A SUMMER INTERNSHIP PROJECT REPORT On
“Financial advisors‟ knowledge about the investment habits of their clients” At NJ INDIA INVEST PVT. LTd. In partial fulfillment of the requirement of the Award for the degree of Master of Business Administration
Submitted to: Gandhinagar Institute of Technology
(A Center for Management Studies) (An ISO 9001:2008 Certified)
(AICTE approved & Affiliated to Gujarat Technological University)
Prepared by:
Name: AviPadia AviPadia Enrollment No: 117150592010 Year- 2012-2013
DECLARATION
I, AVI YOGESHBHAI PADIA , hereby declare that this project is genuine and confide work prepared by me and submitted to Gandhinagar Institute of Technology for the MBA-II semester .
To the best of my knowledge and belief, the matter presented in this project has not submitted earlier for the award of any other university. unive rsity.
Date:
_________________
Place: Ahmedabad
(AVI Y. PADIA)
DECLARATION
I, AVI YOGESHBHAI PADIA , hereby declare that this project is genuine and confide work prepared by me and submitted to Gandhinagar Institute of Technology for the MBA-II semester .
To the best of my knowledge and belief, the matter presented in this project has not submitted earlier for the award of any other university. unive rsity.
Date:
_________________
Place: Ahmedabad
(AVI Y. PADIA)
EXECUTIVE SUMMARY As a part of my study stud y curriculum it is necessary to conduct a summer training project. It provides us an opportunity to understand particular topic in depth and which leads to through to that topic. My topic for the summer training project is title ―financial advisors‘ knowledge about the investment habits of their client.‖
This project is divided into two parts. The first part gives an insight about Mutual Fund and its various aspects, the Company Profile, Objectives of the study. One can have a brief knowledge about Mutual Fund and its basics through the Project. The second part of the Project consists of data, Research Methodology and its analysis collected through survey done on 100 people. th
From 5 of June I had start my training at NJ India Invest (Ahmedabad-Maninagar). On the first day of the training I had started getting knowledge about how advisory company can work, what is mutual funds, how many MNC are there in mutual funds, over view of the company, procedure of investment in mutual funds and other so many things I knew in first few days. Company wants to increase their business so it is necessary to convince financial advisors for AMFI exam. And also it is necessary to understand the investment habits of the client. With the help of this research manager can get depth knowledge about investment habits of customer and also convince financial advisors for AMFI exam an d for NJ sub partner. After getting information about company and mutual funds, there is one topic provided by manager for research so my topic is “Financial advisors knowledge about the investment habits of their client.” So So after getting research topic I have started to prepare questionnaire. I have met
personally all the financial advisors nearest to maninagar in Ahmedabad. They have answered very genuinely and truly. Their co-operation was very nice while filing up of the questionnaire and to understand the Agent guide and respond according to that.
ACKNOWLEDGEMENT Learning is a delightful experience and in the ocean of knowledge you can acquire limitless understanding through your passion for it. And in my passion to know more, it has been memorizing extravagance of memorable experience. At this enlightening moment of completion of my project, I feel obliged to record my heartfelt and deep gratitude to those who have helped me. I am thankful to Mr. Jignesh shah who allowed me to be a part of his organization and provided me necessary guidance throughout my tenure and I am also thankful to Mr. ParagSoni, Mr. Bhavesh Joshi and the staff of the organization that directly or indirectly helped me.
I am sincerely thankful to all the faculty members of GIT who directly or indirectly supported me during the project. I am also thankful to all the non-teaching staff of G IT for their kind support.
AVI Y. PADIA
OBJECTIVE OF THE STUDY
OBJECTIVE OF THE STUDY For the growth of the company it is necessary to increase mutual funds advisors. And also it is necessary to understand the investment habits of the client. So my topic is ―Financial advisors knowledge about the investment habits of their client.‖ With the help of this research manager
can get depth knowledge about investment habits of customer and also convince financial advisors for AMFI exam and for NJ sub partner.
To know the investment habits of investors in Ahmedabad
To help company to Convince financial advisors for become N.J. sub partners
To know the factors considered by the people before they invest their money in any instrument
To know the market potential of mutual funds
To know the investment objective of investors
To know the investors‟ preference level about mutual funds
OV E RA L L I N D U ST RY I N I N D I A
HISTORY OF INDIAN MUTUAL FUND INDUSTRY The origin of mutual fund industry in India is with the introduction of the concept of mutual fund by UTI in the year 1963. Though the growth was slow, but it accelerated from the year 1987 when non-UTI players entered the industry. In the past decade, Indian mutual fund industry had seen a dramatic improvement, both quality-wise as well as quantity-wise. Before, the monopoly of the market had seen an ending phase; the Assets under Management (AUM) were Rs. 67bn. The private sector entry to the fund family rose the AUM to Rs. 470 bn in March 1993 and till April 2004, it reached the height of 1,540 bn. Putting the AUM of the Indian Mutual Funds Industry into comparison, the total of it is less than the deposits of SBI alone, constitute less than 11% of the total deposits held by the Indian banking industry. The main reason of its poor growth is that the mutual fund industry in India is new in the country. The mutual fund industry can be broadly put into four phases according to the development of the sector.
Note: Erstwhile UTI was bifurcated into UTI Mutual Fund and the Specified Undertaking of the Unit Trust of India effective from February 2003. The Assets under management of the Specified Undertaking of the Unit Trust of India has therefore been excluded from the total assets of the industry as a whole from February 2003 onwards. Each phase is briefly described as under. First Phase – 1964-87
This phase began with the inception of the Unit Trust of India (UTI). It remained the only mutual fund player in the country till 1987. UTI started its operations in July 1964. it was set up by the Indian Government with a view to augment small savings in the country and to channelize these savings to the capital markets. UTI witnessed a slow and steady growth over the 1970s and the 1980s. In 1978 UTI was de-linked from the RBI and the Industrial Development Bank of India (IDBI) took over the regulatory and administrative control in place of RBI. Second Phase – 1987-1993 (Entry of Public Sector Funds)
1987 marked the entry of non- UTI, public sector mutual funds set up by public sector banks and Life Insurance Corporation of India (LIC) and General Insurance Corporation of India (GIC). SBI Mutual Fund was the first non- UTI Mutual Fund established in June 1987 followed by Canra bank Mutual Fund (Dec 87), Punjab National Bank Mutual Fund (Aug 89), Indian Bank Mutual Fund (Nov 89), Bank of India (Jun 90), Bank of Baroda Mutual Fund (Oct 92). LIC established its mutual fund in June 1989 while GIC had set up its mutual fund in December 1990.At the end of 1993, the mutual fund industry had assets under management of Rs.47, 004 crores.The total number of schemes increasing to about 167 by the end of 1994. Third Phase – 1993-2003 (Entry of Private Sector Funds)
This phase marked the entry of private sector funds. The phase also signaled the intensification of the competition. Both domestic and foreign players entered the market, offering a wide variety of schemes to investors. Kothari Pioneer Mutual Fund was the first private sector fund to be established in association with a foreign fund.
Fourth Phase – since February 2003
This phase had bitter experience for UTI. It was bifurcated into two separate entities. One is the Specified Undertaking of the Unit Trust of India with AUM of Rs.29,835crores (as on January 2003). The Specified Undertaking of Unit Trust of India, functioning under an administrator and under the rules framed by Government of India and does not come under the purview of the Mutual Fund Regulations. The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and LIC. It is registered With SEBI and functions under the Mutual Fund Regulations. With the bifurcation of the erstwhile UTI which had in March 2000 more than Rs.76,000crores of AUM and with the setting up of a UTI Mutual Fund, conforming to the SEBI Mutual Fund Regulations, and with recent mergers taking place among different private sector funds, the mutual fund industry has entered its current phase of consolidation and growth. As at the end of March, 2008 there were 35 funds, which manage assets of Rs 505152 crores.
Different AMC Involve in Mf u nd its’ Market Share
Mutual Funds Name (MNC)
Axis Mutual Fund Birla Sun Life Mutual Fund BNP Paribas Mutual Fund DSP Blackrock Mutual Fund Franklin Templeton Mutual Fund HDFC Mutual Fund ICICI Prudential Mutual Fund IDBI Mutual Fund IDFC Mutual Fund ING Mutual Fund JM Financial Mutual Fund Kotak Mahindra Mutual Fund L&T Mutual Fund Principal Mutual Fund Reliance Mutual Fund SBI Mutual Fund Sundaram Mutual Fund Tata Mutual Fund UTI Mutual Fund
Average Assets Under Management (AAUM) 8874.56 61174.14 4412.14 29298.27 36081.17 90085.72 68816.49 5482.14 25763.61 1545.48 5885.14 26236.41 3897.61 4126.28 80231.99 42671.35 14098.53 19818.27 58922.15
Average AUM of MF industry decresed by 4.65% in January-March 2012 Average assets under management of the mutual fund industry decreased by 4.65% during the Januarymarch 2012 quarter compared to October-December 2011 quarter. According to the data provided by the association of mutual funds in India, the combined AAUM of mutual funds stood at Rs. 6.71 lakh crore at the end of March 2012, which had decreased by Rs. 6.87 lakh crore as at the end of December 2010. Among the 44 fund houses.
