A Report On

PORTFOLIO MANAGEMENT
AND FINANCIAL PLANNING

SHRIRAM FORTUNE
DELIVERING PROSPERITY

SUBMITTED BY:
MOHIT MADNANI
15BSP2158
[email protected]

A Report On
1

PORTFOLIO MANAGEMENT
AND FINANCIAL PLANNING
Submitted ByMOHIT MADNANI
Enrollment No. - 15BSP2158
A Report submitted in the partial fulfillment
of the requirements of PGPM Program at
IBS Gurgaon.

SHRIRAM FORTUNE
DELIVERING PROSPERITY

Submitted to:
Faculty Guide - Prof. VINEETA MISHRA
Company Guide Mr. DEEPAK SINGH
SISODIYA

Authorization
I hereby declare that interim report titled- Portfolio
Management and Financial Planning for Shriram Fortune
Solution Ltd. in Laxmi Nagar, Delhi which I have submitted in
partial fulfillment of the requirement of PGPM program of IBS
Gurgaon, is an original piece of work, the data and statistics
used have been duly acknowledged. This submission has never
been a basis for any previously awarded degree to any
individual or any institution.
Date: 14 April 2016

Mohit
Deepak Singh Sisodiya

Madnani
(Company

Guide)

ACKNOWLEDGEMENT
I have taken efforts in this project. However, it would not have
been possible without the kind support and help of many
individuals and organizations.
I would like to extend my sincere thanks to all of them.
First of all, I would thank Mr SC Sharma, Director of ICFAI
Business School for providing me the opportunity to work at a
reputed corporate house.
I am highly indebted to Prof.Vineeta Mishra, ICFAI Business
School for her guidance and constant supervision as well as for
providing necessary information regarding the project & also for
her support in completing the project.
I would like to express my gratitude towards my parents & Mr
Deepak Singh Sisodiya, BP- Shriram Fortune Solution Limited
for their kind co-operation and encouragement which helped
me in completion of this project. I would also like to thank
MrNitesh Kumar, Manager at Shriram Fortune Solution Limited
who introduced me to various financial terminologies and all
the concepts which were required for the project and for being
patient with me through the endless Quality checks.
I would like to express my special gratitude and thanks to
industry persons for giving me such attention and time.
My thanks and appreciations also go to my colleagues in
developing the project and people who have willingly helped
me out with their abilities.

EXECUTIVE SUMMARY
Student Name:

Mohit Madnani

Enrollment No:

15BSP2158

Industry Type:

Financial Services

Address:

WA-86 First Floor Shakarpur, New Delhi-110092

Project Title: Financial Planning And Portfolio Management

Objective:

The main objectives of the report are: To gain knowledge about Financial Service
Industry & Investment Advisory.
To know about the awareness of importance of
financial planning in society.
Determining the awareness of financial planning
and focus on aspects of financial planning.
Determining the motives of buying Life
Insurance Plans.

Background: India is the one of the fastest growing economy

of the world and the financial sector plays an important part in
the development of the economy.
For the purpose of practical training through Summer Internship
Program, I worked with Shriram fortune solutions Ltd. In
financial sector I had to do the project on financial planning and
portfolio management of various clients. The main purpose of
financial planning and portfolio management is to know the
customer where his/her interest is to invest.
5

Methodology:

For completion of the project:

Classroom training
Market survey activity
Customer interaction
Preparation of Financial Planning report for
companys customers.

Collection of primary data through:

Market survey
Questionnaire
Personal meetings
Achievements:
I represented my organization at SRM
University, ASIAN BUSINESS SCHOOL AND
UNIVERSITY OF DELHI (MASTER OF BUSINESS
ECONOMICS)
I was able to sell three policies thereby
completing my sales target and achieving a
Rising Star Certificate
I also got opportunity to deliver a training
session on Financial Planning to the interns of
LAL BAHADUR SHASHTRI COLLEGE AND IMT
BUSINESS SCHOOL, NAGPUR

INTRODUCTION
Investment is the current commitment of money for a particular
period of time in order to derive anticipated future benefits, it
involves commitment of certain current cash flow in
anticipation of an uncertain future cash flows. Higher the risk
from investment higher the return derived from return from it a
well-diversified portfolio reduces risk by a large way.
Portfolio management is a complex, often regulated activity.
The basic sense of construction of portfolio is making the
optimal relation between risk and contribution by combining
various assets. Portfolio is a collection of assets. The assets
may be physical or financial like shares, bonds, debentures, etc.
The work of managing the portfolio is very dynamic as financial
markets can change at a moments notice, requiring rapid
analysis and decision making. Managing a portfolio is an ever
changing process that requires flexibility and strategic decision
making as circumstances evolves. Portfolio managers are
employed throughout the financial service industry by banks,
investment dealers, mutual fund companies, pension
management firms and insurance companies to manage the
portfolio of single investors, pool of investors (e.g., mutual
funds, pension funds), or institutions (e.g., insurance
companies).
Portfolio manager deals with different types of products and
portfolio strategies depending upon the type of financial
institution they work for. Portfolio manager with insurance
companies are responsible for managing the insurance
7

companys own investment portfolio; this involves investing the

insurance companys premium revenues to increase the firms
profitability and ensure appropriate liquidity to meet its future
insurance policy pay-outs/claims.

Table of Contents
About the Company......................................................................................... 10
SHRIRAM GROUP........................................................................................... 10
Genesis of the Shriram phenomenon.....................................................10
The Shriram Way!...................................................................................... 10
COMPANY PROFILE........................................................................................ 11
SHRIRAM FORTUNE SOLUTIONS LIMITED..................................................12
VISION.......................................................................................................... 13
MISSION....................................................................................................... 13
VALUES......................................................................................................... 13
Introduction...................................................................................................... 14

Industry overview...................................................................................14

Market size of financial services..........................................................15

Asset management: AUMs have more than doubled since FY07........................15

MICHAEL PORTER ANALYSIS...........................................................................16

SWOT ANALYSIS............................................................................................. 17
STRENGTH AND WEAKNESS OF THE COMPANY.....................................18
STRENGTHS................................................................................................... 18
WEAKNESS.................................................................................................... 18
OPPURTUNITY AND THREATS OF THE COMPANY......................................19
OPPURTUNITY................................................................................................ 19
THREATS........................................................................................................ 19
8

MODULE 1............................................................................................................ 20
TRAINING........................................................................................................ 20
MODULE 2............................................................................................................ 22
Marketing Activity......................................................................................... 22
1. Shriram Life Assured Income Plan...................................................22
2. Shriram New Shri Life Plan................................................................23
Financial Planning............................................................................................ 24
OBJECTIVES OF FINANCIAL PLANNING.......................................................24
BENEFITS OF FINANCIAL PLANNING...........................................................24
IMPORTANCE OF FINANCIAL PLANNING.....................................................25
FINANCIAL PLANNING ADVISORY................................................................26
CASH PLANNING............................................................................................ 27
RETIREMENT PLANNING.................................................................................... 27
ESTATE PLANNING............................................................................................ 27
TAX PLANNING.................................................................................................. 27
Financial Planning Process.............................................................................28
Portfolio Management..................................................................................... 31
Portfolio Management..................................................................................31
Types of portfolio management..................................................................31

Active Portfolio Management............................................................31

Passive Portfolio Management..........................................................31

Discretionary Portfolio management...............................................31

Non-Discretionary Portfolio management.......................................32

Phases of portfolio management...............................................................32

Security Analysis........................................................................................... 32
Portfolio Analysis........................................................................................... 32
Portfolio Selection.......................................................................................... 33
Portfolio revision............................................................................................ 33
Portfolio evaluation........................................................................................ 35
ASPECTS OF PORTFOLIO MANAGEMENT....................................................35
Types of Risk in Portfolio Management.....................................................36
SEBI Guidelines to Portfolio Management................................................37
PORTFOLIO MANAGEMENT SERVICES........................................................38
Benefits of PMS.......................................................................................... 39
Services and Strategies Offered Through PMS.....................................40
Portfolio Manager......................................................................................... 41
Who can be a Portfolio Manager?...........................................................41
9

