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A
PROJECT REPORT
ON
Study on perceptions of advisors regarding
Mutual Fund business
&
Investment habits of people
(A SEMI URBAN AREA PERSPECTIVE)
With reference to summer training at
PRUDENT CAS LTD
AHMEDABAD
Submitted to:
Prof. Gurmeet singh
Submitted by:
Rungta Preeti V.
Enrollment no. 117140592004
GLS Institute of computer technology- MBA
2011-13
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PREFACE
Financial market has always been talking about the investors. Companies offer
financial products and their returns but in this competitive market, recent trends say
that this is dependent on the mediators. Mediators are the advisors. This is important
to know the channel because the channel is very important for sustaining in
competition.
This report is prepared for such an indirect channel where the mutual fund
companies are depending upon the mediators and these mediators are advisors and
advisory firms. Hence, until they find good advisors and agents, the expansion is not
possible. Return is an uncertain part which can be controlled at a certain level
through mutual fund but the awareness part is in companies hands. They need to
focus on the agents and find new opportunities. In urban areas, people are aware
about their moneys investment options but in a country like India, man y rural and
semi urban areas exist where savings are done wisely but investment is leading to
few hands who either dont know about the investment or try to fill their own pockets.
Preeti Rungta
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ACKNOWLEDGEMENT
A survey takes many days and many tasks. While doing this work, I was not alone.
There are many people who directly or indirectly are joined to this report and helped
me in learning and finding many things important for this project and my
understandings.
The first thanks for the GUJARAT TECHNOLOGY UNIVERSITY for giving us the
opportunity to learn in the open market and prepare this report.
Then I would like to thank the director of our college Mr. Hitesh Ruparel who is
always working as the indirect but the most important hand to us. This is his effortsthat we are getting good opportunities in the market. I thank my internal guide Prof.
Gurmeet Singh who has supported and guided me in this project at each and every
phase of the training.
A hearty thanks to PRUDENT CAS LTD for allowing us to join them and work under
them as a fresher and a special thanks to Mr. Ayaj Mansuri and Mr. Chirag Modh
from the indirect channel for their continuous support. They have spent a lot of time
behind me for making me learn many things and help me in each difficulty I faced on
the field.
Last but not the least, thanks to all those people who directly or indirectly helped me
in understanding the facts, filling up the questionnaire and spending time in making
this research what it is in this report.
Preeti Rungta
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EXECUTIVE SUMMARY
This report is prepared in context to the mutual fund advisory business. In India,
people are good at savings but their investments are poor. The inflation rate is
growing faster while the investment returns are not high. The current market
situations in the country are very uncertain. The market has dramatically increased
and decreased twice in the last 5 years. In this condition, people dont want to take
risk. There are many stocks which have continuously performed well but people
dont know about this. So there is a need of advisory and a new business arose.
In this report, result of a survey is analyzed. The survey is on two groups. The first
group is insurance agents who are considered as the potentials for mutual fund
advisory business. The second group is of the investors who invest their money in
the market either directly or by way of advisors. The sample size is kept 50 and the
location is chose Kadi. This is a semi urban area.
The factors that are forcing the advisory business include the foreign companies
coming in for getting investment, increasing competition in the advisory business due
to uncertain markets, low commission for advisors and a very tough competition fromother financial products making it difficult to get agents.
The survey said that most of the agents who are working in Kadi as LIC agents are
not interested in working for mutual funds business. They feel that the business is
going very down and the income of agents is very low. Hence, they are good at LIC
and dont want to enter in this business. They are also not aware of the mutual fund
business completely. Some are not even interested in knowing more about it.
On the other hand the investors are having an overall 40% saving perception. They
give an equal priority to savings and want some good returnable products. Due to
lack of knowledge regarding mutual funds, investors are not being able to take the
advantage of it. Advisors are not getting into this business at this place hence; the
benefits of mutual fund are not entering into this market. The investors are investing
much of the money in the banks and FDs but the return is very low. They have a
perception that mutual fund contains same risk as the stock market has. Hence, they
dont like to invest in it.
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As a suggestion to Prudent, they should try to enter in this area that contains a lot of
investment opportunities for them. The companies should raise the benefits for
advisors and advisories should find the fresher for this business and train them from
beginning. This will solve the loyalty issue and provide them a long run benefit to
sustain in the market. The firm anticipates that this business will grow wide in next
few years. So this training cost will be an investment and covering such semi urban
areas from beginning will strengthen their base. People in these areas are more
disciplined towards their advisors for any field and their shift is very less.
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TABLE OF CONTENT
Sr. No. Particulars Page No.Preface
Acknowledgement
Executive Summary
1 Introduction 8
2 Research methodology 11
3 Industry 143.1 Structure of mutual fund in India 15
3.2 Types of schemes 16
3.3 How mutual fund industry works? 17
3.4 How does advisors earn? 18
3.5 Why mutual fund is so important? 19
3.6 MF activities for previous years 20
3.7 10 major sectors in India 223.8 Why mutual fund advisory 24
3.9 MF advisory industry five force
analysis
25
4 Company 28
4.1 About overall work 29
4.2 What prudent does for advisors who
join?
31
4.3 SWOT of prudent 33
5 Location of survey- Kadi 35
6 Literature review 37
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7 Analysis 41
7.1 Data analysis and hypothesis testing
of 1 st questionnaire
42
7.2 Data analysis and hypothesis testing
of 2nd questionnaire
64
7.3 Hypothesis together 77
7.4 Reviews of advisors in open ended
questions
78
7.5 Reviews of investors in open ended
questions
80
8 Conclusion 81
9 Findings and suggestion 84
10 Bibliography 87
11 Annexure 89
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Introduction
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This research leads to two sided approach where we focus on customers as well as
advisors. The main work of advisory firms is to find the best mutual fund companies
who give greater return at lower risk and associate a connection among these
companies and advisors. Hence, this research tries to understand the perception of
investors regarding the savings and investments. It also tries to know about the
advisors dealing in financial instruments and try to know their perceptions regarding
mutual fund. It helps them understand the benefits of mutual fund, help advisory
firms to get more advisors and help the mutual fund companies in selling their
products.
Objectives
To know the investment pattern of people at Kadi as a rural area
To know the current trend of investment choices among investors
To know the investment objectives of people
To know the perceptions of financial advisors working in other instruments
regarding the mutual funds
To know possible steps for attracting advisors in mutual fund businessTo understand the loopholes in the mutual fund business as a subject of
advisors income
Importance
Helpful in deciding the scheme according to customer likings
Helpful in finding new ways to attract advisors
Spreads the real knowledge of mutual funds among advisors and investorsThis study may give an idea about the rural area and investment opportunities
in these areas.
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Differentiated research
This research involves two surveys. One is about advisors and second is
about investors.
This research is done in a specific region on a specific target of advisors whoare dealing in life insurance. The sample size is 20% of the population of
advisors. Hence, the worth of research is more
In past, there are very few or none researches about the mutual fund
advisories and even if they are present, no meaningful insights are available
according to my knowledge.
Limitations
This research has been limited to one area only. So the results will be useful
to that small area only.
This research has good sample size for advisors but the investors sample
size is low. The sample size in figures is same but as a proportion, it is very
low. Hence, the investors view cant be taken as a complete result. But in this
study, this much of research was worth. The only need was a general
perception of people in that specific reason and the attitude that they have
towards such things.