Source: FUNDS WATCH (Jan-march 2012)
CORPORATE PROFILE OF THE COMPANY
INTRODUCTION NJ India Invest was started in 1994 to cater to the growing financial services sector. NJ India Invest evolved out as a client focused need based investment advisory firm. At NJ mutual fund as one of the best investment avenue available to satisfy any kind of investment need. NJ gained expertise in analyzing mutual fund schemes, and an in-depth study on various parameters is carried out on a regular basis. NJ India Invest Pvt. Ltd. is one of the leading advisors and distributors of financial products and services in India. Established in year 1994, NJ has over a decade of rich exposure in financial investments space and portfolio advisory services. From a humble beginning, NJ over the years has evolved out to be a professionally managed, quality conscious and customer focused financial / investment advisory & distribution firm.
ABOUT NJ INDIA INVEST COMPANY
HISTORY AND EVOLUTION
NJ India Invest Pvt. Ltd. is one of the leading advisors and distributors of financial products and services in India. NJ India Invest pvt. Ltd. was started in 1994 to cater to the growing financial services sector. NJ India invests evolved out as a client focused need based investment advisory firm. At NJ regard mutual fund as one of the best investment avenue available to satisfy any kind of investment need. N.J. has gained expertise in analyzing mutual fund schemes, and an in-depth study on various parameters is carried out on a regular basis. NJ has over a decade of rich exposure in financial investments space and portfolio advisory services. From a humble beginning, NJ over the years has evolved out to be a professionally managed, quality conscious and customer focused financial/investment advisory & distribution firm. To the advisors, N.J. offer a 360° comprehensive business platform with unmatched IT solutions, empowering them to set the best practice standards and deliver real value to their customers. N.J. has aheadquartered in Surat, India, and has more than INR 10,000 Crore plus of mutual fund assets under advice, with a wide presence at over 104 locations in 21 states in India. The numbers are reflections of the trust, commitment and value that NJ shares with 11 Lac plus customer base with over 14000+ Advisors.
VISION, MISSION AND PHYLOSOPHY Vision:
Creating Wealth Transforming Lives
Total Customer Satisfaction
Commitment to Excellence
Determination to Succeed with strict adherence to compliance
Successful Wealth Creation of our Customers
Mission:
N.J. work towards building trusted relationship with our stakeholders, for inclusive growth through constant process of innovation, time bound implementation & execution of ideas and technological developments. We stretch our means and go overboard to make sure that our clients' aspirations, dreams and expectations are met with, through high service standards.
Philosophy
At NJ our Service and Investing philosophy inspire and shape the thoughts, beliefs, attitude, actions and decisions of our employees. If NJ would resemble a body, our philosophy would be our spirit which drives our body. Service Philosophy:
N.J.INDIA INVETS primary measure of success is customer satisfaction. We are committed to provide our customers with continuous, long-term improvements and value-additions to meet the needs in an exceptional way. In our efforts to consistently deliver the best service possible to our customers, all employees of NJ will make every effort to:
think of the customer first, take responsibility, and make prompt service to the customer a priority deliver upon the commitments & promises made on time anticipate, visualize, understand, meet, exceed our customer's needs bring energy, passion & excellence in everything we do
be honest and ethical, in action & attitude, and keep the customer‟s interest supreme strengthen customer relationships by providing service in a thoughtful & proactive manner and meet the expectations, effectively
Investing Philosophy:
We aim to provide Need-based solutions for long-term wealth creation N.J. aim to provide all customers of NJ, directly or indirectly, with true, unbiased, need -based solutions and advice that best meets their stated & un-stated needs. In our efforts to provide quality financial & investment advice, we believe that. Clients want need-based solutions, which fits them Long-term wealth creation is simple and straight Asset-Allocation is the ideal & the best way for long-term wealth creation Educating and disclosing all the important facets which the customer needs to be aware of, is important The solutions must be unbiased, feasible, practical, executable, measurable and flexible Constant monitoring and proper after-sales service is critical to complete the on-going process
RECOGNITIONS
Some of the awards & recognitions that we have received in past.. Year 2000:
For Outstanding Performance presented by Chairman, Prudential Plc. at London
Year 2002:
For Outstanding Performance presented by Group Chief Executive, Prudential Plc. at London
Year 2003:
For Outstanding Performance presented by Group Chief Executive, Prudential Plc. at London
Year 2004:
Among Most Valued Business Associates presented by HDFC Standard Life at Edinburgh, Scotland
Year 2004:
For Outstanding Performance by Deputy CEO, Prudential Singapore at Malaysia
Year 2006:
Award for mobilising the Highest Number of SIPs at National Level by Fidelity Mutual Fund Plc at Mumbai
Year 2006:
Award – Vietnam
MANAGEMENT
The management at NJ brings together a team of people with wide experience and knowledge in the financial services domain. The management provides direction and guidance to the whole organization. The management has strong visions for NJ as a globally respected company providing comprehensive services in financial sector. The 'Customer First' philosophy in deeply ingrained in the management at NJ. The aim of the management is to bring the best to the customers in terms of Range of products and services offered Quality Customer Service
All the key members of the organization put in great focus on the processes & systems under the diverse functions of business. The management also focuses on utilizing technology as the key enabler for all the activities and to leverage the technology for enhancing overall customer experience.
The key members of the management are: Mr. NeerajChoksi
Jt. Managing Director
Mr. Jignesh Desai
Jt. Managing Director
Key Sales Team:
Mr. Misbah Baxamusa
National Head
Mr. Naveen Rathod
V.P. (Sales)
Mr.KulbhushanNandwani
A.V.P. (Marketing)
Mr. PrashantKakkad
A.V.P. (Sales)
Key Executive Team:
Mr. Shirish Patel
Information Technology
Mr. AbhishekDubey
Business Process
Mr. Vinayak Rajput
Operations
Mr. Dhaval Desai
Human Resources
Mr. Col. Dixit
Administration
Mr. TejasSoni
Finance
Mr. Viral Shah
Research
Mr. RakeshTokarkar
Compliance
PRODUCTS AND SERVICES OF THE COMPANY
PRODUCTS AND SERVICES:
NJ offers advisory and distribution services on the following products. Investment Products:
Mutual funds – covering all AMCs & all schemes,
Fixed Deposits of companies,
PMS products (portfolio management system)
Government/RBI bonds,
Infrastructure Bonds,
Approved securities for charitable trusts, etc
Real Estate:
Residential properties
Commercial properties
Training & Education:
Certification training courses
AMFI
CFP
Training products
SERVICES
Trading and demat account NJ India Invest Pvt Ltd offers benefits of trading and depository services under one roof. NJ is registered as a Member with Bombay Stock Exchange (BSE) & National Stock Exchange (NSE). NJ is also registered as a Depository Participant of CDSL. Dematerializations and trading in the demat mode is the safer and quicker alternative to holding physical securities. Under the depository services the securities are held in electronic form for the investor directly by Depository. At NJ, are committed to provide a complete depository service which is convenient, safe and secure. Customers can approach the DP Helpdesk for any queries & grievances that they may
have.
