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SUMMER TRAINING PROJECT REPORT
ON
A STUDY ON ADITYA BIRLA MONEY WITH SPECIAL
REFERANCE TO BEHAVIOUR OF HNI CLIENTS TOWARDS
WEALTH MANAGEMENT INDUSTRIES
UNDER THE GUIDANCE OF: UNDER THE SUPERVISION OF:
Mr Amit Chourasia Mr. Priyank Raj
SUBMITTED BY:
Mudit Malpani
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ACKNOWLEDGEMENT
It is said, The most important single word is we and the zero
important single word is I.This is true even in todays modern era. It is
absolutely impossible for a single individual to complete the assigned job
without help and assistance from others.
It is my greatest pleasure to acknowledge sincere gratitude towards Mr.
Rajesh Soni (Regional Head) ADITYA BIRLA MONEY MART LTD, I
would like to thank Mr. PRIYANK RAJ (Sr. Relationship Manager and
Mentor), Mr. Shaqueel Ahmed (Sr. Relationship Manager), Mr. Rajat
Anandani (Relationship Manager), Mr. Rajat Gupta (RelationshipManager) Mrs.Ruchika Pal(Relationship manager), Mr.Ashish Gulati
(Relationship manager), Mr. Amrish Tiwari (Broker) and Mr.Vibhu
Sharma(operations) for the completion of the project work.
I would also like to acknowledge to my sincere gratitude to the Director of
my institute MS Sapna Popli and my project guide MS Shipra Jain for
helping me in this project work.
I am thankful to all of my friends and batch mates for their help in
completing this project work. Finally, I am thankful to my entire family
members for their great support and encouragement.
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Table of Content
S no. Content Page no.
1 Declaration 4
2 Executive Summary 5
3 Introduction 7
4 Wealth Management 9
5 Significance of WealthManagement
16
6 Aditya Birla Group 18
7 Aditya Birla Money Mart Ltd. 22
8 Employee hierarchy at ABM 28
9 Financial planning 29
10 Research problem 39
11 SPSS Analysis 4012 Conclusion 46
13 Annexure 1 47
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Declaration
I ,MUDIT MALPANI, Roll No. 12/311, student of SHRI RAM
COLLEGE OF COMMERECE,DELHI UNIVERSITY, hereby
Declare that the project report on A STUDY ON ADITYA
BIRLA MONEY WITH SPECIAL REFERANCE TO
BEHAVIOUR OF HNI CLIENTS TOWARDS WEALTH
MANAGEMENT INDUSTRY at ADITYA BIRLA MONEY
MART LTDis an original and authenticated work done by me.
I further declare that it has not been submitted elsewhere by
any other person in any of the institutes for the award of any
degree or diploma.
Name of the student: MUDIT MALPANI
Date: Jan 31,2014
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EXECUTIVE SUMMARY
The purpose of this training was to have practical experience ofworking within the organization, in the field of finance andMarketing to have exposure to the important managementpractices.
While writing this report the language has been keep simple and
the entire discussion has been logical and has coherent outlines.
The main motto of the project work was A STUDY ON ADITYA
BIRLA MONEY WITH SPECIAL REFERANCE TO
BEHAVIOUR OF HNI CLIENTS TOWARDS WEALTH
MANAGEMENT INDUSTRY
Its very important to do fundamental analysis of the sector and
the particular company in which we want to invest our hard
earned money. Main motive behind making any investment is toearn good returns on the investment without taking much risk.
In order to achieve this we should know the basic fundamentals
of the company.
This project analyzes the varying perceptions of the HNI and
Ultra HNI Clients who invest their hard earned money into
different securities available with the help of the fund managers.
It includes thorough market Research in various plans of Aditya
Birla Money Mart Ltd. and in detail Consumer (Satisfaction)
Responses Analysis, by surveying number of consumers.
This project undertaken by me at ABMML was mainly to
understand about investment avenues like equity, mutual funds,
real estate, commodities significance among the financial
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institutions and how to sell these financial services to the High
Net Worth Individuals by taking an appointments with them
and telling about the company as in who the company is really
and what it does.
The work done there was a pure sales job and required good
conversation skills and hard work as to tap HNIs is a very
difficult job and giving business every month is very important
for the employee working as an Relationship Manager.
In brief, I performed my project under the guidance and
supervision of ABMML, where I learnt effective marketing skills
Financial Analysis and Portfolio Management.
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INTRODUCTION
Wealth Management is a service provided by financial
institutions to help High Net worth Individuals protect and grow
their wealth. This advanced investment advisory discipline
involves providing a diverse range of services, such as financial
planning and investment management, tax planning and cash
flow and debt management, based on client requirements.
There are two aspects to the wealth management process;protecting assets from creditors, market crashes or slowdowns,
taxes, lawsuits and other unexpected events, and growing asset
values through methods that actively manages risk and reward
profiling to clients needs.
Wealth Management help people determine their monetary
goals and development actionable strategies that could help
them realize their goals. It also defends their finances against
risk. Wealth management is a services designed specifically for
High net worth individual. The threshold for high net worth
varies by country and institution, but the most common
definition is individuals who have more than US $1 million in
assets, not including their home. Some HNIs have done well ingrowing their assets from a low base to their current levels, and
may feel that they can continue to manage their own portfolios.
However, as a persons wealth grow and/or the markets get more
challenging, it becomes increasingly difficult to realize the
expected returns.
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With greater wealth comes greater investment options as well as
more complex risks and threats in terms of legal regulations,
taxation issues and opportunities for loss. The level of fear or
even outright panic that can be experienced grows with the sizeof the investment involves. Greater diversification is needed than
its earlier stages of investing. This is where independent
financial adviser or large corporate entities help their clients
through professional management.
Wealth Management Services
Wealth management offers the following services:
Investment planning: Assists you in investing your money
into various investment markets, keeping in mind your
investment goals.
Insurance planning: Assists you in selecting from various
types of insurance options and captive insurance
companies.
Retirement planning: is critical to understand how much
funds you require in your old age.
Asset protection: begins with your financial advisor trying
to understand your preferred lifestyle and then helping you
deal with threats, such as taxes, volatility, inflation,creditors and lawsuits, to maintaining this lifestyle.
Tax planning: Helps in minimizing tax returns. This might
include planning for charity, supporting your favorite
causes while also receiving tax benefits.