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Research
Methodology
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Design : Descriptive research (a comparative analysis done for checking the pattern
of research and bringing out important analysis)
Data used:
Primary data
Secondary data
Methods of data collection :
Primary data collected through Sample survey
Secondary data collected from Prudent CAS ltd, Public magazines & journals
and internet
Instrument of data collection
For sample survey I used questionnaires
For survey, I used social networking website FACEBOOK and Google+
For secondary data I used Printed instruments and search engine Google
Sampling
Sampling unit:
Agents dealing in insurances and other such products having client base
suitable for mutual funds. Contacted to the LIC agents of Kadi
General public who earn or not earn but know the importance of savings and
live in Kadi.
Sampling frame: geographically located in Kadi area which is a town in Mehsana
district and 50 KMs away from Ahmedabad where the prudent office is located
Sample design: Convenience sampling
Sample size:
50 investors
50 advisors
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Time schedule
June-July 2012, 45 days
Researcher
The whole report was prepared by Preeti Rungta under the guidance of the following
people.
External Guides from Prudent CAS ltd.
Mr. Ayaj Mansuri
Mr. Chirag ModhInternal guide
Prof. Gurmeet singh
Qualification: I am doing MBA at present and wishing to opt for finance
specialization. I have done BBA as graduation. I have undertaken many researches
informally hence the experience of research is informally joined to me.
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Industry
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This project is about mutual fund advisory and not about the mutual fund selling.
Hence, there is no need of detailed description about the mutual fund. Here is a
quick review of what mutual fund is.
A mutual fund is a professionally managed type of collective investment schemethat pools money from many investors and invests it in stocks, bonds, short-term
money market instruments and other securities.
Source: http://www.nseindia.com/content/ncfm/MFBM-workbook.pdf
Structure of mutual fund working in India
Sponser
Trustee AMC
Fundmanager
Scheme
Investors
Custodian
SEBI
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TYPES OF SCHEMES AVAILABLE
Open ended schemes Close ended schemes Interval schemes
Structure
Growth schemes Income schemes Balanced schemes Money market schemes
Objectives
Sector specific funds Tax saving funds Special purpose funds Index funds
Otherspecifictypes
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How mutual fund industry works?
AMFI is the regulatory authority of mutual fund in India that makes all the rules
regarding mutual fund. All the mutual fund companies are working under their
regulations. There are many mutual fund companies with many mutual fund
schemes. Each fund is managed separately. These companies depend on advisors
for their work. Hence, they hire their own advisors or join a good advisory firm that
can sell their mutual fund products. These firms also hire advisors who convince andguide investors for investing in mutual fund by using their own contacts and client
base.
AMFI
Mutual fund companies
Mutual fund advisors
Advisors
Investors
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How does the advisor earn?
The AMC (mutual fund companies) invest in a large portfolio after collecting money
from small investors. This money is invested in a portfolio designed by expert
keeping in mind the objective of investment. AMC keeps some percentage of investment received as the fees of management. The rest is distributed among the
investors.
Mutual fund advisors receive their income from three different sources.
1. Commission
this commission is given by the customers for managing their fund. Nowadays
this commission is removed by many of the companies because the
customers find it a high cost hence; very few schemes include this
commission.
2. Trail
trail is the most important thing that an advisor gets. This amount is given by
AMC to advisors. This is a return on the market value of total investment. The
main problem of mutual fund advisory business arises here. This trail is
around 0.5% of the investment which seems very low to advisors. This 0.5%
is on the whole investments market value every year. Hence, the efficient
advisors can make handsome money if understood properly. It is a small
looking income but the total value is very high.
3. Upfront
upfront is another income that investors get on every investment. Its currently
around 0.5% on each investment. This again depends upon the numbers and
level of investment advisors find.
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Why mutual fund is so important?
The highest growing sectors in the economy are real estate and gold. With the
increase in these two sectors, the returns of investors have increased dramatically
but this is only possible for those who have a large amount to invest. What aboutother people? Most of the people in the India are falling in middle class families.
These people have savings but at a very low level. They are facing problems
regarding their houses and gold for various purposes. Education has also been
costly at the same time.
In such condition its not easy to depend on earnings. Bank investments are giving a
return of 8-9% only. They cant invest in gold because they dont have more money.
The answer to their problem is mutual fund. See the annexure for gold SIP.
Mutual fund invests in such growing sector and allows you to invest a small amount
as an installment that can serve you high return as well as systematic investment
plans for achieving some specific future goals. At the current inflation rate, its very
essential to save high and invest for specific purposes especially house and
education.
Mutual fund works on systematic investment base. There are three types of plans in
this.
- Systematic investment plan that allows you to invest regularly in a disciplined
way. This is helpful because you just need to invest a part of your salary every
month. One time huge investment is not required here.
- Systematic withdrawal plan especially designed for elder is such that your
money can be used for your regular expense as well as gain some return on it
regularly so that you can use it for long
- Systematic transfer plan is designed for making your investment flexible. You
can transfer your fund from one scheme to another scheme after a specific
period of time.
These three plans are designed as per the requirement of the investors. This allows
you to plan systematically and increase the worth of your money. It also provides
flexibility to your investment.
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MF Activity for previous years for equity market
Year Gross
Purchase(Cr)
Gross Sale(Cr) Net
Investment(Cr)2011 131,729.70 125,488.40 6,241.202010 159,151.80 186,786.90 -27,635.802009 181,535.60 186,559.50 -5,024.602008 181,054.30 166,941.60 14,111.702007 186,800.52 180,140.20 6,661.002006 135,840.95 120,456.69 15,382.262005 78,271.44 64,634.15 13,637.712004 42,043.39 43,309.58 -1,366.142003 28,096.03 27,744.62 274.162002 15,254.33 18,248.17 -2,711.522001 12,669.82 17,841.21 -5,177.652000 16,418.41 16,386.50 160.96
Source: http://www.indiainfoline.com/MarketStatistics/MF-Activity
This shows how mutual fund industry has been down in the 2009 and 2010. The
same time was when the markets have fallen drastically. But when it was at peak,
the investment was very high. The same happened in year 2001 and 2002 when
people were not being able to trust on markets, but the market revived and
performed outstanding. The same pattern is expected to be seen now.
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MF Activity for previous years for debt market
Year Gross
Purchase(Cr)
Gross Sale(Cr) Net
Investment(Cr)2011 945,618.80 653,452.80 292,166.102010 738,589.00 545,856.50 192,734.602009 527,600.50 325,338.80 202,264.302008 317,141.40 268,548.00 48,593.602007 245,853.20 181,539.00 64,314.402006 136,324.81 88,941.60 47,383.252005 109,410.22 69,056.13 40,379.072004 54,889.76 43,321.63 11,552.012003 58,352.08 38,382.54 19,959.942002 44,879.39 31,341.79 13,752.382001 28,808.34 19,620.86 9,190.832000 9,479.51 6,338.19 3,291.38
Source: http://www.indiainfoline.com/MarketStatistics/MF-Activity
This shows how the investments in debt funds have raised every year. There comes
a shortfall in investments when the market is down but the overall investment is quite
higher in debt funds. These are secured funds telling that people are investing more
in debt funds. These figures show how Indian economy is distributed in debt and
equity market. People are not much risk taking and prefer debt market for many
years and the culture is still followed.
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10 major sectors of India
Food & Beverage
Industry food and drinks in India has gained in popularity over the last 3-4
years, mainly because of changing lifestyles and eating habits of people.