General Responsibilities of Portfolio Manager.....................................42

Code of Conduct of Portfolio Manager...................................................42
Objectives of Investors for Selecting of PMS........................................43
Investors Alerts............................................................................................. 44
Difference between portfolio management Services and mutual funds.45
Benefits of Choosing Portfolio Management service Instead of Mutual
Funds.................................................................................................................. 46
1. Asset Allocation...................................................................................... 46
2. Timing....................................................................................................... 46
3. Flexibility................................................................................................. 46
4. Rules and Regulation............................................................................. 46
CASE STUDY...................................................................................................... 47
PRIMARY RESEARCH:....................................................................................... 50
LEARNINGS........................................................................................................ 69
ACHIEVEMENTS................................................................................................. 70
CONCLUSION..................................................................................................... 73
BIBLIOGRAPHY.................................................................................................. 74

10

About the Company

SHRIRAM GROUP
Genesis of the Shriram phenomenon
The Shriram Group had its humble beginnings in the Chit Fund
business over three decades ago. R Thyagarajan, AVS Raja and
T Jayaraman were the three musketeers who ventured into
these businesses. Not many in the Financial services industry
thought at that time, this small Chit Funds business in Chennai
would indeed be the foundation for the financial conglomerate
that Shriram is today. The Group today manages assets of over
INR 90,000 Cr (including Non-Financial services).
The Shriram Way!
Shriram Groups businesses strive to serve the largest number
of common people. Consider these: Commercial Vehicle
Financing, Consumer & Enterprise Finance, Retail Stock Broking,
Life Insurance, Chit Funds and Distribution of Investment &
Insurance Products. Our foray into Non-Life (General) Insurance,
is again a strong expression of this commitment.

11

COMPANY PROFILE
ESTABLISHED IN:

1974

FOUNDER CHAIRMAN:

MR R TAYAGRAJAN

CHAIRMAN OF SHRIRAM GROUP:

MR

AJAY

PIRAMAL
ASSET UNDER MANAGEMENT (AUM):

Rs

97,200

CRORE
CUSTOMER BASE:

MORE

THAN

CRORE
BRANCH NETWORK:

3000

12

DISTRIBUTORS:

MORE

THAN

1,00,000
PROFIT AFTER TAXES:

2,000 CRORE

SHRIRAM FORTUNE SOLUTIONS LIMITED

Shriram Fortune Solutions Ltd. is one of the leading

integrated financial services Company of India Backed by
Shriram Group of Chennai. Today, SFSL is a premier financial
distribution company and ranks among the top players in this
business segment. SFSL offers financial planning solutions
which are facilitated mainly through four financial products,
Mutual Funds, Life Insurance, General Insurance and Deposits.
These products and solutions are supported by knowledge,
expertise and experience of 53,863 loyal Business Associates
and 1146 employees.
SFSL has a direct presence through more than 72 branches and
an indirect presence in more than 289 locations throughout the
country. The Company taps into the 7-lakh strong Pan-India
13

customer base of the Shriram Group, as well as new clients

through newer channels creating a huge demand for
Investment & Insurance Products. The goal is to become one of
the top distributors of financial products.
SFSL are aggressively growing their business, market share,
and sales and support teams. Their philosophy is to provide
producers with exciting, revenue-generating ideas that
successfully translate into wealth planning solutions for
customers. With the strong support of the entire Shriram Group
and a robust working model, SFSL is on its way to achieve the
Vision "Improving lives by providing innovative financial
solutions for protection and prosperity."

VISION: Improving Lives by providing Innovative Financial

Solutions for Protection and prosperity.

MISSION: Serving the underserved creating value at the

bottom of the pyramid.

VALUES: Always Rigorous, Always Refreshing, Always

Responsive

Customer First
Innovation
Trust
Excellence
Integrity
14

Introduction
Industry overview
Financial services are the economic services provided by the
finance industry, which encompasses a broad range of
businesses that manage money, including credit unions, banks,
insurance companies, accountancy companies, consumerfinance companies, stock brokerages, investment funds and
some government-sponsored enterprises.
India has a diversified financial sector undergoing rapid
expansion, both in terms of strong growth of existing financial
services firms and new entities entering the market. The sector
comprises commercial banks, insurance companies, non15

banking financial companies, co-operatives, pension funds,

mutual funds and other smaller financial entities. The banking
regulator has allowed new entities such as payments banks to
be created recently thereby adding to the types of entities
operating in the sector. However, the financial sector in India is
predominantly a banking sector with commercial banks
accounting for more than 64 per cent of the total assets held by
the financial system.
The financial services sector has been an important contributor
to the country gross domestic product (GDP) accounting for
nearly 6 per cent share in 2014-15.
The Government of India has introduced several reforms to
liberalise, regulate and enhance this industry. The Government
and Reserve Bank of India (RBI) have taken various measures
to facilitate easy access to finance for Micro, Small and Medium
Enterprises (MSMEs). These measures include launching Credit
Guarantee Fund Scheme for Micro and Small Enterprises,
issuing guideline to banks regarding collateral requirements
and setting up a Micro Units Development and Refinance
Agency (MUDRA). With a combined push by both government
and private sector, India is undoubtedly one of the world's most
vibrant capital markets.

Market size of financial services

The Association of Mutual Funds in India (AMFI) data show that
assets of the mutual fund industry have reached a size of
12.95 trillion (US$ 194 billion) as of November 2015. During
April 2015 to September 2015 period, the life insurance
industry recorded a new premium income of 562.86 billion
(US$ 8.4 billion), indicating a growth rate of 14.45 per cent. The
general insurance industry recorded a 12.6 per cent growth in
Gross Direct Premium underwritten in FY2016 upto the month
of October 2015 at 550 billion (US$ 8.23 billion).

16

Indias life insurance sector is the biggest in the world with

about 360 million policies, which are expected to increase at a
compounded annual growth rate (CAGR) of 12-15 per cent over
the next five years. The insurance industry is planning to hike
penetration levels to five per cent by 2020, and could top the
US$ 1 trillion mark in the next seven years. The total market
size of India's insurance sector is projected to touch US$ 350400 billion by 2020.
India is the fifteenth largest insurance market in the world in
terms of premium volume, and has the potential to grow
exponentially in the coming years. Life insurance penetration in
India is just 3.9 per cent of GDP, more than doubled from 2000.
A fast growing economy, rising income levels and improving life
expectancy rates are some of the manyfavorable factors that
are more likely to boost growth in the sector in the coming
years.
Asset management: AUMs
have more than doubled since
FY07
The asset management industry in India is amon
the fastest growing in the world
Total AUM of the mutual fund industry clocked a
CAGR of 12.8 per cent over FY0716 to reach US$
215.4 billion
As of FY16 (Till September15), 43 asset
management companies were operating in the
country, with total AUM US$ 215.4 billion
SEBI has announced various measures aimed at
increasing penetration and strengthening
distribution network of MFs

MICHAEL PORTER ANALYSIS

Threat of New Entrants:
With new entrants in the
industry, competition to
survive increases.
Example: STAR UNION

17

Bargaining Power
of Buyers:

Buyers require
special
customization
Customers can
directly interact
with the AMC
and
make
investments
through direct
channel, which
is a threat to
distributor

Competitive
Rivalry within
Industry:

Bargaining Power
of Suppliers:

Large
industry size
Fast
industry
growth rate
Rivalry
on
the basis of
brokerage
and price

More
brokerage
demand
by
the
distributors to
sell
more,
which affects
the

Threat of Substitutes:
When returns of the funds
are
fluctuating
more
according to the market
STRENGTHS
WEAKNESS
conditions, then quality of
Insurance ofthe
all stratas
Customer
product is not
taken service staff
of society
need training
into account
and due
to
Policies
with

Poor
retention
returns, the
considerationfluctuating
for social

SWOT ANALYSIS

impact
SWOT
ANALYSIS
International
expertise of
Sanlam group
Spread of 750 offices
across India
More than 75,000 loyal
and dedicated agents
and has a customer base
of
30
lacs
chit
subscribers and investors

percentage of tied up
agents
Low
customer
confidence on private
companies

18

SWOT
OPPORTUNITIESANALY
SIS
Demand for innovative
products offering a right
mix of flexibility/ risk/
return
Growing rural markets
Earning
urban
youth
looking for investments
Cross
selling through
financial services such as
banking

THREATS
Stringent
economic
measures
by
Government banks and
RBI
Entry of new NBFCs in
the sector
The
private insurance
companies also vying for
the
same
uninsured
population

19

STRENGTH AND WEAKNESS OF THE

COMPANY
STRENGTHS
Large pool of technically skilled manpower with in depth
knowledge and understanding of the market.
The company also provides innovative products to cater to
different needs of different customers
Dedicated workforce aiming at making long-term career in
the field
Strong and well spread network of qualified intermediaries
and sales person.
Strong capital and surplus reserve
Low management expenses and administrative costs
Shriram Fortune Solution Ltd. And Shriram Life Insurance
Comapany leverages on the strong distribution network of
its promoters and advisors.
Finance department helps the organization to keep a track
on the administration and all the other expenses.