Estate planning: Helps in protecting you and your estate
from creditors, lawsuits and taxes. This service is critical for
every person whose net worth is high.
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Business planning: This service aims at optimizing the tax
free advantages of running your own business.
Business succession planning: Assists in planning for the
inevitable to maximize returns. Wealth transfer: helps you pass on your wealth to your
dependents.
Benefits of Wealth managements
Wealth management helps in:
Reducing taxes associates with income, capital gains and
estate.
Protecting assets from misjudgments and creditors.
Improving yields with more diversification and less risk.
Managing liabilities such as mortgages and college
funding.
Market Picture
Indias GDP grew at an annual growth rate of 8% in 2011 and has
a strong growth outlook. This makes the country an attractive
investment location for wealth management firms. India has the
main components that comprise a high-growth wealth
management market, including: a very large and young affluent
customer base, an improving wealth situation among global
Indians, a goal to more tightly regulate financial services by the
Indian government, and an increasing share of organizedcompanies compared to the unorganized workforce. India
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currently has the fourth-largest number of HNWIs in the Asia-
Pacific region, after Japan, China and Australia. There were over
250,000 HNWIs in India, which cumulatively owned assets that
valued over US$1 trillion in 2011. The volume of HNWIs in Indiaincreased at a compound annual growth rate (CAGR) of 7.20%
during the review period (20072011), while the total HNWI
wealth increased in value at a CAGR of 2.47%
The Wealth Landscape
The wealth management marketplace is evolving with theexpansion of an affluent client pool and increased competitioncreated through mergers, acquisitions and the introduction ofnon-traditional players. Wealth managers are setting businessgoals that require innovative technology solutions to help
increase sales, reduce costs, retain existing clients and attractnew ones. They are increasingly coordinating processes aroundtheir customers. They have long since realized the need tocarefully evaluate and quickly deploy the right technologysolutions to garner competitive advantage in the market. Theconsiderations to create or strengthen a customer centric modelare complex, but most firms have recognized that long-termsuccess is determined by an organizations ability to deliver
customer centric products and services. Wealthy individualshave multiple and complex financial needs. Banks geared tomeet their needs build long term relationships in which advice,as opposed to products and transactions, is the focus. Thesebanks establish multiple touch points with clients and typicallybenefit from enduring client loyalty and their predispositiontowards referrals to prospective clients. The primarydifferentiators are advisory capabilities, product breadth, andfacilitation of customer ease and convenience.
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Expanding the wealth management canvas
The spectrum of offerings is spreading and the scope ofservices is widening significantly. A quick glimpse reveals: Delivery channels: Anywhere and anytime through branch/
call center / online / POS / PDA Personalized services: Advisory services, relationship
managers and financial planning experts to manage accountsand plan financial goals
Investment tools for customers and their financial planners to
manage wealth: Analyze portfolio, rebalance portfolio againstmodel portfolio, portfolio simulation and what-if tools
Product types: Traditional banking, traditional investmentproducts and alternate investments
Straight Through Processing: End-to-end transactionprocessing for investments
Tax planning: Country-specific tax and social security One-stop financial shop: Interface with market data vendors,
banks, depositories, clearing houses, custodians andbrokerage houses
Concierge services: Lifestyle related value-added services Customized views and reports: Portfolio specific or across
portfolios Consolidated view: Complete financial picture in one screen Strict adherence: Financial regulation, compliance and other
country-specific mandates Secure and trusted environment: Data storage
Increasing focus on advisory services
Private banking and wealth management customers are turningcautious with their investments as they seek better service
providers. The quality of service, reporting and investmentadvice remains some of the important selection criteria for
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customers. Know all advisors, offering advice across differentproduct types, suggesting unique product bundling, predictingtrends in the local and as well as global markets and suggesting
investment protection mechanism, are key to the success ofwealth management services, today. With the frequent highsand lows in the markets, there is an apparent disconnectbetween advisors and customers. Advisors are turning towardsfact-based analysis and detailed case studies to bridge the gap.However, it would be pertinent to note that there is also agrowing trend towards Do-It-Yourself (DIY) services, whereknowledgeable customers are not fully dependent on the
advisory services provided by the bank. To provide such highlevels of service, banks are seeking assistance from systems thatoffer a holistic view of customer relationship across assets andliabilities, to tailor appropriate investment solutions.
Share of the pie
Wealth management clients are demanding comprehensive andtailored services, with bespoke investment options. They are alsokeen to maintain relationships with multiple banks, to compareofferings and opt for the best. Banks are sparing no efforts tostrategically transform their product offerings and services,while revamping their technology infrastructure to differentiatethemselves from competition. The wealth management space isnow being catered to by different types of firms including
brokers, private banks, retail banks and insurance houses, andall of them are vying for the sameclients - the booming mass affluent segment and the high networth segment. Wealth management firms are making strategicinvestments to differentiate themselves in the eyes of existingand would-be high net worth and ultra-high net worth clients.Insurance firms, brokerage service firms and retail banks areinvesting heavily on the advisor
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Centric model and each one is trying to be the chosen wealthmanager for the retirement segment as well as for the youngergenerations. This has resulted in direct competition in a space
dominated, till recently by private banks and trusts. As a result,each of these players is looking at how best to differentiate itsofferings. Clearly, then, as wealth management firmsincreasingly compete for the same high net worth clients, andclients themselves become more demanding, the pressure is onfirms to understand the essence of client needs in existing andgrowth markets, even if they have already developed an accurateunderstanding of high net worth individuals in their established
markets. Without this insight, firms will find it difficult toDevelop an attractive proposition. As a result, banks are movingaway from the conventional pure product focus and focusing ontotal solutions that are completely oriented to client needs.
Asset allocations, product offerings andinnovations
The diverging investment environment in the two halves of 2007helped define high net worth asset allocation strategies. Basedon steady market returns from 2006, asset allocations of high networth individuals were biased heavily on riskier asset classes.However, onwards the end of 2007 and into the middle of 2008,the turmoil in the financial markets has forced investors to shifttowards safer, less volatile asset classes like cash deposits and
fixed income. Key trends in high net worth asset allocationstrategies include: Cash deposits and fixed-income securities seeing a jump in
asset allocations and currently accounting for 25% of theportfolio.
Equity holdings remaining more or less constant but seeing anincreasing trend towards private equity over public equity.