Block most of the increase in revenues from 2005 to 2009, the section of the
top wines being recorded. 7.5 percent growth rate between 2009 and 2013, it
expects $ 330 billion industry by 2013.
IT Industry
Business India Information Technology in 2009 to 14.1 percent for 2010should increase. 67000000000 analyses of industry experts provide dollar
industry in 2010 to become year 2013 increased 11 percent. IT services and
software, hardware components such as B2B commerce contributed to the
growth of the IT industry are.
Health Care Industry
Costs of health care in India and the West because of a huge separation of the health care industry of the country is experiencing a boom in business
terms. The analysis shows that the current dollar 35000000000 industry by
2017 the figure of 75 billion dollars in 2012 and 150 billion dollars will touch.
Telecommunications Industry
The growth of the telecommunications business in India as easily is called a
revolution. India is the second largest provider in the telecommunicationsnetwork. The growth of 3G services and mobile telephone in the region has
made significant contributions to growth. For 11 percent of mobile subscribers
in the country from 2010 to 2014 is likely to grow.
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Automotive
Indian automotive component industry since 2000 with a growth rate of about
20 per cent growth rate constant and is assumed to remain constant until
2015. Engine parts, transmission parts advertising campaign steering,suspension and brake parts and electric parts, the overall B2B commerce are
the main contributors to development.
Construction Industry
Accounting for 11 percent of India's total gross domestic product side, the
construction industry is an exporter of raw materials to the other world. For
example, China, India exports the largest consumer of steel. In addition, thecement industry is an important contribution in this category.
Crafts
Indian handicrafts is a huge demand in foreign markets such as USA, UK and
Australia, those to enjoy wooden crafts, jewelry, hand-printed fabrics and
knitted goods mainly to land areas that 3 billion in foreign currency are to be
made.Energy
Both renewable energy and non renewable energy, energy sector in India has
contributed to growth. Natural gas, LPG and solar energy are growing.
Banking and insurance
Bank credit cards investment, mortgages and insurance products in areas that
the banking sector of India and insurance are to contribute to development.
For example, the number of debit cards increased 40 percent over 2006 and
2009.
Source: http://www.made-from-india.com/article/Top-10-Business-Sectors-in-India-
719.html
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Why mutual fund advisory?
A mutual fund company will focus on receiving more of the investments through
investors. But in reality, the way of financial planning is different. This planning is
essential for any individual for securing the life. An expert can properly guide themfor their overall financial planning and investment options. People do not know the
importance of planning and badly invest at one place while overlooking the need of
other. Every person has different goals in life and for achieving them they will need
fund at different times. Hence, they must consult advisors before investment.
Financial planning!
A good financial planning says that return is not the sole goal of what you save out of your income, security is very important. Hence the financial planning goes in a
specific direction for distributing the income.
1st
Life insurance Health insurance
2nd
Savings in secured options savings in uncertain but high return
3rd keeping cash in hand
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MUTUAL FUND ADVISORY INDUSTRY FIVE FORCE ANALYSIS
Mutual fund advisory business
Threats from new entrantsForeign market and new funds
Bargaining power of suppliersFund is managed by those whom investors don't know
Bargaining power of buyersInvestors and agents can leave when they want. no entry or
exit restrictions
Threats from substitutesInsurance, post, PPF, direct equity and so on
Threat from existing playersMany advisory firms emerging in Ahmedabad and other places
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Threat from new entrants
Mutual fund industry is threatened by the new coming mutual fund players.
Foreign companies are entering into the industry. Mutual fund industry is
itself entering in Indian market and not so grown. In past, there were very
few companies in MF while today there are many AMCs existing with many
funds. Due to this, a confusion regarding the performance has increased.
Threat from existing players
There are many mutual fund advisories existing in the market. There are
many mutual fund products competing and the returns have been uncertain.
Due to some of the frauds happened in the past, the investors are not
trusting on the mutual funds. Yet there are companies who are not
performing well and due to that the advisory business is not being able to
convince them for investing.
Threat of substitutes
The biggest threat to mutual fund and its advisory business is of substitutes.
There are many investment substitutes available in the industry for
investment as well as business. According to investors, banks are safer
than mutual funds and giving same returns while the agents are not
attracted towards the earnings. This is due to the high commission in the
other businesses that are not so risky also.
Bargaining power of customers
In mutual fund industry, bargaining power of customers is such that they can
withdraw their investment anytime. They have many options available withthem and due to this, they can choose any option that they find the best. So
the industry has threat of losing investments at any time when investors
want. If the investors are having high stake in mutual funds, they can control
the investment options and if not done so, they can withdraw their
investment. Advisory firms have to continuously keep a contact with them
for retaining the investments and also keep a continuous watch on the
industry performance so that they can choose the best products.
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Bargaining power of suppliers
In this industry, bargaining power of suppliers is indirect. It is said that the
regulations enable investors to assure that the investment is not drawn to
any personal interest. But generally this is not the scenario. Many funds are
using the money for their own stake and many a times markets are
dramatically drawn by big investors. The agents who work for mutual fund
advisory are also uncertain. The whole work depends on their
understandings and their own reviews. They need high returns which can
attract them and if they do not get the return, a bad word of mouth can spoil
the image of product.
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Company
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PRUDENT CORPORATE ADVISORY
Prudence (prdns): the exercise of good judgment, common sense and caution,
especially in the conduct of practical matters
It was incorporated in year 2000 with a clear vision of providing professional
services in the area of personal and corporate investments. It has created a
niche segment over a period to time with an excellent quality client base. Over
the past few years Prudent Corporate Advisory Services has created in-house
capabilities of analyzing funds on various parameters before suggesting them
to clients.
The team approach worked wonders and in the short-span of just one
decade, the Prudent Group expanded its horizon by offering specialized
services in the areas of Personal and Corporate Investment Planning through
Mutual Funds, Equities, Derivatives, Third Party Products, Fixed Income
Products, Life/General Insurance and Real Estate through various companies
listed below.
Prudent Corporate Advisory Services Ltd
As the flagship company, Prudent Corporate Advisory Services remains the
primary arm of the Prudent Group. It offers specialized services in the area of
Personal and Corporate Investment Planning through Mutual Funds, Debt and
Third party products.
Besides having a large pool of their own clients, the company also manages
its geographically-spread business operations through a unique platform for independent financial advisors(IFA) which helps them to grow and expand
their services & support through sales and marketing, technology, operations,
back- office support, training & consultation.
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Prudent Broking Services Pvt Ltd
Incorporated in 2004, Prudent Broking Services Pvt. Ltd is a Stock Broking
and Depository Participant service provider. Company is a member with
Bombay Stock Exchange (BSE) & National Stock exchange (NSE) & Central
depository services (India) Limited (CDSL). Company is in the process of
creating its national presence by opening offices in various parts of the
country.
Prudent Properties
The Property sector is an important part of the asset class, but the effort and
paperwork involved in purchasing the same can be intimidating. Prudent
Property provides real estate solutions not only in creating an asset class but
is also helping the customers in buying their dream realty, whether it is homes
or offices.
Source: http://www.prudentcorporate.com/aboutprudent.aspx
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What Prudent does for advisors who join?
1. a large variety of products in the same desk
- Mutual Fund- Life Insurance
- General Insurance
- Fixed Income Product
- Financial Planning
- Broking
- Real Estate
2. Complete financial planning module and new planning ways for changing
market circumstances
Prudent has a team of experts who are working in this field for many years.