WEAKNESS
Customer service staff needs training due to changing
human behavior.
Product awareness is low in the market
Management cover insufficient
Sectored growth is constrained by low unemployment
levels and competition for staff.
Low customer confidence on the private players.
Centralization in the organization, management decisions
are taken by top authority which leads to significant
delays in decisions.
A centralized administrative system gives way to inequity
through the instigation of excessive regulations or strict
conformity to official norms which is redundant or
bureaucratic and that hinders decision-making and delays
work.
20

OPPURTUNITY AND THREATS OF

THE COMPANY
OPPURTUNITY
INSURABLE POPULATION: According to IRDA only 8% of the
population is insured which represents around 92% of the
insurable population. This suggests more than 300m
people with potential to buy insurance, remain uninsured.
International companies will help in building world class
expertise in local market by introducing the best global
practice.
Could extend need to overseas broadly.
New specialist applications.
Could seek better customer deals.
Fast-track career development opportunities on an
industry-wide basis.
An applied research centre to create opportunities for
developing techniques to provide added value services.

THREATS
Big public sector insurance companies like Life Insurance
Corporation (LIC) of India, National Insurance Company
Limited And United India Insurance Company Limited,
People trust them more and attracted towards them more.
Legislation could impact and great risk involved
Very high competition prevailing in the industry.
Vulnerable to reactive attack by major competitors.
Lack of infrastructure in rural areas could constrain
investment.
People prefer short term investments rather than
insurance.

21

MODULE 1

TRAINING
This consists of 14 weeks internship program at Shriram
fortune, consisting of 1 weeks of rigorous full-time classroom
training divided into two parts:
1 Understanding Capital market &Financial planning.
2 Portfolio management & Investment Planning.
This covered training on understanding capital market and
Financial

planning.

It started

with

understanding

Capital

market, tax statements, Risk management and Insurance

planning, What is risk? , risk management technique. Moreover,
it included analyzing financial planning

covering various

policies; Introduction of life Insurance, history, Principal of

Insurance, MVP Act 1874, ULIP, Life Insurance Products,
Annuities, Under writing, Payment Under LIP(Claims)
Anti-money laundering (AML guidelines/PMLA act), Grievances,
Health Insurance (Claim Process, Religera, Apollo)
Further we understood that there are three primary ways.
They are the Data Gathering, Fact Finding, Need Analyses. All 3
are on future needs. Steps Of Financial Planning by Identifying
Needs, Quantifying needs, Prioritizing needs. Case study and
Financial

plan

for

Individual

and

their

Family

through

FACTFINDING. Gathering the information from various

22

clients and suggesting financial plans into the proper

format is called FACTFINDING.

The project involves spreading the financial plans of company

by using a standardized format (fact finding). The main
purpose of financial planning is to assess the clients financial
wealth, evaluate their future goals and determine their financial
needs.
The reasons to spread the Fact sheet rather than just selling the
plans are as follows:
Consistency

in presenting financial products life

insurance, health insurance, ulip.

Consistent and accurate information that are easy to
suggest financial product.
Period to Period Compatibility rate and returns.
In general, the purpose of having fact finding is just for
identifying, quantifying and prioritizing of a customer to
achieve high rate of return.
Accuracy refers to fact finding the amounts correctly and
classifying amount according to the clients information.
Financial Planning helps in assessing the following:
Identifying Needs: Data gathered with various clients

23

 Quantifying Needs: Understanding and providing financial

products according to their needs
Prioritizing Needs: After suggesting the financial products
we provide financial products with the satisfaction of the
clients.

These facts helps in suggesting the best product fit for a family
or an individual. Accurate and consistent facts lead to accurate
and consistent calculations which are essential to the analysis
process.

MODULE 2

Marketing

Activity(sales

promotion
of financial
Customer Interaction)

products

and
and

This covered Marketing activity of financial products

undertaken by Shriram Fortune. This phase of the training
included understanding and creating awareness of financial
products of Shriram Fortune about how these products helps or
beneficial for a customer.
We were introduced two financial products.
1. ShriramLife Assured Income Plan
Shriram life assured income plan (UIN-128N053V01) is a nonlinked non participating plan. Shriram Life Assured Income Plan
is an affordable, easy-to-obtain financial security net for you
and your loved ones.
Plan at a glance: Age at entry: 30days 50 years
Policy term: 8 years/10 years
Minimum annual premium: Rs. 15000/24

 Maximum annual premium: Rs. 500000/ Basic sum assured: Policy term * annual premium
Besides these there are some other benefits such as Death benefit
Maturity benefit
Additional protection through riders
It pays a lump sum payment in case of unfortunate death
helping your family to reduce their debts. Its a fixed return plan
for the annual/ quarterly/ monthly premium investment period
of 10 years the clients will start getting returns from the
company for next 10 years which is approximately 160% of the
amount invested besides this client will get additional benefits
a.k.a. accidental cover, disability cover and most importantly
you will get death cover in this plan i.e. if the investor dies in
the middle of the premium then the company is liable to pay all
the pending premium and the returns can be in form of annual
income or a lump-sum total amount on maturity.
2. Shriram New Shri Life Plan
Shriram New Shri Life Plan (UIN-128N047V01) is a non-linked
participating endowment plan. Besides being a systematic
savings option, the plan acts as a reliable protection tool to
your family in case of any adverse mishap to you. Shriram New
Shri Life Plan is ideal because of the potential upside of
reversionary bonuses which may be added to your life cover
year by year and also the maturity benefit. New Shri Life Plan is
a combination of a systematic Savings option and a reliable
savings tool. The plan provides Life Insurance cover throughout
the term of the policy.
Plan at a glance: Plan which combines an individuals risk coverage and
savings.
Age at entry: 30 days - 65 years.
Term: 10/15/20/25 years.
Limited and regular premium pay options.
Minimum sum assured: Rs.50000
25

 Maximum sum assured: Subject to underwriting

conditions.
Mode of the Premium Payment- Yearly, Half Yearly,
Quarterly, Monthly.

Policy term
10
Premium
7,10
Payment term

15
5,7,10,15

20
5,7,10,20

25
5,7,10,15,2
5

Besides these there are some other benefits such as

Life cover benefit

Tax benefit by sec 80 C and sec (10) 10
Accidental death benefit
Family income benefit
Critical illness benefit

MODULE 3

Financial Planning:
Financial planning is the process of accessing the financial
goals of clients that arises at different intervals of his life,
taking into account an inventory of the investments and other
assets he already has to help him to achieve those goals and
estimating what he will need in the future.

OBJECTIVES OF FINANCIAL PLANNINGis to ensure

that the right amount of money is available to the investor at
the right time to enable him to meet the different goals in
various life stages of an investor.
26

For example:

Savings for buying a car or house

Child Education
Child Marriage
Retirement

BENEFITS OF FINANCIAL PLANNING:

Financial Planning gives guidance and intending to your money
related choices. Its permit you to see how each money related
choice you make influences different territories of your funds.
For illustrations, purchasing a specific venture item may help
you pay off your home loan quicker or it may postpone your
retirement altogether. By survey each money related choice as
a feature of the entire, you can consider its short and long haul
impacts on your life objectives. You can likewise adjust all the
more effortlessly to life changes and feel more secure that your
objectives on track.

