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“Study on Mutual Funds

Role of financial planning in wealth creation”

A Report Submitted to

as a partial fulfillment of Full time


Submitted to: Submitted By:







Any accomplishment requires the effort of many people and this work is no different. I have
been fortunate enough to get the help and guidance from many people. It is pleasure to
acknowledge them though still it is inadequate appreciation for their contribution.

I would not have accomplished this journey without the help, guidance and support of
certain people who acted as guides and friends along the way. I would like to express my
deepest and sincere thanks to my industry mentor Mr. Ritesh Mahajan (Unit Manager),
Mr. Sunil Dutt (Branch Manager) for his invaluable guidance and helpt. This project could
not be complete without their support and guidance.

I am also thankful to my college mentor Mr. Akhil Gautam for cooperating me at every
stage of the project. He motivated me throughout the duration of the project helping me a lot
in completion of this project.


This project report presents a study on “Study on Mutual Funds and Role of financial
planning in wealth creation”. This project has been prepared as part of summer training in
NJ India Invest Pvt. Ltd. NJ India Invest Pvt. Ltd. is a national distributor of mutual funds. It
sells mutual funds with the help of sub-brokers or advisors. The study done tries to analyze
the outlook of insurance advisors towards mutual funds. This will help in convincing
insurance advisors to start selling mutual funds also. The Project gave me a great learning
experience and at the same time it gave me enough scope to implement my analytical skills.
The company involved me in calling insurance advisors and acclaiming to associate with the
company as a Mutual fund advisors for this purpose around 1500 calls were made along
with visiting LICs. For the purpose of conducting this study a survey was done on Insurance
Advisors & Mutual Fund Brokers. The survey consisted of questions related to mutual funds
which not only tested their knowledge on MFs but also brought forward the role of financial
planning in wealth creation. The survey took response of 100 respondents which mainly
consisted of insurance advisors. The research problem basically tries to focus on way by
which conversion rate could be increased.


Topics Page No.

Executive summary 5

Company Profile 7-16

Introduction to Mutual Fund 17-30

Structure of Mutual Fund

Phases of Mutual Fund

Characteristics of Mutual fund

Types of Mutual Fund

Advantages of Mutual Fund

Limitation of Mutual Fund

Financial planning 31-33

Literature review 34-35

Research Methodology 36-42

Data interpretation & Analysis 43-48

Findings 49

Recommendation 50

Conclusion 51

Bibliography 52

Annexure 53-54


About the company

NJ India Invest Pvt. Ltd. is one of the leading advisors and distributors of financial products
and services in India. Established in year 1994, NJ has over a decade of rich exposure in
financial investments space and portfolio advisory services. From a humble beginning, NJ
over the years has evolved out to be a professionally managed, quality conscious and
customer focused financial / investment advisory & distribution firm. The strength of NJ lies
in the strong domain knowledge in investment consultancy and the delivery of sustainable
value to clients with support from cutting-edge technology platform, developed in-house by
NJ. It offers a 360 comprehensive business platform with unmatched IT solutions,
empowering them to set the best practice standards and deliver real value to their customers.
NJ India Invest believes in

 having single window, multiple solutions that are integrated for simplicity and

 making innovations, accessions, value-additions, a constant process

 providing customers with solutions for tomorrow which will keep them above the
curve, today

NJ had over INR 15,000 crores of mutual fund assets under advice with a wide presence in
over 100+ locations in 21 states in India. The numbers are reflections of the trust,
commitment and value that NJ shares with its clients. NJ continues to innovate and
challenge its own processes and systems on constant basis to emerge more convinced. NJ
continues to expand the scope and depth of its offerings, making apt use of technological

NJ India Invest basically works to earn its profit in the form of commission they receive
from the investment which is done on behalf of their ARN (AMFI Registration Number).
ARN is a no given by the AMFI to the sellers of mutual funds in order to identify them and
speed up the process of commission release. Higher the amount of investment done through
their ARN more will be the profit. NJ is not into direct selling of MFs. It sells MFs
indirectly through Mutual Fund advisors/ agents whom recruits and trains in selling mutual
funds. All the investment brought by these advisors is done through the ARN of the
company. NJ also charges a yearly fee from these advisors for providing them technical
support so that they can serve their clients better. So more the numbers of advisors (partners)
being recruited more will be the amount of service charge being paid. They will also bring
in more business in terms of assets to be invested in mutual funds.


To be the leader in our field of business through,
Total Customer Satisfaction
Commitment to Excellence
Determination to Succeed with strict adherence to compliance
Successful Wealth Creation of our Customers
Ensure creation of the desired value for our customers, employees and associates, through
constant improvement, innovation and commitment to service & quality. To provide
solutions which meet expectations and maintain high professional & ethical standards along
with the adherence to the service commitments.


Mr. Neeraj Choksi & Mr. Jignesh Desai are two first generation entrepreneurs who began

the journey of ‘NJ’ in 1994. The promoters of the NJ Group friends since their college years

and the bond between Mr. Neeraj & Mr. Jignesh have been instrumental in the success of


Our Businesses

The NJ Wealth Advisors network is among India’s largest and most successful network of
advisors in the financial services industry. The NJ Wealth Advisory platform is a
comprehensive, 360 Platform offering end to end solutions, required for a successful wealth
advisory practice.

Technology Support

A Complete Online Business Management Desk with extensive MIS reports and
administrative tools to enable you effectively Manage, Monitor & Control your business
through Partner Desk.
 You do not need to maintain back-office records and reports with yourself
 You do not need to maintain records of the investments done by your clients
 You can centrally manage your NJ Services, Send Queries etc
 You can effectively use reports / tools to improve your services to your clients &
develop your business.
 You can smartly manage & monitor your business and concentrate on business
growth backed by disciplined business decisions.

