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Roadblocks in financial advisory

Summer Training Project Report submitted in partial fulfilment of the requirements for the

Diploma of

Post Graduate Diploma in Management

at

Jaipuria Institute of Management, Lucknow

By

Ved Prakash, Jl12PGDM174

PROJECT GUIDE: PROF. SHALINI SINGH

EXECUTIVE SUMMARY The main objective of the study is to find out why people are not interested to take advice by financial Planner .What are the factors influencing the decision making

process of the investors in Lucknow and their perspective about the different kinds of investments. The study also attempts to understand those products which the investors believe were pushed to them and were not beneficial to them. For this the method chosen was qualitative research by in-depth interviews. It was verified by our survey that most of the investors have been cheated by the agents in the past as in most of the cases agents used to suggest the product which carried high commission. Clearly in this situation there is need of an investment advisor who can give an unbiased advice to the investor. The study tries to find out the reasons of unwillingness to hire an investment advisor by an investor even though investors are in constant need of an advisor. Many educated professionals were interviewed personally & were asked to fill the questionnaire prepared. Need for developing brand image & trust among investors are identified as the medium to eradicate roadblocks. One of main recommendation for breaking the roadblocks is to gain the trust of prospective investors by personally meeting them and increase the client base by providing better and updated service to the present client

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ACKNOWLEDGEMENT

I am deeply indebted to Mr SharadBindal, Chief marketing officer, BFC Capital, Lucknow, under whose guidance the present study was conducted. He has been giving valuable suggestions, generous help and corrections during all the phases of the project and without the help from him;thiscould not have been completed successfully.

I owe a debt of gratitude to Mr AnuragAgarwal, Head Strategic BusinessBFC Capital, Lucknow, for his exceptionally coherent guidance and favourable concern at every stage of the project. He has always been a true support in all the phases of the project.

I would also like to extend my indebtedness to Mr KhushalKohli, Wealth Manager, BFC Capital Lucknow, for his guidance and support from time to time.

I would like to thank all the respondents, officers and HRs from various corporates, PSUs & government offices we visited for giving their time and invaluable responses in making my project report.

I am thankful to Officers and Staff at BFC Capital who have shown tremendous cooperation and support throughout the course of study. I also thankful to Faculty guide Prof. Shalini Singh faculty, Jaipuria institute of management, lucknow for their continuous support & cooperation throughout my project without which the present work would not have been possible.

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Contents
CHAPTER-1 .................................................................................................................................... 1 1. 1. INTRODUCTION ........................................................................................................... 1 Our team................................................................................................................... 2

1.1.1. 1. 2.

BUSINESS PHILOSOPHY ............................................................................................. 2 Mission ..................................................................................................................... 2 Vision ....................................................................................................................... 2 Quality policy........................................................................................................... 2

1.2.1 1.2.2 1.2.3 1. 3. 1. 4.

MANAGEMENT ............................................................................................................. 2 PRODUCT OFFERED .................................................................................................... 3 Mutual Funds: .......................................................................................................... 3 Insurance: ..................................................................................................................... 6 Insurance is for the earning member of the family .............................................. 6 Your life insurance needs ..................................................................................... 6 Fixed Deposit ........................................................................................................... 7 POST OFFICE ......................................................................................................... 8 BOND ...................................................................................................................... 9 PMS ........................................................................................................................ 10

1. 4.1. 1. 4.2.

1. 4.2..1. 1. 4.2..2. 1. 4.3. 1. 4.4. 1. 4.5. 1. 4.6. 1. 5.

SCOPE OF SERVICES ................................................................................................. 10 Services related to financial planning and advisory ............................................... 10 Services related to execution.................................................................................. 11

1.5 1. 1.5 2. 1. 6.

FINANCIAL ADVISORY MODEL........................................................................................ 11 Advisory model with fixed yearly charges ............................................................ 11 Advisor on demand (pay when you want advice) .................................................. 12 Investment Advisor on One-time payment basis ................................................... 12 Fees charged as a percentage of Portfolio Worth................................................... 12

1.6 1. 1.6 2. 1.6 3. 1.6 4. 1. 7. 1. 8. 1. 9. 1. 10.

FUNDAMENTAL CONFLICTS WITH TRADITIONAL ADVISORY MODEL ...... 12 BENEFITS OF ASSOCIATING WITH BFC CAPITAL PVT. LTD. .......................... 14 WORKING PROCESS .................................................................................................. 15 PROBLEM DEFINITION ......................................................................................... 16

CHAPTER-2 .................................................................................................................................. 17 2. 1. v RESEARCH METHODOLOGY ................................................................................... 17

2. 1.1. 2. 1.2. 2. 1.3.

