to work best and is more comprehensive and relevant than grouping investors merely
by age or "life stage".

The Accumulation Stage: During this phase, clients are looking to build wealth
because their financial goals are quite some time away and investments can be made
for the long-term.

Typical client needs such as saving for retirement, acquiring assets, and providing for
children loom are distant, and the client's primary aim is long-term wealth
accumulation.

The Transition Stage: During this stage, one or more of the client's goals are
approaching and clearly in sight. For example, a salaried executive in late fifties who
is planning to retire at 60 years of age. He/she needs to start preparing in advance by
adjusting his/her investments. Likewise, a couple in their mid 40s who have children
approaching the age of higher education or marriage are in a transition stage.

Reaping Stage: This is the cashing out stage, because the goal and purpose towards
which the clients have been investing have arrived. In essence, this is the time to reap
the harvest they have sown. A client who is about to retire or has just retired is an
example. The other example of a client in the reaping stage is a person whose goals
such as buying a home or funding a child's education are close at hand.

The Intergenerational Transfer Stage: Clients upto their early 50s may not yet feel
the need to take care of the next generation in event of their own death. However,
many older investors need to start thinking about how to share their wealth, either
during their own lifetime, or by bequeathing through their will after their lifetime.
Such transfer of wealth may have to be done in favour of different categories of
beneficiaries such as the client's children or grandchildren, or to family or charitable
trusts or causes. A good financial planner will make himself well-versed in the legal
and financial aspects of estate planning and provide suitable advice on these matters,
especially to older clients.
The Sudden Wealth Stage: Sometimes, significant events such as a sale of shares or
business, inheritance, or winnings from a contest/lottery have given clients a bonanza
in the form of a one-time receipt which multiplies their networth, making them
suddenly wealthy.

Goal-Oriented Investing

Besides carving out investment strategies based upon the wealth cycle, another
effective mode of investing is 'goal-oriented investing' where each financial goal is
viewed distinctly, and a specific and separate asset allocation and investment strategy
evolved to meet each individual goal. This works well for all types of investors,
wherein the financial planner breaks up the investment portfolio into a retirement
component, a children's component, an asset acquisition component and then
recommends specific strategies to achieve these goals, which could be diverse in
terms of timeframe and amount required.

Financial Planning for Affluent Investors

Affluent or high networth investors are defined as those who have so much wealth
that they do not need to specifically plan for the typical financial goal such as
retirement or children's welfare or asset acquisition. Their networth is such that these
needs can be easily accommodated with or without them having to implement a
financial plan or embark on goal-based investing.

Yet, while they are not worried about having enough money to meet normal day to
day expenses, investing is a big part of an affluent individual's world, and they too
look for proper guidance and advice in this important activity.

Affluent investors can be classified into two types:

 Wealth-Creating: These individuals are looking to build their wealth further

for a variety of reasons, and are willing to take a risk to make their networth
grow.

 Wealth-Preserving: These types of investors are looking primarily to preserve

the wealth that has been created.

The best way to determine whether the client is in a wealth creating or wealth
preserving mode is to ask a series of questions. The client need to be asked to make
trade-offs between higher returns with the possibility of loss, and more nominal
returns but with a lower probability of loss. By analyzing the responses, the financial
planner can identify the category the client belongs to.
 Research Methodology

Methodology

A survey based methodology was used for the study. A questionnaire was formed after
careful study of various factors related to mutual fund selling.

Meaning of research:
Research in common parlance refers to a search for knowledge. One can also define research as a
scientific and systematic search for pertinent information on a specific topic. In fact, research is an art of
scientific investigation.
The Advanced Learner’s Dictionary of current English lays down the meaning of research as “a
careful investigation or inquiry especially through search for new facts in any branch of knowledge.”
Redman and Mory define research as a “systematized effort to gain new knowledge.”
According to Clifford Woody “research comprises defining and redefining problems, formulating
hypothesis or suggested solutions: collecting, organizing and evaluating data”

Research Process
Research process consists of a number of closely related activities. But such activities overlap
continuously and do not follow a strictly prescribed sequence. Various steps involved in a research
process are not mutually exclusive; nor are they separate and distinct. They do not necessarily follow
each other in any specific order and the researcher has to be constantly anticipating at each step in the
research process the requirements of the subsequent steps. However, the following order concerning
various steps provides a useful procedural guideline regarding the research process.

Formulating the research problem

Extensive literature survey

Developing the hypothesis

 Preparing the research design

Determining design

Collecting the data

Analysis of data

Generalization and interpretation

Preparation of the report or presentation of the result

o Objective and Scope of Research

o Research Problem

The research problem basically tries to focus on way by which conversion rate could be
increased. For this a survey was conducted among the Financial Advisors focusing on various
relevant factors which were related to increase in the conversion rate.