Sales Support

Every NJ Fundz network partner is provided with a Relationship Manager who remains in
touch with him on a regular basis to provide all necessary information and support. Your
requirement in terms of sales material, application forms etc would be taken care of by our
sales team. Apart from regular sales support on a daily basis NJ does:

 Regular sales meet of your client

 Regular partner meet by inviting an industry expert to gain market insight.
 Doing joint calls for you whenever required
 Doing sales planning and setting up sales process for your sales staff

Marketing Support

Marketing your services and products is another important aspect of growing your business.
Building your brand in the market is very important in today’s competitive world. NJ
understands this need and provides marketing support through NJ print shop. NJ print shop
provides multiple branding materials which you can order through your partner desk. A

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dedicated Marketing platform to add an edge to your Advisory Business. NJ Print Shop
offers wide range of marketing material for your business with excellent features.

 Co – branded – Project your Brand / Company

 Professionally designed
 Quality / excellent content from NJ Marketing
 Ready Printed – Door step Delivered
 Distinguishing factor - Get Ahead
 Available in many regional languages

Training Support

Developing soft skills in financial advisory industry is not optional but necessity as client
relationship is at the core of business. At NJ we truly believe in this fact and they to provide
all necessary training support.
Continuous enhancement and up gradation of one’s skills & knowledge are the needs of the
hour. NJ Gurukul emerged as an idea to bridge the gap that existed in meeting the needs of
Financial Advisors for continued training and education.

 Exclusively Designed Quality Training Modules

 Training at every level of business / knowledge
 NJ Gurukul is registered EP for CFP

Research Support

Our competent research team adds significant value to our advisory by providing regular
product, schemes and market updates. Our research team, on a regular basis does detailed
analysis and study of different mutual funds schemes available in the market and come out
with list of recommended schemes. This ‘ready reckoner’ of schemes helps our partners to
pick and choose a particular scheme for their investors.
The research team does:
 In depth analysis of schemes performance

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 Investment philosophy of the scheme
 Due diligence of AMC
 Practices followed by fund management exam of AMC
 Service standards
 Creditworthiness of trustees
 Regular publications:
➢ Monthly magazine 'FUNDZ WATCH‘
➢ Weekly reports
➢ Daily market update
➢ Daily MF track and much more...

 Research reports : Recommendations, market insight, analyses etc.

 Ongoing interaction through product training, Fund Manager Meets etc.
 Launch Presentations of all prominent products of various Mutual Funds

Customer Support

Solving all your client’s investment related queries is just a phone call away as our customer
care executives remain available to answer and solve your queries. NJ platform also
provides you facility to submit your queries online at your Partner desk platform and you
can keep track of status of your query. Single Contact Point for All Queries available to All
Advisors in India

 Trained Executives for Time-Bound solving of Queries

 All India Toll Free Number - 1800 233 0155
 Facility to submit Queries and track latest status Online
 Centralized query handling across all Products.
 Query Module / Access to Customer Care
 Instant service for Account Statement (Soft Copy – via e-mail)

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NJ Portfolio Management Service

NJ has ventured in asset management business with NJ Advisory Services Pvt. Ltd., a group
company, launching its discretionary PMS products.

At the Heart of NJ Advisory Services is the idea to provide customers with solutions that
give them the freedom from active management of investment while having an assurance
that we would be doing so in the best possible manner. Our conviction, matched by our
passion and expertise, is all about ensuring the peace of mind of the investors. The PMS
products currently offered are aimed at meeting investor’s need for successful long term
wealth creation by following strategies that control risk and optimize returns in a mutual
fund portfolio.

NJ Advisory Services leverages upon with its rich experience in portfolio management with
in-depth knowledge & expertise in mutual funds. The decisions on mutual fund portfolio
also combine results of time tested proprietary research models, extensive due- diligence of
fund houses, interactions with fund managers & internal risk controls. The defined Processes
and smart use of technology further ensures that the investors are offered with quality
portfolio management and administrative services, ensuring a complete peace of mind.

NJ Realty

The NJ Realty venture offers an integrated service model offering end-to-end services to
various stake-holders in realty program management & execution. The idea is to associate
with stakeholders and engage actively in various stages of program management, viz.
market survey, legal due diligence, land acquisition, planning & execution of projects and
managing sales & distribution through NJ Wealth Advisors Network.
Managing realty programs is a lengthy process replete with many challenges right from
program identification to marketing. As a developer, investor or land owner, one may be
keen to execute realty projects, but may not be equipped with the right skill-sets, contacts,
experience and/or know-how for the undertaking. This is where NJ Realty can associate and
help in shaping up the realty programs. NJ Realty has acquired considerable experience in
program management and is also currently engaged in multiple programs playing diverse

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At the heart of NJ Realty is the philosophy of sustainability and preservation of
environment. Going beyond words, NJ Realty seeks to keep environment as one of the focal
points in it's real estate business.

NJ Insurance Brokers
NJ Insurance Brokers Pvt. Ltd., a licensed insurance broker by IRDA, seeks to provide
customers with comprehensive solutions catering to their insurance needs.
At the heart of NJ Insurance is the strong vision for continued financial well-being for
customers - individuals and families, regardless of any circumstances. The key is to offer
'right' advice which is unbiased and customer centric and encompasses the right risk to
insure, the right coverage, the right product and at the right time. The idea to offer clients
with comprehensive solutions extends further to cover quality claim settlement and other
NJ Insurance leverages from the rich experience of NJ group in financial planning and
investment management for customers. NJ Insurance Brokers has appointed Certified
Insurance Advisors (CIAs) who work with customers in identifying, fulfilling & managing
their insurance needs. NJ offers a comprehensive basket of products both in life & non-life
insurance space and makes exhaustive use of technology to deliver great value to customers.

NJ Global Wealth Advisory

NJ Global Invest (Ltd.) is a new venture wherein NJ seeks to offer a Global Wealth
Advisory platform to advisors for offshore funds across the globe.
The vision at Global Wealth Advisory platform is to offer a single window for investment
opportunities across the globe to customers. The idea is to bring to customers a wide range
of offshore fund schemes (domiciled in Mauritius, Luxembourg, Dublin and other
jurisdictions), through advisors on the Global Wealth Advisory platform. NJ Global Invest
seeks to provide a offshore fund distribution platform & offshore Portfolio Advisory
services under a B2B distribution model. NJ Global Invest also desires to offer
comprehensive order routing and trade settlement facility with support services of client
reporting & fees settlement.
NJ Global Invest is a venture that leverages from rich experience & success of financial
products advisory & distribution business in India. Incorporated in Mauritius, NJ Global

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Invest is set up an offshore fund distribution company and is a licensed 'Investment Dealer
(Full Service Dealer, excluding underwriting)" by FSC, Mauritius.