Management problems ........................................................................................... 17 Research Design:.................................................................................................... 17 Sampling: ............................................................................................................... 18

CHAPTER -3 ................................................................................................................................. 19 3..1. Data Collection and Analysis ......................................................................................... 19

CHAPTER- 4 ................................................................................................................................. 21 4..1. FINDING ....................................................................................................................... 21

CHAPTER-5 .................................................................................................................................. 22 5.1. RECOMMENDATION ................................................................................................. 22

LIST OF REFERENCES AND APPENDICES ............................................................................ 23 REFRENCES ............................................................................................................................. 23 BOOKS: ................................................................................................................................. 23 INTERNET: ........................................................................................................................... 23 ANNEXURE - I ............................................................................................................................. 24 ANNEXURE-II.............................................................................................................................. 26

Figure 1: B FC CAPITAL LOGO .................................................................................................. 1

Table 1:BFC Capital Scheme For Membership(Solitaire) ............................................................. 14 Table 2:BFC Capital Scheme For Membership(Platinum) .............................................................. 14

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CHAPTER-1 1. 1. INTRODUCTION

Figure 1: BFC CAPITAL LOGO BFC Capital is a company promoted by financial professionals with a vision to place the organization among the best Financial Service Providers. Our main endeavour is to provide solutions to our clients, after assessing the requirements of the client, by understanding his profile for risk, return, liquidity & tax liability. Our orientation is towards enhancing our customer service standards at all times. BFC Capital is one of the leading players in the Indian financial services space. We offer advice and execution platform for the entire range of financial services covering products ranging from Equities and derivatives, Commodities, Wealth management, Asset management, Insurance, Fixed deposits, Loans, Investment Banking, GOI, Bonds and other small savings instruments. BFC Capital is committed to its independence and works exclusively for the benefit of its clients without any conflicting interests. It provides Client centric services with full transparency and dedication. BFC Capital founded as treasury management in 2004. BFC Capital entered in Financial Advisory in 2009. BFC Capital follow unique business model to serve satisfactory financial services to the Customer. BFC Capital Pvt. ltd. capital stands at Rs. 390 crores (as of March 31, 2013).BFC Capital sharing12% of the total UP MF market. Today, BFC Capital are one of the leading financial services institutions with operations in Lucknow. We also have one of the most recognized and trusted brand symbols: We strive to

create long-term value for our member through strong business fundamentals. We are committed to keeping our promises and to doing business the right way. 1.1.1. Our team

Team BFC Capital comprises of top investment professionals with outstanding academic and professional backgrounds. Each Employee has extensive experience at leading financial institutions and maintains a specific expertise in trading, portfolio management, risk analysis, compliances and taxes. Consequently, BFC Capital is able to provide its clients with comprehensive and specialized investment solutions. 1. 2. BUSINESS PHILOSOPHY 1.2.1 Mission To provide end to end solutions to our members exactly matching their requirements and thereby delivering best possible risk adjusted returns to them. 1.2.2 Vision To place the organization amongst the most ethical brands across the globe and to be known as the most trustworthy organization in the finance industry. 1.2.3 Quality policy BFC Capital, are committed to provide a process and system driven atmosphere and culture to our members by adjusting and adapting to their changing needs and market dynamics. 1. 3. MANAGEMENT

Sunil Gupta: A Financial professional with over nine years of experience in Finance Industry. He is Chief Executive Officer of the company. He takes care of third party relationships. He also takes care of EPF/ Gratuity trusts, Banks and Corporate segment.

Sharad Bindal: A Financial professional with over ten years of expertise in Distribution of Financial Products, working as Chief Marketing Officer of the company. Mr. Bindal

takes care of all matters related with sales & marketing strategies. He takes care of trusts, Corporate, HNI & NRI segment. Alok Bindal: Mr. Alok Bindal is having vast experience in the field of finance & accounts. He is Director of the company. 1. 4. PRODUCT OFFERED 1. 4.1. Mutual Funds:

A mutual fund is a fund that is created when a large number of investors put in their money collectively, and is managed by professionally qualified people, called Fund Manager, with experience in investing in different asset class viz. shares, bonds, money market instruments, and other asset class like Gold and real estate. Mutual Funds are compulsorily registered with the Securities and Exchange Board of India (SEBI) , which acts as regulator of Mutual funds for the protection of Investors. When a person invests in a particular scheme of mutual fund, the fund house allots what are called UNITS to the investors, at a price that is fixed through a process approved by SEBI. This price is based on the net asset value, in simple terms which is the total value of investment in a scheme divided by the total number of units issued to investors in the said scheme. Normally, NAVs are computed and published on a daily basis. 1. 4.1.1. Types of Mutual Funds

1. Equity Funds Equity funds aim to provide capital growth by investing in the shares of individual companies. Any dividends received by the fund can be reinvested by the fund manager to provide further growth or paid to investors. Both risk and returns are high but equity funds could be a good investment if you have a long-term perspective and can stay invested for at least five years.