IMPORTANCE OF FINANCIAL PLANNING:

Financial Planning is process of framing objectives, policies,
procedures, programmes and budgets regarding the financial
activities of a concern. This ensures effective and adequate
financial and investment policies. The importance can be
outlined as1. Adequate funds have to be ensured.

27

2. Financial Planning helps in ensuring a reasonable balance

between outflow and inflow of funds so that stability is
maintained.
3. Financial Planning ensures that the suppliers of funds are
easily investing in companies which exercise financial
planning.
4. Financial Planning helps in making growth and expansion
programmes which helps in long-run survival of the
company.
5. Financial Planning reduces uncertainties with regards to
changing market trends which can be faced easily through
enough funds.
6. Financial Planning helps in reducing the uncertainties
which can be a hindrance to growth of the company. This
helps in ensuring stability and profitability in concern.

FINANCIAL PLANNING ADVISORY

28

CASH
PLANNING

TAX
PLANNING

FINANCIAL

INVESTMENT
PLANNING

PLANNING

INSURANCE
PLANNING

ESTATE
PLANNING

RETIREMENT
PLANNING

CASH PLANNING:
Cash flow forecasting or cash flow management is a key aspect
of financial management of a business, planning its future cash
requirements to avoid a crisis of liquidity.

Suggested Investment Style:

29

Income Investment = Expenses

RETIREMENT PLANNING:
Retirement arranging, in a monetary setting, alludes to the
distribution of investment funds or income for retirement. The
objective of retirement arranging is to accomplish money
related autonomy.
The procedure of retirement arranging points to:
Survey status to-resign given a sought retirement age and
way of life, i.e., whether one has enough cash to resign
Recognize activities to enhance status to-resign
Get money related arranging learning
Empower sparing practices

ESTATE PLANNING:
Estate Planning is the procedure of suspecting and organizing,
amid a man's life, for the transfer of their home. Bequest
arranging can be utilized to wipe out vulnerabilities over the
organization of a probate and to boost the estimation of the
home by decreasing duties and different costs. A definitive
objective of estate planning can be controlled by the particular
objectives of the customer, and might be as straightforward or
unpredictable as the customer's needs direct. Watchmen are
frequently assigned for minor kids and recipients in
insufficiency.

TAX PLANNING:
Tax planning is the analysis of one's financial situation from
a tax efficiency point of view so as to plan one's finances in the
most optimized manner. Tax planningallows a taxpayer to make
the best use of the varioustax exemptions, deductions and
benefits to minimize their tax liability over a financial year.

Financial Planning Process

30

Establishing
relationship
1.

and

defining

the

client-Planner

The Financial Planner should clearly explain or document the

services to be provided to you and define both his and your
responsibilities. The Planner should explain fully how he will be
31

paid and by whom. The Planner should also disclose any

restrictions on his ability to give unbiased advice and disclose
any conflicts of interests. You and the Planner should agree on
how long the professional relationship should last and how
decisions will be made.

2. Gathering client data, including goals.

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

3. Analysing and evaluating your financial status.

The Financial Planner should analyse your information to assess
your current situation and determine what you must do to meet
your goals. Depending on what services you may have asked
for, this could include analysing your assets, liabilities and cash
flow, current insurance coverage, investments or tax strategies.

Developing and presenting Financial

recommendations and/or alternatives.
4.

Planning

The Financial Planner should offer Financial Planning

recommendations that address your goals, based on the
information provided by you. The Planner should go over the
recommendations with you to help you understand them so
that you make informed decisions. The Planner should also
listen to your concerns and revise the recommendations as
appropriate.

32

Implementing
recommendations.
5.

the

Financial

Planning

You and the Planner should agree on how the recommendations

will be carried out. The Planner may carry out the
recommendations or serve as your 'coach', coordinating the
whole process with you and other professionals such as
solicitors or stockbrokers.

6. Monitoring the Financial Planning recommendations.

You and the Planner should agree on who will monitor your
progress towards your goals. If the Planner is in charge of the
process, she should report to you personally to review your
situation and adjust the recommendations, if needed, as your
life changes.

33

Portfolio Management:
Firstly we need to answer this question that what is
portfolio?
A mix of securities with various danger and return
characteristics will constitute the arrangement of the
speculator. In this manner, a portfolio is the mix of different
resources and/or instruments of speculations. The mix may
have distinctive elements of danger &return, separate from
those of the segments. The portfolio is also built up out of the
riches or salary of the financial specialist over a timeframe,
with a perspective to suit his danger and return inclination to
that of the portfolio that he holds. The portfolio examination of
the danger and return characteristics of individual securities in
the portfolio and changes that may occur in blend with different
securities due to interaction among themselves and effect of
every one of them on others
Portfolio Managementis the process of creation and
maintenance of investment portfolio. It is a complex process
which tries to make investment activity more rewarding and
less risky.

Types of portfolio management

Portfolio Management is further of the following types:
Active Portfolio Management: As the name suggests,
in an active portfolio management service, the portfolio
34

managers are actively involved in buying and selling of

securities to ensure maximum profits to individuals.
Passive Portfolio Management: In a passive portfolio
management, the portfolio manager deals with a fixed
portfolio designed to match the current market scenario.
Discretionary
Portfolio
managementservices: In
Discretionary portfolio management services, an individual
authorizes a portfolio manager to take care of his financial
needs on his behalf. The individual issues money to the
portfolio manager who in turn takes care of all his
investment needs, paper work, documentation, filing and
so on. In discretionary portfolio management, the portfolio
manager has full rights to take decisions on his clients
behalf.

Non-Discretionary Portfolio managementservices: In

non-discretionary portfolio management services, the
portfolio manager can merely advise the client what is
good and bad for him but the client reserves full right to
take his own decisions.

Phases of portfolio management

Portfolio management is a process of many activities that
aimed to optimizing the investment. Five phases can be
identified in the process:
1. Security Analysis
2. Portfolio Analysis
3. Portfolio Selection
4. Portfolio revision
5. Portfolio evaluation
35

Each phase is essential and the success of each phase is

depend on the efficiency in carrying out each phase.

Security Analysis:
Security analysis is the examination of tradeable money related
instruments called securities. These can be ordered into
obligation securities, values, or some half and half of the two.
All the more comprehensively, prospects contracts and
tradeable credit subordinates are here and there included.
Security analysis is regularly partitioned into key investigation,
which depends upon the examination of major business
variables, for example, money related articulations, and
specialized examination, which centers upon value patterns
and force.

Portfolio Analysis:
Portfolio analysis is an efficient approach to dissect the items
and administrations that make up an affiliation's business
portfolio. All relationship (aside from the least difficult and the
littlest) are included in more than one business.

Portfolio Selection:
Security selection includes a quest for under estimated
securities. On the off chance that a speculator resort to
dynamic stock determination, he may utilize key as well as
specialized investigation to distinguish stocks that appears to
guarantee unrivaled returns and overweight the stock segment
of his portfolio on them. In like manner, stocks that are seen to
be ugly will be under weighted with respect to their position in
the business sector portfolio. To the extent securities are
concerned, security selection calls for picking securities that
offer the most astounding respect development at a given level
of danger.

Portfolio revision:
In the whole procedure of portfolio administration, portfolio
revision is as vital stage as portfolioselection. Portfolio revision
36

includes changing the current blend of securities. This might be

affected either by changing the securities as of now
incorporated into the portfolio or by modifying the extent of
assets put resources into the securities. New securities might
be added to the portfolio or some current securities might be
expelled from the portfolio. In this manner it prompts buy and
offer of securities. The target of portfolio revision is like the goal
of determination i.e. expanding the arrival for a given level of
danger or minimizing the danger for a given level of return.
The requirement for portfolio revision has stirred because of
changes in the budgetary markets since making of portfolio. It
has excited as a result of numerous components like
accessibility of extra supports for speculation, change in the
danger state of mind, change venture objectives, the need to
sell a part of the portfolio to give assets to some option
employments. The portfolio should be amended to suit the
adjustments in the financial specialist's position.