SERVICES OFFERED BY NJ INDIA INVEST
Mutual Fund Nest Web Nest
Life Nest
NJ Funds services CRM Nest
Wealth Nest Financial Planning Nest
Mutual Fund Nest
The Mutual Fund Nest is a unique platform wherein your clients have a separate mutual fund investment account, available online, automatically reflecting all mutual fund transactions routed through you. This service will be great for all your mutual fund investors investing through you. They will truly appreciate this 'Complete Online Mutual Fund Investment Account' with truly comprehensive, insightful reports available to them. This service is a basic service availed by all NJ Fundz Partner Features
Unique
On-line Automatic
Comprehensive
Web Nest
Web Nest is a great product and a must for any advisor. It basically is a service wherein you get your own branded website with certain additional features/contents along with a Client Desk from where your Clients can login to their on-line accounts. You will have a choice of selecting the domain name as - www.yourname.njfundz.com for your website. Features
Your Brand
On-line Automatic
Comprehensive
Wealth NEST
Wealth Nest is a unique, revolutionary product/platform wherein your client will have a complete investment account covering all the investment assets. You can offer this unique, comprehensive investment account to your selected important clients. This service is ideal for your big clients - HNIs and Corporate alike, where you can make a head start with this product and impress them and make them your loyal clients. Such an integrated product with the quality, scope of reports is unique in the industry. Features
Unique
Assets Covered
On-line Automatic
Comprehensive
Financial Planning Nest
As an advisor, you have the onus to undertake complete Financial Planning for your clients. Financial Planning is in fact a must for every individual. A detailed Financial Plan would make it possible for your clients to achieve their goals and objectives in life. At NJ we realize the importance of Financial Planning (FP), both from the perspective of an Advisor and a Customer. NJ FP Nest is an online zone where you as an advisor would be in a position to prepare detailed Financial Plans for your Clients. The Financial Plans of the clients would be saved for your future references and for ongoing monitoring of the Plans. The FP Nest would allow you to plan for the various goals and objectives for your clients, and also take print-outs of the same so as to present it to your clients. You can also prepare Financial Plans for your prospective clients from
the FP Nest… Needless to say, the FP Nest would make financial pla nning process, a very easy, simple to understand exercise for you to undertake… und ertake…
FP Nest Features: Goal Planning for:
Children's Education
Children's Marriage
Retirement
Purchase of Home \ Car
Protection to Family
Taking in to consideration Risk profile of client
➢
Savings Potential
➢
Existing Investments
➢
Existing Protection
➢
CRM Nest
Customer Relationship Management forms a crucial part in establishing a growing and healthy relationship with your clients. Customer loyalty and satisfaction plays a very important role in the success of any Advisor. Studies have shown that it costs 7 times more to acquire a client than to retain a client. Hence proper customer relationship management (CRM) forms an important element in the overall success of the advisory ad visory business. Realizing the importance of CRM, NJ will be soon launching CRM Nest. This module will help advisors to effectively manage their clients and provide quality services to them. The CRM Nest will also allow you to know your customers better. This is also very crucial since different customers have different expectations from you. The CRM Nest will also allow you to manage your time more productively and will help you streamline your processes in a better way. CRM Nest Features:
Client Service Management
Client Business
Reports Time Management
Automated Utilities
Life Nest
The existing hectic lifestyles and increasing complexities and uncertainties in life have made protection a very crucial goal for each of us. Adequate protection of family in advent for any unforeseen events or circumstances should be the first task of any individual. As an advisor, you have the onus of helping your clients get proper protection at all times. Life Nest will help you as an advisor to properly plan and monitor the protection of your clients in a better way. Life nest will also give you information on the existing insurance plans, their features, etc available in the markets. You may also track your clients' investments in ULIPs and provide them updated reports on the same. By adding ad ding Life Nest, you can better project yourself as a complete financial advisor to your clients taking care of his investment and protection needs.
PEOPLE AND CULTURE People
Enthusiasm, Enterprise, Education and Ethics form the four pillars at NJ. At NJ one can witness the vibrant energy, enthusiasm and the enterprising drive to excel flowing freely throughout the organization. At NJ can also experience the creativity, one-to-one responsiveness, collaborative approach and passion for delivering value. At NJ people evolve to be more effective, efficient, and result oriented. Knowledge is inherent due to the education-centric approach and the experience in handling different clients groups across diverse product profiles. NJ understands that the people are the most important assets of the company and it is not the company that grows but the people. NJ hence undertakes rigorous training and educational
activities for enhancing the entire team at NJ. NJ also believes in the „Learning through Responsibility‟ concept for its employees. For people at NJ success is not a new word, but is a regular stepping-stone to realizing the one vision that everyone shares.
Culture
At NJ we believe in transforming the lives of our customers. We exist to create a difference – a change towards a better life. The culture at NJ reflects this responsibility, this dream of transforming lives. And we at NJ are always excited and enthused in doing so. N.J.believes in keeping ‗You First‘ , providing you with products and services that meet you‟re stated and unstated needs. Client satisfaction and client service is the Mantra we constantly recite. This service oriented philosophy runs throughout the organiz ation, from top to bottom. Employees are given ample freedom in their work. The objective is to keep an open, healthy environment with ample scope for enterprise, improvement, innovations and out-of-the box solutions.
FUNCTIONAL AREAS OF NJ INDIA INVEST
MARKET AND MARKETING FUNCTION About Mutual Funds
Mutual Funds in India is gaining ground and getting popular as an investment option. The fund industry has witnessed healthy growth in last five years or so. Mutual Fund is a common pool of savings created by a number of investors. Mutual Fund is an ideal investment product for an individual investor. Different investors with common investment objective contribute to create a common pool of money. This money is then invested by fund manager according to the objective of the scheme. The flow chart below describes broadly the working of a Mutual Fund.
Structure of Mutual Funds
In India mutual funds function as trust created under the Indian Trust Act, 1882. There are three layers of mutual fund in India. (i) Sponsors (ii) Trustee and (iii) Asset Management Company. Sponsors work as Promoters of the company. They take responsibility of starting mutual fund business. Sponsors contribute initial capital (40% of net worth of AMC) and appoint Trustees and Board of Trustees. Board of Trustees act as guardians of investors and ensure that money invested by investors is used according to the objective of the scheme. Asset Management Company is the public face of fund management business. Sponsors and Trustees together form AMC and appoint Fund Manager. Fund manager with help of fund management team makes all investment decisions.
Sponsor
A sponsor is a body corporate who establishes a mutual fund. It may be one person acting alone or together with another body corporate. Sponsor must contribute at least 40% of the net worth of the Investment Managed and meet the eligibility criteria prescribed under the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996.The Sponsor is not responsible or liable for any loss or shortfall resulting from the operation of the Schemes beyond the initial contribution made by it towards setting up of the Mutual Fund
Board of Trustee:
Mutual fund requires to have an independent board of Trustee, where two third of the trustees should be independent person who are not associated with the sponsor in any manner. The board of trustees of the trustee company holds the property of the mutual fund in trust for the benefit of
the unit holders. The board of trustees is responsible for protecting the unit holder‟s interest. Asset Management Company (AMC)
The role of asset Management Company is highly significant in the mutual fund operation. The AMC is appointed by the Trustee. They are the fund managers i.e. they invest the investors money in various securities ( equity, debt and money market instruments) after proper research of market conditions and the financial performance of individual companies and specific securities in the efforts to meet or beat average market return and analysis. The AMC is required to be approved by the Securities and Exchange Board of India (SEBI) to act as an asset management company of the Mutual Fund. At least 50% of the directors of the AMC are independent directors who are not associated with the Sponsor in any manner. The AMC must have a net worth of at least 10 crores at all times. They also look after the administrative functions of a mutual fund for which they charge management fee. Registrar and Transfer Agent
The AMC if so authorized by the Trust Deed appoints the Registrar and Transfer Agent to the Mutual Fund. The Registrar processes the application form, redemption requests and dispatches account statements to the unit holders. Custodian
Mutual fund is required by law to protect their portfolio securities by splacing them with a custodian. Nearly all mutual funds use qualified bank custodians. Only a registered custodian under the SEBI regulation can act as a custodian to a mutual fund. A custodian handles the investment back office of a mutual fund.
Types of Mutual Funds
In India, there are many companies, both public and private that are engaged in the trading of mutual funds. Wide variety of Mutual Fund Schemes exists to cater to the needs such as financial position, risk tolerance and return expectations etc. The table below gives an overview into the existing types of schemes in the Industry.
By structure
By investment
Other scheme
objective
Open ended
Equity funds
ELSS
schemes
Fixed term plan
Close ended
Debt funds
SIP
schemes
Index scheme
Interval
Balanced
schemes
funds
Sector specific schemes
BY STRUCTURE Open Ended Schemes
An open-end fund is one that is available for subscription all through the year. These do not have a fixed maturity. Investors can conveniently buy and sell units at Net Asset Value ("NAV") related prices. The key feature of open-end schemes is liquidity. Close Ended Schemes
A closed-end fund has a stipulated maturity period which generally ranging from 3 to 15 years. The fund is open for subscription only during a specified period. Investors can invest in the scheme at the time of the initial public issue and thereafter they can buy or sell the units of the scheme on the stock exchanges where they are listed. In order to provide an exit route to the investors, some close-ended funds give an option of selling back the units to the Mutual Fund through periodic repurchase at NAV related prices. SEBI Regulations stipulate that at least one of the two exit routes is provided to the investor. Interval Schemes
Interval Schemes are that scheme, which combines the features of open-ended and close-ended schemes. The units may be traded on the stock exchange or may be open for sale or redemption during pre-determined intervals at NAV related prices. BY NATURE 1. Equity fund:
These funds invest a maximum part of their corpus into equities holdings. The structure of the
fund may vary different for different schemes and the fund manager‟s outlook on different stocks. The Equity Funds are sub-classified depending upon their investment objective, as follows:
• Diversified Equity Funds • Mid-Cap Funds • Sector Specific Funds • Tax Savings Funds (ELSS) Equity investments are meant for a longer time horizon, thus Equity funds rank high on the riskreturn matrix. 2. Debt funds:
The objective of these Funds is to invest in debt papers. Government authorities, private companies, banks and financial institutions are some of the major issuers of debt papers. By investing in debt instruments, these funds ensure low risk and provide stable income to the investors. Debt funds are further classified as: Gilt Funds:
known
Invest
their
corpus
in
securities
issued
by
Government,
popularly
as Government of India debt papers. These Funds carry zero Default risk but are
associated with Interest Rate risk. These schemes are safer as they invest in papers backed by Government. Income Funds : Invest a major portion into various debt instruments such as bonds, corporate
debentures and Government securities. MIPs: Invests maximum of their total corpus in debt instruments while they take minimum
exposure in equities. It gets benefit of both equity and debt market. These scheme ranks slightly high on the risk-return matrix when compared with other debt schemes. Short Term Plans (STPs): Meant for investment horizon for three to six months. These funds
primarily
invest
in
short
term
papers
like
Certificate
of
Deposits
(CDs)
and
Commercial Papers (CPs). Some portion of the corpus is also in vested in corporate debentures.
