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ABSTRACT
The main purpose of this study is to better understand the percentage of people
investing in safety securities and its impact. This study attempts to fill a gap in the
existing private wealth management services with their individual customers. A number
of changes have taken place in the private wealth management industry and it appears to
be a gap between those changes and the customersெ expectations and preferences.
Data used in this study were collected from two sources, primary and secondary data.
For primary data, they were obtained through the well-structured questionnaire.
Secondary data were collected from various sources such as library, journal articles,
eBooks, catalogues, textbooks and internet. In the first part of this study, a review of
definitions and explanations about the wealth, the wealth management, the private wealth
management and high-net-worth-individual customer preferences, various investment
avenues is undertaken.
Then, in the second part of this study, the research findings from the
implementation of primary data are described and analyzed. Research findings are aimed
to help the investors to be more responsive in selecting their of investment preferences.
This research would help private wealth management companies to better evaluate the
changed landscape by adjusting their business models in order to provide a better wealth
management to their customers, who have made their preferences accordingly. The
outcome of this would have identified things to improve and helped to provide a better
wealth which would motivate their increased investments.
INTRODUCTION
1.1 RESEARCH BACKGROUND:
McCann and Lavayssiere related (2008, p16) that “the world is witnessing the
greatest period of wealth accumulation in history. Never before have so many people
from so many different regions of the earth become so wealthy in so short period of time.
And never before have so many opportunities existed to create new wealth, both as the
natural outcome of new ideas and the product of existing capital appropriately and
prudently leveraged”.
People who invest in safety securities in India is very low compared to other
countries since they do not have enough knowledge of wealth Management. Preferably
many of the investors depend upon their choices of investment.
The wealth management process is composed by four steps which are all
considered equally important, because each of them can directly contribute to a
successful wealth management. According to Dun and Bradstreet (2009, p5), the wealth
manager and the client need to understand the nature of the process and appreciate the
resources that are needed at each stage in order to get a successful process.
Wealth Management:
Every individual want to invest money in order to get return and for productive
use of money. For businessmen it is easier for them to invest in various types of
investment assets such as fixed deposits, equity shares, bonds, real assets and saving
certificates etc due to number of sources, earnings from their business. Investment
management (selection of one or other investment assets) varies from businessman and
salaried persons. People of different age, education, gender, income and family
background are attracted towards different investment activity, the availability of money
to invest decides whether investor is potential or not. .Salaried employees seek return ,
safety, liquidity, convenience and affordability and tax benefits (B.B.S. Parihar and
K.K.Sharma 2012)Salaried individuals have different preferences of investment decisions
according to the demographic variables. This research is concerned with age, gender,
education and income of the salaried person and measurement of risk level of individuals
and their investment preferences. This research is concerned with investment of salaried
individuals in equity shares and whether are attracted towards gambling or not.These
demographic factors provides as starting point in identification of risk tolerance, it is the
complex process that is started form the demographic factors More research is needed to
determine which additional factors, such as expectations, attitudes, preferences, family
background and culture, and financial stability factors, can be used by investment
managers to increase the explained variance in risk-tolerance differences.
WEALTH MANAGEMENT PROCESS:
Wealth Management is a process - not a product or a one-time event - which
provides a longterm strategy for clientெs financial future („The Wealth Management
processெ, no date). The wealth management process clearly describes the relationship
between the client and the wealth manager. Dun and Bradstreet (2009, p4) explain that
“the wealth management process is founded on the values of the client”. That is the
reason why the wealth manager has to determine their clientெs goals and what really
matters for them. Understanding the wealth management process may well be the most
important element of a successful relationship between an individual investor and his
professional adviser (Brunel, 2006, p15).
1.1.3 DEFINITION:
As defined by Goel (2009, p7), wealth management is “a holistic approach to
understanding and providing solutions to all of the major financial challenges of an
investorெs financial life. From a clientெs perspective, this means having all financial
challenges solved. From a wealth managerெs perspective, it means the ability to
profitably provide a wide range of products and services in a consultative way”.