Portfolio Revision basically involves two stages:

Portfolio Rebalancing:
Portfolio Rebalancing includes evaluating and reexamining the portfolio arrangement (i.e. the stockbond
blend).
There
are
three
fundamental
arrangements as for portfolio rebalancing: purchase and
hold strategy, consistent blend approach, and the
portfolio protection strategy.
Under a purchase and hold arrangement, the underlying
37

portfolio is left undisturbed. It is basically a 'purchase

and hold' approach. Regardless of what happens to the
relative values, no rebalancing is finished. For instance,
if the underlying portfolio has a stock-bond blend of
50:50 and following six months it happens to be say
70:50 on the grounds that the stock segment has
acknowledged and the bond segment has stagnated,
than in such cases no progressions are made.
The consistent blend arrangement calls for keeping up
the extents of stocks and bonds in accordance with
their objective quality. For instance, if the coveted blend
of stocks and bonds is say 50:50, the consistent blend
calls for rebalancing the portfolio when relative
estimation of its segments change, so that the objective
extents are kept up.
The portfolio insurance policy approach calls for
expanding the introduction to stocks when the portfolio
acknowledges
in
worth
and
diminishing
the
presentation to stocks when the portfolio deteriorates in
quality. The fundamental thought is to guarantee that
the portfolio esteem does not fall underneath a story
level.
Portfolio Upgrading:
While portfolio rebalancing includes moving from stocks to
bonds or the other way around, portfolio-upgrading calls
for re-surveying the danger return attributes of different
securities (stocks and in addition bonds), offering overevaluated securities, and purchasing under-valued
securities. It might likewise involve different changes the
financial specialist may consider important to improve the
execution of the portfolio.

Portfolio evaluation:
Portfolio evaluation is the last stride during the time spent
38

portfolio administration. The procedure is worried with

evaluating the execution of the portfolio over a chose
timeframe as far as return and hazard. Through portfolio
evaluation the financial specialist tries to discover how well the
portfolio has performed. The portfolio of securities held by a
speculator is the consequence of his venture choices. Portfolio
evaluation is truly an investigation of the effect of such choices.
This includes quantitative estimation of genuine return
acknowledged and the danger conceived by the portfolio over
the time of speculation. It gives a component to distinguishing
the shortcoming in the speculation procedure and for
enhancing these lacking territories.
The evaluation gives the essential criticism to planning a
superior
portfolio
next
time.

ASPECTS OF PORTFOLIO MANAGEMENT

Basically, portfolio management involves:
1. A proper investment decision-making of what to buy and
sell
2. Proper money management in terms of investment in a
basket of assets to satisfy the asset preferences of the
investors.
3. Reduce the risk and increase the returns.
4. Balancing fixed interest securities against equities.
5. Balancing high dividend payment companies against high
earning growth companies as required.
6. Finding the income or growth portfolio as required.
7. Balancing transaction costs against capital gains from
rapid switching.

39

8. Balancing income tax payable against capital gains tax.

9. Retaining some liquidity to seize upon bargains.

Types of Risk in Portfolio Management

Each and every investor has to face risk while investing.
What is Risk? Risk is the uncertainty of income/capital
appreciation or loss of both. Risk is classified into: Systematic
risk or Market related risk and Unsystematic risk or Company
related risk.
TYPES OF RISK IN PORTFOLIO MANAGEMENT

SYSTEMATIC RISK

1. Market Risk
Risk
2. Interest
2. Internal Risk
3. Inflation
3. Financial Risk

UNSYSTEMATIC RISK

1. Business
Rate

Risk

Rate

Risk

SYSTEMATIC RISK
Systematic risk refers to that portion of variation in return
caused by factors that affect the price of all securities. It
cannot be avoided. It relates to economic trends with
effect to the whole market.
This is further divided into the following:
1. Market risks:
A variation in price sparked off due to real, social political
and economical events is referred as market risks.
2. Interest rate risks:
Uncertainties of future market values and the size of
future incomes, caused by fluctuations in the general level
40

of interest is referred to as interest rate risk.

Here price of securities tend to move inversely with the
change
in
rate
of
interest.
3. Inflation risks:
Uncertainties in purchasing power is said to be inflation
risk.

UNSYSTEMATIC RISK
Unsystematic risk refers to that portion of risk that is
caused due to factors related to a firm or industry. This is
further divided into:
1. Business risk:
Business risk arises due to changes in operating
conditions caused by conditions that thrust upon the firm
which are beyond its control such as business cycles,
governmentcontrols,etc.
2. Internal risk:
Internal risk is associated with the efficiency with which a
firm conducts its operations within the broader
environment imposed upon it.
3. Financial risk:
Financial risk is associated with the capital structure of a
firm. A firm with no debt financing has no financial risk.

SEBI Guidelines to Portfolio

Management
SEBI has issued detailed guidelines for portfolio management
services. The guidelines have been made to protect the
interest of investors.
The salient features of these guidelines are:
The nature of portfolio management service shall be
investment consultant.
The portfolio manager shall not guarantee any return to
41

his client.
Clients funds will be kept in a separate bank account.
The portfolio manager shall act as trustee of clients
funds.
The portfolio manager can invest in money or capital
market.
Purchase and sale of securities will be at a prevailing market
price.

PORTFOLIO MANAGEMENT SERVICES

A Portfolio in Securities Market alludes to wicker container of
securities that a man has put into. Here and there this
incorporates Debt Instruments, Mutual Funds and even Bank
Balance notwithstanding normal values.
The individual assigned to deal with the portfolio is called
Portfolio Manager. The Portfolio Manager prompts, oversees and
regulates the securities and assets for the benefit of the
entrusting customer.
The administration is offered by a Portfolio Manager under a
particular permit from Securities and Exchange Board of India.
According to meaning of SEBI Portfolio signifies "an
accumulation of securities claimed by a financial specialist". It
speaks to the aggregate possessions of securities having a
place with any individual". It contains distinctive sorts of
benefits and securities. Portfolio administration alludes to the
administration or organization of a portfolio of securities to
ensure and improve the estimation of the basic venture. It is
the administration of different securities (offers, bonds and so
42

on) and different resources (e.g. land), to meet determined

venture objectives for the advantage of the speculators. It
lessens hazard without yielding returns. It includes an
appropriate venture choice with respect to what to purchase
and offer. It includes appropriate cash administration. It is
otherwise called Investment Management.
Portfolio Management Services, called, as PMS are the
admonitory administrations gave by corporate monetary
mediators. It empowers speculators to advance and ensure
their ventures that help them to create higher returns. It
dedicates adequate time in reshuffling the ventures available in
accordance with the evolving flow. It gives the aptitude and skill
to direct through these mind boggling, unpredictable and
dynamic times. It is a decision of selecting and amending range
of securities to it with the attributes of a speculator. It averts
holding of loads of devaluing quality. It goes about as a
monetary mediator and is liable to administrative control of
SEBI.
Under PMS, the Client and the Portfolio Manager diagram
particular needs of the customer and the Portfolio Manager
deals with the Portfolio as per those necessities. Now and again
the Portfolio Manager may likewise have separate prepared
plans for the customer to browse. As an aftereffect of this
customization, customer, with his particular needs, advantages.
The administration level through reporting exchanges, property
articulations and so on, likewise are tantamount or shockingly
better than that of a shared asset.

Benefits of PMS
Personalized Advice:
A client gets investment advice and strategies from master
Fund Managers. An Investment Relationship Manager will
guarantee that you get all the administrations identified with
your speculation needs. The customized benefits additionally
deciphers into zero printed material and all your money related
43

articulations will be messaged

Professional

Management:An experienced team of

portfolio managers ensure your portfolio is tracked, monitored

and optimized at all times.