2. Debt or Income Funds The aim of debt or income funds is to provide you with a steady income. These funds generally invest in securities such as bonds, corporate debentures, government securities (gilts) and money market instruments. Opportunities for capital appreciation are limited. 3. Balanced Funds The aim of balanced funds is to provide both growth and regular income as such schemes invest both in equities and fixed income securities in the proportion indicated in their offer documents. The investor may wish to balance his risk between various sectors such as asset size, income or growth. Therefore the fund is a balance between various attributes desired, however, NAVs of such funds are likely to be less volatile compared to pure equity funds 4. Liquid Funds Liquid funds are a safe place to park your money; it is an appealing alternative to bank deposits because they aim to provide liquidity, capital preservation and slightly higher interest rates than bank accounts. Returns on these funds fluctuate much less compared to other funds as the fund manager invests in 'cash' assets such as treasury bills, certificates of deposit and commercial paper. 5. Index Funds Index funds are passively managed funds i.e. the fund manager attempts to mirror the performance of a benchmark index like the BSE Sensex or the S&P CNX Nifty, by being invested in the same stocks. NAVs of such schemes would rise or fall in accordance with the rise or fall in the index. 1. 4.1.2. Benefits of Investing in Mutual Funds Mutual funds have gained in popularity with the investing public especially in the last two decades following are some of the primary benefits.

Professional Financial Experts

Every Mutual Fund scheme has a well-defined objective and behind every scheme, there is a dedicated team of financial experts working in tandem with specialized investment research team. These experts diligently and judiciously study companies, their products and performance, and after thorough analysis, they decide on the best investment option most aptly suited to achieve the schemes objective as well as investors financial goals. Diversifying Risk

It plays a very big part in the success of any portfolio. Mutual funds invest in a broad range of securities. This limits investment risk by reducing the effect of a possible decline in the value of any one security. Mutual fund unit-holders can benefit from diversification techniques usually available only to investors wealthy enough to buy significant positions in a wide variety of securities. Low Cost

Mutual Funds generally provide an opportunity to invest with fewer funds as compared to other avenues in the capital market. You can invest in a mutual fund with as little as Rs. 5,000 and also have the option of investing a little of Rs.500 every month in a SIP or Systematic Investment Plan. Liquidity

You can encase your money from a mutual fund on immediate basis when compared with other forms of savings like the public provident fund or National Savings Scheme. You can withdraw or redeem money at the Net Asset Value related prices in the open-end schemes. In closed-end schemes, lock in period is mentioned; investor cannot redeem his investment until that period. Variety of Investment

There is no shortage of variety when investing in mutual funds. There are funds that focus on blue-chip stocks, technology stocks, bonds or a mix of stocks and bonds and with due assistance from a financial expert, the investor can choose a scheme that aptly fits his requirements, and helps him achieve maximum profitability 1. 4.2. Insurance:

Insurance is a highly misunderstood product and it's often bought and sold for the wrong reasons. At the same time it's a very important part of your life and you must know certain ground rules for making the right decisions in the New Year. Many of us consider insurance just another investment for tax saving. Our day-to-day life is full of unpredictable risks for example loss of life, loss of income, critical illness, disability etc. Insurance planning means figuring out adequate cover against "insurable risks" and getting the maximum out of the premium you pay. Tax exemption is just another aspect of it. Having the right insurance cover gives you peace of mind as it provides financial support in case of contingencies 1. 4.2..1. Insurance is for the earning member of the family

Life insurance is a replacement for your income. When your income ceases or falls insufficient either due to death, illness, retirement or a major goal such as children's education or marriage, insurance fills in the gap. On your death, the money received from term insurance policies will provide a corpus with which the family can pay off debts, convert dreams to reality and still lead a comfortable life. You must have seen cases of non-working mothers or non-earning family members getting insured. It goes against the fundamental principle of insurance. Therefore it's important that the breadwinner covers the risks to his life and income, so that his family's quality of life is not compromised after he is gone. 1. 4.2..2. Your life insurance needs