Percentage of allocation to alternate investments and realestate going down significantly.
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Rapid changes in asset allocation strategies based on a dynamicmarket place have resulted in banks reviewing their product
offerings and offering innovations on current products, whiletrying to move client holdings to safer investments. Banks haverealized that product range and features are key differentiatorsin todays fiercely competitive and largely unpredictable market.The manufacture of products is not every banks cup of tea andthe gap in product offering is catered to by distributingproducts originating from other issuers. While manufacturingproducts is definitely the way forward, distribution income
continues to be a key revenue stream. The investment domainspans across a wide range of products and there is a definite shiftfrom traditional investments in funds, equities and fixed incometo alternate investments like structured products, real estate,private equity and hedge funds. Banks have also realized thebenefits of innovation in terms of product bundling andutilization of customers sleeping assets. Loan products bundledwith insurance, margin lending, self funding installments to gaingeared share exposure, and bundling of banking and investmentproducts are some interesting products on showcase.
The future lies in the current trends
Mass affluent and high net worth client segments willcontinue to grow their wealth but at the same time look at
more risk mitigated Strategies Acquiring and retaining clients and their assets with robust
client servicing are the key challenges for service providers Service providers have determined the criteria for success
but believe that adequate technology tools are still notavailable
Service providers are convinced that they need flexibleservice delivery models
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IT strategy should evolve around the service deliverymodels
Service providers are taking a holistic view of their
technology infrastructure moving away from the productsilo approach.
Ultimately, the greatest success will be realized by those banksthat comprehensively understand their clients. They will be ableto leverage existing strengths to transform and adapt theirservice delivery and technology to cater effectively to clientneeds in their target growth markets. Without doubt,
technology is an importantEnabler in delivering efficient actionable advice, but it is only asupporting tool in the client-to advisor relationship, which playsa key role in managing the institutions customers. Other factorscontributing to the success of a wealth management strategyinclude the quality of advisors, the business model,organizational structure, customer segmentation and diversity ofofferings.
Significance of wealth management
Wealth management is a highly profitable and attractivebusiness, either on its own or as part of a more diversifiedfinancial enterprise. It uses relatively little capital, it does nothave the tail risk of other banking businesses like dealing or
lending, the base of global wealth is growing, and it generatesremarkable pre-tax margins of some 30-40% on the revenue baseand perhaps 40 basis points on assets managed. Many clients arelocked into the provider due to trust deeds, and an ageingpopulation may be looking for a new home for their wealth.
On the other hand, there is a high degree of polarization in
profitability between business segments and individual
firms. A McKinsey & Co. study notes that one third of its
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broad sample of European firms experienced net funds
outflows in the down year of 2008, while some 45% were
net losers in the recovery year of 2009. Margins also differ
widely between offshore and on-shore banking andbetween the units of global banking institutions. Finally,
margins differ widely among geographic and product
markets.
Market volatility can create violent shifts in profitability.
Whether the brokerage or ad valorem fee models are used
as the basis for revenue generation, swings in market prices
in particular for equities can create substantial shifts inprofitability. Thus the meltdown of markets in 2008 was
followed by an almost equal upward surge in 2009. But
with virtually no new funds inflows or cost adjustment, the
net impact as indicated in McKinseys research produced a
47% collapse in the overall European profit pool from the
peak boom year of 2007 to the recovery in 2009.
Growing the pool of managed funds is a major challenge.While an estimated two thirds of the wealthy global
population is prepared to pay fees for wealth management,
there remains some $ 10 trillion in funds which are not. The
total net new funds inflow for the sector has been nominal
for the past few years. And the industry is highly
concentrated, with the top 10 global providers holding an
estimated 52% of the total market and the top 20 over 80%.
Creating and capturing product trends has become
increasingly difficult. Product innovation has increasingly
become a critical success factor. In Europe, for example,
research by Fitch Ratings indicates that 80% of mutual
fund providers have experienced zero net sales in recent
years. Demand has moved massively between products, and
only a handful of providers have been able to capture the
bulk of this demand.
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Improving productivity and client service both provide
substantial challenges. Cost ratios have soared since 2007
as the fall in revenues has not been offset by increased
productivity, and incremental costs such as new regulationdirectly impact the bottom line. As one of our interviewees
notes, Private banking hasnt been industrialized yet like
other banking businesses.
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ADITYA BIRLA GROUP
Aditya Birla Group is one of India's largest conglomerates with
US$ 35 billion presently headed by Mr. Kumar Mangalam Birla
and also claims to be the most international of the country's
major corporations. It was established in 19th century 1919 by
Ghanshyam Das Birlacompany acts as a holding company for
more than 72 manufacturing and services subsidiaries
throughout India and operates in 33 countries with more than
133,000 employees worldwide, the group has diversified business
interests and is dominant player in all the sectors in which it
operates such as: Viscose staple fiber, Metals, Cement, Viscose,
filament yarn, Branded apparel, Carbon black, Chemicals,
Fertilizers, Insulators, Financial services, Telecom, BPO, IT
services.
Organization
Aditya Birla Novo
Grasim Industries ltd
Hindalco Industries ltd
Ultra Tech Cement ltd
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Aditya Birla Minacs Worldwide ltd
Aditya Birla Chemicals ltd
Utkal Alumina International ltd Dahej Harbour & Infrastructure ltd
Aditya Birla Finance ltd
Aditya Birla Money
Aditya Birla Insurance Brokers
Aditya Birla Capital Advisors Pvt ltd
Idea Cellular ltd
Madura Fashion and Lifestyle
Essel Minning and Industries
Aditya Birla Group Power Projects
Aditya Birla Money Mart Ltd
Aditya Birla Money is a part of Aditya Birla Financial ServicesGroup headed by Mr. Sudhakar Ramasubramaniam ABMM is anintegrated financial services group, with a range of solutions.Subsidiaries of Aditya Birla Financial Group are as follows:
1. Birla Sun Life Insurance
Complete suite of life insurance products
One of the leading insurance companies
2. Birla Sun Life Mutual Funds
Mutual Funds and PMS
5th largest AMC in India
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3. Aditya Birla Capital Advisors
Private Equity
Well positioned to generate high returns through rigorous
selection of companies
4. Aditya Birla Finance
Lending Products for Private and Corporate Clients
5. Aditya Birla Money
Common brand for ABML and ABMML.