They continuously prepare some planning modules that can help in fulfilling
the different investment objectives of investors. Advisors need more specific
and customized planning for their clients. When there are more plans, the
customization is more. While doing internship, I have seen some of examples
that show how efficiently their experts make such plans which are extremely
beneficial after a bit of changes and fit many of the investors.
3. Priority accounts for advisors as well as clients
This is a unique facility that Prudent is providing. They provide their own
accounts especially designed for their database maintenance and easy record
through internet. They also provide the clients with a facility to offer such
special account for each of their clients so that they can understand their own
investments in the past. Advisors can charge their clients for these services
while Prudent does not charge anything for the same.
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SWOT ANALYSIS OF PRUDENT CAS LTD.
Strength
Prudent has a good expert team that can analyze the market very well. This
helps them in finding the best products available in the market so that the
investors are more attracted and stay for long. This is the main strength of
Prudent that they provide such support and other facilities to agents and
that too at no cost. The other main strength is the big combo of servicesprovided. There are many things included in same bracket so many financial
services can be provided under one head. There are many reputed
companies which are connected with prudent because of the excellence of
work they have and the experience in this field.
StrengthExcellence
Weaknes sRetention
OpportunityUnexploited market and
need for expert
ThreatSubstitute businesses
and uncertain rules of MF
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Weakness
Prudent needs a lot of market work. Its not easy to collect many advisors
who can join this business. They are spending a lot behind advisors and its
not easy to get work from them. They are not being able to retain more of
the advisors with them. This is due to the changing rules of mutual funds.
Their work and facilities are excellent but many of the new advisors are
joining them and leaving after getting experiences.
Opportunity
They have an opportunity to secure a large market because people need to
invest in secured funds. People need expert advice for investment because
markets are being very uncertain. So they need trustworthy advisor to get
suggestions and secure their money. There are many rural markets where
people have money to invest but awareness is less. These markets are yet
to be explored and a great opportunity is hidden for them in such markets.
They also have opportunity to provide guidance and literacy about MF at
rural markets and gain life time loyalty and a huge investment.
Threat
There are many threats to Prudent. The first one is most obvious direct
competition from other advisory firms that exist at different places. At
present the number of mutual fund advisories is not high but its increasing
day by day. Except that, the advisory business is facing threat of the other
financial services, especially insurance where the initial income is so
attractive that the agents are moving in to that. The advisory business hasseen downfall in advisors income hence the agents are not attrac ted to the
income and prudent is focusing on the existing advisors, that is very tough.
So it can be a challenge for them to attract such advisors and train them for
MF business or find new comers to train from starting.
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Location
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Kadi as a location
Kadi is a small town that has a population of around 1 lakh people. This is a place
which is at the centre of many villages that are not much developed. These villages
find most of their facilities from Kadi. Kadi is a semi developed region where
education has been a priority for many years. Due to this, the place is developing
and attracting other villages to join.
People in Kadi are earning their incomes from good sources as their education
quality is good and they are surrounded with a good industrial area. Big cities like Ahmedabad, Mehsana, and Patan etc are very close to the town. In these cities,
there are numerous jobs available and easy travelling is possible.
In Kadi town, excluding the other villages included in that, there are 300 LIC agents
who are working at their best client base. Each of them is having a high client base
in Kadi and nearby villages. These people are not much involved in any of the risky
financial products while the public has money to invest. In such a situation, it is
worthwhile to know about their perceptions of investment and target the place for investment.
In Kadi, mutual fund business has been established previously. Reliance and Kotak
are working at this place for few years but the overall coverage is very low. These
companies are also not being able to cover much market because of the limitation of
having little choice in products.
This place can be targeted for attracting the investors by making them aware aboutproper financial planning. This is the main topic of this research and proven in this
research.
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Literature
review
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Mutual fund industry has not grown much in India yet.It needs advisors who can sell these schemes to clients as they have good
client base. For this, mutual fund companies need to think about advisors
also.
There is a lack of awareness among advisors regarding mutual funds. They
generally consider it so risky as equity
The advisors are given trails on the investment which they consider as low
due to its small percentage size which is 0.5% but in long run the total amount
grows larger. This is the fact of mutual fund industry which may or may not be
known to these advisors.
There is a huge share market in India but people do not understand the
importance of mutual funds and find it riskier which is not.
People do not invest on the complete investigation. They invest on their
intuitions and incomplete knowledge. Hence, their perceptions are important
to know.
Its important to find advisors if the mutual fund industry needs to grow and for
this reason, their perceptions are needed to learn and rectification is needed
by giving them true knowledge of the same.
Investment market for mutual fund schemes SIP / STP are threatened by bank
deposits, post office, etc. Main reason behind that is people are more concern about
the security of money and life after retirement and also fixed rate of return. The
misconception that prevails among the most of investor and investment advisor is
that mutual funds schemes SIP / STP are only for middle c lass & it is invested in
stock markets. Very small numbers of investor are aware about the mutual fund and
its concept. So, the success lies in creating awareness among investor and brokers.
Source: research report 1*
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People generally tend to save 20% to 40% of their income while investment Kit of
that tends to remain 40% to 60%. As we have seen in the analysis, investors are
always searching for the safe investment. And they also want healthy returns. So
mutual fund is the safest way for getting healthy returns. In the case of timings most
individuals prefer only two options:
(1) As per yearly schedule in order to have proper returns & regular flow of income
can be generated very easily.
(2) As & when they have surplus in order to go for the option of wealth generation.
In the case of opinions people take more opinion from spouse/ parents & financial
advisor thinking that professionals always help in such decisions.
On a comparative basis we found certain similarities like need for safety and wealth
generation top the list of criterion they consider while investing. They all prefer to
invest their savings at least in 2 avenues or more and the most preferred avenues
are government securities basically for tax saving purpose i.e. PPF, Post Office
Deposits, RBI Bonds, Banks/FIs which remain the top three preferences for investing
and then the rest. Here, it is also found that comparative investment in mutual fund is
quite less.
When it comes at safety being 1st criteria, individuals are very well aware about the
investment avenues available under this criterion. So attitude is likely to invest in
PPF, Post Office Deposits, & INSURANCE.
When it comes at liquidity as 1st criteria people are not clear about its meaning & as
they are keeping some amount on hand instead of saving therefore it becomes
indifferent for people as investment criteria.
When it comes at tax efficiency Insurance, PPF & RBI tax-free bonds are preferred
the most. It has been ranked 2nd as far as it is concerned with investment criteria.
When people are asked about a scheme that is available at lesser return rate but
with liquid funds & tax-free return, generally people are ready to accept it. As far as
knowledge about different statements of portfolio is concerned, it is observed that
people are having proper understanding of portfolio market & its scenario concern.
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There was an open-ended question that was asked to know the effect of inflation &
government policy. And it was very perfectly asked by individuals. Most of them have
started planning for Retirement, Children education and meeting with future
contingencies.
So, overall we can conclude that people are less aware about the working & different
schemes offered by mutual fund schemes. People always consider Safety as 1st
criteria & now-days they are also taking an advantage of tax-free schemes. They are
perfectly aware of portfolio market may be the help by professionals.
Source: research report 2*
Currently industry is gradually growing phase and Indian Mutual Fund industry has
been definitely maturing over the last few years and the level of awareness today is
much more than what it was in the past. But the level of awareness has not yet
reached the rural and other smaller towns and it is more of a smaller towns and it is
more of an urban phenomenon. What is needed is the spread of awareness beyond
regional limits. Mutual Fund as a concept is well known, but the target audience still
needs to gain more awareness.
