A STUDY ON CONSUMER PREFERENCE TOWARDS PORTFOLIO MANAGEMENT SERVICES AT WAY2WEALTH BROKERS PRIVATE LIMITED IN PUNE.

Presented by

Prof. Rishikesh Kumar Assistant Professor Alard Institute of Management Sciences, Pune. Cell Ph. No. - 09049767802. [email protected]

Introduction:The objective of this research is consumer preference for investment and their interest in portfolio management services. It focuses on the construction and management of the customers portfolio

with the help of various investment assets. The company deals with all kinds of financial products like mutual funds, debentures, general insurance, life insurance, fixed deposits, equity, commodity, and currency trading, portfolio management services, real estate etc. Selecting appropriate investment vehicles for an investor according to his needs must bear in mind the horses for courses systems so well accepted by horse race followers: a horse that consistently performs well on one course may consistently underperform on the other race courses. Investors have a number of investment needs and desires which may be fulfilled with different investment vehicles however ascertainment of the appropriate investment vehicle for the investor is the challenge. Investment asset classes cover the range of areas in which an investment may be made either by direct purchase or indirectly through such collective investment schemes such as unit trusts. The asset classes include equity, fixed-interest bonds, and property. Investment vehicles include unit trusts, pension funds and other such methods of investing in the asset classes. Portfolio Management Services is an exclusive offering from Way2Wealth that specializes in providing risk managed investment solutions to discerning High Net Worth Individuals, Non Resident Indians (NRIs), Overseas Corporate Bodies (OCBs) and Indian Corporates. Financial markets these days are characterized by increased volatility and strong links to various domestic and global factors. Way2Wealth portfolio management team which is in constant touch with ever changing economic and market conditions, coupled with substantial market knowledge, is in a better position to handle these complex and dynamic situations.

Objectives of the Study:

To study consumer preference towards portfolio management services. To study and analyze the various financial services of portfolio management.

To find out the ways and means to improve the services of Way2Wealth brokers Pvt.Ltd.

Limitations of the Study:1. The research is conducted in Pune city only.

2. The sample size is 100.

Methodology of the Study:Primary Data- The primary data were collected through well-designed and structured questionnaires based on the objectives. Secondary Data: - The secondary data are those, which have already been collected by someone else and passed through statistical process & through various newspapers, magazines and Internet etc. Method of Research: - Descriptive Method. Sampling Method: - Simple Random Sampling, Quota Sampling. Sample Size: - 100. Sampling Area: - Pune City.

Data Interpretation & Analysis:Table 1. Reasons for Investment.

Reasons for Investment Security Returns Tax saving Returns + Tax saving Security+ tax saving All three reasons

Preference of respondents in % 32% 12% 14% 23% 12% 7%

INTERPRETATION: Above table shows that 32% people invest for the purpose of security, 12% people invest for earning high returns and 14% people invest for tax saving purpose. Many people choose investments on basis of more than one criterion. 23% people choose to invest for returns as well as tax saving.

Table 2. Consumer preference for Annual Investment. Annual Investment Below 1 lac 1 lac 2.5 lacs 2.5 lacs 5 lacs 5 lacs-10 lacs Above 10 lacs % of respondent. 78% 7% 7% 3% 5%

INTERPRETATION: Most respondent prefered to invest below a range of Rs.1 lac (78%). Other people prefer to invest in various ranges as shown in above graph.

Table 3. Duration Considered for the investment. Duration Considered % of respondent

Below 3 years 3 to 5 years 5 to 10 years Above 10 years

43% 12% 5% 40%

Interpretation: From the data collected 43% want to invest for lesser duration and even less than a year as they find it risky to keep money in market for a long time because of great versatility of market conditions. On the contrary 40% of people invest for more than 10 years in insurance like services which can benefit them whole life.

Table 4. Consumer preference about their income percentage in PMS. Percentage of Total Earning Upto 10% Upto 25% Upto 50% Above 50% % preference of respondent 51% 40% 9% 0%

INTERPRETATION: Maximum people i.e. 51% people invest only 10% of their total earnings in PMS. Other 40% people invest up to 25% of total income in PMS and feel that it is beneficial. Some 9% people may be belonging to higher income class invest up to 50% of their total earnings.