Calculating life insurance needs is not a simple exercise but you must evaluate your current and required cover in 2010 and take corrective action. Remember that each of us has our own lifestyle, goals, aspirations and dependents which may be completely different from the life

situation for your friend or colleague. So what works for someone else may not work for you. There are essentially three ways to calculate your insurance needs

a) Expense protection Calculates the corpus required to take care of the family's future expenses and goals. Inflation diminishes the value of money and hence expenses need to be adjusted to inflation for calculation of protection required. b) Human life value It is the economic value of an individual; the present value of all his or her future income. Setting aside the part of income one spends on oneself, the protection required through human life value calculates today's value of one's income for the years till his or her retirement. c) Needs analysis In this method you calculate your needs by considering each of your dependents and what financial milestones you want to achieve for them. The needs may range from child education, marriage to repayment of loans. Next you assess your current assets and investments and shortfall due to loss of life. This gap in income can be filled up by insurance. 1. 4.3. Fixed Deposit

FDs are one of the oldest and most common methods of investing. When it comes to assured returns, choosing the right type of savings scheme makes all the difference. Fixed Deposits let you make the most of value-added benefits as you create wealth at low risk. Fixed Deposits in companies that earn a fixed rate of return over a period of time are called Company Fixed Deposits. 1. 4.3..1. Types of Companies offering Fixed Deposits

Financial Institutions Non-Banking Finance Companies (NBFCs). Manufacturing Companies Housing Finance Companies

1. 4.3..2.

Government Companies You can also go for Fixed Deposits with Banks. Features and Benefits

Company Fixed Deposits offer comparatively higher returns than banks. Choose the best tenure for you from a wide range as per your convenience. You can choose how frequently you want to receive your interest payments: 1. Maturity 2. Yearly 3. Half-yearly 4. Quarterly 5. Monthly

Company Fixed Deposits are nontransferable that means there is no fear of FD receipt being stolen. In case it falls into wrong hands, it cannot be misused. Premature encashment of deposit is available any time subject to payment of prescribed penalty Diversify Risk- The deposits should be spread over a large number of companies engaged in different industries. This way, you'll be able to diversify your risk among various industries/companies.

1. 4.4.

Wide Choices- Many companies operating in the Company Deposit market. This will help you decide whether to renew or reshuffle the deposit. Attractive rates as applicable from time to time.

POST OFFICE

Trapping rural savings has been a pressing need since time immemorial. The authorites have taken undue advantage of the existence of post office even in remote nooks and corners of the country. They are forced to undertake normal banking activities liken SB, TD, RD, MIS. The systems and procedures handling these schemes are clumy, laborious and outdated. The leathargy of bureaucraft in taking remedical action results in frittering away of scarce and

valuable resources. The rate of interest were reduced considerably and continuously from 1.1.99 to 1.3.2003. However these schemes offer better return most other avenues. The salient features of the current schemes are given below: 1. 4.5. National Savings Certificates (NSC) Public Provident Fund (PPF) Post Office Monthly Income Scheme Senior Citizen Saving Scheme (SCSS) BOND

In finance, a Bond is a debt security, in which the authorized issuer owes the holders a debt and, depending on the terms of the bond, is obliged to pay interest (the coupon) to use and/or to repay the principal at a later date, termed maturity. A bond is a formal contract to repay borrowed money with interest at fixed intervals. Thus a bond is like a loan; the holder of the bond is the lender (creditor), the issuer of the bond is the borrower (debtor), and the coupon is the interest. Bonds provide the borrower with external funds to finance long-term investments, or in the case of government bonds, to finance current expenditure. The Bond market in India can be divided into two categories, firstly the Govt. bonds i.e. securities issued by central and state government (therefore loans being taken by the Central and state governments), Financial Institution Bonds, PSU (Public sector Undertaking) bonds, and Corporate bonds/Debentures. The most compelling reason for investing in bonds are fixed interests and lesser risk associated with them. While the credit risk is nil for Government bonds, in case of other debt instruments issued by corporate, financial Institutions and PSUs, certain element of risk is associated with them and therefore they are rated by the Credit rating agencies. Depending on the rating, which is a comment on the risk return profile of the instrument, the interest in the instrument varies.

1. 4.6.

PMS

BFC Capital offer investment management and advisory services to individuals who not only understand the long-term potential of equities as an asset class, but also understand the associated risks. BFC capital also have an access to a number of Third Party PMS by various Fund Houses and NBFCs with research desk that actively researches and tracks their performance. The service provides professional management of equity portfolios and Mutual Funds with the objective of delivering consistent long-term performance while controlling risk. BFC Capital recognize that portfolios need to be constantly monitored and periodic changes made to optimize the results. A research team is responsible for establishing our investment strategy and providing us real time information to support it. Client servicing and customization is the key. BFC Capital takes care of all the administrative aspects of a particular portfolio with a monthly reporting on the overall status of the portfolio and performance. 1. 5. SCOPE OF SERVICES Services related to financial planning and advisory Collection of Key Documents Detailed interaction to Identify Needs Detailed Analysis Comprehensive Financial Plan Identify Realistic Financial Goals True Picture Current Portfolio Analyse Securities, Bonds, Schemes, etc.

