Intouch Volume 1 Issue 2 - Feb 2011

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Intouch: The Monthly newsletter for Financial Advisors from Moneytouch. Pls send feedback and comments to feedback@touchbase.co.in

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Intouch Volume 1 Issue 2 - Feb 2011

  1. 1. Volume 1 Issue 2Intouch Monthly newsletter for advisors from Moneytouch providing you with details on Products, Services, Partners, Technology, business strategy and much moreMessage from the editor This issueWe hope you enjoyed reading our launch issue. We New Products………………Page 2did get accolades from industry and readers, thankyou very much. Our objective is to share best Newpractices and learnings on an on-going basis so that Partners.…….………………..Page 4our readers can apply it in their day to day business. NewThe key development in January was Know Your Services………………………..Page 4Client (KYC) w.e.f. January 1, 2011, where all Internationalcategories of investors irrespective of amount of Corner ……………………………..Page 4investment in Mutual Funds are required to complywith KYC norms. To know more please visit the AMFI Cross sellwebsite opportunity…..………………….Page 5The other development which would impact your Technologybusiness is Know Your Distributor (KYD) - All ARN Development……………………Page 6holders are required to complete the KYD process byFebruary 28th, 2011. If the same is not completed by Businessthen, payment of commission would be suspended Strategy……………………………Page 7till the KYD requirements are complied with. To Clientknow more about KYD process, visit AMFI website Corner………………………………Page 9In addition to the regular features we have added asection called for International Corner and Client Partner List………………………Page 10corner, hope you like it.Continuing on the cross sell theme we talk aboutLending against Property (LAP) in this issue.In our last issue we shared what CLOUD computing isall about, in this use we share what are the benefitsof CLOUD to you as an IFA.Please make use of the Refer a friend programmeand earn attractive fees.Look forward to hearing from you atfeedback@touchbase.co.in .Happy reading.
  2. 2. Intouch V1 I2 [2011]New ProductsAlternate Investments- Real Estate in UKWe are in talks with a leading Real Estate firm from UK, details as under:The Complete Property Investment Solution produces results. London’s largest, independent,lettings-only agency. They specialise in finding corporate tenants from top multi-nationalorganisations. And when we have found you a good tenant our property management service willtake care of the day-to-day running of your property, whether it is collecting the rent or organisingrepairs.* Dedicated lettings service* Over 50 years’ property experience* Professionalism* Reliable tenants* Local knowledge – nine offices across London, Hong Kong, Singapore and DubaiAn independent property investment service.They will help you establish your investment objectives and research suitable properties. Willnegotiate the best price on your behalf and manage all the legal aspects of the purchase, rightthrough to completion.* Independent, impartial advice* Over 50 years’ property experience* Full acquisitions service* Industry contacts* Specialist skillsDesign-led furnishing packages and refurbishment services. Whether you are looking to replace afew items of furniture or need a full furniture pack, a single room decorated or a full refurbishmentprogramme, our inhouse team can handle it all.* Inspired design, refurbishment and furniture packs * 85% of the properties let within a week *Specialists in maximising investment potential * Competitive cost * Offices in London and DubaiThe soft furnishings division of In:Style Direct. Having received wide acclaim in mass consumermedia, the brand is noted for its comprehensive range of luxurious and affordable soft furnishingswhich are designed and manufactured in-house and seek to enhance any living environment.* Iconic style * Affordable prices * High quality * Decorative and functionalVisiting India in FebruaryIf you or your clients would be keen then let us know as the company is visiting India and holdingmeetings with advisors and clients to share their company credentials. If you find them to besuitable partners then you could look at referring clients to them.After all investments is all about TrustVisit their website for details - http://www.brlets.co.uk/1|Page
