FINANCIAL PLANNING PRODUCTS :

BY BANKING CHANNELS :

CHALLENGES AND PROSPECTS

EDUCATIONAL QUALIFICATIONSMBA (Banking and Finance) , M A (Political Science) , Bachelor of Commerce, Diploma in Journalism , Diploma in Bank Management (DBM), IIBF, PROFESSIONAL CERTIFICATIONS1. Certified Associate of Indian Institute of Banking and Finance (CAIIB)2. Certified Financial Planner (CFP) from Financial Planning Standards Board Ltd3. Certified Internal Auditor (CIA), from IIA, USA4. Certified Financial Services Auditors (CFSA), from IIA, USA5. Certification in Internal Auditor - ISMS (ISO 27001)6. Certified Information System Auditor (CISA) ISACA, USA7. Certified Associate in Mutual Funds, AMFI8. Certification in Financial Markets:Depository Module(NCFM-DM) by NSE9. Certified Faculty in credit and banking10. Certification in Behavioural Science Trainer11. Certification in Wealth Management (Basic Level)12. Certification programme in computer appreciation and cobol language 13. Certification in Rural Banking IIBF, Mumbai14. Certified Insurance Facilitator (LIFE INSURANCE) and SP(GENERAL INSURANCE) from IRDA

OBJECTIVES OF THIS INTERACTION

TO MAP THE FINANCIAL PLANNING MARKET & SPACE.

PROVIDE AN IDEA OF ITS SIZE AND RECENT GROWTH TRENDS

DESCRIBE THE COMPETITIVE LANDSCAPE AND THE WAYS TO REACH THERE.

CRITICALLY EXAMINE THE PROSPECTS OF THE BANKING CHANNEL AND SUCCESS FACTORS. 2

FINANCIAL PLANNING : COVERS THE CLIENT’S FINANCIAL

NEEDS AND ACHIEVEMENT OF EACH OF THE CLIENT'S GOALS,

AS DEFINED BY HIM.

The scope of planning would usually include the following:

A. Risk Management and Insurance Planning Managing cash flow risks through sound risk management and

insurance techniques

Investment Planning by creating and managing capitalaccumulation to generate future capital and cash flows forreinvestment and spending, including managing for risk-adjustedreturns and to deal with inflation Retirement Planning toensure financial independence at retirement.

B. Tax Planning for the reduction of tax liabilities and the freeing-up of cash flows

for other purposes

Estate Planning for the creation, accumulation, conservation anddistribution of assets

C. Cash Flow and Liability Management: Maintaining and enhancing personal cash flows through debt and

lifestyle management3

FINANCIAL PLANNING- PRODUCTS

Financial advices / plan, based on the relevant information ( gathering, maintaining, preserving, enhancing, updating and testing)

Lending products, such as margin lending, credit cards, mortgages.

Insurance and protection products, such as property and health insurance, life assurance and pensions.

Asset management

Advice in all shapes and forms: asset allocation, wealth structuring, tax and trusts, various types of planning (financial, inheritance, pensions, philanthropic), family-dispute arbitration

4

CLIENT SEGMENTS

Private channels targets only the very wealthiest clients or high net worth individuals (HNWIs):

Banking channels, by contrast, targets segmented clients with vanilla products as well customisedproducts for HNIs

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MAIN PLAYERS

Qualified Individuals and FirmsFinancial advisors like CAs,

Insurance Agents, Accountants, Solicitors and Relatives etc

Private banksPublic Sector Banks Wealth Management

OrganizationsEquity Research Firms Non Banking Finance companies

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THE RICH & FAMOUS

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What about our Amitabh Bachchan ?

THE OMNIPRESENT COMMON MAN !

DOES HE REQUIRE FINANCIAL PLANNING

SERVICES ?

8

… OR DO THEY REQUIRE IT ?

9

… BUT THEY CAN AFFORD AND

UNDERSTAND FINANCIAL PLANNING, ONLY

IF IT IS PROVIDED LIKE TRAVELING IN

LOCAL TRAIN ?

10

AND HOBBIES OF A COMMON MAN

?

11

MAJOR FINANCIAL FOCUS AREA FOR THE

COMMON MAN

How to grow the income more

than the growth in inflation &

expenses?

How to take care of the basic

needs of self and family?

How to save for the future social

responsibilities?

How to make provision for

uncertainty and emergencies 12

THREE MAJOR FINANCIAL FOCUS AREA

FOR THE HNI CLIENT TODAY

Preserve: How to transfer wealth to the next

generation ?

Grow: How to earn tax-efficient & inflation-

adjusted growth to secure the family’s

financial future?

Give: What is the most efficient way for

charity?

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Static / Dynamic

Technique Application Ease Interpretation skill CostSingle Multiple Very

easyEasy Difficult Very

easyEasy Difficult L M H

CATEGORY "A" – COMMON MANStatic TERM / INSURANCE

PLAN

Dynamic BASIC NEEDS

Dynamic MEDICAL

Dynamic EDUCATION

Dynamic MARRIAGE

Dynamic AFTER

RETIREMENT

CATEGORY "B" - HNIsDynamic TERM / INSURANCE

PLAN

Dynamic BASIC NEEDS

Dynamic MEDICAL

Dynamic EDUCATION

Dynamic MARRIAGE

Dynamic AFTER

RETIREMENT

Dynamic WEALTH

MANAGEMENT

Dynamic ESTATE

MANAGEMENT

PRINCIPLES – IMMEDIATE ACTION- CHECKS

Detection –

Easy to recognise / observe

Much before CRISIS occurs

Match the ability of the FAMILY MEMBERs and probable support may available

Death bed mentality

Frequency

Appropriate to meet the objectives

Cost –

Economic & suiting to the pocket

Applicability

MUST, NEED, WANT

TRADITIONAL METHOD & ITS SHORT-COMMING

Products are usually derived from –

Manuals

Individual / Team Experience

Historical (as followed in the industry)

Derived by application of tools ( Usually half cooked)

Short-comings

Not “Fit for all purpose / people”

Unnecessary checks

Dependent on the knowledge of an individual

Costly

May worsen the situation

Static ( Usually not changing with time)

PROACTIVE APPROACH

Periodical up-dation of FP

The use of specific tools to identify the

presence of a crisis early enough, so, we

can take corrective measures

Many a times, cannot be planned because

crisis is just near the corner

The environmental crisis

CONCLUSIONS

Financial Planning movement is the next step to financial inclusion

JAN-DHAN YOJANA- final destination is “Financial Planning for All”

Banks are emerging as Super Market of financial services

Problem is availability of experienced professionals for a long period of time without the hassles of transfers etc

Experience of Banks is no so good in the space. 18

CONCLUSIONS

Financial Planning movement is the next step to financial inclusion

JAN-DHAN YOJANA- final destination is “Financial Planning for All”

Banks are emerging as Super Market of financial services

Problem is availability of experienced professionals for a long period of time without the hassles of transfers etc

Experience of Banks is no so good in the space. 19

CONCLUSIONS

Financial Planning business may prove,

currently a major area for development for

Banks.

The market is large, growing and highly

profitable

Industry is fragmented & there can not be

an agreed single ‘preferred’ model

Most of the bank tried to devise

AUTOMATED ADVISORY with limited

success. 20

QUERIES PLEASE....................................

Thank You21