A leading Broking player
6. Equity, commodity, currency andderivatives
A range of 3rd party financial products
Wealth ManagementAditya Birla Money believes that individuals differ in theirinvestment needs depending on their financial goals, risk takingability and time horizon available to meet these goals. To caterthese different needs Aditya Birla Moneys solutions provideindividuals the flexibility to make investments based on onesindividual financial goals.
Vision
Aditya Birla Moneys goal is to be the premier wealth
management organization in the India, offering high qualityproducts, providing outstanding in services and attracting,motivation and retaining talented individuals
Principles
Our most valuable assets are the trust and confidence of ourclients. In responding to their needs, we strive to provide them
with the highest quality products superior investmentperformance and the best level of our industry.
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BRIEF REVIEW OF ADITYA BIRLA MONEY
MONEY has fundamental significance in life of human being.
Aditya Birla Money Mart Limited A wholly owned subsidiary of Aditya Birla Nuvo, an Aditya
Birla Group company
A premier wealth management & distribution companythat emphasizes on investment advisory and financialplanning
Product range includes mutual funds, life insurance andother instruments like RBI Relief Bonds, bonds of publicfinancial institutions and initial public offerings of equityand debt securities structured products
Direct presence through its own branches (47) andadditional reach through its network of Business Associates(7800+) in over 35 cities
A trusted investor base of over 3.25 Lacs & AUM ofRs.22000 Crs
Identification of Target Segment Any person who can investin various schemes of Aditya Birla become its market. But, it isimperative on part of its marketing and sales department toclearly define its TARGET market so that greater thrust can begiven to those lots of investor for achieving better results.INVESTOR can be classified as follows:
High net worth individuals
Foreign institutional investor
Corporate houses
Government institution
Retail investor
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As target market for Aditya Birla Money is High Networth
Individuals, it is important for all its employees to understand
hidden or unhidden needs of its target market.
Managing investments in equities requires time, knowledge,experience and constant monitoring ofstock market.Those whoneed an expert to help to manage their investments.
Products offered by Aditya Birla Money Mart
Mutual funds:A Mutual Fund is a body corporate registered with SEBI(Securities Exchange Board of India) that pools money fromindividuals/corporate investors and invests the same in avariety of different financial instruments or securities suchas equity shares, Government securities, Bonds, debenturesetc. Mutual funds can thus be considered as financial
intermediaries in the investment business that collect fundsfrom the public and invest on behalf of the investors.Mutual funds issue units to the investors. The appreciationof the portfolio or securities in which the mutual fund hasinvested the money leads to an appreciation in the value ofthe units held by investors. The investment objectivesoutlined by a Mutual Fund in its prospectus are binding onthe Mutual Fund scheme. The investment objectives specifythe class of securities a Mutual Fund can invest in. MutualFunds invest in various asset classes like equity, bonds,debentures, commercial paper and government securities.The schemes offered by mutual funds vary from fund tofund. Some are pure equity schemes; others are a mix ofequity and bonds. Investors are also given the option ofgetting dividends, which are declared periodically by the
mutual fund, or to participate only in the capitalappreciation of the scheme
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Equities:
Equity trading is the buying and selling of company stock
shares. Shares in large publicly-traded companies arebought and sold through one of the major stock exchanges,such as the Bombay Stock Exchange, National StockExchange, which serve as managed auctions for stocktrades. Share or stock is a document issued by a company,which entitles its holder to be one of the owners of thecompany. A share is issued by a company or can bepurchased from the stock market.
Share marketwhere dealing of securities is done is knownas share market. There are two ways in which investors getsshare from market:
Primary market: markets in which new securities areissued are known as primary market. This is part ofthe financial market where enterprises issue their newshares and bonds. It is characterized by being the onlymoment when the enterprise received money inexchange for selling its financial assets.
Secondary Market: Market in which existingsecurities are dealt is known as secondary market. Themarket where securities are traded after, they areinitially offered in the primary market. Most trading isdone in the secondary market. The Stock Market is aninvisible market that trades in stocks of various
companies belonging to both the public and privatesectors. The Indian Stock Market is often referred toas the Share Market since it deals primarily withshares of various companies. A Stock Exchange is aplace where the stocks are listed and traded. Suchexchanges may be a corporation or mutualorganization which specializes in the business ofintroducing the sellers with the buyers of stocks and
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securities. The Indian Stock Market in India comprisesof two stock exchanges:
Bombay Stock Exchange (BSE)
National Stock Exchange (NSE)
BOMBAY STOCK EXCHANGE (BSE)The Bombay Stock Exchange (BSE) was established in 1875.TheBSE India Stock Exchange serves as the most important forcompanies to raise money. The chief function of the StockMarket of India is to help raise money as capital for the growth
and expansion of various private and public sector enterprises.Besides, the Stock Market of India provides able assistance to theindividual investors through daily updates on current position ofthe stocks of the respective companies that are enlisted in theStock Index in which the movement of prices in a section of themarket are captured in price indices. The popular acronym forStock Index is Sensitive index or sensex. Moreover, the liquidityprovided by the exchange enables the investors to sell securities
owned by them easily and quickly. Hence a person, who issubjected to sudden dearth of funds, can immediately sell hisshares for cash in India Stock Market. The BSE Sensex, alsoknown as BSE 30 is a widely used market index not only inIndia but across Asia. In terms of volume of transactions, it isranked among the top five stock exchanges in the world.
NATIONAL STOCK EXCHANGE (NSE)The National Stock Exchange of India Ltd. (NSE), set up in theyear 1993, is today the largest stock exchange in India and apreferred exchange for trading in equity, debt and derivativesinstruments by investors. NSE has set up a sophisticatedelectronic trading, clearing and settlement platform and itsinfrastructure serves as a role model for the securities industry.The standards set by NSE in terms of market practices; products
and technology have become industry benchmarks and are being
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replicated by many other market participants. NSE provides ascreen-based automated trading system with a high degree oftransparency and equal access to investors irrespective of
geographical location. The high level of informationdissemination through the on-line system has helped inintegrating retail investors across the nation. The exchange has anetwork in more than 350 cities and its trading members areconnected to the central servers of the exchange in Mumbaithrough a sophisticated telecommunication network comprisingof over 2500 VSATs. NSE has around 850 trading members andprovides trading in equity shares and debt securities. Besides
this, NSE provides trading in various derivative products such asindex futures, index options, stock futures, stock options andinterest rate futures. In addition to these organizations there areother organizations highlighting on the share trading in theIndian Stock Market are:
Commodities: Do you think gold prices will go up further?Are you sure that crude oil prices are going to fall? Have youheard that the soya crop this year is bad and will result insoya prices going up? If you believe that these predictionshave a good chance of coming true and are willing to betsome money on them, you could try your hand at playingthe commodity futures market. A commodity is a basicgood representing a monetary value. Commodities are mostoften used as inputs in the production of other goods or
services. With the advent of new online exchange,commodities can now be traded in futures markets. Whenthey are traded on an exchange, Commodities must alsomeet specified minimum standards known as basic grade.
