WEALTH MANAGEMNET

Wealth management is a type of investment advising service that combines various financial
services to meet the demands of high-net-worth individuals. The advisor gathers information
about the client's desires and individual situation through a consultative approach, then
creates a customised strategy that incorporates a variety of financial products and services.

Wealth management entails more than simply financial planning. It can apply to every aspect
of a person's financial life. High-net-worth individuals may benefit more from an integrated
approach than from attempting to incorporate pieces of advice and goods from many
professionals. A wealth manager uses this strategy to coordinate the services required to
manage their customers' assets as well as develop a strategic plan for their present and future
needs, such as will and trust services or business succession plans.
An insurance business, for example, might describe its agents as providing wealth
management rather than selling insurance. Alternatively, an investment business that only
manages your money but calls its services wealth management.
Products:
Equity
Mutual Funds
Commodity
Currency
Derivatives
Fixed-income instruments
Initial Public Offering (IPO)
Alternative investment
Client Profiling:
Client profile is the initial stage in wealth management. Understand the client's specifics in
order to create the most efficient plan and execute it successfully. Clients are divided into
numerous classes based on their ability to do certain tasks.
They are as follows:
 Liquidity
 Capital adequacy
 Cash flow management
 Lifestyle preservation
 Current financial obligations
 Future goals
 Personality
 Life experience
 Personal Circumstances

Process of Wealth Managers to Manage Investors’ Wealth

 Profiling & Risk Analysis:
This is usually the initial stage in developing a client-specific investing strategy. Risk
analysis entails determining the client's risk tolerance capacity in terms of his or her money.
Current and future responsibilities, investment objectives, client personality, and other factors
all play a role in determining this competence. These and other relevant customer details are
used to build a comprehensive profile in order to gain a detailed picture of the client's risk-
taking ability.
 Asset Allocation:
Following the risk analysis process, both the wealth manager and the client should have a
better grasp of the best risk-return relationship. Financial advisers and wealth managers are
expected to develop an appropriate allocation plan that is compatible with the client's risk-
reward requirements. To maximise returns while limiting total portfolio risk, the
recommendations would include distributing the client's available/investable capital among
important asset classes such as real estate, equity, debt, alternative investment funds, and so
on.
 Investment Products:
Wealth managers in India frequently have close working links with major banks, allowing
them to access a diverse range of investment opportunities. Wealth managers would try to
deliver customised investment solutions that are particularly matched to the client's needs in
addition to discovering existing investment possibilities. The mix of traditional and specialist
investment products used by each client would differ, allowing for a high degree of
personalization.
 Investment Process:
In most cases, wealth management entails accomplishing both short and long-term financial
goals. This is normally accomplished through investing advisory services that enable
investors to take advantage of short-term opportunities in a flexible manner. Simultaneously,
they would ensure that the investor's long-term investment vision is considered while picking
investment possibilities.
 Research & Execution:
The wealth manager's job does not cease when the client makes the investment decisions. The
wealth manager would also be responsible for closely monitoring the performance of the
various investments over time. Most clients will continue to get extra reports that employ
both qualitative and quantitative methodologies to ensure that the portfolio is properly
executed. This is especially significant given the large range of risk profiles, features, and
variables that contribute to a portfolio's overall complexity. This long-term support provided
by wealth managers is crucial in ensuring that clients' goals are realised not only in the near
term, but also in the long run.

Factors that Influence Risk Appetite

1. Timeline
Based on their investment objectives, each investor chooses a different time horizon. In
general, if there is more time, greater risk may be taken. A person who needs a specific
amount of money in fifteen years might assume more risk than someone who needs the same
amount in five years. It is because the market has shown an increasing tendency throughout
the years. In the near term, however, there are continual lows.
2. Objectives
Individuals have different financial aspirations. Many people’s primary goal in financial
planning is not to collect as much money as possible. The amount needed to reach certain
objectives is determined, and an investment plan designed to produce such returns is often
pursued. As a result, depending on their objectives, each person has a varied risk appetite.
3. Age
Young people should, on average, be able to take greater risks than elderly people. Young
people have the capacity to earn more money while working and have more time on their
hands to deal with market swings.
4. Portfolio size