1.5 1.

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1.5 2.

Preparing Working Papers (exclusive feature of BFC Capital) Financial Planning Report Periodic Research Report Organize Educational Campaigns

Services related to execution Completing Legal & Operational Formalities Important Alerts & Reminders Timely Submission & acknowledgement of all docs. Online facilities, door step services Dedicated Wealth Manager Access to Top Management & easy grievance redressed Predefined frequency of portfolio review Timely Portfolio booking & Portfolio Rebalancing

1. 6.

FINANCIAL ADVISORY MODEL 1.6 1. Advisory model with fixed yearly charges In this model, the advisor will be available for you throughout the year, whether you need him/her or not. Its kind of yearly contract where he advises you on anything you ask him on your financial life. If in some year you ask more, thats fine, you pay same fixed cos t and in some years if you dont consume his services much, still you pay him the same money. With this model, you are clear about the fixed cost you will incur on your financial advisor and even advisor knows that his cash flows are fixed. This model is one of the best advisory models, but sadly this model is not very popular in India particularly tier2 and tier3 cities.

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1.6 2. Advisor on demand (pay when you want advice) This model is very much like the above one, but in this advisor is paid on the go. So whenever client takes the advice or use the time of the advisor for asking anything, advisor is paid for that much time, nothing less and nothing more. This model is not that much widespread, but some courageous advisors take this route. So if a client takes 30 hours of the advisor in some year then for those 30 hours fee is paid. And if in some year only 5 hours is taken then just fee is paid for 5 hours only. For advisor it makes his life easy as he spends his time only for what he is paid for and is really committed to produce the value for that time. Indian is not comfortable with this model. 1.6 3. Investment Advisor on One-time payment basis A lot of advisor works on one time basis where advisor works with the client till the time client get what he/she need. Advisors really try to make sure that there are yearly relationships, but many time clients dont come back after a year as they feel its a waste doing it again and again. But some advisors just run on this model. 1.6 4. Fees charged as a percentage of Portfolio Worth Call it wealth management or Financial Planning as well as Wealth Management, in this model a fixed percentage of clients net-worth is charged. The yearly fixed fees can be present or missing, but a percentage of assets under management (total worth) are taken by the advisor/planner/wealth-manager. A lot of people feel comfortable with this model as this is linked to their net worth. If there is no increase in their net worth, then no fees to be paid, but if the net worth increases, you give away a part of it in fees. 1. 7. FUNDAMENTAL CONFLICTS WITH TRADITIONAL ADVISORY MODEL Traditionally, advisors charge their fees as percentage of portfolio managed. The dominant investing advisory model, based on assets under management (AUM), is bad for many investors. It exposes them to unnecessary risks and comes at too high a cost. Both factors can be mitigated through good financial advice. Therein lies the problem: many people cant afford that advice. People are often aware that their nest eggs are subject to financial risks, but most are unaware that seeking professional help means facing advisor risk the risk of

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financial loss or emotional damage due to advisors poor decisions and (in)actions. Advisor risk arises for a variety of reasons which include: ineptitude, dishonesty, and conflict. Any discussion of advisor risk must examine the fundamental conflicts that currently exist between advisors and their clients. The first fundamental conflict is that clients yearn for the peace of mind that comes from knowing an expert is available to ease jangled nerves. Advisors much prefer to spend their time soliciting new clients or working on their analyses rather than functioning as therapists. The cruel irony of the existing advisory model is that the amount of attention paid to clients emotional needs is proportional to client wealth. Thus, the wealthiest clients get all the attention, while those who have the least, and who arguably most desperately need good investing advice, get hardly any attention at all. Typical AUM advisory fees range from 0.5% to 2% annually. In his bestselling book, Stocks for the Long Run, Wharton finance professor Jeremy Siegel provides some insight using basic assumptions and shows that a one per cent annual fee assessed over 30 years can reduce nest egg value by a third. A 3% fee can reduce the accumulated value by about 50%!. Transparency is another fundamental conflict. In general, complexity and opacity favour advisors. Lack of transparency allows some advisors to make misleading performance claims and to confuse investors. Advisors may benefit when investors are confused because they can sell them more complex and expensive services. The final conflict has to do with education. A more educated or knowledgeable investor is in position to make better decisions. Better educated investors know how to vote with their wallets and ballots to support honest services and curb irresponsible industry practices. Advisors are well aware that educated investors demand better risk-adjusted performance, understand the importance of minimizing fees, seek greater transparency, and are less likely to give up control of their assets. Some advisors fear that investor education has the potential to seriously undermine their role. For this reason, the educational experiences they offer may be restricted to thinly veiled marketing efforts.