Types of Commodities Precious Metals : Gold and Silver
Base Metals : Copper, Zinc , Steel and Aluminum
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Energy : Crude Oil, Brent Crude and Natural Gas
Pulses : Chana , Urad and Tur
Spices : Black Pepper, Jeera, Turmeric , Red Chili
Others : Guar Complex, Soy Complex, Wheat and Sugar
4) Bonds: Bonds refer to debt instruments bearing interest onmaturity. In simple terms, organizations may borrow funds byissuing debt securities named bonds, having a fixed maturityperiod (more than one year) and pay a specified rate of interest(coupon rate) on the principal amount to the holders It is a fixed
income (debt) instrument issued for a period of more than oneyear with the purpose of raising capital. The central or stategovernment, corporations and similar institutions sell bonds. Abond is generally a promise to repay the principal along with afixed rate of interest on a specified date, called the MaturityDate.
5) Portfolio Management Services (PMS): Portfoliomanagement service (PMS) is a type of professional serviceoffered by portfolio managers to their client to help them inmanaging their money in less time. Portfolio managers managethe stocks, bonds, and mutual funds of clients considering theirpersonal investment goals and risk preferences. In addition tomoney, the portfolio managers manage the portfolio of stocks,bonds, and mutual funds. Successful investing in Capital
Markets demands ever more time and expertise. InvestmentManagement is an art and a science in itself. PortfolioManagement Services (PMS) is one such service that is fastgaining eminence as an investment avenue of choice for HighNet worth Investors (HNI). PMS is a sophisticated investmentvehicle that offers a range of specialized investment strategies tocapitalize on opportunities in the market. The PortfolioManagement Service combined with competent fundmanagement, dedicated research and technology, ensures a
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rewarding experience for its clients. India info line PMS bringswith it years of experience, expertise, research and the backing ofIndia's leading stock broking house. At Angel, experienced
portfolio management is the difference. It will advise you on asuitable product based on factors such as your investmenthorizon, return expectations and risk tolerance.
6) Loan: A loan is a type of debt. Like all debt instruments, aloan entails the redistribution of financial assets over time,between the lender and the borrower. In a loan, the borrowerinitially receives or borrows an amount of money, called the
principal, from the lender, and is obligated to pay back or repayan equal amount of money to the lender at a later time.Typically, the money is paid back in regular instalments, orpartial repayments; in an annuity, each instalment is the sameamount. The loan is generally provided at a cost, referred to asinterest on the debt, which provides an incentive for the lenderto engage in the loan. In a legal loan, each of these obligationsand restrictions is enforced by contract, which can also place theborrower under additional restrictions known as loan covenants.Acting as a provider of loans is one of the principal tasks forfinancial institutions. For other institutions, issuing of debtcontracts such as bonds is a typical source of funding.
7) Insurance: Insurance is a basic form of risk managementwhich provides protection against possible loss to life or physical
assets. A person who seeks protection against such loss is termedas insured, and the company that promises to honor the claim,in case such loss is actually incurred by the insured, is termed asInsurer. In order to get the insurance, the insured is required topay to the insurance company (i.e. the insurer) a certain amount,termed as premium, on a periodical basis (say monthly,quarterly, annually, or even one-time).
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Employee Hierarchy at ABM
Relationship Manager
Relationship Manager
Senior Relationship Manager
Area Manager
Area Manager
RegionalHead
Zonal Head
Country Head
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Aditya Birla Money Financial Planning
Introduction to Financial Advisors
Planning for a secure financial future is not easy. Yetincreasingly, individuals are in charge of their own financialfutures. Most are aware that planning is critical, yet dont the
have time or the expertise to develop a plan and make theneeded financial decisions. So there arises a need forFINANCIAL ADVISORS to manage the individuals wealthand the whole process of managing this wealth is known asWealth Management.There are a number of financial advisors offering a diverseportfolio of services to suit different financial requirements oftheir clients. In order to accomplish the task, these companies
provide the assistance of professional financial advisors. These
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financial advisors help individuals or corporate manage theirwealth appropriately through:
1. Investment Solutions: The financial planner helps the
individuals diversify their portfolio through alternativeinvestment plans, mutual funds, equities, and even savefor retirement through annuities.
2. Financial Planning: Financial Planning is an exerciseaimed to ensure availability of right amount of moneyat the right time to meet the individuals financial goals.Financial planners plan individuals current
expenditures and save for future short-term or long-term goals by analyzing different options available.
3. Retirement Planning: The financial planner guides theirclients in planning for their financial requirements afterretirement, by helping them identify goals, researchingand analyzing different opportunities to secure fundsand make investments to suits their needs.
4. Wealth Management: It is a comprehensive service tooptimize, protect and manage the financial well-beingof an individual, family or corporation. Its basicdefinition covers advice on loans, investments andinsurance to give a broad picture of how individualsshould best deploy their financial resources. A broader
picture may include tax advice, estate planning,business planning, charity foundations and otherfinancial needs.
Even though one of the most significant factors in our life isthe state of our personal finances, we rarely spend time onmanaging them since unlike businesses. The reason being, weare not accountable to any one for our personal financial goals
and results. As a result we tend to get careless in our financial
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matters. I know we all understand the importance of savingsbut let us not get confused between savings and investment.Mere savings (putting aside a portion of earnings) do not
insure or guarantee achievement of future financial goals. It isimportant to save but more important is to invest yourmoney. By merely stashing away money into thatneighbourhood bank's savings account, you are neithermaking any more money, nor preserving its value. Theinflation rate at around 4-5 per cent p.a. in excess of yourbank savings account rate at 3.5 per cent p.a. mercilesslyerodes your wealth to that extent. The purchasing power of
rupee keeps depreciating. So, to fight against suchdepreciation one has to invest the money saved in assets thatwill help it work for you and earn more than the erosion invalue through inflation over a period of time. That's just oneof the primary reasons why each individual should invest.Another more definitive reason is the 'Power ofCompounding'. Put simply, it means that "Interest onInterest is Interesting". Let me explain this by means of asimple example.