NJ Technologies
NJ Technologies is a latest venture by NJ wherein we aim to provide quality technology
solutions to businesses in a wide range of domains.
NJ started its journey in technology with the start of Fin logic Technologies (India) Pvt. Ltd.,
a group company, in year 2000. The idea then was to develop software applications to
support the growing (financial services) distribution business and manage the IT
infrastructure. Over the years, the captive IT team, gained strong domain expertise and skills
in diverse areas and technology domains. Today, Fin logic team boasts of over
250* employees with skills & rich experience in product development, software testing,
infrastructure management, R&D, project management & information security. The entire
NJ Group's internal systems and infrastructure is managed by Fin logic which also has
developed many state-of-the arts, proprietary applications that power NJ's businesses.

NJ Gurukul
The NJ Gurukul is a venture aimed at providing valuable training & education support to the
young, emerging talent pool in India. Started in year 2007, NJ Gurukul today offers a very
wide range of training programs across India in all major cities.
NJ Gurukul is about a vision that aspires to nurture the young talent in India and to
transform them into individuals with knowledge & skills for employment and enterprise.
With special focus on the financial advisors community, NJ Gurukul today, is a leading
provider of training programs in the financial services industry. NJ Gurukul offers a wide
range of training programs by way of part / full time classroom sessions being conducted at
multiple locations across India. NJ Gurukul has an institutionalized, process driven approach
to training with focus on delivering uniformity in quality & content.
The NJ Gurukul has a Board of Trainers with over 35* well qualified, professional trainers
empanelled across India for delivering training programs. Within a short time, NJ Gurukul
has trained over 30,000* participants in over 50 locations across India. NJ Gurukul is an
authorised Education Provider (EP) with FPSB India to deliver training for the prestigious

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Certified Financial Planner - CFPCM Certification. NJ Gurukul is also amongst the largest
trainers of Mutual Fund Distributors in India.
Key Training Programs:
 Mutual Fund Distributors Certification by NISM for prospective NJ Wealth Advisors
 Certified Financial Planner (CFPCM) Certification by FPSB India
 Certified Personal Financial Advisor (CPFA) Certification by NISM
English4all – a distance learning / home kit for English language

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Mutual Fund is a trust that pools the savings of number of investors and invests the money
who shares a common financial goal. A mutual fund is most suitable investment for the
cautious investors as it offers an opportunity to invest in diversified professionally managed
basket of securities at a relatively low cost. Every Mutual Fund is managed by a fund
manager, who using his investment management skills and necessary research works
ensures much better return than what an investor can manage on his own. The capital
appreciation sand other incomes earned from these investments are passed on to the
investors (also known as unit holders) in proportion of the number of units they own.In
India, a mutual fund must be registered with the SEBI which regulates securities market.In
order to deal with mutual fund one should be AMFI certified.

The primary role is to assist investors in earning an income or building their wealth, by
participating in the opportunities available in various securities and markets. Mutual fund
are the financial institutions who mobilize resources from the investors. The savings of
investors are utilized to purchase the securities of companies and corporation, Returns
generated from these investments are remitted back to investors.

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The structure of mutual funds in India is governed by the SEBI Regulations,
1996. These regulations make it mandatory for mutual funds to have a 3-tier structure of
Sponsors- Trustee-AMC (Asset Management Company). The Sponsor is the
promoter of mutual fund, and appoints the Trustee. The Trustees are responsible to the
investors in the mutual funds, and appoint the AMC for managing the investment portfolio.
The AMC is the business face of the mutual funds, as it manages all the affairs of mutual
funds. The mutual funds and AMC have to be registered by the SEBI.

Sponsors: Any corporate body which initiates the launching of a mutual fund is called
‘Sponsors’. It may be one person acting alone or together with another body corporate.
Sponsors needs to have a minimum 40% share holding in capital of AMC. Sponsors will
have to appoint at least 4 trustees.

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Trustee: The Trustee has a critical role in ensuring that the mutual fund complies with all
the regulations, and protects the interests of unit holders. Mutual fund requires to have an
independent board of trustee, where two third of the trustees should be independent person
who are not associated with the sponsors. The board of trustees of Trustee Company holds
the property of mutual fund in trust for the benefit of unit holders. The board of trustee is
responsible for protecting the unit holder’s interests.

Asset Management Company: Day to Day operations of asset management are handled by
AMC. The AMC is appointed by the Trustee. They are fund managers i.e.; they invest the
investors money in various securities after proper research of market conditions and
financial performance of individual companies. The AMC is required to be appointed by
SEBI to act as an AMC of mutual fund. Atleast 50% of directors should be independent
directors who are not associated with sponsors. AMC needs to have a minimum net worth of
Rs. 10 crore.

Custodians : The Custodians has custody of assets of fund. The custodian needs to accept
and give delivery of securities for the purchase and sale transaction of various schemes of
fund. The custodian needs to register with SEBI. The custodian is appointed by Mutual

Transfer Agents : A trust company banks or similar financial institution assigned by a

corporation to maintain records of investors and account balances and transaction to cancel
and issue certificates, to process investors mailing and to deal with any associated problem.


The mutual fund industry in India started in 1963 with the formation of UTI at the initiatives
of the government of India and the Reserve bank of India. The history of mutual funds in
India can be broadly divided into four distinct phases:

 In the First Phase (1964-87), UTI was established on 1963 by an act of parliament. It
was set up by the RBI and the Government of India and functioned under the
regulatory and administrative control of RBI. . In 1978 UTI was delinked from the
RBI and the Industrial Development Bank of India (IDBI) took over its regulatory

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and administrative control. The first scheme launched by UTI was Unit Scheme
1964. By the end of 1988 UTI had Rs.6, 700 corers of assets under management.

 In the Second phase (1987-93), public sector mutual funds set up by public sector
banks, Life Insurance Corporation of India (LIC) and the General Insurance
Corporation of India (GIC).