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1. 8.

BENEFITS OF ASSOCIATING WITH BFC CAPITAL PVT. LTD. Advisory Model followed by BFC Capital overcomes all the fundamental limitations mentioned above as they curb Advisor Risk,provide Client focus & satisfaction, Feesare charged annually and the amount is minimal `5000 &`10000 only, transparency in each & every transaction, online facility, and last but not the least imparting education to investors. Twice or thrice a month BFC Capital Pvt Ltd conducts an program as part of their Corporate Social Responsibility named Quality Circle Program to impart knowledge to existing clients as well as to a common investor from Lucknow city. The fee structure is designed to benefit the small investor, which are as follows.

a) Solitaire: 10,000 per annum Table 1:BFC Capital Scheme For Membership(Solitaire) Monthly Income Portfolio to be managed by BFC Portfolio to be managed for > 1,00,000, or > 10,00,000, or All family members

b) Platinum: 5,000 per annum Table 2:BFC Capital Scheme For Membership(Platinum) Monthly Income Portfolio to be managed by BFC Portfolio to be managed for < 1,00,000, and < 10,00,000, and Spouse & dependants

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1. 9.

WORKING PROCESS Financial planning is the process of successfully meeting financial needs of life through the proper management of finances. It is your roadmap to Financial Health, & Sustainable Wealth creation. There are six stages to the process of doing a financial plan First step: The First Step of financial planning is to establish the professional relationship. BFC Capital Wealth Manager explains all the detail about Company and related to membership. Wealth Manager. Second step: The second step of the financial planning process is gathering data. Wealth Manager Using data survey form or questionnaire collects all the relevant information that is required for financial planning. In this meeting he is trying to determine and discussed client goal, need and priorities. BFC Capital wealth Manager Focus on Financial Needs Assessment Form, together with the collection of documents as required by legislation, a general questionnaire and a determination of your investment profile all form part of this section. Third step: The third Step is processing and analyzing the information gathered from Client. BFC Capital will undertake a review of the following: Clients financial position Current cash flow statement A review of existing insurance policies Analyze the information to determine the strengths and weaknesses in the clients Finances evaluate our clients objectives in view of available resources, Economic conditions as they relate to future resources.

Analysis and evaluation of the clients financial status. Here we often use sophisticated computer programmes. The comprehensiveness of the analysis depends on the type of analysis and services that you require. Fourth step: Development and submission of a Financial Plan with recommendations and alternative proposals, where necessary. A personal report and plan is compiled following the analysis and information provided by you. Proposals will be made as well as explanations of

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the implications and costs of implementation. Where necessary, alternative proposals will be made. All this is done to enable you to make an informed decision. After discussion, or at the clients request, the plan can be adapted. Fifth step: A fifth step in the financial planning process is implementing the plan. Client may need help in obtaining products and in pursuing strategies identified in step four. The client and adviser agree about when and how the plan will be implemented and what recommendations should enjoy the highest priority. The adviser helps with the implementation and can serve as coordinator of the process and as the link with other professional people like attorneys and auditors and products. Final step :In final step is monitoring the plan. Periodically wealth manager should review plan to evaluate the significance of any changes in tax, economic conditions, and available investment techniques. If client choose to use company investment advisory services client will be encouraged to have quarterly meetings related to assets under management. 1. 10. PROBLEM DEFINITION: BFC Capital follow Financial Advisory model which is

overcomes all the fundamental limitations that are mentioned in topic 1.6 & 1.7 and charged annually amount `5000 &`10000 only, transparency in each & every transaction, online facility etc. BFC conducted a two survey in the city Lucknow .Finding of those survey are following1) People prefer advisory over selling. 2) Majority of the investors were cheated by hiding the important terms and agreements regarding its features and complexity of offer documents. 3) More than 35% of the people were misled even after being aware of the regulatory changes. 4) Lack of knowledge and blind faith on agent. These finding shows that the investor are facing problem, loses money. After these problems why investor not interested in hiring financial advisor. To study why people are not interested in hiring financial planner. What are factors that are stop the to become client of BFC Capital. To get answer of these question BFC Capital Allotted me project topic Roadblocks in Financial advisory

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CHAPTER-2 2. 1. RESEARCH METHODOLOGY Research Methodology is a way to find out the result of a given problem on a specific matter or problem that is also referred as research problem. Different sources use different type of methods for solving the problem. Research methodology is the arrangement of condition for collection and analysis of data in a manner that aims to combine the relevance to the research purpose with economy in procedure. Research is conceptual structure within which research is conducted. It is way to systematically study and solve the research problems. 2. 1.1. Management problems