Financial Planner (Wealth Planner / Financial Advisor):The financial planner helps identify various taxable and non-taxable investments. This is not a comprehensive list ofservices. They may differ from one financial managementcompany to another. One can select the services according to
their requirements, be it personal or professional.A financial planner work begins with a consultation with theclient, from whom the planner obtains information on theclients finances and financial goals. The planner thendevelops a comprehensive financial plan that identifiesproblem areas, makes recommendations for improvement,and selects appropriate investments compatible with theclients goals, attitude toward risk, and expectation or need for
a return on the investment. Financial planners usually meet
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with established clients to update them on potentialinvestments and to determine whether the clients have beenthrough any life changessuch as marriage, disability, or
retirementthat might affect their financial goals.Finding clients and building a customer base is one of themost important of a financial planners job, because referralsfrom satisfied clients are an important source of new business.Many planners also contact potential clients by givingseminars or lectures or meet clients through business andsocial contacts.
1. Need for a financial planner:
Holistic in outlook: CFPs consider all circumstances,family needs, goals, values, and aspirations, whilemaking recommendations.
Professionals: CFPs protect privacy, strive to maintainthe highest ethical standards and continually enhanceskills and credentials through continuing education.
Educational in nature: CFPs guide one through optionsand explain the clearly to help make the best choices.
Committed to success: Holistic financial planning is aprocess, not an event, and commit to adjusting plan aslife goals change.
2. Role of Financial Plannersa) Defining your Goals - A planner will take note of and
record all your financial goals. You save for a variety ofreasons: to buy a house and a car, to educate yourchildren, to set them up in business, to get themmarried, to go on vacations, and, finally, to giveyourself a comfortable life in retirement. But not all ofus get around to defining what comfortableretirement means or good education means in moneyterms. The planner will help you work out the money
value for each of your goals. You might want Rs.30
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lakh for a house today, Rs.5 lakh for a car next year,Rs.10 lakh for your childs education in 10 years, Rs.5lakh for his marriage in 15 years and Rs.50 lakh for
your retirement in 20 years. Additionally, youll setaside money for contingenciesmedical and otheremergenciesall your life, perhaps in cash or virtuallyas liquid. You also need insurance for yourself, yourfamily and your property.
b) Saving for them - Once these goals are written down,you can clearly see what you need to save today tomeet these goals. The concept of savings changes
from something thats left over to something thatyou target every month. The planner helps with yourbudgeting by making you write down your incomeand expenses in great detail. He helps you rationalizewasteful expenses and establish a system of generatingsurpluses every month. Once you see the magnitudeof your investment goals and the need to saveproperly, the desire for the latest in everythingdiminishes. In other words, planning is about creatingwealthand managing it efficiently.
c) Covering Risk - The planner then assesses yourinsurance needs, which varies from person to personand from age to age. As a young bachelor with nodependants, youll need disability insurance rather
more than life insurance, but the minute you getmarried and you have a stay-at-home wife whom yousupport, you need life insurance as well. When thekids come along and your old parents too becomeyour dependants, the outlay on your life insurance willhave to increase, as will that on disability. The plannerwill help you identify your insurance needs, quantifythem and then suggest policy options.
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d) Planning for Retirement - The planner then looks atyour retirement needs and plans for the time whenyoull no longer be earning. Your contributions to your
EPF and PPF accounts will, of course, help you on thatcountprovided youve been disciplined and not madewithdrawals from these accounts halfway through.
A planner will help you quantify in money terms thecomfortable retirement you dream of. Hell thenwork out how much you need to save every monthand at what rate it needs to grow to hit the target.
More important, the planner will work with you tokeep your short-term financial needs in check so thatyou dont touch your retirement funds at all. Hisjob isto make you understand that retirement funds areonly for the future, when you have no other source ofincome, and that dipping into it prematurely is veryrisky.
e)Making It Happen - The planner has taken so long justto establish what you want out of life in money terms;even now, the actual investment is two steps away.The planner will now assess your risk profile. This isjust a way to see what level of risk youre comfortablewith. It would depend on your age and your familycircumstances. For example, a person in his mid-30scan take far greater risk than a man in his 60s. Based
on the goals, the savings and the risk profile, theplanner will then chart an asset allocation strategythat is, help you decide the percentage of your totalportfolio you want to put in different instruments:property, equity, debt, or funds that invest in theseassets.
f) Total Financial Solutions -A planner has a big picture
vision and is able to see the inter-linkages of all your
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goals, expenses and investments. For example, if aperson is earning well and has a non-working wifewith two kids, theres no problem if he takes a home
loan and a car loan. But what if he dies next year? Hislife insurance will take care of his familys livingexpenses, but how will his family pay off the loans? Aplanner would make provisions for such aneventuality and increase the insurance amount tocover the debt as well. The planner will also help youfigure out what impact reducing a Rs.15,000 homeloan EMI to Rs.10,000 would have on your retirement
kitty. And what impact downgrading a Corsa to aSantro would have on your childs education corpus.
g) The Balancing Act - A planners responsibility doesnt,however, end with your buying a product. He still hasto hand-hold you, for instance, when the stock markettanks or tops. Imprudent investors tend to buy whenthe market is high and sell in a slump. The plannereducates you on the merits of a long-term approachand regular investing and helps you rebalance yourportfolio. For example, you may have agreed on a60:40 equity-debt allocation, but a steady rise in thestock market over a couple of years, which mayincrease the value of your stocks portfolio, may skewyour asset mix to 70:30 in favour of equity. That high
an exposure to equity may not be good for you, butleft to yourself, you might get carried away andwithdraw completely from debt and hike the equitycomponent of your portfolio. The planner will step into remind you of your risk profile, your investmentgoals and your long-term approach. In rising markets,financial planners do the work of circuit-breakers inthe stock market: they temper their clients unrealistic
expectations and keep them on track.