Liquid Funds: Also known as Money Market Schemes, These funds provides easy liquidity and
preservation
of
capital.
These
schemes
invest
in
short-term
instruments
like
TreasuryBills, inter-bank call money market, CPs and CDs. These funds are meant for short-term cash management of corporate houses and are meant for an investment horizon of 1day to 3 months. These schemes rank low on risk-return matrix and are considered to be the safest amongst all categories of mutual funds. 3. Balanced funds : As the name suggest they, are a mix of both equity and debt funds. They invest in both equities and fixed income securities, which are in line with pre-defined investment objective of the scheme. These schemes aim to provide investors with the best of both the worlds. Equity part provide growth and the debt part provides stability in returns. Further the mutual funds can be broadly classified on the basis of investment pa rameter vise;each category of funds is backed by an investment philosophy, which is pre-defined in the objectives of the fund. The investor can align his own investment needs with the funds objective and invest accordingly. OTHER SCHEMES Tax Saving Schemes: Tax-saving schemes offer tax rebates to the investors under tax laws
prescribed from time to time. Under Sec.88 of the Income Tax Act, contributions made to any Equity Linked Savings Scheme (ELSS) are eligible for rebate. Fixed Term Plan FTP : Fixed Term Plan schemes are special schemes of Mutual Funds. These
are short term close ended schemes. The AMCs issue a fixed number of units for each s eries only once and then the issue is closed after the initial offering period. These units are not listed in the stock market. FTPs are generally offered in money market funds. They can be considered as an alternative to investing in the corporate deposits or bank deposits as they give a higher rate of return.
SIP:SIP One of the best schemes of Mutual Funds is considered to be SIP or
Systematic Investment Plan. The basic funda of SIP is to encourage the people to invest a small amount on a regular basis. Under SIP one can invest as little as Rs 100 per month in mutual funds. This regular investment over a large period of time gives fantastic returns to the individuals. The major reason for high returns of SIP investments as compared to others is the concept of Rupee Cost Averaging. When the market is booming the value of the units bought by the investors have increased while in the bearish market when the NAV of the funds fall then the number of units allotted is more. The value of these higher numbers of units increases when the Bull Run begins again. Thus the investors set to gain both when the market is up or down. This coupled with the small amount needed to invest has led to SIP being one of the most popular Mutual Fund schemes. Index scheme: Index schemes attempt to replicate the performance of a particular index such as
the BSE Sensex or the NSE 50. The portfolio of these schemes will consist of only those stocks that constitute the index. The percentage of each stock to the total holding will be identical to the stocks index weight age. And hence, the returns from such schemes would be more or less equivalent to those of the Index. Sector Specific Schemes: These are the funds/schemes which invest in the securities of only
those sectors or industries as specified in the offer documents. e.g. Pharmaceuticals, Software, Fast Moving Consumer Goods (FMCG), Petroleum stocks, etc. The returns in these funds are dependent on the performance of the respective sectors/industries. While these funds may give higher returns, they are more risky compared to diversified funds. Investors need to keep a watch on the performance of those sectors/industries and must exit at an appropriate time.
Advantages of Mutual Fund 1. Portfolio Diversification
Mutual Funds invest in a well-diversified portfolio of securities which enables investor to hold a diversified investment portfolio (whether the amount of investment is big or small). 2. Professional Management
Fund manager undergoes through
various research works and has better investment
management skills which ensure higher returns to the investor than what he can manage on his own. 3. Less Risk
Investors acquire a diversified portfolioof securities even with a small investment in a Mutual Fund. The risk in a diversified portfolio islesser than investing in merely 2 or 3 securities. 4. Low Transaction Costs
Due to the economies of scale (benefits of larger volumes), mutual funds
pay lesser
transaction costs. These benefits are passed on to the investors. 5. Liquidity
An investor may not be able to sell some of the shares held by him very easily and quickly, whereas units of a mutual fund are far more liquid. 6. Choice of Schemes
Mutual funds provide investors with various schemes with different investment objectives. Investors have the option of investing in a scheme having a correlation between its investment objectives and their own plans/options
financial goals. These schemes further have different
7. Transparency
Funds provide investors with updated information pertaining to the markets and the schemes. All material facts are disclosed to investors as required by the regulator. 8. Flexibility
Investors also benefit from the convenience and flexibility offered by Mutual Funds. Investors can switch their holdings from a debt scheme to an equity scheme and vice-versa. Option of systematic (at regular intervals) investment and withdrawal is also offered to the investors in most open-end schemes. 9. Safety
Mutual Fund industry is part of a well-regulated investment environment where the interests of the investors are protected by the regulator. All funds are registered with SEBI and complete transparency is forced.
Disadvantage of Mutual Fund 1. Costs Control Not in the Hands of an Investor
Investor has
to
pay
investment management
fees and fund distribution costs as a
percentage of the value of his investments (as long as he holds the units), irrespective of the performance of the fund. 2. No Customized Portfolios
The portfolio of securities in which a fund invests is a decision taken by the fund manager. Investors have no right to interfere in the decision making process of a fund manager, which some investors find as a constraint in achieving their financial objectives. 3. Difficulty in Selecting a Suitable Fund Scheme
Many
investors
find
it
difficult
to select one
option from the plethora of funds
/ schemes / plans available. For this, they may have to take advice from financial planners in order to invest in the right fund to achieve their objectives. 4. Delay in Redemption
The redemption of the funds though has liquidity in 24-hours to 3 days takes formal application as well as needs time for redemption. This become s cumbersome for the investors. 5. Non-availability of loans
Mutual funds are not accepted as security against loan. The investor cannot deposit the mutual funds against taking any kind of bank loans though they may be his assets.
MARKETING OF MUTUAL FUNDS
One of the primary job as a trainee in N.J. India Invest was to market the various schemes of Mutual Funds to various clients. N.J. India Invest is a distribution house which distributes Mutual Funds to the general public via its network of agents and partners. The trainees are assigned to a partner and they have to pitch the schemes of Mutual funds to the clients of the partners. Details about mutual Funds and the various schemes available have been discussed in the previous. MARKET STRUCURE
Before marketing of any product we must study the structure of the market. This structure will determine where we should market the product so that it gets the best response from the public. To study the market structure we must first divide the market into different segments then choose our target segment. This is because no product can be pitched to every person in the population. We have to then position the product so that the public is attracted to it. Thus Segmentation Targeting and Positioning are extremely important before the marketing of the product. SEGMENTATION
The purpose of segmentation is to divide the whole market into smaller segments so as to better understand the market and pitch your produ ct to the right segment of the population. There is no product which can be marketed to the entire population and if one tries to market it to the entire population then it is a waste of the resources. To ensure the optimum utilization of the resources we have to divide the market into smaller segments and concentrate on the segment which will be most receptive of the product. Mutual Funds are a financial product and so it is imperative that one of the basis of segmentation will be income. For mutual funds first we will use the Socio Economic Classification or SEC to segment the market. SEC is a systemthat combines social and economic factors through intelligent use of the demographics of occupation and education.
TARGETING
After the market segments have been decided we have to look at which particular segment of the market are we going to target. This is because no product can be marketed to all the segments of the society. In case of Mutual Funds we have to target the segments based on the different types of Mutual Fund schemes. Using the SEC segmentation as a substitute for income based segmentation we can target the A, B and C segments of the market. These are the segments which have a good source of income to be able to invest in the mutual Funds. They are also educated and as a result can easily understand the benefits of investing the money.
Among the A, B, C segments we can offer the C segment only SIP
schemes. They don‟t have that high a disposable income to be able to invest a large amount at one time but can invest a small amount regularly. Many Mutual Fund companies have brought out various schemes targeting this particular segment. For example Reliance Mutual Funds has SIP schemes wherein the investors can start an SIP of only Rs. 100 a month. The ELSS schemes can be marketed to A segment of the people because they are the taxpayers and the schemes which help them in tax planning are going to be attractive to them. As discussed earlier the risk appetite of the investors changes with age. So we can market equity based funds to the people below the age of 35. These people have high risk appetite and so a fund which gives high risk and high returns will be considered to be a good investment option. For people between the ages of 35 to 60 we can offer a Balanced Fund which gives the best of Equity and Income Schemes and has an acceptable level of risk while giving a good return on the investment. In case of people over the age of 60 who
have retired and so don‟t have a steady income source we can offer Income Funds and Money Market Funds to them as they have less risk and give guaranteed returns. Thus it is seen that targeting the different schemes of the funds to different segments based on the income and age is very helpful as one is able to identify the financial requirements of the investor and guide him or her in a very effective manner.