The bigger the portfolio, the greater the risk appetite. An investor with a $50 million
portfolio may take on greater risk than an individual with a $5 million portfolio. If the value
of the portfolio falls, the percentage loss is significantly lower in a bigger portfolio than in a
smaller portfolio.
5. Comfort level
Each investor approaches to risk in a unique way. Some investors are inherently more willing
to take risks than others. Market volatility, on the other hand, may be exceedingly distressing
for certain investors. As a result, risk appetite is closely tied to how comfortable an investor is
with taking risks
Portfolio creation:
1. IT (Information Technology)
The recovery of the US economy is excellent news for the IT industry. Second, the rupee's
depreciation is welcome news. Finally, the government's concentration on Digital India will
help IT companies that relocate their focus to the country. Leading companies such as
Infosys, Tata Consultancy Services, HCL Technologies, Wipro, Tech Mahindra and Mindtree
each have different hedging policies, which is one of the key factors determining gains from
the falling rupee. Though analysts are positive on Infosys, I prefer TCS in the IT area because
TCS stocks rise rapidly when the rupee falls, but do not fall much when it bounces back,
making them stock market darlings in a volatile market.

IT is considered a defensive sector; thus it poses little risk from a Long-Term Investment
standpoint. Currency fluctuations have a significant impact on this industry. The Indian
currency will remain stable in the long run, thus there are no immediate concerns to the IT
sector.
2. Pharma (Pharmaceuticals)
The Indian government has recently taken initiatives to encourage the pharmaceutical
industry. Pharma, like IT, benefits from the INR depreciation. The majority of Indian
pharmaceutical businesses invest extensively in R&D and get positive outcomes. Talking
about my opinion in this sector, I would recommend Sun Pharma Ltd as if one looks at the
pharma update which came up for the month, we see Sun Pharma did quite well. So, Sun
Pharma should outperform firing from all the businesses. Near term, the stock has
underperformed in the last three years. My view is that a lot of upside can be there and Sun
Pharma could be one of the best performing stocks.

3. Power Sector
As of January 2022, India has a total Thermal installed capacity of 235 GW of which 51.6%
of the thermal power is obtained from coal and the rest from Lignite, Diesel, and Gas.
The private sector in the power industry in India generates 48.5% of the country’s thermal
power, whereas States and the Centre generate 26.7% and 24.9%, respectively. The electricity
generation target of Conventional Sources for the year 2021-22 was fixed at 1356 BU i.e.
growth of around 9.83% over the actual conventional generation of 1234.608 BU for the
previous year (2020-21). This target comprises of 1155.200 BU Thermal; 149.544 BU Hydro;
43.020 Nuclear; and 8.236 BU Import from Bhutan.
The Indian power sector attract investments worth $ 128.24-135.37 Bn between FY19-23.
The future of the sector looks bright since by 2026-27 the country's power generation
installed capacity will close to 620 GW, of which 38 per cent will be from coal and 44 per
cent from renewable energy sources.
Indian power sector is undergoing a significant change that has redefined the industry
outlook. The power industry's future in India is bright, and sustained economic growth
continues to drive electricity demand in India. The Government of India’s focus on attaining
‘Power for all’ has accelerated capacity addition in the country.
For me tata power is best to attract as it tends towards EV sector

4. Banking Sector
The banking sector is the backbone of the economy which also goes through its own phases of
ups and downs. When the economy is on track, lending and borrowings boom resulting in
healthy growth in banks. Talking about the banking sector, I will recommend HDFC bank as
HDFC Bank has the lowest GNPA (percentage) in the sector, and the Bank’s capital adequacy,
which stands at 18.9%, is sufficient to support 15-20% advance growth. HDFC and HDFC
Bank announced a merger, bringing the housing finance company under the wings of HDFC
Bank. They recommend buying HDFC Bank on every dip as the proposed merger will
strengthen its housing loan portfolio. While the merger is beneficial to both the companies, for
HDFC Bank it is making the home loan portfolio larger and stronger.
“HDFC Bank reported loan growth of 21% year-on-year and retail deposit growth is healthy.
The operating profits may also see a surge on strong commercial banking and corporate
segments. The merger of HDFC Bank and HDFC is a complement to the investors and a value
addition to HDFC Bank.
Dummy Portfolio (Money Control)