SBI mutual fund was the first non –UTI mutual fund established in June 1987
followed by bank Mutual Fund (December ’87), Punjab National Bank (August ’89),
Indian Bank Mutual Fund (November ’89), Bank of India (June ’90), Bank of
Baroda Mutual Fund (Oct ’92), LIC establishes its mutual fund in June 1989 while
GIC had set up its mutual fund in December 1990. At the end of 1993, the mutual
funds industry had assets under management of Rs 47,004 corers.

 In the Third phase (1993-2003), Private sectors were allowed to set up mutual funds.
The entry of private sector funds in 1993 marked the beginning of a new era for the
Indian mutual fund industry, giving the investors a wider choice of fund families.
This was also the year in which First Mutual Fund Regulations came into being.
Under this, all mutual funds except the UTI were to be registered and governed. The
erstwhile Kothari Pioneer (now merged with Franklin Templeton) was the first
private mutual fund company to be registered in July 1996.

The 1993 SEBI (Mutual fund) Regulations were substituted by more comprehensive
and revised mutual fund regulations in 1996. Today, the industry functions under the
SEBI (Mutual Fund) Regulations, 1996.The number of mutual fund houses
increased, with many foreign mutual funds setting up funds in India and the industry
witnessed several mergers and acquisitions. As in January 2003, there were 33
mutual funds with total assets of Rs44, 541 corers. The Unit Trust of India with Rs.
44,541 corers of assets under management was way ahead of other mutual funds.

 In the Fourth Phase (February 2003 onward), following the repeal of the United
Trust of India Act of 1963, UTI bifurcated into two separate families. One is the
specified undertaking of the United Trust of India with the assets under management
of Rs. 29,835 corers as the end of January 2003, representing broadly, the assets of
US 64 scheme, assured return and certain other schemes. The specified undertaking
if the Unit Trust of India, functioning under the administrator and under the rulings

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of the Government of India does not come under the Mutual fund Regulations. The
second is the UTI Mutual Fund Ltd., sponsored by SBI, PNB, DOB and LIC.


 The ownership is in the hands of the investors who have pooled in their funds so
ownership is joint or mutual.

 It is managed by a team of investment professionals & service providers.

 The investors share is denominated by ‘units’ whose value is called as Net Asset
Value (NAV) which changes every day.

 The investment portfolio is created according to the stated investment objectives of

the fund.

 In India, Mutual Funds are constituted as TRUST.

 Standard Risk factors are common for all mutual funds.

 Unaudited accounts must be published every 3 months.

 Mutual Funds are not allowed to invest in Art in India.

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Open ended

Open ended are those which are open for investors to enter or exist at any time, even after
NFO (New Fund Offering) when fund is accepted and liquidated on a continuous basis by a
mutual fund manager is known as open ended scheme. When existing investors buy
additional units or new investors buy units of open ended scheme is called Purchase
transaction. It happens at a sale price, which is equal to NAV.

When investors choose to return any of their units to scheme and get beck
their equivalent value is known as re-purchase transaction.

Close ended

Close ended schemes are those which are having a fixed maturity. When units are re-
purchased or liquidated only after expiry of a specific period. Investors can buy units of a
close ended scheme from the fund only during its NFO. This is done through listing of
scheme in a stock exchange. Listing is compulsory for close ended. After NFO, Investors
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who want to buy units will have to find a seller for those units in stock exchange, who want
to sell their units will have to find buyer for those units in stock exchange.


A Fund that combines the features of open ended scheme and close ended scheme. The
interval scheme might become open ended between Jan 1 to 15, July 1 to 15 each year.
Between these intervals, the units have to be compulsorily listed on stock exchange.

Equity Fund

Equity Funds are those funds which are having atleast 65% of investment in equity shares &
equity related instruments with fluctuating share prices, such funds shows volatile
performance. These funds can earn long term gain. An investors have to pay tax.

Types of Equity Fund

Growth Fund

This fund aims to provide capital appreciation over the medium to long term. These schemes
normally invest a majority of their funds in equities and are willing to bear short term
decline in value for possible future appreciation.

Diversified Equity Fund

It is a category of funds that invest in a diverse mix of securities. These funds are most
popular among investors. They invest in many stocks across many sectors. They can invest
in all listed stocks, & even in unlisted stocks. They can invest in which sector they like in
whatever ratio, they like.

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Equity Linked Saving Scheme (ELSS)

It has 3year lock period with minimum investment of 90% in equity shares. This scheme
offer tax benefits to investors. It is eligible under sec-80C upto 1 lac. The diviend in this
scheme is tax free & also it is beneficial for long term taxation.

Sector Fund

Sector fund invest in stocks from only one sector. The objective is to capitalize on the story
of sectors & offers investors a window to profit from such opportunities. E.g. Banking

Thematic Fund

Invest in line with an investment theme. For e.g. an infrastructure thematic fund might
invest in shares of companies. The investment is more broad than a sector fund.

Arbitrage Fund

It takes contrary positions in different markets, such that risk is neutralized, but a return is
earned. E.g. By buying a share in BSE & simultaneously selling same share in NSE at
higher price. Most arbitrage funds take contrary positions between equity market & future &
option market.

Debt Fund

Debt fund are the funds which invest money in debt instruments such as short & long term
bonds, Government securities, T-bills, Corporate paper, Commercial paper, call money. The
main investing objective of a debt fund is usually preservation of capital & generation of
income By investing in such instruments. These funds ensure low risk & provide stable
income to investors.

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Types of Debt Fund

Gilt Fund

Invest in only government securities & treasury bills with zero credit risk.

Diversified Debt Fund

Invest in a mix of government & non-government debt securities.

Junk Bond Scheme or High yield Scheme

Invest in companies with poor credit.

Fixed Maturity Plan

Investment portfolio is closely aligned to maturity of scheme.

Floating Rate Fund

Invest largely in floating rate debt securities where interest rate payable by issuer changes in
line with market. Interest changes which cause NAV of a conventional debt fund to go up or

Liquid Scheme or Money Market Scheme

These funds are meant to provide easy liquidity & preservation of capital. These schemes
invest in short term instruments like, T-bills. These funds are meant for short term cash
management of corporate houses & are meant for an investment horizon of 1 day to 3 day.