POSITIONING
Apart from segmenting a market and targeting a particular segment it is also essential
to
position your product in a correct manner so that the customers receive it successfully. Mutual Fund is basically a wealth creation product unlike insurance which is to be used for Risk Cover. Many people have the beliefs that as they already have insurance they have invested in a good product. The need is to tell the people that undoubtedly a great product but it can‟t be used as a substitute for wealth creation. Apart from positioning Mutual Funds as a wealth creation product we have to position the various schemes of the Mutual Fund based on their function. Thus the SIP should be positioned as a low cost investment option which even a person with low income can avail of while ELSS should be positioned as a scheme that gives the investors tax benefits. The Income Funds and Money Market funds should be positioned as low risk investment opportunities. Good positioning of a product makes it more attractive to the potential consumer and he is able to make an informed choice about the product. PROMOTION OF MF
Promotion Marketing of a product or service is incomplete without an effective promotional strategy. Without promotion the general public will not know about the product or service in question and thus will not buy it. Thus promotion is essential to spread the word about the product or service. In case of Mutual Funds the AMCs spend a lot of money in promoting the various schemes. They take out advertisements in various media like newspapers, television internet etc. When a new scheme is launched the different agents are invited to attend seminars where the details about the product are presented. This is because the agents are the people who come in direct contact with the public and promote the products. The agents are also given promotional materials like brochures posters mailers etc to be displayed in the offices or sent out to potential clients.
The distribution houses like N.J. India Invest also give a lot of promotional materials to the agents who are associated with them. Apart from the materials the employees of the distribution houses and AMCs also go with the agents on joint calls where a large number of potential investors are addressed at the same time. Marketing of mutual funds by NJ India Invest Regular publications of information for partner and customer
Monthly magazine 'FUNDZ WATCH„
Weekly reports
Daily market update
Single Service Point – Get/ Deposit Applications of All AMCs/ All schemes at NJ NJ Customer care - Single contact point for all queries across all AMCs/ All problems.
NJ provides better service to investors
NJ provides good training to all NJ partner
NJ provides good commission or return to all partners
ECONOMIC AND INDUSTRY FACTORS AFFECTING THE MUTUAL FUNDS Government influence
Governmental Influences Mutual fund business is a highly regulated business throughout the world as it seeks to ensure that quality and fairly priced schemes are available. Governmental intervention thus in mutual fund market usually is most needed to ensure that insurers are reliable. And in the developing countries the additional goal may be promotion of domestic mutual fund industry and ensuring the industry
contributes
to
overall
economic development.
In
national a
mutual
fund
non technical sense
mutual fund is purchased in a good faith so the duty of government intervention in mutual fund industry is to ensure that this principle of mutual fund is never defeated. The ideology of government plays an important role in mutual fund industry also. Taxation policy
Taxation Policy Social government give
equity
being
one
of
the
motives
behind
tax
collections,
certain exemptions from such levying. One such exemption is deduction
incurred by taxpayers towards investment in mutual fund coverage. Similarly, capital invested in infrastructure bonds etc is offered with certain concession under tax laws. The central idea behind such exemptions is that the capitals so allocated
by
individuals
reduce
the
ultimate burden on the public infrastructure or helps in creatingsuch infrastructural facilities.
Foreign trade regulation
With the vast potential for mutual fund in India due its large population in the country many foreign companies are ready to enter into the Indian market. But companies can be permitted in India through joint ventures with an Indian partner as well as come separately and the foreign equity shall be restricted to only 25%. Another statement also tells that Indian subsidiaries of foreign companies shall not be allowed to participate in banking sector unless they entered in to joint ventures with the Indian partners. But at present the mutual fund regulator is in favor of hike in FDI cap from 25% to 49%, and is finalizing a report that will be submitted to the government for a
comprehensive
legislation for the industry. The security exchange board of India and association of mutual fund India have been advocating a hike in FDI limit for mutual fund companies so that the foreign partners can infuse additional funds in these companies to sustain their growth. The government will need to amend the separate mutual fund Act for FDI capital well as domestic company as this is the statutory
provision
unlike
sectors
as like
civil aviation and telecom, which have come through notification. National income
The relative importance of the mutual fund Market within a country will also be dependent upon growth, income,
economic
consumption and
an
development.
of investment
increased
stock
of
With
should
greater
increase
as
rates a
result
of of
economic increased
assets requiring mutual fund. Furthermore, the
development of mutual fund is likely to facilitate greater economic growth, implying that economic growth may be endogenous. Consistent with these arguments, studies find that the level of financial development and economic development are positively related to the level of mutual fund across emerging markets.
Consumption and saving
The gross capital formation of any country is important for indication of its growth in the future years. It is quite necessary to set up the rate of capital formation so that a large stock of machines, tools and equipments are accumulated in a country. Experience of development in other countries suggests that a high rate of capital formation was achieved to trigger rapid rate of economic growth. coming
to
India
the
rate
of
With
the
hike
in
foreign
capital
capital formation is becoming boom to insurers, which
has given them opportunities. It is heartening to them to note that latest savings rate
of 28% is highest till now and with the growth rate near to 8% is bringing a pool of buyer‟s purchasing power. This directly influences the demand for mutual fund products. Employment
The effect of employment on mutual fund industry is as direct as that on economic development of any country. With the rising levels of employment the effect on mutual fund industry
is positive because employment adds to the insured properties and assets from
everyprospective be it due to organized or unorganized. Inflation
The midterm policy review the strong macroeconomic indicators and RBI has revised its GDP growth estimates to the upper limit of the earlier projection range 8% inflation (WPI) has been steadily moving up in recent times and RBI has highlighted that primary articles prices have been one of the key contributors. However one needs to keep in mind that recent increase in global oil prices.
Money supply
The central banks has indicated that credit growth and money supply number are likely
to be above
its
prosecution
consider promptly
for
the
current
fiscal
year,
the
statement
“to
all possible measures as appropriate to the evolving global and
domestics situation “is indicative of phased increase in FII limits for gilt investment could help
in
depending
the
securities market and is part of the road map towards fuller
convertibility. Interest
Interest is major factor for investment when a person find less return from investment tool than people move towards the higher returns tool of investment. Risk factors
All investments in Mutual Fund and securities are subject to market risks and the NAV of the fund may go up or down depending on the factors and forces affecting the
security market. There can be no assurance that the fund‟s objective will be achieved. Past performance of the sponsors/Mutual fund/schemes/AMC is not necessarily indicative of the future results. The name of the schemes does not in any manner indicate their quality, their future prospects or returns. The specific risk would be credit, market, illiquidity, judgmental error, interest rate, swaps and forward rates. Demographic environment
The demographic
environment significantly affects the demand for the mutual fund
industry. Factors like the average age of the population, levels of education, household structures income distribution, urbanization
life
style
and
the
extent
of
industrialization
as
well
as
terribly influences the demand of mutual fund schemes In India the average
age of the population is at an increasing trend following the improved medical technology and better awareness of health care requirements As a result, the risk of investment death is decreasing while connectivity is increasing. Simultaneously the demand for pension funds and income fund is expected to grow. For example at the time of independence the average age of dying for Indians was 45. Presently it
has increased
to 65 following better
healthcare, improvements in medical science and more health consciousness among the common man. By 2010 it is expected to rise to 75. Hence risk profile is also changing. Earlier people are thinking about safely but at present people thinking about capital growth. Social factors
The social environment covers the customs, habits, level of education, tastes and standard
of living of people in the society. Today‟s social environment is greatly influenced to a major extent by the changes in technological aspects. With the rapid progress in technology and economic liberalization, the physical boundaries are gradually vanishing. As a result, the social life of the people and their views towards risk and uncertainty of life and health are gradually changing. These factors of social life are affecting human motivations and emotions related to the physical and mental incapacities, loss of health and death. In general there are
extremes apprehensions of
one‟s
death,
though
it
is certain.
The
perception of
an
individual toward risk and capital growth depends on the social culture and religious belief. In the urbanized area people does think about investment and capital growth. These beliefs ultimately influence the buying behavior of a consumer. Education
Education is major factor of demand for mutual fund product. If the education levels is higher than the people know the benefits of mutual fund the use mutual fund as investment tool and also take rise capital growth.