Continuous Monitoring:
The clients are informed about your investment decisions. A
dedicated website and a customer services desk allow you to
keep a tab on portfolios performance.

Timing:
Portfolio managers save customer's cash on time. Portfolio
management services (PMS) help in allotting appropriate sum
cash in right kind of sparing arrangement at ideal time. This
implies portfolio managers investigates the business sector and
gives his master exhortation to the customer with respect to
the sum he ought to take out at the season of huge danger in
securities exchange.

Professional Management:
PMS gives advantages of expert cash administration with the
adaptability, control and potential assessment points of interest
of owing individual stocks or different securities. The portfolio
managers deal with all the authoritative parts of customer's
portfolio with a month to month or semiannual providing details
regarding general status of the portfolio and execution.

Flexibility:
Portfolio manager's arrangement sparing of his customer as
indicated by their need and inclinations. Be that as it may,
some of the time, portfolio managers can contribute customer's
cash as indicated by his inclination since they know the
business sector exceptionally well than his customer. It is his
customer's obligation to give him a level of adaptability so he
can deal with the venture with full proficiency and adequacy.
44

Services and Strategies Offered

Through PMS
1. Portfolio management services (PMS) handles all types of
administrative work like opening a new bank account or
dealing with any financial settlement or depository
transaction.
2. PMS also help in managing the tax of his client based on
detailed statement of the transaction found on the clients
portfolio.
3. PMS also provide a Portfolio manager to the client who
acts as personal relationship manager though whom the
client can interact with the fund manager at any time
depending on his own preferences such as:
i.
ii.

To discuss any concern saving or money, the client can

interact with portfolio manager on the monthly basis.
The client can discuss on any major changes he want in
his asset allocation and investment strategies.

Portfolio Manager
Portfolio Manager is an expert who deals with the portfolio of a
financial specialist with the goal of gainfulness, development
and danger minimization. As indicated by SEBI, Any individual
45

who in accordance with an agreement or game plan with a

customer, prompts or coordinates or attempts for the customer
the administration or organization of a portfolio of securities or
the assets of the customer, as the case might be is a portfolio
manager. He is required to deal with the financial specialist's
advantages wisely and pick specific speculation roads proper
for specific times going for expansion of benefit. He tracks and
screens every one of your speculations, income and resources,
through live value overhauls. The manager needs to adjust the
parameters which characterizes a decent speculation i.e.
security, liquidity and return. The objective is to get the most
noteworthy return for the customer of the oversaw portfolio.
There are two sorts of portfolio manager known as
Discretionary Portfolio Manager and Non-Discretionary Portfolio
Manager. Discretionary portfolio manager is the person who
separately and freely deals with the assets of every customer
as per the necessities of the customer and non-discretionary
portfolio manager is the person who deals with the assets as
per the headings of the customer.

Who can be a Portfolio Manager?

Only those who are registered and pay the required licence fee
to SEBI are eligible to operate as Managers. An applicant for
this purpose should have necessary infrastructure with
professionally qualified person and with a minimum of two
person with experience in this business and minimum net worth
of Rs.5 lack. The certificate once granted is valid for three
years. Fees payable for registration are Rs2.5 lack for two years
and Rs.1 lack for the third year. From the fourth year onwards,
renewal fees per annum are Rs.75000. These are subject to
change by SEBI.
The SEBI has imposed number of obligation and code of
conduct on portfolio manager. The portfolio manager should
have a high standard of integrity, honesty and should not have
been convicted of any economic offence or moral turpitude. He
should not resort of rigging up of prices, insider trading or
creating false market etc. Their books of account are subjected
to inspection and audited by SEBI. The observance of code of
conduct and guidelines given by SEBI are subject to inspection
46

and penalties for violation are imposed. The Manager has to

submit periodical returns and documents as may be required by
the SEBI from time-to-time.

General Responsibilities of Portfolio

Manager
Following are some of the responsibilities of a Portfolio
Manager:
1. The portfolio manager shall act in a fiduciary capacity
with regard to the client's funds.
2. The portfolio manager shall transact the securities within
the limitations placed by the client.
3. The portfolio manager shall not derive any direct or
indirect benefit out of the client's funds or securities.
4. The portfolio manager shall not borrow funds or securities
on behalf of the client.
5. portfolio manager shall ensure proper and timely handling
of complaints from his clients and take appropriate action
immediately
6. The portfolio manager shall not lend securities held on
behalf of clients to a third person except as provided
under these regulations.

Code of Conduct of Portfolio

Manager
Every portfolio manager in India as per the regulation 13 of
SEBI shall follow the following Code of Conduct:
1. A portfolio manager shall maintain a high standard of
integrity fairness.

47

2. The clients funds should be deployed as soon as he

receives.
3. A portfolio manager shall render all times high standards
and unbiased service.
4. A portfolio manager shall not make any statement that is
likely to be harmful to the integration of other portfolio
manager.
5. A portfolio manager shall not make any exaggerated
statement.
6. A portfolio manager shall not disclose to any client or
press any confidential information about his client, which
has come to his knowledge.
7. A portfolio manager shall always provide true and
adequate information.
8. A portfolio manager should render the best pose advice to
the client.

Objectives of Investors for

Selecting of PMS
Following are the objectives:
1. Keep the security, safety of principles intact both in terms
of money as well as its purchasing power.
2. Stability of the flow of income so as to facilities planning
more accurately and systematically the reinvestment or
consumption of income.
3. To

attain

capital

growth

by

re-investing

in

growth
48

securities or through purchase of growth securities.

4. Marketability of the security which is essential for
providing flexibility to the investment portfolio.
5. Liquidity i.e. nearness to the money which is desirable to
the investors so as to take advantages of attractive
opportunities upcoming in the market.
6. Diversification: The basic objective of building a portfolio is
to reduce the risk of loss of capital and income by
investing in various types of securities and over a wide
range of industries.
7. Favorable tax status: the effectively yield a investors gets
from his investments depends on tax to which it is subject.
8. Capital growth which can be attained by reinvesting in
growth securities or through purchased of growth
securities.

Investors Alerts
Dos:
Only intermediaries having specific SEBI registration for
rendering Portfolio management services can offer
portfolio management services
Investors should make sure that they are dealing with SEBI
authorized portfolio manager.
Investors must obtain a disclosure document from the
portfolio manager broadly covering manner and quantum
of fee payable by the clients, portfolio risks, performance
of the portfolio manager etc.
Investors must check whether the portfolio manager has
a necessary infrastructure to effectively service their
requirements.
Investors must enter into an agreement with the portfolio
manager.
Investors should make sure that they receive a periodical
49

report on their portfolio as per the agreed terms.

Investors must make sure that portfolio manager has got
the respective portfolio account by an independent
charted accountant every year and that the certificate
given by the charted accountant is given to an investor by
the portfolio manager.
In case of complaints, the investors must approach the
authorities for redressal in a timely manner.

Donts:
Investors should not deal with unregistered portfolio
managers.
They should not hesitate to approach the authorities for
redressed of the grievances.
They should not invest unless they have understood the
details of the scheme including risks involved.
Should not invest without verifying the background and
performance of the portfolio manager.
The promise of guaranteed returns should not influence
the investors.

Difference between portfolio

management Services and
mutual funds
While the concept of Portfolio Management Services and
Mutual Funds remains the same of collecting money from
investors, pooling them and investing the funds in various
securities. There are some differences between them
described as follows:
50

1. In the case of portfolio management, the target investors

are high net-worth investors, while in the case of mutual
funds the target investors include the retail investors.
2. In case of portfolio management, the investments of each
investor are managed separately, while in the case of MFs
the funds collected under a scheme are pooled and the
returns are distributed in the same proportion, in which the
investors/ unit holders make the investments.
3. The investments in portfolio management are managed
taking the risk profile of individuals into account. In mutual
fund, the risk is pooled depending on the objective of a
scheme.
4. In case of portfolio management, the investors are offered
the advantage of personalized service to try to meet each
individual clients investment objectives separately while in
case of mutual funds investors are not offered any such
advantage of personalized services.