Table 5. Sources for Investment.

Sources for Investment Financial Advisors Friends/ relatives Internet Portals

% of preferences of respondent 46 25 29

INTERPRETATION: On the basis of above table its clear that almost half that is 46% people trust on financial advisors to decide about their investments.29% people get information from internet portals and this group mainly includes IT professionals. While 25% seek advice from their friends or relatives.

Table 6. Consumer preference rating for various investment options. Rating for various Investment options Recurring Deposit NSC/PPF Insurance Bonds / Debentures Term Deposits Mutual Funds Stocks / IPOs gold % preference of respondents 7% 9% 16% 8% 6% 14% 19% 21%

INTERPRETATION: Gold is the major investment options for many people in India as acts as a tool for adverse conditions. Remaining people invest or have mutual funds or equity as their investment options though being risky investment options.Their percentage is 14% and 19% respectively.

Table 7. Consumer preference while deciding parameters to select an investment option.

Parameters for PMS selection Liquidity Risk Term/duration Tax benefits Flexibility Returns

% preference of respondent 43% 9% 23% 12% 13%

INTERPRETATION: Above chart indicates that 43% people give importance to liquidity risk while choosing an investment option, 9% people consider duration of investment, 23% consider investment for tax benefits solely.12% people think that flexibility is must for any kind of investment option while 13% think of returns as a major parameter for investments.

Findings While going for investment decisions one should follow the rule that everyone should invest at least 30% of his earnings in order to have proper management of his money. There are various intentions of investors behind investing such as security, returns and tax saving etc.. They invest in guaranteed return giving schemes like insurance, gold schemes etc. in order to get maximum returns with lesser risk. And they invest in mutual funds like products in order to get tax benefits solely. People invest in high risk-high return profile products like PMS in order to get maximum return as a sole purpose. Stocks, commodities like products included in high risk profile are mainly preferred by the experienced players of the market and investors having high risk appetite. PMS is a product coming under High Risk High Return Profile. So it is really very beneficial for all the customers having a big risk appetite as all the investment options are considered under one head of PMS.
PMS is a product that basically starts above Rs. 25 lakhs. So it is basically meant for HNI clients.

 People are still ignorant about PMS and different funds available under the name of PMS services.

Hence it is very essential to create preference among them about PMS and for that combined efforts needed to be taken in the financial industry.

Suggestions: Customers with heavy potential to invest must go for PMS as it provides all investment options under one roof and management of your money by experienced experts.
The main thing is that many people do not exactly understand what is Portfolio and what

Portfolio Management Services are. So combined efforts should be taken in order to create preference about PMS.
PMS services should start with the investment generally start from and above Rs.10 lakhs. So

middle income class people face problem to purchase the Portfolio Management Services even though they are interested to purchase it. Company should invest in technology to provide superior customer services and thereby improving productivity of their operations and thus consequently providing low price to customers. Many experienced investors manage their own portfolio. I think at least they should consult the financial advisor sometimes in order to get better information. Way2Wealth need to take special efforts on promotional activities so that people would be aware about services of Way2Wealth. Indian broking firms need to learn certain aspects from international broking firms abroad in reaching out to customers. The international broking community has been ahead of Indian broking firms in offering products and services through different channels. An important area for Indian firms to learn is how to allocate their investment resources across different channels.

References:

Prasanna Chandra, Investment Analysis and Portfolio Management, Tata McGraw Hill, Third Edition.

Donald E. Fischer, Ronald J. Jordan, Security Analysis and Portfolio Management, Pearson Education, Sixth Edition.

V. A. Avadhani, Marketing of Financial services, Himalaya Publication House, Third edition 2007.

M.Y. Khan, Financial Services, Tata McGraw Hill Education Pvt. Ltd., Fifth Edition. Dr. S. Gurusamy, Financial Markets and Institutions, Tata McGraw Hill Education, Third Edition.

Watsham, International Portfolio Management. Cowdell and Billings, Investment Management. Wealth Compass (Magazine of Way2Wealth)

WEBSITES:

www.google.com www.moneycontrol.com www.theeconomictimes.com www.investopedia.com www.way2wealth.com