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Hybrid Fund

Are combination of both debt & equity fund.

MIP (Monthly Income Plan)

Seeks to declare a dividend every month. Invests largely in debt securities & small
percentage is invested in equity shares to improve the scheme’s yield.

Balanced Fund

The purpose of giving an investor exposure to both equity & debt in one portfolio. The
objective of these schemes is to provide growth & stability, where equity had potential to
meet former objectives.

Capital Protected Scheme

These are close ended schemes which are structured to ensure that investors get their
principal back, irrespective of market conditions.

Other Types of Funds

Commodity Fund

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These funds focus on investing in different commodities like food crops, crude oil. In India,
Mutual fund schemes are not permitted to invest in commodities, other than gold.

Real Estate Fund

Funds that invest directly in real estate or invest in shares/ securities assets of housing
finance company.

International Fund

These are the funds that invest outside the country. A Mutual fund may offer a scheme to
investors in India, with an investment objective to invest abroad.

Fund of Fund

Such funds invest in various other funds, whether in India or Abroad. They are designed to
help investors get over the trouble of choosing between multiple schemes and their variant
in the market.

Advantages of Mutual Fund

1. Professional Management Mutual fund offer investors the opportunity to earn an income
or build their wealth through professional management of their investible funds.

2. Diversification Small investors cannot achieve wide diversification on his own

investment due to lack of knowledge in investment management. Diversification helps
reduce the risk in investment. Lacs of investors invest in many companies.

3. Tax Benefit Depending on the scheme of Mutual Fund, Tax benefit is also available to the
investors. In India, Equity Linked Saving scheme (ELSS) of Mutual fund give benefit of
deduction of amount invested under 80 C of income tax act is available. Dividend received

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from Mutual fund schemes are tax free in hands of investors. So, investing in securities
through mutual fund has many advantages.

4. Liquidity Investors in mutual fund schemes can recover the value of moneys invested,
from the mutual fund itself. Depending on the structure of mutual fund scheme, this would
be possible, either at any time or during specific intervals. Close ended schemes units can
buy & sell in securities market as the schemes listed on stock exchange. For open ended
scheme, Investors can always approach the fund for re-purchase at NAV of the scheme.

5. Investment Comfort Once an investment is made with mutual fund, they make it
convenient for the investor to make further purchase with very little documentation.

6. Systematic Approach to Investment Mutual fund also offer facilities that help investor
invest amounts regularly through a Systematic investment approach (SIP) or withdraw
amount regularly Through a Systematic withdrawal Approach (SWP) or move money
between different kinds of schemes through Systematic transfer Plan (STP).

7. Reduction of Risk Risk in investment is as to recovery of the principal amount and as to

return on it. The expert risk management by Asset Management Company (AMC),
diversification & liquidity of units ensured in Mutual Funds minimize the risks.


People find Mutual fund investment so much interesting because they think they can gain
high rate of return by diversifying their investment and risk. But, in reality this scope of high
rate of returns is just one side of coin. On the other side, there is the harsh reality of highly
Fluctuating rate of returns. Though there are other disadvantages also, this concern of
fluctuating returns is most possibly the greatest challenge faced by the mutual fund.

Choice overload

Over 800 Mutual funds schemes offered by more than 40 mutual fund & multiple options
within those schemes make it difficult for investors to choose between them.

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No Control Over Costs

All the investor’s moneys are pooled together in a scheme. Costs incurred for managing the
schemes are shared by all the unit-holders in proportion to their holding of units in the
scheme. Therefore, an individual investors has no control over costs in a scheme.s


SEBI is the apex regulatory of the capital markets. SEBI has enacted the SEBI

regulation 1996 which provide the scope of regulation of mutual fund in India. All

mutual funds are required to be mandatory registered with SEBI. The structure and

formation of mutual fund, appointment of key functionaries, operations of mutual fund,

accounting and disclosure norms, rights and obligations of functionaries and investors,

investment restrictions, compliance and penalties all are defined under the SEBI

registration. Mutual Fund has to be sending half yearly compliance report to SEBI and

promote all information about their operations.


 Lump sum- You can invest any amount you want at one time, as long as you meet

the minimum requirements of that fund. Some funds have no minimum for opening

an account or no minimum for additional share purchases, while others do.

 Systematic investment plan-Most funds offer plans that allow you to transfer set

amounts on a regular basis automatically from your bank account or pay check. This

is a great way to save money on a routine basis. With automatic investing, you get

the benefits of dollar cost averaging. That is, when you make regular investments in

a mutual fund, such as investing $100 every month, you can take advantage of both

the ups and downs of the market. When the market is down, your monthly

investment typically buys you more shares of the fund, helping to increase your
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ownership in the fund. When the market is up, your monthly investment typically

buys you fewer shares of the fund, helping you avoid buying too many shares at

higher prices. Over a long period of time, the end result is that the average cost of

your fund shares is lower than the average price of the fund shares during the same



A Distributor/Agent is expected to give unbiased and appropriate investment advice to a potential

investor. Appropriate investment decisions, however, require proper planning of the financial

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situation of the investor. A financial planner is needed to help the investor do adequate financial
planning, before he decides on where to invest his funds. Financial Planning forms, therefore, the
basis of genuine investment advice.

Each one of us needs “finance” at various stages of our life, and needs to ensure that we have the
money available at the right time, when needed. We may need money at the time of marriage of a
daughter or son, and we need it then, not later. Or at the time of a medical emergency, and again at
that time, as later the money will not help. Or money will be needed simply at the time of retirement.
In other words, we need finance at different times for different goals. Buying a house, providing for
a child’s education and marriage or for retirement are all examples of goals in life that can be
measured in monetary terms.

Personal financial needs are of two types- protection and investment. An earning member providing
for his family to have continued income after his death is an example of a protection need. Providing
for the marriage expenses of a daughter is an example of an investment need.

Financial Planning is an exercise aimed at identifying all the financial needs of an individual,
translating the needs into monetarily measurable goals at different types in the future, and planning
the financial investments that will allow the individual to provide for and satisfy the future financial
needs and achieve his life’s goals.

