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INTRODUCTION

Personal Wealth Management (PWM) is the term generally used to describe highly customizedand sophisticated investment managemet and financial planning services delivered to high net

worth investors. Generally, this includes advice on the use of trusts and otherestate planning

vehicles, business succession or stock option planning, and the use of hedging derivatives forlarge blocks of stock. Traditionally, the wealthiest retail clients of investment firms demanded agreater level of service, product offering and sales personnel than were received by the average

clients. With an increase in the number of affluent investors in recent years, there has been anincreasing demand for sophisticated financial solutions and expertise throughout the world. The

CFA Institute curriculum on "Private Wealth Management" indicates that there are two primaryfactors that distinguish the issues facing individual investors from those of institutions.

y First, time horizons are different. Individuals face a finite life as compared to thepotentially infinite life of institutions. This fact requires strategies for transferring assetsat the end of an individuals life. These transfers are subject to laws and regulations that

vary from locality to locality and therefore the strategies available to address thissituation vary.

y A second factor contributing different portfolio management strategies for individualsand institutions is the fact that individuals are more likely to face a variety of taxes on

investment returns that vary from locality to locality. Portfolio management techniquesthat provide individuals with aftertax returns that meet their objectives are necessarily

going to be specific to these tax structures.

Advantages of Private Wealth Management are:

y The customer can easily know the investment strategy and analyze return and risk withthe help of wealth management professional.

y The Private wealth management professional provides the good service of tax planninglike how customers can minimize save and the tax more money.

y Customer can also manage their estate with the help of wealth management professional.Estate management provides protection of customers overall estate.

y Those Banks which are engaged in business of wealth management professional areearning revenues from the foreign countries that mean outsourcing for economy.

y Wealth management professional helps the customer in future planning for estate.Disadvantages of Private Wealth Management are:

y The big limitation of Wealth management is that they do not show their actual position tothe customers. So, there may be chances of fraud and forgery with customers.

y As we know that wealth management is now only related with the rich people and is nothaving any plans and solutions for poor, middle and lower class of people of society.

y Thus wealth management reduces the scope of Management.y Mostly customers do not know the actual position of market because every thing is done

by some Wealth management professional. So, that results in inflation and also there maybe chances that the customers are in risk but they are showing the false return etc.

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What Wealth management covers:

Wealth management consists of financial planning, investment portfolio management and anumber of other financial services that help in the effective management of wealth. This can be

done by financial advisors, MBAs, and business managers for individuals with a considerable

amount of wealth or income. This type of management aims to achieve maximum returns oninvestments and tax advantageous treatment in order to safeguard wealth and increase the samein the long run.

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Process of wealth management, an overview:

FINANCIALPLANNING

client profiling

investment objective

ASSETALLOCATION

Defining Portfolio Strategies and Portfolio Modeling

Determination of Portfolio Constituents and Allocation of Assets

Strategy Implementation

Portfolio

Management

Portfolio Administration

Performance Evaluation and Analytics

Strategy Reviewand Alignment

Recalibration of Portfolio Strategy

Rebalancing, Reallocation and Divestment of Assets

Key Challenge Areas

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CLIENT PROFILING:

Name Mr. Rahul Sharma

Age (in years) 30

Marital Status Married

Gender M

Occupation

Businessman (ownsamagazineand

a newspaper)

No. of Dependants 3

No. of Earningmembers in the Family 1

Monthly Income (in Rs.) 1,50,000

Spouse Housewife

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Financial Goals (as on December 2010)

Short Term Goals( 1 year or less)

Goal Priority Target date Cost estimate

A term policy High January 2011 10000

Buy Mediclaim forall High January 2011 20000

Change office high March 2011 500000

Asmall car for family Low (as healready owns

a car)

August 2011 3 lacs

Intermediate Goals( 1-5 years)

Goal Priority Target date Cost estimate

Changing his own car medium March, 2014 5 lacs

Houserenovation High September 2013 4 lacs

Long Term Goals( 5+ years)

Goal Priority Target date Cost estimate(INR)

Children higher

education High 2025

20 - 25 lacs

Marriage of children High 2030 15 lacs

Another house High 2022 40 lacs

Retirement fund High 2024 50 lacs

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NET WORTH STATEMENT

Mr. Rahul Sharma

Personal Net worth as on 15 Dec., 10

ASSETS Amount ( in '000 Rs.)

Liquid assets

Saving Account

Own 100

Spouse's 75

Total Savingaccount 175

Cash at Home 70

Total LiquidAssets 145

Fixed Assets

Real Estate

House 10000

Total Real Estate 10000

Personal Possessions

1 car 600

Gold 500

Furnitureandappliances 200

Total possessions 1300

Investments

Fixed Deposits 1500

PPF 250

Total Investments 1750

Total Fixedassets 13050

TOTAL ASSETS 13195

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LIABILITIES

Long term

Nil

Short Term

Nil

TOTAL LIABILITIES Nil

NET WORTH 13195

CASH FLOW STATEMENT

MONTHLY BUDGET Amount ( In Rs. '000)

RECEIPTS

Income 150000

Income fromsidebusiness 25

Income from Savings 15

Total Receipts 190

EXPENDITURES

Household Expenses ( including fuel, all bills, groceries, toiletries

n otherdaily expenditures) 25

Insurance of Cars, life & House 25

School fees6

Club fees/Gym3

Gifts/ Others.5

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Personal Care2

Domestic Servant2

Miscellaneous5

Total Expenditures 68.5

Savings 121.5

Yearly Saving 1458

Goal Achievement

Goal Amount Timeavailable

( months)

Investment

required if

expenses

have to be

made

through

monthly

savings

Suggestion to meet thegoal

A term insurance 8Lacs 1 10000 y Monthly transfer to savings a/cMediclaim 20000 2 20000 y Monthly transfer to savings a/cChange office 25000 1 25000 y Monthly transfer to savings a/cTrip for family 200000 18 11111 y Monthly transfer into Money

Market Mutual Fund

Daughters

graduation

2 lacs 52 3846 y A five year investment plan

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Houserenovation 3 lacs 19 15800 y Investment in SIP and sharesOfficerenovation 2 lacs 19 10526 y Investment in SIP and shares

Financial security

for Sons family

20 - 25

lacs

96 20833 y Plan some more real estateinvestments which will help to

achieve higher security level.

Marriage ofson 15 lacs 72 20833 y Plan some more real estateinvestments which will help to

achieve higher security level.

Go for World Tour

5 lacs 72 6945 y Put aside money in gold, sharesand fixed deposits

Marriage of

Daughter

20 lacs 120 16667 y Plan some more real estateinvestments which will help to

achieve higher security level and

invest in safe investments like

gold

Retirement fund 50 lacs 180 27778 y Invest more in PPF, post officeand Plan some more real estate

investments which will help to

achieve higher security level.