According to Dun and Bradstreet (2009), “Wealth management is a new, discrete
discipline and not just a variation on the traditional institutional investment management
theme and can also be defined as an all-inclusive service to optimize, protect and manage
the financial goal of an individual, household, or corporate”.
As a matter of fact, wealth management is about a relationship between a
customer and an advisor called wealth manager. The wealth management process begins
with the formal establishment of the client relationship. Commercial banks concentrates
more on the wealth management industry.There are many private wealth management
services who focuses on the individual’s wealth.
wealth management as a process with three essential components which clearly
oppose wealth management to investment management or money:
¾A consultative process
¾Customized choices and solutions
¾Delivery in close consultation with the client.
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1.2 IDENTIFIED PROBLEM:
This study identified the problem of lack of awareness among the investors who
invest in securities. If we look on the wealth management, it is a new one for the younger
generation. Investment in safer securities in India is abysmally low when compared to the
other foreign countries. Therfore the problem has been identified and hence the study is
undertaken.
1.3 NEED FOR THE STUDY:
The percentage of people who invest in safety securities in india is abysmally low
at 2% when compared to the other countries for example Germany which is 12.5% as per
the concerned country. Therefore, a need is to improve the same and it is vital to
understand the preferences of Investors. Hence this study is undertaken.
1.4 OBJECTIVES AND SCOPE OF THE STUDY:
1.4.1PRIMARY OBJECTIVES:
¾ To study the perception of investors towards wealth Management.
1.4.2SECONDARY OBJECTIVES:
¾ To rank the various investments under wealth Management.
¾ To understand the preferences of investors towards various
investment avenues.
¾ To understand the features which will motivate increased investments.
1.4.3 SCOPE OF THE STUDY:
The study aims to identify the awareness and the preferences of investor’s
towards their choices of investments avenues which depends upon the factors like age
,gender, income level, qualification etc…..This study is concerned with the individual’s
Wealth Management in general to the various investment avenues. This study is
conducted towards the individuals personal wealth management with the the various
Investment securities.
1.5 DELIVERABLES:
¾ To study the perception of investors towards wealth Management.
¾ To rank the various investments under wealth Management.
¾ To understand the preferences of investors towards various investment
avenues
¾ To understand the features which will motivate increased investments.
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CHAPTER 2
2.LITERATURE SURVEY
2.REVIEW OF LITERATURE:
2.1INTRODUCTION:
Ridley (2012) defines a literature review as the part of the dissertation where there
is extensive reference to related research and theory in the field of the topic; it is where
connections are made between the source texts that the researcher draw on and where the
researcher position himself and its research among these sources.
The research literature review can be divided into seven steps which are:
¾ Selecting research questions.
¾ Selecting bibliographic or article databases
¾Choosing search terms
¾Applying practical screening criteria
¾Applying methodological screening criteria
¾Doing the review
¾Synthesizing the results.
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2008. “Multigenerational Wealth Management: Getting a Legacy Up.” Alliance
Bernstein’s Global Wealth Management Research Series (April).
Chhabra, Ashvin B. 2005. “Beyond Markowitz: A Comprehensive Wealth
Allocation Framework for Individual Investors.” Journal of Wealth Management, vol.
7, no. 4 (Spring):8–34.
“In sharp contrast to the recommendations of Modern Portfolio Theory, a vast
majority of investors are not well diversified. The author attempts to provide a solution to
this diversification paradox, by expanding the Markowitz framework of diversifying
market risk to also include the concepts of personal risk and aspirational goals. The
wealth allocation framework enables individual investors to construct appropriate
portfolios using all their assets, such as their home, mortgage, market investments, and
human capital. The investor may choose to accept a slightly lower average rate of return
in exchange for downside protection and upside potential. The resulting portfolios
are designed to meet individual investors’ needs and preferences, as well as to protect
individuals from personal, market, and aspirational risk factors. A major conclusion of
this work is that, for the individual investor, risk allocation should precede asset
allocation.” (found at www.iijournalsdoi/abs/10.3905/jwm.2005.470606)
Marcovici, Philip. 2007. “The Wealth Management Industry and Today’s WealthOwning
Families—From Chaos Comes Opportunity.” CFA Institute Conference
Proceedings Quarterly, vol. 24, no. 4 (December):67–73
“Traditionally, whether acknowledged or not, a focus of international wealth
management has been to use bank secrecy laws for the purpose of tax avoidance. An
unstoppable trend toward greater global transparency, however, is rendering this model
obsolete International wealth managers who fail to adapt will not survive.” (p. 67)
NevinDaniel. 2004. “Goals-Based Investing: Integrating Traditional and Behavioral
Finance.” Journal of Wealth Management, vol. 6, no. 4 (Spring)1–16.