The objective of financial planning is to ensure that the right amount of money is available in the
right hands at the right point in the future to achieve an individual’s financial goals. Successful
financial planning makes a considerable contribution to the sum total of human happiness. Financial
planning is a process that helps a person work out where he or she is now, what he/she may need in
the future and what he/she must do to reach the defined goals. The process involves gathering
relevant financial information, setting life goals, examining the person’s current financial status and
coming up with the strategy or plan for how the person can meet his/her goals given the person’s
current situation and future plans.

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Some personal finance software packages, magazines or self-help books can help a person do his
own financial planning. However, an individual may decide to seek help from a professional
financial planner if the individual:

 Needs expertise he or she does not possess in certain areas of his finances. For example, a
planner can help a person evaluate the level of risk in his/her existing investment portfolio
and revise it suitably;
 Does not feel he/she has the time to spare to do one’s own financial planning;
 Knows that he/she needs to improve his/her current financial situation but doesn’t know
where to start
 Feels that a professional advisor could help him improve on how he/she is currently
managing the personal finances;
 Has an immediate need such as a major illness, or unexpected life event such as an
inheritance, or
 Wants to get a professional opinion about a self-developed financial plan.

Scope of Financial Planning

Financial planning should cover all areas of the client’s financial needs and should result in the
achievement of each of the client's goals. The scope of planning would usually include the


Risk Management and Insurance Planning

Managing cash flow risks through sound risk management and insurance techniques.
Investment and Planning Issues
Planning, creating and managing capital accumulation to generate future capital and cash flows for
reinvestment and spending.

Retirement Planning
Planning to ensure financial independence at retirement including 401Ks, IRAs etc.

Tax Planning

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Planning for the reduction of tax liabilities and the freeing-up of cash flows for other purposes.

Estate Planning
Planning for the creation, accumulation, conservation and distribution of assets.

Cash Flow and Liability Management

Maintaining and enhancing personal cash flows through debt and lifestyle management.

Child Education Planning

Planning for the higher education of client’s child through proper planning.

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Literature Review

Mutual Funds in India by H. Sadhak, Response Books, A division of Sage Publications.

This book is divided into six chapters. Chapter 1 deals with relationship between mutual
funds and financial markets. Chapter 2 deals with UTI and changing economic environment
and market pressures. Other chapters deal with resource allocation, investment research and
timing. Need and scope for regulation for mutual funds. They also discuss about the
measures necessary for the healthy growth of the mutual fund industry in India.
Investing in mutual funds by Kurt Peray, St.Lucie Press. This book enables investors to
make independent and educated decisions to hedge their portfolios from the volatile forces
in the market ,it also emphasize the need to engage portfolio managers .It also talks about
how to become the ultimate decision maker.

Mutual Funds Management and Working by Lalit K Bansal. This book talks about
financial services in India, the concept of mutual fund and its constitution and
management .This book also talks about various mutual fund schemes in India.

Sharpe, William F. (1966) suggested a measure for the evaluation of portfolio

performance. Drawing on results obtained in the field of portfolio analysis,
economist Jack L. Treynor has suggested a new predictor of mutual fund performance,
one that differs from virtually all those used previously by incorporating the
volatility of a fund's return in a simple yet meaningful manner.

Michael C. Jensen (1967) derived a risk-adjusted measure of portfolio

performance (Jensen’s alpha) that estimates how much a manager’s forecasting ability
contributes to fund’s returns. As indicated by Statman (2000), the e SDAR of a fund
portfolio is the excess return of the portfolio over the return of the benchmark index, where
the portfolio is leveraged to have the benchmark index’s standard deviation.

S.Narayan Rao , evaluated performance of Indian mutual funds in a bear market

throughr e l a t i v e p e r f o r m a n c e i n d e x , r i s k - r e t u r n a n a l y s i s , Tr e y n o r ’s r a t i o ,
S h a r p e ’s r a t i o , S h a r p e ’s measure , Jensen’s measure, and Fama’s measure. The study
used 269 open-ended schemes (out of total schemes of 433) for computing relative
performance index. Then after excluding funds whose returns are less than risk-free returns,
58 schemes are finally used for further analysis. The results of performance measures

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suggest that most of mutual fund schemes in the sample of 58were able to satisfy investor’s
expectations by giving excess returns over expected returns based on both premium for
systematic risk and total risk. Mishra (2002) measured mutual fund performance using
lower partial moment. In this paper, measures of evaluating portfolio performance based on
lower partial moment are developed. Risk from the lower partial moment is measured
by taking into account only those states in which return is below a pre-specified
“target rate” like risk-free rate. Kshama Fernandes (2003) evaluated index fund
implementation in India. In this paper, tracking error of index funds in India is
measured. The consistency and level of tracking errors obtained by some well-run index
fund suggests that it is possible to attain low levels of tracking error under Indian
conditions. Pendaraki studied construction of mutual fund portfolios, developed a
multic r i t e r i a m e t h o d o l o g y a n d a p p l i e d i t t o t h e G r e e k m a r k e t o f
e q u i t y m u t u a l f u n d s . T h e methodology is based on the combination of discrete
and continuous multi-criteria decision aid methods for mutual fund selection and

Zakri Y.Bello (2005) matched a sample of socially responsible stock mutual funds
matchedt o r a n d o m l y s e l e c t e d c o n v e n t i o n a l f u n d s o f s i m i l a r n e t a s s e t s t o
i n v e s t i g a t e d i ff e r e n c e s i n c h a r a c t e r i s t i c s o f a s s e t s h e l d , d e g r e e o f p o r t f
o l i o d i v e r s i f i c a t i o n a n d v a r i a b l e e ff e c t s o f diversification on investment
performance. The study found that socially responsible funds do not differs
significantly from conventional funds in terms of any of these attributes. Moreover, the
effect of diversification on investment performance is not different between the two groups.

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Research Methodology


A survey based methodology was used for the study. A questionnaire was formed after
careful study of mutual funds and role of financial planning in wealth creation.