  3. 3. Intouch V1 I2 [2011]SMC Wealth Strategic Transfer Portfolio – SMC Wealth ManagementIt is a combination of equity and debt portfolio with an objective of the generating returns by initiallyinvesting the funds in debt/ liquid instruments and subsequently strategically moving these funds toequity instruments with an endeavour to generate capital appreciation.ADVANTAGES OF STRATEGIC TRANSFERTriple advantage of Equity + Debt + Strategic Investment Disciplined and Regular Equity Investment: Portfolio seeks to achieve better results by investingsmaller amount regularly.Rupee Cost Averaging Convenience: Reduces banking and other administrative inconvenience.Expert Advice: Our well experienced team has a proven record of managing wealth through variedformats. It is supported by a robust investment process and large research desks at Sanlam, SMCGlobal and Sanlam Equity Analytics.HOW DOES STRATEGIC TRANSFER WORKInvestors money is divided into 2 parts i.e. Debt and Equity. Initially 100% of fund will be invested inDebt/ Liquid funds and on a regular basis a fixed portion of initial investment gets transferred toEquity. The debt investment is done in relatively safe and stable fixed income securities.Selection of Equities is done by our investment team. At the end of stipulated time period entirefund will be shifted to Equity.Key FeaturesMinimum Investment Rs. 10 LakhsEntry Fees NilWithdrawal Fees Till 1 year 3%From 2nd year onwards NilAsset Allocation Pattern Equity: 0-100% Debt: 0-100%Investment Strategy 10% of Initial investment is moved from debt to equity every monthBenchmark 1st year CRISIL Balanced Index;2nd year onwards NiftyCorpus Allocation Fees A fees of 2% will be charged for each transfer from Debt to EquityAnnual Management Fees Fund Management fees of 2.5% p.a. of portfolio to be deducted monthlyGold LoansSweekar Loans from One Capitall has launched short term Personal loans against the pledge of Goldand jewelleryLoan amount Rs 1 lac to 4 lacsInterest rate 14%Repayment 90 daysProcessing 72hoursStorage Well tested, vaulted protection of securitySegment Urban Salaries, Self Employed, Low incomeRefer a friend campaign continues:Refer your associates, friends and relative and earn referral fees on theirsuccessful sign up as under:Classic - Rs 1000 Silver -Rs 2000 Gold- Rs 5000 Platinum- Rs 100002|Page
  4. 4. Intouch V1 I2 [2011]New PartnersOne CapitallOne Capitall launched by House of Patels, one of the largest logistics conglomerates in Asia with astrong presence in transportation, door-to-door express cargo, freight forwarding, construction andFinancial Services.SMC WealthSMC Wealth Management Services Ltd. is a wealth management company formed as a joint venturebetween Sanlam Group a leading international financial services conglomerate from South Africaand SMC Group, one of India’s largest equity broking companies. This partnership creates a uniquecombination, a combination of local expertise, knowledge and resources with specialist internationalwealth management expertise. It offers to its customers a rewarding long term relationship whichcenters around customized investment solutions using a wide product suite based on domesticinsights, and global expertise.New ServicesMoneytouch 360 PlatformWe are constantly upgrading the platform from the back end without disturbing your operationsunlike desktop programmes. We are now adding the following features based on feedback andmarket developments, to know more call our service team  We will provide direct upload for data from India Infoline broking  You can now add prospect upload into the platform  New reports o A new Multi Asset report (Asset allocation , Investment summary and networth) o Equity report. o Prospect MIS for RM  Improved Financial Planning section o Level 1 entry for customers/ prospects o System integration with level 1 entry for existing customers o Enhanced FP sectional report o New FP dashboard o Revised FP offline form  Calculators : Interest engine, Loan/EMI, PV/FV  And last but not the least improved look and feelInternational cornerKeep yourself updated with what is happening in the worldhttp://www.ifaonline.co.ukThe premium website for IFAs in UK. Read all about new products, platforms and more. UK is one ofthe mature Financial Services markets and gives us an idea how the Indian market could evolve inthe coming yearshttps://www.sesame.co.ukOne of the premium IFA platform companies in UK who support over 300 IFAs on their platform3|Page
  5. 5. Intouch V1 I2 [2011]Cross Sell opportunityWelcome to the world of Cross Selling- Lending against PropertyThere are various types of loans that are available in the market; one of them is Loan againstProperty (LAP).A very strong and stable asset is property. Loan against property is a very good borrowing option asthere are several advantages of a property, which include possibility of appreciation in value, beingin the nature of a fixed asset, income earning potential and so on. This allows the best use of theproperty that is owned and at the same time will enable the raising of funds required for variouspurposes. Also, a loan against property comes with a low interest rate compared to that of apersonal loan or home loan. Proper use of the funds will ensure that the maximum benefit is takenfrom the position.Benefits:Easier To Obtain:A loan against property is also easier to obtain in terms of clearance and other factors once thenecessary security is available. If the property is available, it does not have a mortgage and can begiven as a security, it will not