Research Objectives
 To get knowledge about Mutual Funds.
 To analyse the awareness level of mutual fund among life insurance agents/Financial
advisors.
 To know the mutual funds performance level in the present market.
 To analyse and estimate the return and risk by financial product
 To know the factor affecting the awareness level of insurance advisors

1. Sampling data

Data was collected from potential insurance advisors, Mutual Fund. Convenient sampling
procedure was used for the study. A sample data of 70 respondents was taken for this study on the
basis judgmental sampling technique were given a printed questionnaire and were explained about
the purpose and nature of the study an informed consent was obtained from all the subjects on the
basis. The respondents filled the questionnaire and any queries regarding the questions were solved
on the spot. In order to analyse the data use of excel is there.

o Instruments used

Questionnaire: A schedule or measuring instrument for obtaining information from the respondents.
The questionnaire is close ended. In order to reduce questionnaire error such as (avoiding biosness
in mind of respondent) question have been worded carefully. The research consists of structured
questions.

o (A sample questionnaire has been attached at the end)

Data Collection Procedure

For getting the survey filled various LIC offices and places where insurance agents normally gather
were visited. Private insurance company offices were also visited for the getting the survey filled.
CAs and Tax Advisors were visited in their offices for the survey

Primary Data:

The first hand information bearing on any research is the one which has been collected by the
researcher. The data here is collected through:
 A structured questionnaire
 Personal interview of both retailer and consumers.

Secondary Data:

The data which has already been collected, complied and presented earlier by any agency may be
used for purpose of investigation. The data collected through:

 Various publications in form of annual reports, various papers and journals published from
time to time.
 Through internet and Books

Limitations of the study:

 Research is based on the collection of data from primary source.
 There may be a possibility of biosness on the part of some respondents, but very much care
has been taken to make this report unbiased.
 Some respondents might not give the correct information due to their lack of interest and
shortage of time.
 All the information, which is taken, is biased on primary and secondary data that has its own
limitations.
  Location constraint i.e. respondents from high profile location will respond positively and
respondents from lower level location will respond negative, although, diversification of
location has been maintained and I have tried to cover almost all type of Compani

Data Analysis and Interpretation

ANALYSIS ON THE BASIS OF QUESTIONNAIRE

Q1. Have you ever made an investment?

YES 70
NO 30

Yes No

Q2. In which financial option have you made an investment? (Give approximation in
percentage)
Share Market 10
Debentures 7
Mutual funds 8
Banks 40
Post Office 5
Real Estate 10
Insurance 20
 Yes 60
No 40

share market mutual funds debentures

banks post office real estatae
insurance

Q3.) Have you ever taken any assistance in Financial Planning for yourself before
making an investment?

80
60
40
20
0
YES NO

Q.4 According to you which of following is wealth creation product?(you have to rate 1 to
5)

LIC 5

PPF 4

MF 3

FD 2

PO 1

FINDINGS:
Most of the financial adivsors in the favor of LIC and PPF. Some of them believe that mutual funds
are also a good wealth creation product and there are less who are intrested in FD and PO.
 Yes
No

Q5.) Why you did investment in the financial option? Please rate the following on a
scale of 1-5 in order of preference. (1 being the highest and 5 being the lowest)

Return 1
Tax-Saving 2
Future plan 3
Wealth Creation 4
Liquidity 5

Q6).Would you prefer ELSS (Equity Linked Saving Scheme) over other tax-saving
investment option?

Q7. What part of your income do you normally invest?(in %)

0-10 40
10-15 30
15-20 15
20-25 10
Above25 5
Yes 65
No 35

Column1

0-10 15-Oct 15-20 20-25 Above 25

Q8. Do you think your investment will be able to fulfill your long term goals?
 Column1

Yes No

Q9. If you have not consulted a financial planner, then have you done research before
investing your money?

Yes 60
No 40
Column2

Yes No

Q10. Do you think investors who have done Financial Planning have been able to
create wealth for themselves?

Yes 80
No 20
 Column2

Yes No

Q11. How much are you willing to shell out for the fees required for getting
financial planning done?
1000 60
2000 20
3000 12
5000 5
10000 3

1000 2000 3000 5000 10000

Q12. What return do you expect from your investments?

10% 50
11% 35
12% 10
14% 5
 Column1

0.1 0.11
0.12 0.14000000000000001

Q13. What reason according to you causes investors to avoid financial planning?

 Less awareness about financial planners ( )

 They do not realize the importance of financial planning ( )

 They do not want to pay the fees to the financial planners for the money
invested ( )

Thanks for devoting your precious time.