Benefits of Choosing Portfolio

Management service Instead of
Mutual Funds
While selecting a portfolio management service over mutual
fund services it is found that the portfolio manager offer
some very service which are better than standardized
51

product services offered by the mutual fund manager. Such

as:
1. Asset Allocation:
Asset allocation plan offered by portfolio management
service (PMS) helps in allocating savings of the client in
terms of stock bonds or equity funds. The plan is tailor
made and is designed after a detailed analysis of
clients investment goals, saving pattern and risk taking
goal.
2. Timing:
Portfolio manager preserves clients money on time.
Portfolio management services helps in allocating right
amount of money in right type of saving plan at right
time. This means the portfolio manager provides their
expert advice when his client should invest his money
in equity or bonds or when he should take his money
out of particular saving plan. Portfolio manager
analyzes market and provides his expert advice to the
client regarding the amount of cash he should take out
at the time of big risk in stock market.
3. Flexibility:
Portfolio manager plan saving of his client according to
their need and preferences. But sometime portfolio
manager can invest the clients money according to his
own preferences because they know the market very
well than his client. It is his clients duty to provide him
a level of flexibility so that he can manage the
investment with full efficiency and effectiveness.
4. Rules and Regulation:
In comparison to mutual funds, portfolio managers do
not need to follow any rigid rules of investing a
particular amount of money in a particular mode of
investment. Mutual fund managers need to work
according to the regulations set up by financial
authorities of their country. Like in India, they have to
follow rules set up by SEBI

52

CASE STUDY
Mr. Arpit Singh is one of our companys client.
Mr. Arpit lives in Gurgaon.In his family, he has three
dependents Priya Singh (spouse), Bhavita Singh (daughter),
Kushagra Singh (son).
The family has total monthly expense of Rs 65,000. He had
taken Home Loan for which he have to pay EMI of Rs 22,071.
He also had taken Gold Loan as well for which he have to pay
EMI of Rs 5,000 per month.
Therefore, total EMI per month he have to pay is Rs. 27,071.
Monthly living expenses which required to maintain familys
standard of living in current scenario is Rs 37,929.

Human Lifetime Value = (Monthly

Expenses*12)/ One Year FD Rate

Living

= 37929*12/0.06
= Rs 75,85,800/Therefore, his Human Lifetime Value comes out to be Rs
75,85,800/In this, the outstanding Home Loan is Rs 17,00,000 and
outstanding Gold Loan is Rs 2,00,000.
Therefore, the total outstanding liabilities of the family is Rs
19,00,000.

FUTURE GOALS:
1. Daughters higher education (MBA) which costs him 7 lacs
right now.But he require this money after 15 years.
Keeping in mind the concept of time value of money and
inflation in education field, Future value would be 24 lacs
for this future goal at the inflation rate of 8%.
2. Same for the Kushagras higher education (MBA) which
53

costs 7 lacs right now. Tenure of the goal is 20 years, so

Future value comes out to be 30 lacs.
3. Third goal is Bhavitas marriage which costs him around
20 lacs and he has no savings for this goal. The tenure of
the goal is 20 years.
Current Value for Future Goals= Rs 34,00,000

Final HLV= Gross HLV+ Total Outstanding Loans+

Current Value for
Future Goal
= 75,85,800+ 19,00,000+ 34,00,000
= Rs 1,28,85,800/-

KNOW THE RISK APETITE:

If you had Rs.1lakh, how would you like to invest? (Please tick
in the circle provided)
Adventurous
Risk Adverse

Equity=90%
0%
Debt=10%
100%

60%
40%

30%
70%

He choose Equity=90% and Debt=10%, which shows his risk

apetite is more as he is young.
Next, we asked him if he is comfortable in investing in Unit
Linked Insurance Plan (ULIP), he was comfortable with this plan
54

for her daughters education.

Secondly, we asked him if he is comfortable in investing in
Mutual Fund Schemes, he was comfortable with this also.

RECOMMENDATIONS:
1. He should take a TERM PLAN of Rs1.30 Cr. (ReasonIncase of any mishappening, this term plan covers
MrArpits HLV)
2. He can take a ULIP Plan from SHRIRAM FORTUNE
SOLUTION with a monthly contribution of Rs 6890 to fulfill
the future goal of his childrens education. And he would
get additional benefits of risk cover, double accidental
rider, critical illness rider and family income benefit.
3. He can take a New Shri Life Plan (Endowment Plan)of
annual contribution of Rs 50k for his childrens education.
And he would get additional benefits of risk cover, double
accidental rider, critical illness rider and family income
benefit.

55

PRIMARY RESEARCH:
QUESTIONNAIRE ANALYSIS
GENDER
o MALE
o FEMALE

Total

Female

40%

Male

60%

AGE

21 YEARS- 30 YEARS
31 YEARS- 40 YEARS
41 YEARS- 50 YEARS
56

50 YEARS AND ABOVE

Total
21 Years- 30 Years

7% 2%

31 Years- 40 Years

11%

41 Years- 50 Years
51Years and Above

81%

OCCUPATION
o
o
o
o
o

BUSINESS
SERVICE
STUDENT
RETIRED
OTHER

Total

9%

Business

2%

intern
Service

44%

Student

46%

INTERPRETATION
From the above diagram, we came to know that most of the investors are
service people.

ANNUAL INCOME
o Upto 5 Lakh
o 5 lakh- 10 Lakh
57

o 10 Lakh- 15 Lakh
o 15 lakh and Above

Total
7%

61%

10 Lakh- 15 Lakh
15 lakh and Above

5%

5 lakh- 10 Lakh

26%

Upto 5 Lakh

MARITAL STATUS
o MARRIED
o UNMARRIED

Total
16%

MARRIED
UNMARRIED

84%

1 ARE YOU AWARE OF THE FOLLOWING INVESTMENT OPTIONS?

a)
b)
c)
d)
e)
f)
g)
h)
i)

PUBLIC PROVIDEND FUND

POST OFFICE SAVINGS
GOVT. SECURITIES
MUTUAL FUND
BONDS
SHARES
REAL ESTATE
GOLD
SILVER

58

j) CHIT FUND
k) FIXED DEPOSIT
l) RECURRING DEPOSITS
m) All of the Above

INTERPRETATION
Mostly people are aware of Fixed Deposit and Shares whereas less
percentage of people are aware of chit fund.
This is because it is not much secure as compared to FD and others
investment options.

2 HAVE YOU INVESTED YOUR MONEY IN FOLLOWING SCHEMES?

a) PUBLIC PROVIDEND FUND
b) POST OFFICE SAVINGS
c) GOVT. SECURITIES
d) MUTUAL FUND
e) BONDS
f) SHARES
g) REAL ESTATE
h) GOLD
i) SILVER
j) CHIT FUND
k) FIXED DEPOSIT
l) RECURRING DEPOSITS
m) All of the Above

INTERPRETATION
Maximum percentage of investors have invested in FD as these has fixed
returns and more secure as compared to other investment options
whereas least in Chit Funds because of N number of scams in this field.

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RATE THE FOLLOWING FINANCIAL INSTRUMENTS ACCORDING

TO YOUR PREFERENCE RANGING FROM 1 TO 5 (1 BEING THE
HIGHEST AND 5 BEING THE LOWEST)
a) PUBLIC PROVIDEND FUND

b) POST OFFICE SAVINGS

c) GOVT. SECURITIES

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d) MUTUAL FUND

e) BONDS

f) SHARES

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g) REAL ESTATE

h) GOLD

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i) SILVER

j) CHIT FUND

k) FIXED DEPOSIT

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l) RECURRING DEPOSITS

INTERPRETATION
From the above ratings, it shows that investors prefer more to invest in
PPF, FD, Gold, Silver and Real Estate than other financial instruments as
these are more secure and reliable.