Why people are not interested to hire financial Planner .what reasons that are stop them to hire financial planner for financial planning. Research problems To know awareness & understanding of Advisory model in the public (Lucknow) To know reasons for reluctance from middle class investor towards financial planning. 2. 1.2. Research Design:

A Research design is a plan that shows how a researcher intends to study an empirical question. Choice of research design depends on a number of factors. A good research design will ensure that the marketing research project is conducted effectively and efficiently. After discussing with some investor and wealth manager, why people not interested in hiring financial planner, what are the factors that are stop them to become customer of BFC Capital Pvt. Ltd. Descriptive research is used to answer descriptive research questions: What is happening? How is something happening? Why is something happening?.

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The study involves finding out factors why people not interest in taking financial advisory .The research Design descriptive in nature. 2. 1.3. Sampling:

It is important to select a sample purposely, focusing on the group we want to study. Participants must be chosen for the specific qualities that they bring to the study. This is often called purposive strategy-"intentionally sampling research participants for the particular perspectives they offer. A carefully chosen sample allows exploring different experiences among various individuals or groups. Selection decisions must consider the researchers ability to access research participants. Quota Sampling The target population for BFC Capital Pvt Ltd in retail are the individuals with family income more than `60,000 in Lucknow city having urban population of 3037718 (source: census 2011). In this Study quota sampling is used. Sampling technique that do not use chance selection procedures and rather they rely on the personal judgment of the researcher. Quota sampling requires that representative individuals are chosen out of a specific subgroup. In this study project study I have collected data whose family income is more than 60,000 in lucknow Employees from various corporate offices & PSUs in Lucknow were contacted including Sate Government Corporation Employee , Bank Professionals, School or College teacher ,Doctors, Vodafone, Hindustan Times , DainikJagran, Airtel, Idea Cellular, TATA Docomo, TATA Motors , TATA Motors (Passenger Vehicle division), NBRI (National Botanical Research Institute), Reliance Communication, NTPC, TVS Motors, Tata Sky, Maruti Suzuki, TVS

Motors, TCS, Honda Motors, DainikBhaskar, BHEL and Central Pollution Control Board (CPCB). On basis of secondary data made available to us by BFC Capital, Sample size of 150 individuals was taken.

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CHAPTER -3 3..1. Data Collection and Analysis

For this study in BFC capital I directly met the clients who were not interested in financial planning so that ask the reasons and collect the response from them. When get detail why people are not interested to hire financial planner. Explain the benefit of financial planning accordingly so that they are able to understand. The stake holders identified to be involved with investment industry Businessmen Bureaucrats Professionals like Doctors, architects, engineers Persons involved in administration/top management of government and private institutions Information needed from each group of stake holders identified to be involved with investment industry is identified. Inferences: (Annexure II)

Although 73% of the population mentioned that they are satisfied with their current financial management, 67% admitted that they are a victim of misselling of financial instruments.

While 6% of investors are unaware of any misselling or malpractices done to them by their advisor or agents. 87% of the investors are of the thought that they understand the difference between selling & advisory, then also only 60% would prefer advisory over selling.

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Even after understanding the concept of Advisory Model, 27% of investors would prefer pure selling over Advisory.

33% of well-educated investors are of the thought that they could beat inflation by investing in traditional investments

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CHAPTER- 4 4..1. FINDING

After taking out the inferences based on the findings, some broad conclusions can be drawn. These conclusions basically indicate the thought process of educated earning professionals. The broad conclusions are: Brand image is one of the vital factors for the success of this model. Saving of an individual is very important for the overall well-being, so an individual wants to go for a known brand. In many persons opinion, an advisor whom they have interacted before will get high preference. When an advisor is known to an investor then chances of getting the service from that advisor increases even if that advisor does not carry a brand name. Educated professional are more dependent on themselves for managing their money. Most of them said that they do not take the advice of banker and agents. So it can be said that in todays scenario educated professional do not fall into the trap of agents. Bad experience in the past has come out as one of the major obstacle in the advisory model. In the interviewee opinion those who have bad experience in the past will try to play safe. So we can conclude that it will take some time when people will get over of the past malpractices. Some other facts which came out during the interview are: Generally investors belonging to middle and upper middle class play safe. Most of the investor is inclined for a safe investment like fixed deposit and PPF/PF since investing in fixed deposit and provident does not require financial skill. If there is Change of need in a persons life they will be more in need of a financial advisor. In the current scenario middle class family and upper middle class family requirement continuously changes so they may need a financial advisor.