Conclusions

Conclusions:
The data compiled in my sample clearly shows that more than half the investors are
yet to take financial assistance in any of their investments. The basic reasons behind
investor’s lack of interest in financial planning was due to less awareness about
financial planning coupled with their negligence about the benefits which financial
planning can provide them in the long run.
The survey shows that the investors who are most interested in getting their financial
planning done are the ones who are married and have young children, which makes
them realize the importance of financial planning since they have an added
responsibility of a family on their shoulders.
The investment option in which most investors have showed their faith in proved to
be Banks, followed by Insurance and Mutual Funds. This also proved that most
investors are risk-averse and hence chose an option which was safe, providing
modest and regular returns. The survey also shows that Indian investors, being risk-
averse, are not very comfortable investing in options like commodity and real estate
which involves huge investment along with high risk.
It is also visible that most investors are willing to invest approximately 15-20% of
their income in any sort of investment. It was ironical to see that on one side,
investors are not willing to get their financial planning done, while on the other hand
they feel that Advisors/Consultants are the best option available for Financial
Planning.
More than three-fourth of the investors who have got Financial Planning done are
satisfied with it and believe that it was able to create wealth for them.
Around 90% investors who not gone for financial planning have done proper
research before investing their money in any option.
The maximum number of investors were satisfied with their investments if they
received a return of 11-15% p.a. which was closely followed by a return of 16-20%.
When the investors were asked that what commission will they be willing to pay to
the advisor for getting their financial planning done, then the maximum number of
them revealed that they would not like to pay anything or would pay the least
amount, which was Rs. 1,000. This also comes out to be a reason as to why investors
avoid Financial Planning.

The advisors which were interviewed mainly advised Mutual Funds and Insurance to
their clients. We saw that around 60% investors were not willing to get their financial
planning done, which was also verified by the Advisor’s feedback about the
investors. This compelled the advisors to admit that it was they who had to convince
their clients to get their financial planning done. Most investors, according to
advisors, were willing to invest in a periodical/systematic investment mode rather
than lumpsum. It was also discovered that investors preferred to invest for long-term
i.e. above 3 years rather than short-term or mid-term. Advisors also cited the fact that most
investors were willing to take the advice on Share Market more than any other option, as they
lacked the required experience or knowledge to invest in shares by themselves. Advisors also
mentioned that the investors consider tax-saving as the most important factor while getting their
financial planning done, which was closely followed by return and risk.

Recommendations:

Financial planning will help people realize what balance to create between their
expenditure and saving. They will know how much to save in order to create wealth
for themselves required in the long-run. This will lead to a stable economy as huge
investments will be made, which would improve the liquidity in the economy and
would therefore result in reduction in economic imbalances as the one currently
prevailing.
Awareness of financial planning can be spread through programs or workshops
organized by Banks and other Private sector Investment Houses along with support
from the Government to educate the masses about the worth of Financial Planning.
Certified Financial Planners(CFP’s) are very few in India, but they can play a very
major role in promoting the awareness of Financial Planning. Hence, if people start
looking at it as a viable career option, then it will help create better awareness among
the Indian public.
Financial Planning is also helpful in saving people from facing unforeseen situations.
If an investor has not been able to create sufficient wealth for himself post-
retirement, then even his spouse will have to bear the consequences. In order to avoid
such situations, it’s always better to get your financial planning done before-hand.
 Bibliography
Book-

Business Research Book- Naresh Malhotras book

Author- I. M. Pandey

Research Methodology- C.R. Kothri

Internet-

www.njindiainvest.com
www.njfundz.com
www.njgurukul.com
www.njwealth.com
www.google.com
www.indiainfoline.com
www.rathi.com
www.karvy.com
www.bonanza.com
www.bajajcapital.com

QUESTIONNAIRE

Dear Respondent,
I Nitish sharma a student of M.B.A 3rd semester in Government Post Graduation College
Dharamshala (Himachal Pradesh).I'am conducting a research on the topic “Roll of financial
advisor in wealth creation”.The information given by you will be kept confidential.
Kindly spare a few moments to fill out this questionnaire.
Respondent Information:-
Name :- Mr./Miss/Mrs. ___________________________
Sex :- Male ( ) Female ( )
Age(in years) :- ___________
Income (in ₹ ) :- a.) Between 0 - 20 ,000 ( ) b.) Between
20,000 – 40,000 ( )
c.) Between 40,000 – 60,000 ( ) d.) 60,000
and above ( )
Educational Qualification :- a.) Matriculation ( ) b.) Senior Secondary ( )
c.) Graduation ( ) d.) P.G ( )

Mobile No.:- +91_________________________

E-Mail ID:- _________________________

Thanks & Regards,

( Nitish sharma )