3. WHAT ARE YOUR FINANCIAL OBJECTIVE FOR INVESTMENT?

a) Hold sufficient cash for emergencies
b) Ensure your family are financially protected in case of your
premature death
c) Establish plan to meet your goals
d) Help you decide when to retire
e) All of the Above

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a) Hold sufficient cash

for emergencies

13%
9%
52%
25%
2%

b) Ensure your family

are financially
protected in case of
your premature death
c) Establish plan to
meet your goals
d) Help you decide
when to retire
e) All of the Above

INTERPRETATION
From the above data, it is clear that investors in India gives priority to
meet their objectives after ensuring the sufficient liquidity for the
emergencies and then the other options come for the investment to meet
their financial goals.

Following are Financial Objectives (Please indicate

priority from1-5, 1 being lowest and 5 being highest)
a) Buy a House

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b) Buy a Car

c) Provide for childs/childrens Education costs

d) Provide for childrensMarriage

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e) Achieve growth in investments

f) Protect income in the event of death/disability

g) Reduce Credit Card liability and other Personal Expenses

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h) Reduce Income-tax

i) Protect Income/Assets from Inflation

INTERPRETATION
From the above ratings, we came to know that major financial objective of
investors is to achieve good return with minimal amount of risk and the
other one is to achieve their long term goals to buy their own house.
5 WHAT PERCENTAGE (%) OF MONTHLY INCOME YOU ABLE TO
SAVE?
a)
b)
c)
d)

0-15%
16-30%
31% -50%
50% AND ABOVE

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18%

4%
0 -15%

44%

16% - 30%
31% - 50%

35%

50% AND ABOVE

INTERPRETATION
From the above data, 44% of people are able to save between 0-15%
which shows that people are spending more on their needs rather than
savings or investing for their future goals.

6. WHICH FACTOR DO YOU CONSIDER BEFORE INVESTING?

(Please indicate priority from1-5, 1 being lowest and 5

being highest)
a) LIQUIDATION

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b) LOW RISK

c) HIGH RETURNS

d) MATURITY PERIOD

INTERPRETATION
From the above analysis we can conclude that investors majorly prefer
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high returns and low risk over liquidation and tenure of the investment.

7. FROM WHERE YOU GET TO KNOW ABOUT INVESTMENT

SCHEMES?
a)
b)
c)
d)
e)
f)

SOCIAL MEDIA
TELEVISION
NEWSPAPERS
FINANCIAL PLANNER
FAMILY AND FRIENDS
OTHERS

INTERPRETATION
Family and Friends are the best source to know about the financial
schemes because they are the people who have already invested or
investing in such schemes and can be trusted more than any other
medium.

8 FROM WHERE DO YOU PREFER TO PURCHASE THE

FINANCIAL INSTRUMENTS?
a)
b)
c)
d)
e)

Brokers
Investment advisors
Online portals
Banks/Financial Institutions
Other Sources

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INTERPRETATION
From the above data, we can say the first preference to purchase financial
products is Banks and Financial Institutions as these are more secure than
opting the investment options from the third party channels.

9. DO YOU HOLD ANY INSURANCE POLICY?

YES
NO

Total
60
50
40
Total
30
20
10
0

NO

YES

INTERPRETATION
From the above data, it is clear that mostly investors hold Life Insurance
because it includes risk cover and other benefits with good returns on
maturity.

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10.OBJECTIVE FOR PURCHASING LIFE INSURANCE POLICY

a) saving my income tax
b) investing for long- term goals while covering risk of life
c) investing for my childs education
d) investing for my retirement
e) covering risk of life
f) I do not have any life insurance policy

INTERPRETATION
From the above data, we came to know that the main objective of people
for opting life insurance policy as investment option is to invest their
money for meeting long term goals simultaneously covering the risk to
their lives.

11. WHICH IS THE MOST IMPORTANT FACTOR WILL YOU CONSIDER

WHILE FIXING THE AMOUNT OF COVER ON LIFE INSURANCE
POLICIES:
a) They should cover my familys future expenses till my spouse survives
b) They should cover all my future earning years income
c) They should cover my goal-based financial liabilities
(education/marriage of children)
d) They should at least cover all my outstanding loans
e) They should cover my familys future expenses, goals and outstanding
loans
f) I have not considered the above parameters while taking life insurance

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g) I have gone by return aspiration on my policies rather than the amount

of risk coverage

Total

I have gone by return aspiration on my policies rather than the amount of risk coverage
I have not considered the above parameters while taking life insurance

7%income
They should cover all my future earning 9%
years
12%

28%expenses till my spouse survives

They should cover my familys future
16%

They should cover my familys future expenses, goals and oustanding loans

28%
They should cover my goal-based financial liabilities (education/marriage of children)

INTERPRETATION
From the above analysis, we can conclude that the investors consider
before investing in Life Insurance is that it should cover their family
expenses, future goals and outstanding liabilities.

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LEARNINGS
All the learning I have got from this project is as follows:
Importance of team work to the success of any project and
the organization at large. Not only does it foster
knowledge sharing but helps develop ideas and innovation
which drives the profitability of any business.
Improve Confidence level.
The different types of financial planning by the company
and the client.
Conducted Training sessions of various colleges
Development of interpersonal skills.
Stress Management.
Time Management.
Presented Company in various colleges and conducted
Interview.
How to handle different set of clients.
Improve communication skills.
Learning of the companys rules and regulations.
Discipline.
Application of theory in real life.

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ACHIEVEMENTS
Working with Shriram Fortune Solution Ltd has so far been a
great learning experience it not only accentuated my
professional skills but also helped in overcoming my inhibition
of presenting a large number of people. I learnt how to work
altruistically to achieve the goals of the organization but also
learned that one cannot assume that an altruistically founded
organization always embodies qualities that match its altruistic
intend.
My internship coordinator Mr Deepak Sisodiya showed vehement support and
chose me along with two more interns to represent the organization by giving a
presentation. In this whole process I ameliorated my presentation skills and
learned how to work as a team. I represented my organization at SRM
University, Modi Nagar, Ghaziabad. Presenting an organization in front of so
many MBA students not only so that they understand the facts about the
organization but also show interest in the organization to appear for
organizations interview was not an easy to do task.
The presentation talked about the organizations profile, its listed companies,
about Shriram Fortune Solutions, Shriram Transport Finance Company, Shriram
Life Insurance Company, Shriram General Insurance and then students were
explained about the Summer Internship ProgramWhat we do in
Internship?,What is in for You?,Comprehensive Training, Internship Process.
I along with my other two team mates have conducted student interviews and
recruited 24 students as interns for a 2 months period.
I learned to focus on the marketing of organizations financial products and
achieving the sales target by pitching the products in front if potential
customers. I was able to sell three policies thereby completing my sales target.
Also working during years closing taught me how to work under stressful
conditions.

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Some other things I learned while working at Shriram are

work to my highest potential in a specific area of expertise
develop excellence in several areas of knowledge and
skills
explore new ways of doing things
discover new opportunities in my work
initiate new ideas to improve my work
contribute to the well-being of others
do work that is meaningful
do work that is significant
do things in my own unique way
do things in my own personal way
have high aspirations
influence others in order to improve my work
do more than what seems possible
feel optimistic
feel proud of what others accomplish
envision the possibilities of future accomplishments

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CONCLUSION

78

CONCLUSION
After the overall all study about each and every aspect of this
topic it shows that portfolio management is a dynamic and
flexible concept which involves regular and systematic analysis,
proper management, judgment, and actions and also that the
service which was not so popular earlier as other services has
become a booming sector as on today and is yet to gain more
importance and popularity in future as people are slowly and
steadily coming to know about this concept and its importance.
It also helps both an individual the investor and FII to manage
their portfolio by expert portfolio managers. It protects the
investors portfolio of funds very crucially.
Portfolio management service is very important and effective
investment tool as on today for managing investible funds with
a surety to secure it. As and how development is done every
sector will gain its place in this world of investment.

79

BIBLIOGRAPHY
Reference books:
Prasanna Chandra Security Analysis and Portfolio
Management.
V.A. Adadani- Security Analysis and Portfolio Management.
V. Gangadhar- Security Analysis and Portfolio
Management.

Website :

www.shriramfortune.com
www.investopedia.com
www.moneycontrol.com
www.valueresearchonline.com

www.sec.gov.in

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