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Financial Planning
Financial planning is the process of charting out the moneycourse of your life. Its like having a financial roadmap thatguides your every step till you pass on the baton to the nextgeneration. In other words, it is a process in which anindividual sets long-term financial goals through investments,tax planning, asset allocation, risk management, retirementplanning and estate planning. Most of us approach ourfinancial lives like the disorganized traveller who gets to his
destination eventually and perhaps even enjoys the roughride. We think we have a clear roadmap in mind, but ourfinancial lives are marked by ad-hoc decisions andcapitulation to the temptations of the flavours of the financialseason.
1. Benefits of Financial Planning
A sound and meticulous Financial Planning will havefollowing enumerated benefits:
Sophisticated financial advice to cope with changing lifesituation
Non-biased opinion on ones insurance needs Help dealing with ones retirement planning Optimum asset allocation and investment strategy
formulation
Efficient tax strategy and estate planning
2. Scope of Financial Planning
Sometimes it so happens that when one consulted with afinancial advisor in the past he felt that he was asked to buysomething he didnt fully understand. Maybe he felt thatproducts were recommended without consideration for his
overall financial situation. In cases like this,
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comprehensive, holistic, fee-only financial planningeliminates such concerns. A person receives objectiveadvice targeted to his needs and goals.
One of the myths regarding financial planning is that onlyrich individuals and HNIs can undertake this. Thisperception exists because most players in the market targetthese people, as they are very profitable customers.However, anyone can use financial planning. In fact,individuals should use effective financial planning to buildtheir wealth over the years.
There are financial planners who service small individuals too.However, individuals need to remember the financial plannerscharge for the services they render, so they should be ready topay for the advice.
A financial planning exercise ensures you get the benefit of acustomized portfolio that addresses your specific financial needsand goals. At Aditya Birla Money, we map your needs, riskappetite and expectations to create your individual, uniqueportfolio:
Investment plan With a keen insight into your short- andlong term goals, we build a suitable asset allocation plan.Armed with this plan, your Relationship Manager thenworks closely with you to rebalance your portfolio.
Portfolio construction Our dedicated Wealth Managerwill take you through every stage of the investment process,always ensuring that the health of your portfolio is nevercompromised. We execute a tailor-made investmentstrategy across the breadth of your investment portfolio,maintaining complete confidentiality at all times.
Portfolio maintenance Your Wealth Manager will
proactively monitor the state of your portfolio, periodically
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re-evaluating each account. This ensures that you get timeto react to market fluctuations. A carefully craftedalternative investment strategy can be devised to capitalize
on changing market trends.
Portfolio reviewYour portfolio is periodically reviewed, sothat your current investment horizon can be smoothlyrealigned to stay in line with the changes in yourinvestment needs, patterns and goals.
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Research Problem
This Research problem answers about the behaviour of HNIs and
gives the reasons responsible behind their investment it alsoanalyzes the varying perceptions of the HNI and Ultra HNI
Clients who invest their hard earned money into different
securities available with the help of the fund managers.
The project will throw light on the various factors leading to the
growth of high net worth individuals (HNIs) and the bright
future of wealth management. The outcome will helpRelationship managers is focusing the key factors at time of
interaction with the Prospects this will lead to high probability
in converting prospects into clients or investors
Scope and Importance
Wealth Management is concern with organizing once wealth in
the best possible manner, Its been found that in India there is
6% growth in no. of millionaires which means more wealth to be
managed so as to get benefitedin future, wealthmanagement
is not restricted to future benefit only it also gives tax shield till
the money is invested. This research will provide RMs with
better strategies of tabbing prospects or clients.
Methodology
The methodology Ill be using as per the suitability of this
problem will be FACTOR ANALYSIS for clubbing the similar
factors which are resulting similar responses.
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Data Collection
Through Simple Random Sampling, randomly data of approx
150 prospects were taken and asked to respond through e-mailsand by visiting them personally, with the help of Likert scale
Questionnaire. Final size of respondents is 100.
# Annexure 1: Questionnaire
LimitationThe problem revolves around HNIs only it does not revel
any connection with any other class of society and it also
focus on individual which may or may not be the clients
in future this only tells about the psychology of HNIs
before investment, it also tells about their perception
towards the Wealth Management Industry.
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Analysis of the research
Through exploratory research we Ive found that only 15 factors
are responsible behind the investment idea of HNIs and those
factors are:
Organizing your wealth
Disposable income Improved savings
Future goals
Liabilities
Risk
Consistent return
Horizon
Market capitalization
Market trend of investors
Capital growth
Liquidity
Regular income
Tax saving
Sector specific growth
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# Note: In the research analysis the factors are denoted by their
respective numbers like:
1Organizing your wealth
Correlation Matrix
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
1 1.000 -.012 -.064 .230 -.002 -.135 -.032 -.002 -.022 -.040 .093 .138 -.035 .177 -.051
2 -.012 1.000 -.102 .024 .066 -.085 -.090 .139 .037 -.011 .019 -.014 -.077 .030 .114
3 -.064 -.102 1.000 -.002 -.072 .035 -.013 -.137 -.154 -.116 .118 .030 -.111 .026 -.152
4 .230 .024 -.002 1.000 -.038 -.061 -.139 -.092 .032 .011 -.034 -.025 -.083 .010 -.172
5 -.002 .066 -.072 -.038 1.000 -.235 .305 .126 -.037 -.009 -.066 -.004 .156 -.035 -.083
6 -.135 -.085 .035 -.061 -.235 1.000 -.129 .007 .033 .029 .002 .057 .014 .097 .081
7 -.032 -.090 -.013 -.139 .305 -.129 1.000 .181 -.102 -.215 -.124 -.022 .079 .180 -.042
8 -.002 .139 -.137 -.092 .126 .007 .181 1.000 -.107 -.158 -.244 .114 .122 .063 -.071
9 -.022 .037 -.154 .032 -.037 .033 -.102 -.107 1.000 .148 .031 .109 -.019 -.063 -.022
10 -.040 -.011 -.116 .011 -.009 .029 -.215 -.158 .148 1.000 .059 .173 -.055 -.067 .039
11 .093 .019 .118 -.034 -.066 .002 -.124 -.244 .031 .059 1.000 .112 .164 .031 .113
12 .138 -.014 .030 -.025 -.004 .057 -.022 .114 .109 .173 .112 1.000 .132 -.055 .008
13
-.035 -.077 -.111 -.083 .156 .014 .079 .122 -.019 -.055 .164 .132 1.000 .021 -.033
14 .177 .030 .026 .010 -.035 .097 .180 .063 -.063 -.067 .031 -.055 .021 1.000 .142
15-.051
.114
-.152
-.172
-.083
.081
-.042
-.071
-.022
.039
.113
.008
-.033
.142
1.000
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KMO and Bartlett's Test
Kaiser-Meyer-Olkin Measure of Sampling Adequacy. .473
Bartlett's Test of
Sphericity
Approx. Chi-Square 107.504
Df 105
Sig. .414
Communalities
Initial Extraction
Organizing your wealth 1.000 .696
Disposable income 1.000 .768
Improved savings 1.000 .645
Future goals 1.000 .576
liabilities 1.000 .604
risk 1.000 .651
Consistent return 1.000 .638
horizon 1.000 .753
Market capitalization 1.000 .440
Market trend of investors 1.000 .465
Capital growth 1.000 .726
liquidity 1.000 .631
Regular income 1.000 .514
Tax saving 1.000 .680
Sector specific growth 1.000 .660
Extraction Method: Principal Component Analysis.