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CHAPTER-5 5.1. RECOMMENDATION

The following suggestions are strongly recommended Transparency and compliance: Focus on transparency and compliance, while targeting customers with attractive, segment focused products. Online platform: Use online platform so that people register with BFC Capital from anywhere and become a client and use service online from anywhere at any point of time. Online Marketing: In Current scenario working age population of India i.e. 63.9% (age group of 15-64 source: World bank) and increased reach & usage of Information Technology company should focus on various online marketing techniques it might be through social networking sites like Facebook, Google Plus ,Forum ,Twitter or by uploading videos on YouTube, informational blogs, Email Marketing (by forwarding informational news or know how to recipients by email).The Company could promote its website as a query solving portal or conduct quizzes, events or online discussion. Develop Brand Image: Investors connect brand name with credibility, differentiation, visibility, stability & trust that they can impart on their wealth managers. Most of the investors want to go with a well-known brand. For attaining brand identity, company should work on imparting high quality service to the existing client. Increase Networking: Currently, company is relying heavily on word-of-mouth from existing satisfied clients. For mass penetration company should come up with marketing strategies by segmenting and targeting the client base.

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LIST OF REFERENCES AND APPENDICES REFRENCES BOOKS: o Marketing Management, 14th edition, Philip Kotler, Kevin Lane Kotler, Published by Prentice Hall, USA o Barnewall M (1987), Psychological Characteristics of the Individual Investor, in Willia mDroms, ed., Asset Allocation for the Individual Investor, Charlottsville. o Hoffmann, Arvind, Heiner Franken, and Thijs Broekhuizen. "Customer intention to adopt a fee-based advisory model." An empirical study in retail banking, 2011. o BarnewallMacGruder M (1988), Examining the Psychological Traits of Passive and Active Investors, Journal of Financial Planning. o Harris Interactive Inc., Public Relation research. The 2012 Consumer Financial Literacy Survey, National Foundation for Credit Counseling. o NarangSomil (2007) Investigating the Factors Affecting the investment Decision in Residential Development, The University of Nottingham. o Inderst, R. and M. Ottaviani (2009). Misselling through agents. The American Economic Review 99 (3), 883 908.

INTERNET:

o www.bfccapital.com o http://en.wikipedia.org/wiki/Financial_adviser o http://www.moneycontrol.com/personal-finance/planfinance/ o http://www.fpsbindia.org/

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ANNEXURE - I Assessment Form Name .. Your annual household family income 1) 2) Rs 0- 2 lakh Rs 2- 5 lakh Rs 5- 10 lakh More than 10 lakh Are you really satisfied with the current status of your financial management? YES NO I am not sure Have you ever been the victim of misselling of financial products? YES NO I dont know Age

3) Do you understand the concept of advisory model? YES NO 4) If the answer to 3. is NO, then are you interested in understanding the financial advisory model? YES NO 5) Do you understand the difference between selling and advisory? YES NO 6) Do you prefer advisory model over pure selling of financial products? YES NO 7) Have you attended the Quality Circle Program conducted by BFC Capital? YES

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NO

8) If the answer to 6. is YES, then did you like the session? YES NO 9) If the answer to 8. is NO, please specify any particular reason for it 10) What is/are the reason(s) for not getting associated with BFC Capital (You can tick more than one reason)? Do not have enough savings Cannot trust BFC Already happy with the way I manage it I do not want to pay membership fees I want very quick returns Not interested in investing anywhere Others Please specify 11) Do you think that you can create wealth and beat inflation by doing fixed deposits and traditional savings only? YES NO I dont know 12) Would you be willing to take services from BFC, if it provides honorary membership (Zero fees) to you for a year? YES NO

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ANNEXURE-II

Series1, No, 2, 14%

Series1, Not Sure, 2, 13%

Series1, Yes, 11, 73%

Are you really Satisfied with the current status of your financial management?

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Have you ever been the victim of misselling of financial products?


Series1, I Don't Know, 1, 6% Series1, No, 4, 27% Series1, Yes, 10, 67%

Do you understand the concept of Advisory Model?


Series1, No, 5, 33%

Series1, Yes, 10, 67%

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Do you understand the difference between selling and advisory?

Series1, No, 2, 13%

Series1, Yes, 13, 87%

Series1, Can't Say, 2, 13%

Series1, No, 4, 27%

Series1, Yes, 9, 60%

Do you prefer advisory model over pure selling of financial products?

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Do you think that you can create wealth and beat inflation by doing fixed deposits and traditional savings only?
Series1, No, 10, 67%

Series1, Yes, 3, 20%


Series1, I don't know, 2, 13%

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