Meaning of research:

Research in common parlance refers to a search for knowledge. One can also define research as a
scientific and systematic search for pertinent information on a specific topic. In fact, research is
an art of scientific investigation.

The Advanced Learner’s Dictionary of current English lays down the meaning of research as
“a careful investigation or inquiry especially through search for new facts in any branch of

Redman and Mory define research as a “systematized effort to gain new knowledge.”

According to Clifford Woody “research comprises defining and redefining problems,

formulating hypothesis or suggested solutions: collecting, organizing and evaluating data”


The basic types of research are as follows:

Descriptive vs. Analytical: Descriptive research includes surveys and fact-finding enquiries of
different kinds. The major purpose of descriptive research is description of the state of affairs as it
exists at present. In analytical research, on the other hand, the researcher has to use facts or
information already available and analyze these to make a critical evaluation of the material.

Applied vs. fundamental: Research can either be applied (or action) research or fundamental (or
basic or pure) research. Applied research aims at finding a solution for an immediate problem
facing a society or an industrial/business organization, whereas fundamental research is mainly
concerned with generalizations and with the formulation of a theory.

Quantitative vs. Qualitative: Quantitative research is based on the measurement of quantity or

amount. It is applicable to phenomena that can be expressed in terms of quantity. Qualitative

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research, on the other hand, is concerned with qualitative phenomenon, i.e., phenomena relating
to or involving quality or kind.

Conceptual vs. Empirical or Experimental type of research:

Conceptual research is that related to some abstract idea(s) or theory. It is generally used by
philosophers and thinkers to develop new concepts or to reinterpret existing ones.

On the other hand, Empirical research relies on experience or observation along, often without
due regard for system and theory. It is data-based research, coming up with conclusions with are
capable of being verified by observation of experiment.

Some other types of research: All other types of research are variation of one or more of the
above stated approaches, based on either the purpose of research, or the time required to
accomplish research, or the environment in which research is done, or on the basis of some other
similar factor. From the point of view of time, we can think of research either as one time research
or longitudinal research. In the former case the research is confined to single time period, whereas
in the later case the research is carried on over several times.

Significance of Research

“All progress is borne of inquiry. Doubt is often better than overconfidence. For it leads to
inquiry, and inquiry leads to invention” is a famous Hudson, Maxim in context of with the
significance of research can well be understood. Increased amounts of research make progress
possible. Research inculcates scientific and inductive thinking and it promoted the development
of logical habits of thinking organization. The role of research in several fields of applied
economics, whether related to business or to the economy as a whole, has greatly. Increased in
modern times. The increasingly complex nature of business and government has focused attention
on the use of research in solving operational problems. Research, as an aid to economic policy,
has gained assed importance, both for government and business. Research provides the basis for
nearly all government policies in our economic system. Research has its special significance in
solving various operational and planning problems of business and industry.

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Research is equally important for social scientists in studying social relationships and in seeking
answers to various social problems.

a) To those students who are to write a master’s or P.hd. thesis, research may mean careerism
or a way to attain a high position in the social structure;

b) To professionals in research methodology, research may mean a source of livelihood;

c) To philosophers and thinkers, research may the development of new ideas and insights;
d) To literary men and women, research may mean the development of new styles and
creative work;
e) To analysts and intellectuals, research may mean the generalizations of new theories.
Research methodology is way to systematically solve the research problem. It may be understood
as a science of studying how research is dined scientifically. In it we study the various steps that
are generally adopted by a research in studying his research problem along with the logic behind
them. It is necessary for the research to know not only the research methods/techniques but also
the methodology. Researchers not only need to know how to develop certain indices or tests, how
to calculate the mean, the median or the standard deviation or chi-square, how to apply particular
research techniques. The scope of research methodology is wider than that of research methods.
Thus, when we talk of research methodology we not only talk of the research methods but also
consider the logic behind the methods.

Research Process

Research process consists of a number of closely related activities. But such activities overlap
continuously and do not follow a strictly prescribed sequence. Various steps involved in a research
process are not mutually exclusive; nor are they separate and distinct. They do not necessarily
follow each other in any specific order and the researcher has to be constantly anticipating at each
step in the research process the requirements of the subsequent steps. However, the following
order concerning various steps provides a useful procedural guideline regarding the research

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Formulating the research problem

Extensive literature survey

Developing the hypothesis

Preparing the research design

Determining design

Collecting the data

Analysis of data

Generalization and interpretation

Preparation of the report or presentation of the result

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Objective and Scope of Research

Research Problem

The research problem basically tries to focus on way by which conversion rate could be
increased. For this a survey was conducted among the Financial Advisors focusing on
various relevant factors which were related to increase in the conversion rate.

Research Objectives
 To analyse the awareness level of mutual fund among Financial advisors

 To analyse and estimate the return and risk by financial product

 To know the factor affecting the awareness level of insurance advisors

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Sampling data

Data was collected from potential insurance advisors, Mutual Fund advisors.
Convenient sampling procedure was used for the study. A sample data of 70
respondents was taken for this study on the basis judgmental sampling technique were
given a printed questionnaire and were explained about the purpose and nature of the
study an informed consent was obtained from all the subjects on the basis. The
respondents filled the questionnaire and any queries regarding the questions were
solved on the spot. In order to analyse the data use of excel is there.

Instruments used

Questionnaire: A schedule or measuring instrument for obtaining information from the

respondents. The questionnaire is close ended. In order to reduce questionnaire error
such as (avoiding biasness in mind of respondent) question have been worded carefully.
The research consists of structured questions.

(A sample questionnaire has been attached at the end)

Data Collection Procedure

For getting the survey filled various LIC offices and places where insurance agents
normally gather were visited and other financial advisors like mutual fund advisors are
also included in this survey. Private insurance company offices were also visited for the
getting the survey filled. CAs and Tax Advisors were visited in their offices for the

Primary Data:

The first hand information bearing on any research is the one which has been collected
by the researcher. The data here is collected through:

 A structured questionnaire

 Personal interview of both retailer and consumers.

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Secondary Data:

The data which has already been collected, complied and presented earlier by any agency
may be used for purpose of investigation. The data collected through:

 Various publications in form of annual reports, various papers and journals published
from time to time.

