Life Cycle Stages

Financial
Planning
C S PASRICHA

Wealth
The word wealth comes from the
Old
English
words
weal
(wellbeing) and th (condition),
which, taken together, means the
condition of well-being.

Wealth
Wealth is defined as the present value of all the
future cash flows that are expected to flow in from
ones assetsbe it a financial asset (like equity
shares) or a real asset (like real estate or a piece of
art).
Wealth may be defined as the passive income that
one should be able to generate to maintain a
desired lifestyle. This simply means generating an
adequate amount of income without actively
working, which ensures that one need not worry
about meeting the various living or leisure
expenses.

Wealth management
Wealth management is defined as an allinclusive service to optimize, protect, and
manage the financial goal of an individual,
household, or corporate.
Investment management is the art of
selecting investments such as stocks,
bonds, and derivativesand combining
them in way that compliments a clients
specific risk-to-reward requirements, is
often called money management or
asset management

Wealth Management
Issues
Current lifestyle needs. The income a client requires for
meeting their living expenses, the needs of their children,
and short- term or long-term financial/personal goals.
Income tax considerations. Tax planning has always
been at the core of the wealth management proposition.
The timing of stock or bonds purchase and sales may have
an impact on the total tax liability.
Inheritance goals. To whom the client wants to entrust
his/her money and how much control to confer upon
probable successor(s).
Humanitarian pursuits. The charitable clients would like
to support as well as when and how they wish to donate
their money or assets (a decision that determines any tax
advantages to the client).

Wealth Management Process

Strategy
Creating the best mix of investment types in
which you invest is a critical factor affecting both
the level of risk and the likely returns that may be
achieved over the long term.
Use a variety of multi asset funds and
investments to ensure that the returns are
maximised whilst ensuring that the risk profile
remains within the agreed parameters.
.

The Consumer Life Cycle

Most family these days go through six
financial, or life cycle, stages. It's said
thatover our lifetimes, the total income
that comes into our household every year is
also very dependent on our stage of life. For
examplemarried couples with both spouses
working usually make more than single
individuals and also make more than
married couples with only one working
spouse. These changes in income are due
to the changing stage of the life cycle.The
consumer life cycle has six basic stages.

Alpha
First is theAlphastage which
consists of young, single,
childless people who are
financially independent from
their parents.

Bravo
The second stage of the life
cycle, for most people, is
theBravostage in which they
are married, but still childless.

Charlie
TheCharliestage begins with the
birth of the first child and continues
until the youngest child is of school
age. The creation of this as a
separate stage is due to the fact
that many parents of pre-school
children choose not to work full
time. Those who do work generally
have high child care expenses,
making it difficult to save money.

Delta
The fourth life cycle stage is
theDeltastage in which there
are dependent children who are
no longer of pre-school age.
With no children at home during
the day, and college expenses
on the horizon, most families
with two adults have both
working full time.

Echo
When the last child has
finished his or her schooling
and is no longer dependent on
the parents, theEchostage
begins. This is the preretirement or empty nest
stage. For those individuals
without children, the Echo
stage begins about 10 years

Foxtrot
TheFoxtrotstage begins when people retire
and ends at the time of their death.
But not all people go through all six of these
life cycles, some people choose not to marry,
and are classified asPerpetual Alphasuntil
they reach the Echo stage. Other people who
marry but do not have children are classified
asPerpetual Bravos.They skip over the
Charlie and Delta stages and enter the Echo
stage at the same time as their Perpetual
Alpha counterparts.

Stage By Stage AnalysisAlpha/Bravo/Charlie/Delta/Echo/F

oxtrot
Income /expenses
Ability/propensity to save
Housing
Credit
Life insurance
Liquidity
Risk preference
Tax exposure
Estate planning

Major Product
Offerings

Portfolio management services(PMS)

Mutual funds.
Insurance products
Equity
Fixed income instruments
Mortgage lending
Real estate
Art funds
Derivatives and structured products

Key Trends
Rapidly growing market
Clients becoming increasingly sophisticated
Open product architecture approach adopted by
wealth managers
Wealth managers are being looked upon as
trusted advisors rather than money managers for
their clients

Key Limitations
Market is in its nascent stage
In the country also, 85% of the financial
assets are still in the form of bank deposits
Low usage of technology tools by wealth
managers
Shortage of skilled and experienced
wealth managers

High Net Worth

Individuals

Growth of Ultra HNIs in

India
Number of
ultra HNIs
witnessed
compounded
growth of
24% over the
last 4 years

Expected growth of Ultra HNI1s in

india

6 types of ULTRA
HNIs

6 types of ULTRA
HNIs..contd..