Source: research report 3*
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Analysis
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General data regarding advisor survey
The client base of agents who are working as the agents at LIC
Client base Frequency
Less than 100 0
100-300 5
300-500 10
500-1000 21
more than 1000 14Total 50
As discussed earlier, agents in Kadi have a large client base. They all have anaverage client base of 1000. This shows that people are investing money in the lifeinsurances.
100-30010%
300-50020%
500-100042%
more than100028%
Client Base
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Age group of sample
The age group of most of the agents is 31-40. This age group is generallyconsidered as the most enthusiastic age. This is an age where a person is
experienced and enthusiastic to learn.
26-3010%
31-3536%
35-4024%
41-4518%
46-5012%
Age
Age Frequency
26-30 5
31-35 18
35-40 12
41-45 9
46-50 6
Total 50
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Agents who know about royalty income in mutual fund
This shows that agents who know about mutual fund also know about mutual fund
royalty income. There are 40% people who know about this. Our perception initially
said that they are not aware of this royalty income.
no60%
yes40%
Royalty income
Do you know it gives royalty income
Frequency
no 30
yes 20
Total 50
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Agents who would like to enter in mutual fund business
This shows that agents are not ready to enter in mutual fund business. They are
having a trendy negative impact on this thought. Only 22% are ready that too with no
serious thought of joining it without knowing about it.
no78%
yes22%
Enter in MF business
Enter in MF business
Frequency
no 39
yes 11
Total 50
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H0: There is no significant relation between approximate client base and interest in
joining with MF.
H1: There is a significant relation between approximate client base and interest in
joining with MF.
Enter in MF
business
TotalNo Yes
Approximate client
base
100-300 3 2 5
300-500 7 3 10
500-1000 19 2 21
more than
100010 4 14
Total 39 11 50
Chi-square tests
Value D/f
Value
2 tailed
Pearson chi-square 3.574 3 .311
N of valid cases 50
Result
There is no significant relation between approximate client base and interest in
entering to MF. Only 22% people wishes to join in MF and they are not from any
specific category.
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H0: there is no relation between client base and advisors wish for record and
maintenance.
H1: there is a significant relation between client base and advisors wishing for
record and maintenance support.
Advisor record and
maintenance
Total
If not
selected If selected
Approximate clientbase
100-300 5 0 5300-500 7 3 10
500-1000 21 0 21
More than
100012 2 14
Total 45 5 50
Chi-Square Tests
Value D/f
Value
(2-sided)
Pearson Chi-
Square7.619 3 .055
N of Valid Cases 50
Result
H0 is accepted hence there is no such relationship. Generally we find that people
having more clients, complaint that their record maintenance is tough. But in this
sample, most of the people are not giving importance to record maintenance. It
shows that they dont know the importance of record maintenance.
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H0: there is no relation between client base and interest in knowing about mf.
H1: there is significant relation.
It's good to know about mf as it's an emerging business in
India
Total
Approximate
client base Highly
agreed
Moderatel
y agreed Neutral
Moderatel
y
disagreed
Highly
disagree
d
100-300 1 1 1 1 1 5
300-500 8 1 1 0 0 10
500-1000 7 10 1 1 2 21
More than
10006 3 5 0 0 14
Total 22 15 8 2 3 50
Chi-square tests
Value D/f
Value
(2-sided)
Pearson chi-square 21.19 12 .048
N of valid cases 50
Result.
There is a significant relation between client base and interest in knowing about
mf. People with more client base are interested in knowing more about MF.
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H0: there is no relation between knowing about royalty income and joining mutual
fund.
H1: there is a significant relation between knowing about royalty income and
entering into MF business.
Enter in MF
business
TotalNo Yes
Do you know it
gives royalty
income
No 27 3 30
Yes12 8 20
Total 39 11 50
Value D/f
Value
(2-sided)
Pearson Chi-
Square6.294 1 .012
N of Valid Cases 50
Result
The null hypothesis is rejected. There is a significant relation between knowing
about royalty income and joining mutual fund. Most of the people do not know
about royalty income. Those who dont know about royalty income, 90% of them
are not joining MF
Those who know about royalty income, 40% of them are wishing to join MF.
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H0: there is no relation between age and client base.
H1: there is a significant relation between age and client base.
Approximate client base
Total100-300 300-500
500-
1000
More than
1000
Age 26-303 2 0 0 5
31-35 2 8 8 0 1835-40 0 0 9 3 12
41-45 0 0 2 7 9
46-50 0 0 2 4 6
Total 5 10 21 14 50
Chi-Square Tests
Value D/f
Value
(2-sided)
Pearson Chi-
Square
50.82
912 .000
N of Valid Cases 50
Result
Null hypothesis is rejected. There is a significant relation between client base and
age. People with more age have more client base.
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H0: there is no relation between age and knowing about MF
H1: there is significant relation between age and client base.
Do you know about mf
TotalNo Yes
Age 26-303 2 5
31-35 4 14 18
35-40 5 7 1241-45 4 5 9
46-50 6 0 6
Total 22 28 50
Chi-Square Tests
Value D/f
Value
(2-sided)
Pearson Chi-
Square
11.64
84 .020
N of Valid Cases 50
Result
Null hypothesis is rejected. Hence, there is a significant relation between age and
knowledge of MF. Age group of 31-35 knows more about MF while agents above
45 do not at all know about it.
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This data is about how many advisors are aware about the business of mutual fund
and if not aware then what is the reason for the same.
Do you know
about mf businessFrequency
No 22
Yes 28
Total 50
From the above data it is clear that 56% people know about mf. It cant be said that
they know completely but they feel that they are aware about mf business. Out of
those who dont know about mf business say that either their workload is high or
they can t spend time for this low income option.
Why you dont know about mf business?
Frequency
Dun know about mf 3
Cant understand clients return 1
Cant handle the workload 8
Income seems low to me 9Cant understand product difference 1
Total 22
System 28
50
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Advisors viewpoints regarding beneficial variables for their clients are likewise.
Selected
High return 46
Low risk 30
Diversified product category 9
Tax savings 20
Low charges on investment 4
It can be said that people are more likely to see the return and risk factor while
investing or advising for investment. They also focus on tax saving as a purpose of
investment.
46
30
9
20
40
5
10
15
2025
30
35
40
45
50
High return Low risk Diversifiedproduct
category
Tax savings Low chargeson investment
Investor's benefit
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Advisors viewpoints regarding their own benefit in the following variables are
likewise.
Selected
Commission 50
Extra incentives 14
Easy record and maintenance 5
Complete knowledge of instruments 6
Continuous guidance 5
Free of charge entry and exit 6
This chart and data shows that advisors are mainly focusing on commission while
looking for any business. Other factors are not so important. Extra incentives are
preferred by some people but commission is the main benefit.
50
14
5 6 5 60
10
20
30
40
50
60
Commission Extraincentives
Easy recordand
maintenance
Completeknowledge
of instruments
Continuousguidance
Free of charge entry
and exit
Advisors' benefits
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Decision of advisors about Prudent Frequency
interested in knowing more 21Interested in joining now 0
interested in joining but later 1
not t all interested 28
Total 50
There is no one who would like to join the business at present. In fact only 2%people are wishing to join afterwards. Many people are interested in knowing but
they dont seem to be joining or thinking about joining later.
interested inknowing more
42%
interested in joining but later
2%
Not at allinterested
56%
Decision of advisor
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Analysis regarding following statements
1 2 3 4 5
Mutual fund is less risky than stock
market.