COMPETITORS OF NJ AnandRathi-
AnandRathi is one of the major competitors of NJ India Invest. The firm, founded in 1994 by Mr. AnandRathi, today has a pan India presence as well as an international presence through offices in Dubai and Bangkok. AR provides a breadth of financial and advisory services including wealth management, investment banking, corporate advisory, brokerage &distribution of equities, commodities, mutual funds and insurance, structured products - all of which are supported by powerful research teams. Karvy-
The karvy group was formed in 1983 at Hyderabad, India, karvy ranks among the top
Player fields in almost all the fields it operates. Karvy computer share limited is India‟s largest registrar and transfer agent with a client base of nearly 500 blue chip corporate, managing over 2 croresaccounts, Karvy stock brokers limited. Karvy also works asdistribution house of some AMCs. India Infoline
The India Infoline group, comprising the holding company, India Infoline Limited and its wholly-owned subsidiaries, straddle the entire financial services space with offerings ranging from Equity research,
Equities and derivatives
trading,
Commodities trading Portfolio
management services, Mutual Funds, Life Insurance, Fixed deposits, Gov. Bonds and other small savings instruments to loan products and investment banking. The company has a network of 758 business locations (branches and sub-brokers) spread across 346 cities and towns. It has more than 800, 00 customers.
Bajaj capital
The Bajaj Capital Group is one of India‟s leading Investment Advisory and Financial Planning companies. Bajaj Capital is also SEBI-approved Category I Merchant Bankers. Bajaj Capital offers personalized investment Advisory and Financial Planning services to individual investors, corporate houses, institutional investors, Non-Residents Indians (NRIs) and High Net worth Clients, among others. Bajaj Capital offers a wide range of investment products such as mutual funds, life and general insurance, bonds, post office schemes, etc. offered by public and private and government organizations. Bonanza -
Bonanza is a leading Financial Services & Brokerage House. It also distributes mutual funds of various AMCs.
All Banks and Other Financial Institutions -
In India many banks also distributes Mutual funds of various AMCs such as Karnataka bank distributes mutual funds of Franklin Templeton. So these banks and other financial
institutions
are
also
major
competitor
of
NJ
India invest. Though
these
organizations are engaged in distribution of mutual funds bud most of them have a different concept from NJ India invest they are selling Mutual funds directly to the investors whereas NJ India invest distributes Mutual funds of all the AMCs indirectly (through its channel partners) except of four cities
SWOT ANALYSIS STRENGTHS
The biggest strength of the organization is the;
• Money power, which makes them ignorant about gestation period. • Brand image, business experience and innovative products. • The agents are very selectively chosen have excellent communication skills. • Service quality which is the crux of their mission. And new technology used by NJ is biggest strength of the organization. WEAKNESS
• High target for sales departments. • Many competitors in market offer same products by the little difference in the offering. • Sustainable to risk associated with investments in money market. OPPORTUNITY
• Huge market is literally untapped; out of estimated 320 million only 20% of population has investment in mutual fund industry.
• Equity and ELSS schemes, contribute an estimated market potential of approximately $15 billion. THREATS
• Entry of many other private player companies with equally strong experience and financial strength of foreign partners making the competition difficult and saturating the u rban market.
• Current govt. policies which do not encourage gross domestic saving. If the tax liability of service class rises the customer will have little money to invest.
HRM FUNCTION OF NJ INDIA INVEST ORGANISATION STRUCTURE AND DIVISION Organization structure
MD Mr. Neeraj Choksi Mr. Jignesh Desai
Operation
Human Resource
Marketing
Finance
Mr. Vinayak Rajput
Mr. Dhaval Desai
Mr. Naveen Rathod
Mr. Tejas Soni
A.V.P. (Marketing)
A.V.P. (Sales)
Mr.Kulbhushan Nandwani
Mr. Prashant Kakkad
The organisation structure of NJ India Invest Company is centralization. So here all the decision is taken by top level management and performed by bottom level of the organization. But at the branch level and region level manager have some rights to take decision.
Division
NJ IndiaInvest has two broad distinct divisions of business as follows
NJ Fundz Network has been pla ying a pioneering role in India in providing independent advisors / advisory firms with integrated, comprehensive and practical business solutions for ensuring continuous growth & continuity of business. It provides the financial advisors and the institutions that serve them with insights, strategies and tools to help them significantly grow their businesses. How do we do it? Thats because we understand how financial & wealth management businesses work and what is needed to manage, monitor and grow the practice... With the 360° Advisory platform, NJ has managed to successfully transform the business of many advisory / distribution houses, bringing them on equal footing or even better than the toughest competitors in the industry in the concerned domain. With a vast experience & strong delivery mechanism, we at NJ Fundz Network, help & ensure transformation and the exploitation of the opportunities available.
NJ Realty Services
This is an integrated service model offering solutions for meeting the diverse real-estate needs of corporate & retail customers in transacting properties. Finding the right property at the right value and the best buyer for a property is the crux of any realty solution. At NJ IndiaRealty we value this critical element of retailing and aim to provide the customer with an integrated service model that not only focuses on him meeting his desired needs but also on enhancing the overall experience of the transaction. The scope of properties embraces both commercial & residential projects / properties. The integrated value-added services ensure that the solutions are feasible, authentic, secure & profitable.
Leveraging upon the strengths of the parent company NJ, NJ IndiaRealty aims to offer attractive options and operational guidance to satisfactorily realize the customers realty dreams. Today NJ Realty Services has tied up with over 40 developers with over 150 projects across India.
Making people benefit from the growing economy is possible by attracting them to participate in Equity for long term, to make their money work for itself and create wealth. For this to happen, a huge force of effective Financial Advisors is needed. Visualizing this need and with a view to bridge the gap, NJ IndiaInvest Pvt. Ltd. has set up NJ Gurukul to offer different training programs at moderate costs. NJ Gurukul works to conceive craft, design, develop and execute effective training modules to energize people with right inputs through different training programmes at modest cost. Powered by NJ's experience of over 14 years as leaders in financial advisory services, NJ Gurukul has emerged successful in conducting sizeable number of trainings since inception in April 2007 and enjoys lineage of efforts put in by NJ prior to April 07. NJ Gurukul seeks to create an
enlightened community of „quality‟ financial advisors capable of changing millions of lives across India and even beyond… NJ Gurukul also seeks to help people become better professionals / business personalities & achieve success in their own endeavours. For businesses, as a people partner, NJ Gurukul seeks to groom employees & management so that they deliver upon their expectations & responsibilities, successfully. NJ Gurukul is authorized to give training for Certified Financial Planner (CFP) by FBSB India. Today NJ Gurukul has offered over 1200 training programmes with over 20000 candidates.
Human Resource Planning, Recruitment and Selection
Company believes that people are its real assets and the stronger the team is the better would be
the achievements. The organization‟s growth demands regular inflow of employees at different levels and thus a continuous process of recruitment. Being a knowledge organization and having achieved a leadership position, it is our endeavour to have right people with flair to learn and contribute. Company besides knowledge and skill, puts lot of thrust on the attitude of the person to be recruited, as it believes that with changing roles the knowledge base required would also be changing often. Though, we as an organization prefer to absorb people at junior level so that our employees, being in the organization have understood the operational methodologies, familiarized with the organization philosophy, are aware of the practices/ requirements and get right growth slots available for them. However in certain cases, depending upon the need, people at higher levels are also recruited. In addition to availing options of all the formal ways of recruitment, reposing faith on the employees and their our
HR
policy
gives
preference
to
Employee
commitment referral
to
the
organization,
in recruitment. Employees
referring somebody known to they and owning responsibility of the conduct of the referred person is a preferred state.
Performance Appraisal system for different levels
As you all know that NJ is a performance driven organisation, performance are the major criteria on which an employee is been appraised. Employees in addition to their regular functional responsibilities must strive to achieve specific targets, and to contribute to well defined, Key Result Areas. KRA would be determined involving the concerned employee, his functional head and HR representative. All employees need to put in their best for achieving the same. Performance Appraisal employees
who
process
is
been
carried
out
at
NJ
once
in
a
year. All
have completed their probation period successfully and are been made
permanent employees of organisation will be eligible for the same. At NJ around 70% weight is been given to performance and 30% weight is given to other behavioural / skill sets related to your work profile. Process of same will be informed to employees from time to time by HR department. All
major decision related to Promotions, Increments, Transfer, Performance
Incentives, Training, etc. will be made on the basis of Appraisal reports.
Training and Development activities including feedback process
Induction / Training & Development: NJ is a knowledge centric organisation, and spreading knowledge to its employees / associates / clients is in its philosophy. NJ Management takes equal care of all employees and provides them with equal opportunities to training and development and keep them updated from
time to
time. Keeping
into consideration the
nature of
work and
skills sets required, management always tries to add value to employee by providing them training & development as and when required.
Induction :
Every employee who enters / joins the organisation is supposed to go through a
induction programme carried by HR department. Frequency of such programme is on monthly basis. It will be seen that all employees go through the process of induction with a approach of
„First come first serve basis', further it will be seen that all employees get a chance to induction within 45 days from his date of joining.
Training / Development : NJ Employees will be nominated for different kind of training on
basis of following grounds:
On basis of Performance Appraisal reports
On recommendation of management due to specific need for any profile
On basis of potential Appraisals (For future development)
On recommendation of Immediate Superior / Functional head
On self recommendation of employee
Each employee will have to undergo minimum 48 hours of training in a year. Employees cannot opt / go for any training without prior permission / approval of management.