Once an optimal asset mix is decided, the wealth management practitioner must
“sell” the portfolio to the clients. This article provides a good introduction to behavioral
asset allocation, which relies on a decomposition of the total financial portfolio into a
series of subportfolios. Nevin bases his sub portfolios on client goals, whereas other
behavioral asset allocation approaches use timelines. Nevin’s goal-based approach
defines portfolio efficiency in terms of client goals and then considers risk measurement
and investment strategies that are appropriate for each goal. Goal-based investing
improves upon traditional finance in the areas of measuring risk, risk profiling, and
managing behavioral biases. In addition, this study provides a good review of behavioral
finance concepts.
Bodie zvi, and Jonathan Tressward. 2007. “Making Investment Choices as Simple
as Possible, but Not Simpler.” Financial Analysts Journal, vol. 63, no. 3
(May/June):42 47.
“Target-date funds (TDFs) for retirement, also known as life-cycle funds, are
being offered as a simple solution to the investment task of participants in self-directed
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retirement plans. A TDF is a ‘fund of funds’ diversified across stocks, bonds, and
cash with the feature that the proportion invested in stocks is automatically reduced as
time passes.
Empirical evidence suggests that a simple TDF strategy would be an
improvement over the choices currently made by many uninformed plan participants.
This article explores a way to achieve even greater improvement for people who are very
risk averse and have high exposure to market risk through their labor.” (p. 42)
Camejo, Pedro with Geeta iyer .. [et al.]. (2002)“ The SRI Advantage :Why
Socially Responsible Investing has Outperformed Financially”. Foreword by Ralph
Nader ; Introduction by Robert A.G. Monks. New Society Publishers, Altona, Manitoba.
Topics covered included are not limited to the case for SRI outperformance,
pension funds and fiduciary responsibility discussion on mainstreaming SRI,
international dimensions of SRI and community investing strategies. (xvii) In his
introduction, Monks considers “shareholder involvement as necessary in order to mitigate
the most brutal negation of shareholder values”. (xvii) As a result, the first five chapters
of the book are dedicated to analysis of the various modes of measuring stock
performance over varying lengths of time. Monks “usefully lays to rest any concern that
SRI induced funds might not perform at least as well as the general averages over any
relevant length of time. (xv) The book includes an “insightful list of the reasons why the
finance committees and boards of directors and trustees of our leading institutions largely
continue to refrain from considering social investing”. (xvii) Considering whether SRI is
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a fringe activity, Monks predicts that over the next decade. We have given scores
of examples of how citizen investors directly and indirectly are reshaping the corporate
agenda. So Important to not view this as a civil economy utopian, That conclusion would
be wrong. A a civil economy mirrors civil society. (242) they identify throughout the
book actors who are important, however the responsibility lies with the citizen investor.
“We, the people are not just the audience. We, the citizen owners, can direct this drama
and decide its outcome”. (242) “The book concludes by placing the onus on the reader to
advance the SRI agenda, which is an interesting spin on mainstreaming efforts . Most
proponents and critics get caught up on the difficulties associated with inefficient and
seemingly impossible public policy processes as being the only legitimate route to
expanding. “The money that circulates in global capital markets is our money. The
companies it owns are our companies. How those companies behave, how the civil
economy develops, is ultimately up to us, the new capitalists”. (243).
Ramakrishna Reddy & Ch.Krishnudu ( 2009),investment behavior of rural
investors. “Finance India”, vol. XXIII No.4.