4 20 14 9 3
Advisors income is more in long
run in MF business
1 2 15 15 17
Expert advice plays an important
role
24 18 6 2 0
At costless support there is no
harm in joining MF business.
3 3 10 10 24
MF is an emerging business andits good to know about it.
22 15 8 2 3
18%
240%
328%
418%
56%
MF is less risky than
stock market
Most of the agents are saying that mutual
fund is less risky than the stock market.
But a few people do not agree with this
statement. Only 8% people were agree
that its highly safe than stock market.
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12% 24%
330%
430%
534%
Advisor income ismore in MF in long run
148%236%
312%
44%
Expert advice plays animportant role
Most of the advisors are not agreed
with the statement that the income in
MF business is more in long run. They
are not agreed with the incomeopportunities in long run also.
Most of advisors are in the favor of
expert advice and all of them feel that
the importance of expert advice is
inevitable for any investment .
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1
6% 26%3
20%
420%
548%
At costless supportthere is no harm in
joining MF business
144%
230%
316%
44%
56%
It's good to know about
MF business
This analysis is clarifying the fact
that such a free support is also not
attracting the advisors and they are
not ready to join the business for such facilities.
In the above graph it was shown that
agents are not interested in joining thebusiness but this graph shows that they
would like to know about the business.
There can be a hidden line between
these two statements that they dont
want to join because they dont know
about this business.
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Analysis regar ding to facilities of Prudent and agents view on that
1 2 3 4 5
Online back office support for managing your and
your clients data
5 10 5 9 21
Basic business opportunity knowledge 3 8 10 12 17
Complete knowledge of MF 22 14 5 6 3
Exam preparation 21 26 3 0 0
Knowledge of best products available 13 25 10 0 2
Continuous support and suggestions 6 10 13 12 9
Every week awareness seminar 2 8 19 14 7
Special seminar for your clients at our cost 3 10 18 9 10
Health insurance added to the same bracket 21 26 3 0 0
110%
220%
310%
418%
542%
Online backfficesupport
Very few people are interested in such
kind of support though it can be very
useful and provided at no cost.
Basic business opportunity knowledgeis not given much importance by the
advisors. They dont find is so
essential and feel that it can be done
easily by anyone who is joining
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16%
2
16%
320%
424%
534%
BOK
144%
228%
310%
4
12%
56%
Complete knowledge of MF
Prudent provides complete
knowledge of mutual fund before
starting with the business. Most of
the people have agreed that this isvery important as they do not know
about mutual fund .
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142%
252%
36%
Exam preparation
126%
250%
320%
54%
Knowledge of bestproducts available
Exam preparation is a task that
every advisor has to pass
through before entering in any
of the financial productbusiness. Hence, exam
preparation is chosen as
important by advisors.
There are many schemes available
in the mutual fund and the advisors
always need to know about the best
products that they can offer to their
clients. Hence, the advisors are
looking at this point as important .
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112%
220%
326%
424%
518%
Continuous supportand suggestions
1
4%2
17%
341%
431%
5
7%
Every week seminar
Continuous support is a good
facility that every advisory has
to compulsorily provide. This
point is equally distributed andhence any specific like or dislike
is not seen. However, the more
part is on negative side.
The every week seminar is not
much understood by agents as
it is new to them and of no use
until they understand the
complete business. Hence, they
havent given much importance.
There is no such highly positive
or highly negative response .
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17%
223%
342%
421%
57%
Special seminars
142%
252%
36%
Health insurance
The special seminar is also
having same kind of response as
in every week seminar. There
are equally distributedfrequencies in this and most of
the people stayed neutral.
As the sample is taken from LIC
agents, the health insurance option
is more liked by the agents. They
are most likely to select the health
insurance part as this is quite
familiar product to them.
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General data regarding the investors survey
18-2328%
23-2814%
28-3522%
35-5032%
50-654%
Age
Age Frequency18-23 14
23-28 7
28-35 11
35-50 16
50-65 2
Total 50
Gender Frequency
Male 29
Female21
Total 50
male58%
female42%
Gender
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Salary Frequency
None 22Less than 10000 pm 2
10001-20000 pm 12
20000-30000 pm 10
30000-45000 pm 3
Above 45000 pm 1
Total 50
Occupation Frequency
Student 11Profession 8
Business 9
Housewife 8
Government
employee6
Private employee 8
Total 50
Student22%
Profession16%
business18%
housewife16%
governmentemployee
12%
privateemployee
16%Occupation
none44%
less than 10000pm4%
10001-20000pm
24%
20000-30000pm
20%
30000-45000
pm6%
above 45000pm2%
salary
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H0: there is no relation between age and saving perceptions.
H1: there is a significant relation between age and saving perceptions.
How much should be saved
Total0-15%
15%-
30%
30%-
50%
50%-
75%
Age 18-
230 6 8 0 14
23-
28 2 4 1 0 7
28-
350 1 8 2 11
35-
500 1 11 4 16
50-
650 1 1 0 2
Total 2 13 29 6 50
Chi-square tests
Value D/f
Value
(2-sided)
Pearson chi-square 28.904 12 .004
N of valid cases 50
Result
Null hypothesis is rejected. There is a significant relation between age and saving
perceptions. Elder people are saving more than the younger.
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H0: there is no relation between age and knowing about mf
H1: there is a significant relation between age and knowing about mf
Do u know about mf
TotalNo Yes
Age 18-23 7 7 14
23-28 1 6 7
28-35 5 6 11
35-50 11 5 16
50-65 1 1 2
Total 25 25 50
Chi-square tests
Value D/f Value(2-sided)
Pearson chi-square 5.912 4 .206
N of valid cases 50
Results
Null hypothesis is accepted. There is no relation between age and knowledge
regarding mf. With my surprise, there are an equal proportion of people who know
about mf and who dont. I believe that the population result would surely be
different. But the age factor will not decide the knowledge regarding mf.
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H0: there is no relation between age and type of investment they like
H1: there is a significant relation between age and their investment perception.
Which kind of investment u prefer
Total
Stable return
low risk
High risk high
return
High risk high
return at lower
risk on
investment
Age 18-23 3 3 8 14
23-28 1 1 5 7
28-35 3 4 4 11
35-50 12 2 2 16
50-65 1 0 1 2
Total 20 10 20 50
Chi-Square Tests
Value D/f
Value
(2-sided)
Pearson Chi-Square16.080 8 .041
N of Valid Cases 50
Result
Null hypothesis is rejected. There is a significant relation between age and
investment type. Elder people mostly like stable return at low risk while the
younger people like high return and ready to bear risk.
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H0: there is no relation between age and preference of investing in mf.
H1: there is a significant relation between age and preference of investing in mf.
Would you like to invest
TotalNo Yes
Age 18-23 4 10 14
23-28 4 3 7
28-35 9 2 11
35-50 13 3 16
50-65 1 1 2
Total 31 19 50
Chi-square tests
Value D/f
Value
(2-sided)
Pearson chi-square 11.183 4 .025
N of valid cases 50
Result
The null hypothesis is rejected. There is a relation between age and preference of
investing in mf. Younger are ready to invest in mutual fund while elders are not
ready to invest.
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H0: there is no relation between gender and saving perceptions.