Promotion and Retention Policy
Progression
in
the
career
is
a
multi
dimensional
motivating
factor
and
hence
company offers equal opportunities to all the employees to grow and excel in their career. At NJ promotion is a need based, vacancies based & function / business plan based phenomenon. S o employees need to be sharp to identify the opportunity and grab the same. Promotion will be based on various criteria like past experience, behaviour, skill sets that an employee poses, Performance Appraisals reports, written test, Personal Interview, required qualification / experience for the post, tenure with NJ etc. Keeping into view all the criteria management will consider the best suited employee for the position and will offer him / her promotion.
DECISION MAKING AND FINANCIAL ANALYSIS
NJ believes in centralized decision making so most of the decision are taken by higher authorities. Also in decision making process flows from higher level people to lower level people. In branch level there is some rights or authorities to take any decision by branch manager. NJ also believes in formal power relationship but in some cases there is also an informal power relationship.
In financial analysis I don‟t have sufficient data but I have assets under management of NJ INDIA INVEST and AUM of industry. Here we can see that over a period of time AUM of company and industry both increase. AUM of company is increase rapidly because service provided by NJ is best and also many good points.
Year
2004-05
AUM of AUM of INDUSTRY NJ (Rs.in (Rs. in crores) crores) 149554 290
2005-06
231862
1174
2006-07
326388
2135.97
2007-08
505152
4767.92
2010-11
592250
10000
2011-12
692788
12000
Source: AMFI.com
Average annual investment in MF 800000 692788
700000 592250
600000 505152 500000
Series 1
400000
326388 Series 2
300000 200000
231862 149554
100000 290
1174
2004-05
2005-06
2135.97
4767.92
10000
12000
2010-11
2011-12
0 2006-07
2007-08
RESEARCH METHODOLOGY
RESEARCH DESIGN
The preparation of research design, appropriate for a particular research problem, involves the consideration of the following:
1. Objectives of the research study. To know the financial advisors knowledge about investment habits of their client.
2. Method of Data Collection to be adopted Data collection Primary data : primary data can be obtained through direct communication with respondent or
through personal interview. There are several method of collecting primary data through survey and descriptive research. I have used questionnaire for collecting primary data. Secondary data: secondary data means, the data has already collected and analyze by someone
else. For the first part of this report I have used secondary data like NJ funds watch and websites. Sample size
The sample size of my project is limited to 100 people only. Out of which 50 person are insurance advisors, 20 people are post office advisors and 30 people are privet company advisors.
3. Source of information — Sample Design Data source
The study is based on primary data only. For this, a questionnaire was prepared consisting of both open and close ended question. Data is collected by personal interview.
4. Tool for Data collection- questionnaire Sampling procedure
The sample was selected of them who are the financial advisors. It was also collected through personal visits to persons, by formal and informal talks and through filling up the questionnaire prepared. The data has been analyzed by using charts.
QUESTIONNAIRE ANALYSIS AND ITS INTERPRETATION
Information regarding to financial advisors client
1) Give the approximate % of your client occupation.
a) Business d) Agriculture
b) Profession e) Other………………
c) Salary Person
OCCUPATION OF THE CLIENTS OCCUPATION OF THE CLIENTS
39.05%
34.70% 21.30% 4.55%
BUSINESS
PROFESION
SALARY PERSON
AGRICULTURE
From the above chart we can say that business persons can invest more in any investment plan. And then profession and salary person are interested in investment. Any business men are interested in investment because they all are aware about market and they want to take some risk.
Same with profession and salary person but agriculture people don‟t know about any investment plan in the market and they all are depend on seasonal income so they don‟t want to invest and they like to invest any safety investment plan. Here business people are interested to invest by lump sum amount of money but salary person and agriculture people mostly prefer to invest by installment because they get their salary after specific time period.
2) How long is your average relationship with your clients? a) Less than 1year c) 3 to 5 year
b) 1 to 3year d) above 5 year
Adviser-Client relationship
11%
less than 1 year 46%
24%
1 to 3 year 3 to 5 years above 5 years
19%
In this research around 46 % of the financial advisors has above 5 years relationship with his client and around 43% of the financial adviser has 1 to 5 years relationship with their clients. And also most of the investment plans are long term like LIC, mutual funds and equity, so by investing in this investment plan for short term no one can get their required return because of this all are prefer to invest for long term and make long term relationship with their financial advisor.
3) Percentage of your clients in following age group. a) Less than 30 year…… c) 40 to 50…..
b) 30 to 40…. d) Above50 year
Age group of clients
18%
16%
less than 30 30 to 40 40 to 50 32%
above 50
34%
In any investment plan age group is much affected. In above chart age group of 40 to 50 years is much interested in investment and also this age group wants to take some risk because they have whole life to earn money so they can take risk. But less than 30 year and above 50 year people
are not earns so much and that‟s why they don‟t want to take risk they invest very less amount from their salary. And also they want safety investment plan. So also we can say that 30 to 50 years age group is interested to invest in mutual funds, liquid assets and equity but less than 30 year and above 50 year age group people are invest in insurance, post office, debt and bonds because they want safety.
4) Average percentage of annual income your clients invest. a) 0 to 10 d) 30 to 50
b) 10 to 20 e) above 50
c) 20 to 30
Average annual income invest 0% 4% 10% 0 to 10 10 to 20 20 to 30 52% 34%
30 to 50 above 50
On an average 52% the investors invest in any investment plan only 0 to 10 percentage of annual income.Because they would like to keep some cash on hand and because of inflation they spent 50 % on expenses like today education expenses of their children and marriage expenses of
children‟s are so much high. So they don‟t invest more then 20 to 30 %.
Question regarding to research topic 1) How do you approach your client?
a) TVs
b) telephone
c) newspaper
d) References
e) seminar & work shop
f) other…….
Mediam of approach 60 48
50 40
36
30 Mediam of approach 20 11 10
5 0
0
0 TVs
Telephone Newspaper References Seminar & Workshop
Others
All the financial advisors approach their client mostly through references and telephone because TVs, newspaper and seminar & work shop are so much expensive and not so much effective.And also TVs, newspaper and seminar & work shop are not that much effective it is only waste of time and money so all financial advisors focus only in references and telephone. It required so many efforts of financial advisors to convince them for investment and so personal contact is necessary.
2) What are the factors do you consider for designing clients portfolio?
a) Age
b) Risk
c) income
d) Purpose of investment
e) Product scheme &policy
f) Current liabilities
g) occupation
h) other
All the financial advisors mostly age of investors, risk taking ability of investors, income of investors, and purpose or product scheme and policy are consider for designing clients portfolio. It is much depends on client age be cause senior citizens don‟t want to take any type of risk and all young people want to take high risk and high return.
3) Rank the common objectives of the client for investment?
a) Tax d) High return g) Safety
b) Retirement e) Education h) capital gain
Common Objective of Client
c) Insurance f) liquidity i) other
Rank
% of investors
Tax
3
15
Retirement
2
17
Insurance
4
12
High Return Education
5 6
10 7
Liquidity
8
5
Safety
1
30
Capital Gain
7 9
3 1
Other
Rank has been given on the basis of investors‟ objective that means 30 % investors‟ objective is safety. From the above it can be interpreted that the common objective of the investors for investment is safety and then all other. The common objective of client is safety because no one wants to lose their capital amount.Second is retirement because at the age of above 60 most of people not able to do work effectively and so they cannot earn more so for the future safety all prefer second objective as retirement.
Most of business and salary people‟s objective is to save tax.
4) What is the average time duration of your client investment?
a) 1to 2 year c) 3 to 5 year
b) 2 to 3 year d) above 5 year
Time duration of clients 0% 13%
11%
1 to 2 year 2 to 3 year 3 to 5 year above 5 year
76%
All the investor wants high return and that‟s way they invest their money for long time so here the average time duration of investment is above 5 year.And also most of the investment plans are long term like LIC, mutual funds and equity, so by investing in this investment plan for short term no one can get their required return, because of this all are prefer to invest for long term.
5) How does your client invest?
a) Lump sum
b) installment
Type of investment
19%
Lump sum Installment
81%
Mostly all the investors prefer to invest by installment. Because in this survey most of people are from salaried or business so they can get their earning after specific period of time and so they are not able to invest by lump sum. And also because of new schemes like systematic investment plan(SIP), unit link investment plan (ULIP) and monthly investment scheme(MIS) all investors prefer to invest by installment.
