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Anuj Verma

A Clients comes and says

Mr. Arun I just want my portfolio to be best managed & I have no goals You do a Risk Profiling giving weightage to various aspects Fixed / Strategic AA Mr. Kulbhushan - Let me decide what I want and you do the rest You construct & follow the Kulbhushans decision Tactical AA For HNIs & Market Savvy investors Mr. manoj Sharma - I have goals to achieve You do a Financial Planning
Single Goal:You may do a Flexible AA directed at the goals Multiple Goals:You may do a Flexible / Strategic / Fixed AA directed at the goals depending upon the information available

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Anuj Verma

Portfolio Construction & Management

There are 3 basic approaches to construction and management of the customers portfolio. The Idea Behind a Portfolio

Arun
Portfolio to best suit to Arun & his risk profile

Kulbhushan
Generating the desired / required returns

Manoj Sharma
Meeting the Goals in the best way

Risk Profile

Expected Returns (ERR)

Financial Planning

Asset Allocation Decisions Product / Instrument / Scheme Mix

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Portfolio Construction / Management Based on Risk Profile

Mr. Arun
Profile:

Person has no specified objectives

Approach: Fixed / Strategic Asset Allocation

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Anuj Verma

Risk Profile: Life Cycle for Arun

This is subjective in nature and may change person to person.
Stage Young Unmarried Young Married Young Married + Children Married With Older children Married With children settled Retirement Stage Risk Tolerance High Moderate Low Moderate High Low Debt 20% 40% 60% 40% Equity 80% 60% 40% 60%

30%
70%

70%
30%

* For illustrative purpose only

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Risk Profile: Wealth Cycle for Arun

This is subjective in nature and may change person to person.
Stage Accumulation Transition Reaping / Withdrawing Distribution Sudden Wealth Surge Risk Tolerance High Moderate Low Moderate High Debt 25% 40% 70% 60% 20% Equity 75% 60% 30% 40% 80%

* For illustrative purpose only

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Anuj Verma

Risk Profiling
Risk Profiling Questionnaire

The questionnaire can help you to determine the risk taking ability of the client at any given point of time. This profiling however is dynamic in nature and can change over time Questions in Risk Profile generally covers

Risk Taking Aptitude

The understanding, attitude &approach of the client towards risk

Existing Life or Wealth Cycle

Cash Flow / Financial Statement The financial status / capacity of the client

The current stage at which the client is

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Anuj Verma

Risk Profile
Risk Assessment Based on Profile
Mr. A Age (yrs) Profession Income (yly) Expenses % Family - Dependents Liabilities Investments Risk Profile ? 25 Service 200,000 50% 2 Nil Nil Mr. B 30 Service 500,000 80% 4 1,000,000 200,000 Mr. C 47 Business 1,000,000 60% 4 2,000,000 500,000 Mr. D 60 Retired 200,000 75% 1 Nil 1,500,000

Extra Info: Male Earning member of family Marriage age 26, 1 son + 1 daughter at age 27 & 29 respectively. Risk Profile (Equity/Debt): Aggressive (80/20) Moderate (60/40) Cautious (40/60) Conservative (20/80)
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Risk Profile
Risk Assessment Based only on Profile
Mr. A Age (yrs) Profession Income (yly) Expenses % Family - Dependents Liabilities Investments Risk Profile ? Mr. B Mr. C Mr. D LT Investor All goals & with some Goals are liabilities have LT Investor liabilities may nearing maturity been met only with no liabilities have immediate equity concern is best time to goals like home, proportion is meeting the invest in equities automobile, etc + reduced for the regular income & forget need for time being needs and having protection of capital protection current wealth Aggressive Moderate Conservative Cautious

This is very subjective / debatable but in general, the above can be the risk profile Risk Profile (Equity/Debt): Aggressive (80/20) Moderate (60/40) Cautious (40/60) Conservative (20/80)
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