H1: there is a significant relation between gender and saving perceptions
How much should be saved
Total0-15%
15%-
30%
30%-
50%
50%-
75%
Gend
er
Male 1 7 19 2 29
Fem
ale1 6 10 4 21
Total 2 13 29 6 50
Chi-square tests
Value D/f
Value
(2-sided)
Pearson chi-square 2.316 3 .509
N of valid cases 50
Result
The null hypothesis is accepted. There is no relation between gender and saving
perceptions. Women are also having same perceptions regarding savings as men
are having. May be this is because we are talking about family savings.
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H0: there is no relation between gender and knowledge regarding mf
H1: there is a significant relation between gender and knowledge regarding mf
Do u know about mf
TotalNo Yes
Gender Male 11 18 29
Female 14 7 21
Total 25 25 50
Value D/f
Value
(2-sided)
Pearson chi-square 4.023 1 .045
N of valid cases 50
Result
The null hypothesis is rejected. There is a significant relation between gender and
knowledge regarding mf. Females are not much aware about mf.
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H0: there is no relation between occupation and knowledge regarding mf
H1: there is a significant relation between occupation and knowledge regarding mf
Do u know about mf
TotalNo Yes
Occupation Student 5 6 11
Profession 2 6 8
Business 5 4 9
Housewife 7 1 8
Government employee 5 1 6
Private employee 1 7 8
Total 25 25 50
Chi-square tests
Value D/f
Value
(2-sided)
Pearson chi-square 13.869 5 .016
N of valid cases 50
Result
The null hypothesis is rejected. There is a significant relation between occupation
and knowledge regarding mf. Private employees and those who are in profession
know about mf (most of them are professors and teachers) while the housewives,
government employees and unexpectedly businessmen are not aware about mf.
Students are equally proportioned in knowing or not knowing about mf.
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H0: there is no relation between occupation and type of investment preferred.
H1: there is a significant relation between occupation and type of investment
preferred.
Which kind of investment u prefer
Total
Stable return
low risk
High risk
high return
High risk high
return at lower risk
on investment
Occupati
on
Student 2 2 7 11
Profession 2 2 4 8
Business 2 4 3 9
Housewife 6 1 1 8
Government
employee6 0 0 6
Private
employee2 1 5 8
Total 20 10 20 50
Chi-square tests
Value D/f
Value (2-
sided)
Pearson chi-square 21.989 a 10 .015
N of valid cases 50
Result
The null hypothesis is rejected. There is a significant relation between occupation
and type of investment preferred. Students, professionals and private employees
are more likely to invest in high return high risk with low risk on investment while
housewives and government employees prefer stable return at low risk.
Businessmen are most likely to invest in high risk high return investment options.
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Investment pattern of people
Investment
option
Frequency
Short term
Savings
account
34
Fixed deposits 34
Money market 9
S. Equity 15
Physical
Gold 41
Real estate 10
Commodity 28
Long term
Post office 10
PPF 2
Company FD 8
Bonds 15
Mutual Fund 14
L. Equity 24
See top five- dark colored
34
34
9
15
41
10
28
10
2
8
15
14
24
0 10 20 30 40 50
Savings account
Fixed deposits
Money market
S. Equity
Gold
Real estate
Commodity
Post office
PPF
Company FD
Bonds
Mutual Fund
L. Equity
Investment
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Market perception of people
See top 4 darkened
Current market perception in investors mind
Commodity 5 Oil and gas 11Banking 23 FMCG 9
For-ex 14 Food processing 13
Real estate 46 Steel 23
Pharmacy 13 Heavy electronics 19
IT 18 Power 31
Financial services 3
5
23
14
46
13
18
3
11
9
13
23
19
31
0 10 20 30 40 50
Commodity
Banking
For-ex
Real estate
Pharmacy
IT
Financial services
Oil and gas
FMCG
Food processing
Steel
Heavy electronics
Power
Current market
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Ranking of investment objectives
1 2 3 4
Regular income 12 11 17 10
Capital appreciation 22 19 8 1Tax saving 8 13 11 18
For specific reason 8 7 14 21
People are mostly doing investment for capital appreciation. The second objective
is regular income. Third objective is tax saving and forth is for specific reason. That
means people are not concerned with the fact that they will need money for some
specific task in future and there should be a systematic investment for that.
12
22
8 8
11
19
137
17
8
11
14
10
1
1821
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Regular income Capitalappreciation
Tax saving For specificreason
1 2 3 4
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Hypothesis
H0 H1 Comparison Result
There is no significant
relation between
There is a significant
relation between
Advisors
Client base and interest in joining MF business 0.311 > 0.05 H0 accepted
Client base and importance of record and
maintenance
0.055 > 0.05 H0 accepted
Client base and interest in knowing about MF
business
0.048 < 0.05 H0 rejected
H1 accepted
Age and client base 0 < 0.05 H0 rejected
H1 accepted
Age and knowledge about MF business 0.02< 0.05 H0 rejected
H1 accepted
Knowing about royalty income and interest in
joining MF business
0.012< 0.05 H0 rejected
H1 accepted
Investors
Age and saving perception 0.0040.05 H0 accepted
Age and investment perception 0.041
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Reviews of advisors in open ended questions
- They would like to know about MF but they dont want to join
MF business for various reasons.
- 0.50% trail and 0.5% upfront is not a good amount of commission. Its better to focus on life insurance.
- Mutual fund is risky for advisors and investors. Only long term
income is possible. In short run, there is nothing to earn.
- Mutual fund is completely risky as it depends on the market.
- They will wait for the commission to grow up and then think of
entering in market
- The money of investors has been lost. Their clients and their own investment has seen losses in mutual funds.
- They are having lots of work and not having time to learn
about mutual fund.
- They are not able to understand these many products
- They dont want any online support as they cant work on
internet a nd they dont have time to spend after it.
- It needs lots of market knowledge and ability to understand theproduct. Youngsters with financial knowledge should join it.
- People do not understand MF and they cant take such
products which they cant offer suc cessfully.
- Commission is the main income as upfront and trail, other
incentives are not so attractive and they cant be taken as real
income.
- MF industry is declining so there is no need to enter it
- There are many other options available to deal along with the
life insurance. These products are better than mutual fund
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Advisors dealing with insurance and MF
- People are not aware about MF
- Very few people know about MF and they invest in those
products which their advisors offer - There is a huge money to at tract but the investors dont have
any knowledge regarding the returns hence they invest in
insurance as a safe measure
- They have passed through bad experiences in the past. Many
advisors without any expertise have shown them huge losses
which they cant f orget hence they like to stay away from
market investment whether its in stock market or mutualfunds.
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Comments of investors
Stocks manage by only knowledge of market and for knowledge of market
you have full concentrate on market up dates but this not possible for a
working person, businessman or student .
Stock market gives higher returns than the mutual funds. The risk level is
same in both. There is nothing like low risk in mutual fund.
Stock market and mutual funds are risky and its not wise to invest in that. Its
better to invest in any physical product such as real estate or gold.
Its good to invest for long term. Short term investment in the market is very
risky and without any analytical skills, its not advisable to invest for short
term. I always keep a long term perspective.
Stock market volatility is the major issue for the short term investment
nowadays, but for long term as usual specific stock approach can lead you to
capital gain or a good return.
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Conclusion
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- These advisors are not interested in joining mutual fund business
because of the commission they receive.
- The second mostly preferred reason is their workload and age. They are
already in to a business where they feel they are getting high income.