6) which of the options your client prefer to invest? (Rank)
a) Debt….. d) MF…. g) Real estate…. .i) Liquid assets
b) Equity…. e) Insurance…. g) Post office…. j) other …
Option prefer by client for invest Debts Equity Bond Mutual funds Insurance Gold Real estate Post office Commodity Liquid assets Other
c) Bond…. f) Gold…. h)Commodity…
Rank
6 8 5 7 1 3 4 2 9 10 11
% of client
9 7 10 8 17 14 13 15 4 2 1
Rank has been given on the basis of client‟s preference to invest. Here we can see that insurance and post office first and second option prefer by client for investment because there is high safety in that. And also Life is full of dangers, but with insur ance, you can at least ensure that you and your dependents don‟t
suffer. It‟s easier to walk the tightrope if you know there is a safety net. Second and third option prefer by client is gold and real estate because they‟re high return in this option. Very few people want to invest in mutual funds, equity, liquidity and commodity because of risk.
7) In which proportion the client allocate their investment plan? (%)
a) Debt….. d) MF…. g) Real estate…. i) Liquidity……
b) Equity…. e) Insurance…. g) Post office…. j) other
c) Bond…. f) Gold…. h) Commodity….
% of investment plan 4% 3%
Dabt 5%
5%
Equity 11% Bond MF 10%
20%
Insurance Gold
6%
Real Astate Post Office
9% 17% 10%
Commodity Liquid Assets
Mostly all the investors have insurance policy and then they invest in different investment plan because all the investors first wants their safety and then they will agree to take some risk. Because of risk investors first invest in post office, bonds, gold and insurance. We know that equity and mutual fund
contain so much risk and that‟s why investors don‟t want to invest their money. In above chart we can see that % of equity and mutual funds are very less because of risk.
8) Do your clients agree with your portfolio design?
a) Strongly agree d) Disagree
b) agree e) strongly disagree
c) neutral
According to financial advisors opinion all the client agree or strongly agree with his portfolio design because of good service provided by advisors. And also all investors have trust on advisors decision.
9) Do your clients study the published literature before investing?
a) Yes
b) No % of clients study the published literature before investing Yes
No
15%
85%
50 % investors want to know about their investment plan and that‟s why they study the published literature before investing. And 50 % people have no idea about new schemes and policy because they
feel that whatever done by my advisors is right so they don‟t interested in stu dy any literature.
10) Do your clients approach you to evaluate their portfolio?
a) Yes
b) No
% of clients approach to advisor for evaluating portfolio Yes
No
15%
85%
Active clients are eager to know about their investment plan so they approach to financial advisors for evaluate portfolio.All the investors are interested to know current position of their investment and evaluate their portfolio. Because they want to know there is any kind a risk or not?
11) How frequently your clients change their portfolio?
a) Less than 1 month c) 7 to 12 months
b) 1 to 6 months d) more than 1 year
Investors are not interested in change their portfolio because of high exit load and also they have invested
in fixed plan so they don‟t want low return. In insurance and post office there is no chance to change because it is based on long term period but in mutual funds any investor can make switch their investment plan to other new schemes. So most of investors are not interested in change their portfolio.
12) Do your clients approach you to discuss the problem regarding their portfolio?
a) Yes b) No If yes….what problem they face…………
% of clients approach to advisor for problem Yes
No
15%
85%
Some of the investors have problem regarding their portfolio. Most of the problems are related to the return, due premium and interest, identity problem, related to different new policies and plans, not manage properly their investment plan, related to medical claim, other outside information like NAV, policy address change and related to nomination change etc. so for the solution of above problem any investors can be approach to financial advisors.
13) Do you monitor your client‟s portfolio regularly?
a) Yes
b) No
Yes
No
15%
85%
If yes …do you communicate with your client?
a) Yes
b) No
Yes, all the advisors monitor their client‟s portfolio regularly and also communicate with their client because they want to provide their best service for earn more money. If they don‟t monitor than investors will ask lot of question regarding portfolio or any other service and also investors can be leave their financial advisors and go to other. So all the financial advisor monitor their client‟s portfolio.
14) Is there any other facility demanded by your customer from you?
a) Yes b) No If yes ….please specify … 1)……………………………… 2)………………………………
Yes
No
15%
85%
According to advisors opinion there are many facility demanded by their client. Client wants to know about new schemes and policy and also they ask about commission and better services. All the investors are interested to about how to get more benefit and securities, proper service, and new investment plans.
FINDINGS, CONCLUSION AND LIMITATIONS
For the growth of the company it is necessary to convince all the financial advisors for AMFI exam and become NJ partner. But it is not possible because all the financial advisors other than MF advisors are not interested to give AMFI exam. There are many reasons that AMFI exam fee is so much high and very less
brokerage in MF. So most ofadvisor don‟twants to become NJ sub partner.
Highest number of investors comes from salaried class and business people so all the advisors have to focus on that class of people.And also highest number of investors comes from the age group of 25 to 40.because this age group wants to take some risk for higher return. Mostly investors prefer monitoring
their investment on monthly basis so all the advisors must monitor their client‟s portfolio. Most of the people invest up to 6% of their annual income in mutual funds.
It found that customer are prefer safe financial plan for investment. They do not want to take risk.
LIMITATIONS
Sample size is very small that is 100 so it is notadequate for analysis and 30 people are insurance advisors.The sample size may not adequately represent the whole market.
Respondent‟s reluctance to answer questions asked by unknown interviewers about things they consider private.
Busy people may not want to take the time
May try to help by giving pleasant answers
RECOMMENDATIONS & SUGGESTIONS
There are some suggestions from my side regarding the research project which could be more effective and useful for NJ India Invest.
Because of very law brokerage no one advisor wants to become NJ sub partners so Company must have to increase brokerage.
NJ should give safety attributes because insurance agents are more concerned about safety of the investment of their client. All the existing sub partner are not aware about how to use partner desk so for this NJ must provide their best training programme to the partner. Before convince new people or financial advisors for NJ sub
partner, first NJ must have to focus on existing partner‟s satisfaction and provide them best service.
LEARNING
It was a great opportunity to work with NJ INDIA INVEST PVT. LTD.After completing this training I know about how advisory company can work and what the growth driver of the advisory company.
Before this training actually I don‟t know about what is mutual fund, types of mutual funds and how many different AMC are there in the MF but now I know all this things. I meet personally all the financial advisors so now I am able to how to communicate with people and how to convince them for become NJ sub partner. After this training I know about what is the investment objective of the investors and also which factors are considered by the people before they invest their money in any investment plan. And also I know investment habits of the investors& investor‟s preference level about mutual fund. So after completion of my summer training withNJ INDIA INVEST COMPANY I got good learning and practical knowledge.
REFERENCES
Funds Watch-JAN 2012 www.njfundznetwork.com www.njfundz.com www.mutualfundadvisorindia.com www.fpsbindia.org www.amfiindia.com
ANNEXURE
Questionnaire
“Financial advisors’ knowledge about the investment habits of their clients .”
Profile of the adviser NAME: OCCUPATION: 1) Profession
2) Business
3) Service
4) other___________
ADDRESS:
AGE (in years): 1) 20 to 25 4) 45 to 50
2) 25 to 30 5) above 50
3)30 to 45
QUALIFICATION:_________________________________________________ EXPERIENCE AS FINANCIAL ADVISOR (IN YEAR):
_____________
APPROXIMETE NUMBER OF YOUR CLIENT: ______________ CONTACT NUMBER: ________________________
Information regarding to your client 1) Give the information about your client occupation? a) Business b) Profession c) Salary Person d)Agriculturee) Other………………
2) How long is your average relationship with your clients? a) Less than 1year b) 1 to 3year c) 3 to 5 year d) above 5 year 3) Percentage of your clients in following age group. a) Less than 30 year…… b) 30 to 40…. c) 40 to 50….. d) Above50 year
4) Average percentage of annual income your clients invest. a) 0 to 10 b) 10 to 20 c) 20 to 30 d) 30 to 50 e) above 50 5) What is the approximate average investment of your client (in Rs.)?
a) Up to 1,00,000 c) 3,00,000 to 5,00,000
b) 1,00,000 to 3,00,000 d) above 5,00,000
Question regarding to research topic 1) How do you approach your client? a) TVs b) telephone d) references e) seminar & work shop
c) newspaper f) other…….
2) What are the factors do you consider for designing clients portfolio? a) Age
b) Risk
c) income
d) Purpose of investment f) current liabilities
e) Product scheme &policy g) occupation h) other
3) Rank the common objectives of the client for investment? a) Tax b) Retirement c) Insurance d) High return e) Education f) liquidity g) safety h) capital gain i) other 4) What is the average time duration of your client investment? a) 1to 2 year b) 2 to 3 year c) 3 to 5 year d) above 5 year 5) How does your client invest? a) Lump sum
b) installment
6) which of the options your client prefer to invest? (Rank) a) Debt….. b) Equity…. d) MF…. e) Insurance…. g) Real estate…. g) Post office…. j) other ……. i) Liquid assets
c) Bond…. f) Gold…. h) Commodity….
7) In which proportion the client allocate their inv estment plan? (%) a) Debt….. b) Equity…. c) Bond…. d) MF…. e) Insurance…. f) Gold…. g) Real estate…. g) Post office…. h) Commodity…. i) Liquidity…… j) other