take much time for getting the entire loan cleared. This is because thespecific steps related to the loan against property will ensure that the process is completed withoutmuch wastage of time.Adequate Security:The presence of a property often proves to be an adequate security feature of the loan. Like severalother assets like shares, which might witness a massive reduction in their value, a property does notwitness such a large change in the position. In several cases, the property value actually rises witheach passing year and in such a situation it proves to be an adequate security for the purpose of theloan.Larger Loan Possible:The other benefit for a loan against property is that a larger amount of loan is possible. This dependsupon the property and its value, which allow a bit of flexibility to the borrower. If the funds requiredare slightly larger than what the individual can raise through other sources then he/she can go forthe loan against property to raise the necessary amount of funds. There is usually no majorrestriction in this regard as long as the loan against property can be serviced and the person then isable to complete the goals that are related to the requirement of funds.Use of Idle Property:In many cases, there are properties that are lying unused for a lot of people. This will not bebeneficial in any way and at the same time various circumstances might also make it difficult to raisefunds from the property unless it is sold off. In such a condition, using this to take a loan against theproperty will be a very good way to ensure that the best use is made of the property that is actuallylying idle. This will also ensure that proper use is also made of the asset available with all thosepeople who want to raise funds.Moneytouch Mantra:Leverage your asset if unencumbered to fund productive/ profitable cash positive ventures as youwill need to service the debt and pay the principal to release the property. Not a good idea tospeculate with this asset specially if you are residing in it.Our Partners:4|Page
  6. 6. Intouch V1 I2 [2011]Technology developmentsCloud Computing - BenefitsReduced Data Leakage: How many laptops do we need to lose before we get this? How manybackup tapes? The data “landmines” of today could be greatly reduced by the Cloud as thin clienttechnology becomes prevalent. Small, temporary caches on handheld devices or Netbook computerspose less risk than transporting data buckets in the form of laptops. And what about Small andmedium businesses? How many use encryption for sensitive data, or even have a data classificationpolicy in place?Updates are seamlessInstead of having to patch each and every individual user, the patches/upgrades are applied to theserver and each user received the updated version the next time they log in.No legacyThis is a big issue for traditional software vendors. Users who purchase previous versions of asoftware almost always will result in legacy versions lying around which need supportAvailable anywhere, anytimeLess bugs and virusesThere are certainly going to be a lot less bugs in Web based software, due to the fact that it is notdepending on any of the hardware or environment settings in the OS that may usually cause aproblem. No installation, means no viruses. Start shorting all those Anti-Virus stocks! Enough said!Piracy-proofHere is a big one. Imagine a world without software piracy. That world is here, and Web Applicationsare the solution to that problem.Low-cost support and maintenanceNo need to have expensive operating system gurus on hand to help with installation problems.User data is kept safe in hosting environmentUsing providers like Rackspace or Amazon or Net Magic will go a long way in reassuring yourcustomers that their data is safer than on their desktop!Low cost distributionNo more channel reliance. Reach out to new cities and towns with no cost on IT infrastructure. Gofor the billion users online!Access to the entire assets of the Web (APIs, widgets, messaging, collaboration)By being wired into the web, Web Apps are able to integrate seamlessly and are a lot morecustomizable, than traditional software applications.Mobile is hereCompiled desktop applications are going to have a hard time being adapted for mobile devices. Webapps are ready made (in most cases).5|Page