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Total Variance Explained
Component
Initial Eigen values
Extraction Sums of Squared Loadings
Total % of Variance Cumulative % Total % of Variance Cumulative %
1 1.811 12.070 12.070 1.811 12.070 12.070
2 1.425 9.503 21.573 1.425 9.503 21.573
3 1.406 9.376 30.949 1.406 9.376 30.949
4 1.327 8.848 39.797 1.327 8.848 39.797
5 1.289 8.596 48.393 1.289 8.596 48.393
6 1.162 7.750 56.143 1.162 7.750 56.143
7 1.024 6.828 62.971 1.024 6.828 62.971
8 .953 6.352 69.323
9 .882 5.878 75.201
10 .824 5.490 80.692
11 .695 4.635 85.326
12 .635 4.234 89.560
13 .585 3.901 93.461
14 .534 3.560 97.021
15 .447 2.979 100.000
Extraction Method: Principal Component Analysis.
7Component extracted
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Component Matrix
Component
1 2 3 4 5 6 7
Organizing your wealth -.023 -.165 .526 .518 .320 .128 -.068
Disposable income .053 .240 .143 -.165 .501 -.234 .596
Improved savings -.108 -.540 -.242 .225 -.359 -.022 .322
Future goals -.182 -.397 .558 .041 .206 .171 -.035
Liabilities .561 .184 .310 -.029 -.217 -.323 -.080
Risk -.291 .108 -.511 .043 .045 .533 -.073
Consistent return .697 -.011 -.097 .149 -.090 -.081 -.325
Horizon .570 .241 .008 -.086 .169 .479 .323
Market capitalization -.311 .347 .268 -.198 -.026 .069 -.326
Market trend of
investors-.447 .371 .223 -.147 -.106 -.030 -.209
Capital growth -.362 .144 -.015 .586 -.193 -.391 .201
Liquidity -.127 .423 .241 .333 -.240 .396 .230
Regular income .240 .416 .015 .372 -.372 .070 .041
Tax saving
.166
-.057
-.200
.521
.489
.083
-.302
Sector specific growth -.151 .394 -.391 .148 .441 -.330 -.058
Extraction Method: Principal Component
Analysis.
7 components extracted
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Result
1 2 3 4 5 6 7
Liabilities Market
Capitalizatio
n
Organizin
g your
wealth
Capital
Growt
h
Tax
saving
Ris
k
Disposabl
e income
Consisten
t return
Market trend
of investors
Future
goals
Sector
specifi
c
growt
h
Improved
Savings
Horizon Liquidity
Regular
income
The research tool Factor Analysis shows that the above factors
are clubbed in their similar respective categories. This result says
that liability, consistent return and horizon give parallel
behavior of the HNIs, similarly Market capitalization, market
trend of investors, liquidity and regular income falls under one
roof.
This will help RMs in better interaction with clients and less
wastage of time with better persuasive tactics.
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ANNEXURE: 1
Age of Respondent: [ ] Date:Gender: [ ]
I prefer investment because it organises my Wealth:
Strongly Disagree
Disagree
Neither agree nor disagree
Agree
Strongly Agree
The degree of my investments depend on my disposableincome:
Strongly Disagree
Disagree
Neither agree nor disagree
Agree
Strongly Agree
The motto behind my investments is to increase my savings
over my expenditure:
Strongly Disagree
Disagree
Neither agree nor disagree
Agree
Strongly Agree
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I seek investments for fulfilment of the future financial goalsthat I currently have and those that Ill make in my lifetime:
Strongly Disagree
Disagree
Neither agree nor disagree
Agree
Strongly Agree
I have a priority towards my liabilities and would compromisemy investments over them:
Strongly Disagree
Disagree
Neither agree nor disagree
Agree
Strongly Agree
I will look forward to invest in high-risk assets:
Strongly Disagree Disagree
Neither agree nor disagree
Agree
Strongly Agree
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In order to secure my financial needs I want to generateconsistent returns from my investment:
Strongly Disagree
Disagree
Neither agree nor disagree
Agree
Strongly Agree
My plan is to make and generate returns from investmentsover a long horizon:
Strongly Disagree
Disagree
Neither agree nor disagree
Agree
Strongly Agree
While making investments in equity I will prefer stock oflarge Market Capitalization companies:
Strongly Disagree
Disagree
Neither agree nor disagree
Agree
Strongly Agree
My investment decisions are largely influenced by markettrend i.e. investment route taken by other Investors:
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Strongly Disagree
Disagree
Neither agree nor disagree
Agree
Strongly Agree
Capital Growth is the primary motive for me to makeinvestments:
Strongly Disagree
Disagree
Neither agree nor disagree
Agree
Strongly Agree
For me Investment is a mode of generating liquid assets that
are capable to meet any financial needs as and when required:
Strongly Disagree
Disagree
Neither agree nor disagree
Agree
Strongly Agree
Motive behind my investments is regular income:
Strongly Disagree
Disagree
Neither agree nor disagree
Agree
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Strongly Agree
I prefer investments to get Tax Shield over my income:
Strongly Disagree
Disagree
Neither agree nor disagree
Agree
Strongly Agree
Sector Specific Growth is a bait to my investments:
Strongly Disagree
Disagree
Neither agree nor disagree
Agree
Strongly Agree