They are not in a condition to learn so many products for a lesser
amount of income.- The starters are ready for it but there has to be an awareness and
proper earnings that can attract youth towards it.- Many research papers say that MF needs to increase awareness for
increasing investment but my research shows that people are aware of mutual fund but the unattractive pattern of income and some bitter
experiences are forcing them to go against it.- Advisors have been investors and experienced outflow of money so they
do not want their clients to suffer through it. They find some reasons for
not joining MF.
The past investment experiences were badThey are unaware of what advisory businesses do
They are not attracting towards the o.50% income pattern.
Advisors are not ready for MF as it includes many products
and dependent on market conditions. Hence, they find it
uncomfortable and risky
Many people feel that MF is a pool of learning stock market but
there is no earning. We cant go for this business just for learning. We have to earn.
Everyone believes that MF gives rewards in long run and that
too is uncertain. Hence, they dont want to enter.
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- On the other hand, investors are saving a large amount. They are ready to
invest in stock market and MF. Many are ready for risk taking. Their
incomes and savings are good and they are just earning low in savings
account and other such things because they are not aware of mutual funds.- If there is saving then there is surely a scope of putting mutual fund.
Perhaps insurance agents are not the targets.- People have lost money in bad funds. They need proper guidance and that
can be given by advisory businesses.
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Findings and
suggestion
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Findings
- Kadi is a place where income level is higher than other nearby
villages. It has a large population and their income level and literacy
level is also high.- This place is a good target for the mutual fund business if done
properly- Awareness regarding mutual fund advisory is less among investors
and due to past experience; people are not ready to invest in MF.- LIC agents are attracted towards the huge initial income.
- Due to general trend, the responses are dependent on each other
and true perceptions of advisors are not arrived.- Investors are investing their money in equity market hence the scope
of mutual fund is high.
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Suggestions
- The MF advisory should turn to Kadi and spread awareness
among investors. When investors will understand they will
demand mutual fund and advisory support. This way can behelpful in attracting advisors.
- The perceptions of advisors can be changed only when their
clients will tell them. Hence, focus on clients rather than on
advisors- Those who are starting with career are more interested in entering
the MF business. It can be a great opportunity to focus on them
and make them ready for long run. Its not so easy to attractpeople who are already into a business earning good amount.
Hence, prepare the new comers for this work, let them
understand market under your guidance and cover new markets.
When there will rise the competition, all agents including
insurance will get attracted.- Most of the advisors dont know about royalty income, its good to
arrange programs at different cities regarding mutual fundbusiness and do the same in business related colleges. This will
attract the youngsters to enter.- Kadi is a place which is covering many villages around it and
these places are full of investors who depend on their advisors. If
advisory firms can prepare agents for consulting with these
people, they can get huge investments.
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Bibliography
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Reports
1. Ladani V., Patel Z. (2010). A project report on Investor perception about
different investment products. R. B. Institute of management studies.
2. Upadhyay S (2011). Study about the investment attitude of individuals.NSVKNS, MBA College.
3. Patel S., Sharma A. (2010). Survey on investor perception with respect to
different investment avenues. R. B. Institute of management studies.
Websites
1. http://www.prudentcorporate.com/aboutprudent.aspx
2. http://www.itrust.in/fixed-deposit.action3. http://www.indiainfoline.com/MarketStatistics/MF-Activity
4. http://www.made-from-india.com/article/Top-10-Business-Sectors-in-India-
719.html
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Annexure
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Questionnaire -1 for advisor survey
1. In which of the following things you deal apart from life insurance? Alsostate the company name.
Instruments Yes/noHealth insuranceGeneral insuranceMutual fundPPFPost recurringFixed depositsDirect Equity
2. What is the approximate client base at present?
Less than 100
100-300
300-500
500-1000
More than 1000
3. Do you know mutual fund business?
- Yes
- No
If no then why not?
Dont know about mutual fund Cant understanding my earningsCant understand clients return(performance of MF) Cant handle the work load Income seems low to me
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Cant understand the product difference Any other..
4. Out of the following, which of these attracts you for the benefit of your clientmore?
High returnsLow riskDiversified product categoryTax savingsLow charges on investmentIf any other
5. Which of the following do you consider are of importance to you as an
advisor?
CommissionExtra incentivesEasy records and maintenanceComplete knowledge of instrumentContinuous guidanceFree of charge entry and exitIf any other..
6. If you are said to be receiving all the above mentioned facilities at no cost,would you like to enter in the mutual fund business?
- Yes - No
7. Do you know the mutual fund is the only business which gives royaltyincome along with trail, upfront, transaction and application fees and giftpackages?
- Yes - No
8. How much do you agree with the following statements?
1 2 3 4 5
Mutual fund is less risky than stock market. Advisors income is more in MF in long run.Expert advice plays important role.When support is costless, there is no harmin joining this business.
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Its good to know about MF as its anemerging business in India.
9. Prudent is giving the following facilities without any cost , which of theseare very important to you? give rank
1 2 3 4 5Online back office support for managing your andyour clients data Basic business opportunity knowledgeComplete knowledge of MFExam preparationKnowledge of best products availableContinuous support and suggestionsEvery week awareness seminar Special seminar for your clients at our costHealth insurance added to the same bracket
10. Leave any comment or views regarding the mutual fund business.
11. What is your decision after knowing about the facilities provided by Prudent
and income in MF?
Interested in knowing moreInterested in joining nowInterested in joining but after sometimeNot interested
12. Personal information
Name AgeGender Contact number
Area
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Questionnaire 2 for investors
1. Do you earn salary/profit?
YesNo
2. How much you think a person should save out of his/her family earnings?
- In percentage
3. Do you know about mutual fund?
4. Which of the following do you like for investments? Mention if other.
Short term Long termSavingsaccount
Post office
Fixed deposit PPFMoney market Company FDEquity Bonds
Mutual FundPhysical EquityGoldReal estateCommodity
5. Which kind of investments you prefer more
Stable return low riskHigh risk high returnHigh risk high return at low risk on investment
6. At present, which are the top 5 sectors performing well in market accordingto you?
YesNo
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Sectors Description if any12345
7. What should be the allocation of savings?
Life insuranceHealth insuranceSavings
- High risk high/low return- Low risk fixed return
Liquid ( cash)100%
8. Rank the following according to your investment objective.
Regular incomeCapital appreciationTax savingsSpecific purpose investment
9. If you invest in stock market, minimum, how many different stocks will bring
the risk near to 0? (At least how many stocks should be added in the
portfolio to avoid risk?)
-
10. Mutual fund is a good option for diversifying your small investment indifferent sectors and lessening the risk. This is the investment option whereyou can systematically save and invest at comparative lower risk and thenumber of products available is large. So if you wish to decide your ownlevel of risk, you get a suitable product for it. Would you like to invest?
Yes
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11. What would you like to say about the stock market and your investment
pattern at present?
-
Personal info
Name AgeGender OccupationSalary, if any
No
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GOLD SIP
Years Monthly
investment in Rs.
Total investment
in Rs.
Total return
in Rs.
Collected
gold in Grams
For 5 years
1000 60000 75424 24.272000 120000 150848 48.53
5000 300000 377121 121.34
10000 600000 754241 242.67
For 10 years
1000 120000 193514 39.77
2000 240000 387029 79.53
5000 600000 967571 198.83
10000 1200000 1935143 397.67
For 15 years
1000 180000 378406 49.67
2000 360000 756812 99.33
5000 900000 1892029 248.33
10000 1800000 3784058 496.66
For 20 years
1000 240000 667887 55.99
2000 480000 1335774 111.98
5000 1200000 3339434 279.9510000 2400000 6678869 559.89