  7. 7. Intouch V1 I2 [2011]Business StrategyAMCs should nurture IFAsInspired by BCG CAMs reportOf the 100,000 IFAs registered with Association of Mutual Funds in India (AMFI) nearly 80percent of IFAs sell other financial products in addition to mutual funds—like life insurance,small savings, and general insurance. Many are also dormant and inactive as well.IFAs dominate in smaller cities and retail segments and as a distributor type have gainedshare over the past few years. If one disaggregates more, it is clear that large IFAs aregaining share rapidly at the expense of the small IFAs and other distributors.Recent regulatory changes have caught most IFAs unprepared, and they are now looking toenhance their capabilities so as to be able to offer better advice and service.As of March end IFA’s have a 29% share which makes it one of the larger distributors for theindustry and a channel that needs to be managed effectivelyIFAs are hurting with recent regulatory changes especially after the removal of entry load onall schemes and introduction of transparency in payment of the commissions. While alldistributor categories have been affected, the IFAs seem to have been impacted mostnegatively. They are looking to enhance their capabilities.IFAs, especially medium and small IFAs, are struggling. The many meetings I have had withIFAs, they clearly want to wait to decide on the future course of action as they feel thingswill settle down. The reality is that the dust is not going to settle in a hurry. The only thingthat is going to be constant for the next few years is Change. Being in denial orprocrastinating will not help, one needs to adjust business models now and move ahead.The report states that now the IFAs are awakening to the need for change and improvementand prepare for the future. They are looking to enhance their capabilities on four keydimensions1. Business build, which covers improving selling capabilities to convert leads into business and business into relationships, as well as improving preparation for meetings.2. Improved advisory, which includes developing the ability to truly understand client needs and to offer advice on portfolio allocation and ongoing portfolio management.3. Ease of operations, which is about leveraging technology and tools to make the administrative elements easier so that the IFAs can spend more time on business building and sales activities, as well as to help reduce costs.4. Improved client services, which is again about leveraging technology and tools to offer better services to clients— for example, offering clients an online account, offering ongoing rebalancing support, providing regular performance updates, among other services. It will be interesting to observe how AMCs, industry bodies like AMFI, and other third party service providers rally around these needs and support and equip them for the future.6|Page
  8. 8. Intouch V1 I2 [2011]Once IFAs realise the need for change they need to put their plan into action. What optionsdo IFAs have to build their business for the future, I share 4 options: 1. Referral Arrangement - IFA can refer business to other competent partners whom they choose for products and services they feel they have a gap, such as Research, Financial planning, Stock broking, Lending, Commodities, insurance etc. IFA can choose the partners, change partners and clearly it helps retain one’s independent status but increases coordination with multiple partners. 2. Create an Informal Group - The IFAs can get together informally as a group/association which can help bargain better commissions from product providers with limited binding on each other. Ring fences revenues but does not take the business to the next level. 3. Become a Company - IFA can invest in building the corporate entity, become a regional /national distributor, invest in branding, people, products, reach, resources etc. This calls for greater commitment and deep pockets. 4. Platform - This is the ideal way forward till one can transition to being a company as per point 3. IFA will need to analyse the multiple players and options that are available. It is easy to just merge the business with a larger player to get benefit of better revenue, better products, and better support. But one needs to understand the negatives to such a deal. Choose a platform partner who gives you in addition • Freedom to build your business in your name • Does not come with strings attached of AUM transfer, fee sharing on primary lines of product, restricted partner list. • Should create opportunities to earn more by cross selling multiple products and increasing product penetration. • Provide support across Operations, Marketing and TrainingThe FutureThe IFAs have to choose wisely what they need to do to build their business. If they arecommitted to their business and wish to grow then I am sure they will make a right decision.I strongly feel the manufacturers have a crucial part in transitioning the IFAs to the nextlevel. By supporting the IFA to choose the vehicle for future business growth AMCs willdevelop the channel with a value proposition that is sustainable. Regular Marketingactivities will continue tactically but to build long term engagement AMCs should be seen asbusiness enablers and partner at the IFAs business and not limit it to Mutual Funds only.We know 80% Advisors are selling multiple products hence by supporting them with theright business solution AMCs will be seen in better light by the IFA. The loyalty that theybuild will get them to be the top 3 funds distributed by the IFA. A smart strategy to adopt asit addresses few of the commandments for success for the AMCs such as • builds a value proposition for the IFAs • gets the AMCs product going with the IFAs • Empowers the IFA to face the growing needs of their clients7|Page