 Through internet and Books

Limitations of the study:

 Research is based on the collection of data from primary source.

 There may be a possibility of biasness on the part of some respondents, but very
much care has been taken to make this report unbiased.

 Some respondents might not give the correct information due to their lack of interest
and shortage of time.

 Small sample size of 70 may not represent the true picture as it would have been by
taking response from entire population.

 All the information, which is taken, is biased on primary and secondary data that has
its own limitations.

 Location constraint i.e. respondents from high profile location will respond
positively and respondents from lower level location will respond negative,
although, diversification of location has been maintained and I have tried to cover
almost all type of Companies.

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Data Analysis and Interpretation

For Investors

1) The age of investors ranged between:

2)Investors who have got their Financial Planning done:

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3) Investment made in various Investment Options by Investors:

4) Which option did investors go for:

 An investment option, like shares, in the urge to make excellent profits

 An investment option, like fixed deposit, to earn a fixed return in the long-run

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5) Option preferred by Investors:

 Hard Investments (like Jewellery, Real Estate)

 Financial Investments (like Equity, Bonds, Debentures)

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6) Preference of ELSS against other tax-saving Investment options:

7) Investment option which requires Financial Planning the most:

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8)Part of Income invested by Investors:

9) Best option to approach for financial planning in the view of Investors:

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10) Investors, who haven’t got their financial planning done, but have done
proper research before investing their money:

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AMFI Book given by NJ

Business Research Methodology by T.N Srivastava

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Dear Respondents,

I am Nishant Sharma , prepairing a project on the topic “Study

on Mutual Funds and role of financial planning in wealth creation” in NJ India
pvt . Ltd . So dear respondent , please help me by filling up the following
questionnaire. All the information provided by you will be kept confidential
and used strictly for the study purpose only. I shall be highly thankful to you
for your cooperation.


A. Fill in the blanks:


1) Age: a) 20-29 years b) 30-39 years c) 40-49 years d) 50 years &


2) Gender: a) Male b) Female

3) Marital status: a) Married b) Unmarried

4) Salary (per month): a) Below 10,000 b) 10,000-20,000 c) 20,000-30,000 d) Above


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Q1. Have you ever made an investment?

o Yes

o No

Q2. In which financial option have you made an investment? (Give

approximation in percentage)

o Share Market……………….
o Debentures………………….
o Bonds………………………..
o Mutual Funds……………….
o Banks………………............
o Post Office………………….
o Real Estate…………………
o Commodity…………………
o Insurance…………………..

Q3. Have you ever taken any assistance in Financial Planning for yourself before making an

o Yes

o No

Q4. Why you did investment in the above mentioned financial option? Please
rate the following on a scale of 1-7 in order of preference. (1 being the highest and
7 being the lowest)

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o Tax-saving…………..

o Liquidity………………

o Risk…………………

o Return……………….

o Past performance of the option……………

o Brand Name……………..

o Advice of friend/family/advisor…………..

Q5. Which option would you like to go for?

o An investment option, like shares, in the urge to make excellent profits

o An investment option, like fixed deposit, to earn a fixed return in the

Q6.Would you prefer ELSS (Equity Linked Saving Scheme) over other tax-saving investment

o Yes
o No

Q7. Would you prefer investing in?

o Hard Investments(like jewellery, real estate)

o Financial Investments(like Shares, Bonds, debentures, Mutual Funds, Insurance)

Q8. Which investment option do you feel requires financial planning the most?

o Share Market
o Insurance

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o Real Estate
o Mutual Funds
o Banks
o Debentures
o Bonds
o Commodities
o Post Office

Q9. What part of your income do u normally invest?

o 0-10%
o 10-15%
o 15-20%
o 20-25%
o >25%

Q10. Do you think your investment will be able to fulfill your long term goals?

o Yes
o No

Q11. For your child’s marriage/education/your retirement how much money is required and after what time

Education Marriage Retirement


After how much time?

Q12. For this investment requirement what step have you taken till date?


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Q13. Did you follow the financial plan for the same?

o Yes
o No

Q14. Which is the best option for financial planning in your view?

o Advisor/Consultants
o News Paper
o Internet
o Reference
o Any Other

Role of Financial Planning in wealth creation

Name ………………………... Age…………..

Gender………….. Occupation………………………….

Q1. Have you ever done financial planning for any investor?

o Yes
o No

Q2. If Yes, then which all products have you advised to your clients?

o Equity
o Mutual Funds
o Insurance
o Banks
o Post Office
o Commodity
o Real Estate
o Debentures
o Bonds

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Q3. What factors do you consider while suggesting any investment option to your clients? Please
rank the following on a scale of 1-8 in order of preference. (1 being the highest and 8 being the


……..Financial objective/Goal in monetary terms

……..Asset Allocation

……..Age of the investor

……..Time Period remaining for the goal to be achieved

……..Income of the investor

……..Requirement of tax-benefit

……..Lifestyle of the investor

Q4. Do you easily find investors willing to get their financial planning done?

o Yes
o No

Q5. If yes, then which category of investors are the most interested in getting their financial planning

o Young but unmarried

o Newly Married
o Married, with young children
o Married, with older children
o Post-retirement

Q6. If no, then what reason according to you causes investors to avoid financial planning?

o Less awareness about financial planners

o They do not realize the importance of financial planning
o They do not want to pay commission or brokerage for the money invested
o Any Other…………………………………………………

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Q7. Which mode of investment do investors normally prefer?

o One-time Investment
o Periodical Investment

Q8. For how long do investors normally prefer to invest?

o Short-term (Less than 1 year)

o Mid-term (1-3 years)
o Long-term (Above 3 years)

Q9. For which investment option do investors usually take the advice on?

o Share Market
o Debentures
o Mutual Funds
o Bonds
o Banks
o Post Office
o Commodity
o Insurance
o Real Estate

Q10. What factors do investors consider the most important while getting their financial planning

o Tax-saving
o Liquidity
o Risk
o Return
o Past performance of the option
o Brand Name
o Short-term or long-term capital gain
o Any other…………………………………………………..

Thanks for devoting your precious time.

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