  9. 9. Intouch V1 I2 [2011] • Create a support mechanism for smaller IFAs • Develop a plan to get ‘retail’ long–term moneySmall/Medium IFAs are being nudged out of the business which may not hurt the industry inthe short term; the key challenge will be felt in the long run as they provide the pool for thesuccessful IFAs of the future. AMCs can do a lot to nurture and grow this key partner in theirdistribution mix.Client CornerInvestments you can offer to reduce your clients; tax burdenMost investors find themselves scrambling during the last quarter to invest in tax-saving avenues.Since this is the quarter when you focus on tax savings investments we thought of sharing all thepossible options you can assist your clients to take a look at:Life insurance (including ULIPS)- The premium paid for a life insurance policy that covers you, yourspouse and dependent children is eligible for deduction of up to Rs 1 lakh under Section 80C.Health insurance - You can claim a deduction of up to Rs 15,000 under Section 80D for the premiumpaid for a health cover. You can also buy health insurance for parents for an additional deduction ofup to Rs 15,000. The limit is increased to `20,000 in case of senior citizens.PPF - The maximum deduction allowed is Rs 70,000.NSCs and FDs - Investments in National Savings Certificates (NSCs) are as secure as those in the PPF.Infrastructure bonds - These bonds can help to further lessen your tax burden as investments ininfra bonds can be claimed as an additional deduction up to Rs 20,000 under Section 80C, beyondthe Rs 1-lakh limit.Senior citizens savings scheme - This scheme offers a return of nine per cent, higher than thoseoffered by most other safe instruments. However, the income is taxable though it should not affectyou much as the tax exemption limit for senior citizens is Rs 2.4 lakh per year. Investment in thisscheme is again eligible for deduction under Section 80C.Equity-linked savings schemes - ELSS have an edge over other tax-saving instruments as these havethe largest equity exposure compared with others. May not be everyones cup of tea as they are alsoconsidered more risky.8|Page
  10. 10. Intouch V1 I2 [2011]List of partnersOur partner list, contact our service team for details.Home Loans Business Loans Mutual Funds BondsAxis Bank Bajaj Finance AIG Investments SHCILBarclays Bank Barclays Bank Axis MF Fixed DepositsIDBI Bank Barclays Finance Baroda Pioneer HDFC Ltd.IndiaBulls Fullerton India Benchmark LIC Hsg. FinanceKotak Mahindra Bank Future Money Bharti AXA SHCILReligare Finvest IndiaBulls Birla SunLife PMSSBI (Mumbai only) Kotak Mahindra Bank BNP Paribas HDFCStanchart* Religare Finvest Canara Robeco HSBCTata Capital Stanchart DSP Blackrock Karma CapitalLoans against Tata Capital DWS Investments SMC Wealth Mgmt.propertyAxis Bank Personal Loans Fidelity ArtBajaj Finance Barclays Finance Franklin Templeton PatrimonioBarclays Bank Fullerton India HDFC REITsBarclays Finance Kotak Mahindra Bank HSBC Aditya Birla PECholamandalam Reliance Consumer ICICI Prudential MilestoneFullerton India Religare Finvest IDBI PropertyFuture Money Stanchart IDFC MF HIRCOIDBI Bank Tata Capital ING HiranandaniIndiaBulls Loans against Shares JM Financial IndiaBullsKotak Mahindra Bank Aditya Birla Finance JP Morgan Equities*Religare Finvest Bajaj Finance Kotak Mahindra MF PINC MoneyStanchart Cholamandalam L & T MF Derivatives*Tata Capital HSBC Mirae Asset PINC MoneyCommercial Prop. ICICI Bank Morgan Stanley MF Demat*LoansCholamandalam Reliance Consumer Motilal Oswal PINC MoneyIndiaBulls Loans against MFs Principal PNB Life Insurance*Tata Capital Aditya Birla Finance Reliance HDFC SecuritiesAuto Loans Bajaj Finance Religare PINC MoneyKotak Mahindra Bank Cholamandalam SBI MF General Insurance*Federal Bank HSBC Sundaram ICICI LombardTata Capital Education Loans Tata MF Small Savings*Gold Loans Credila Jayesh ManekOne Capitall *Referral arrangement /Conditions apply.Reliance Consumer Subject to change without noticeDisclaimerThis publication is for private publication only. Each recipient of this document should make such investigations as it deems necessary toarrive at an independent evaluation and should consult its own advisors to determine the merits and risks of such an investment. Theinvestment discussed or views expressed may not be suitable for all investors The information contained herein is obtained and collatedfrom sources believed reliable and Moneytouch has not independently verified all the information given in this document. Accordingly, norepresentation or warranty, express or implied, is made as to the accuracy, completeness or fairness of the information and opinionscontained in this documentFor any suggestion, feedback please email to Editor Intouch at feedback@touchbase.co.in9|Page

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