Financial literacy is the key to financial freedom

In an interview with Pooja Chopra Goel of Myiris.com, Hemant Beniwal, Director, Ark Financial Planners says, ``The onus of a successful financial advisory system lies in the hands of the people.

Can you tell us about `Ark Financial Planners` and its mission & services? What services do you offer?

Ark Financial Planners is a fee based financial planning firm which is serving Indian clients across the globe. Our more than 50% clients are NRIs. Our priority is to help clients achieve their goals. Not only fulfillment of their goals is our responsibility, but we also make sure that this entire process of managing wealth is independent, comprehensive and competent.

We ensure that our clients get an understanding of the investments and use resources in such a way that they get the most from their life stressing over financial matters. We focus upon comprehensive financial planning only as we believes that financial planning is the only way through which people can achieve their financial goals.

But recently we received lot of queries about single element planning so we have extended our services to - basic financial plan, retirement planning, investment planning, estate planning, mutual fund portfolio reviews and consulting. At Ark, we ensure that whole process is very interactive & learning so that client feels involved.

Can someone get hourly financial planning and tax advice to get a big picture? How do I know if the cost of financial planning is worth it for me?

Hourly financial planning consultancy is a very new concept in India. We live in a country where people think advice is a free gift and the price is always built in the product. We have recently added the only consultation (fee only) in our services and we are getting very positive response. Investors are sharing their concerns and find it a very satisfactory experience. Many investors who are using this service actually want a comprehensive financial planning service.

Cost of financial planning is definitely worth it; although it is a very big & subjective question. We are not dealing in tangible products so the client can`t see the outcome now. The plans that we makes are a road map for 40-50 years & don`t provide any instant gratifications. For making people understand its worth, we always tell them the likely outcome & show sample plans so that they can decide whether they want to get involved in this process or not.

But a big problem in Indian context is that the term `financial planning` & `financial planner` has been misused to sell financial products. Till now the planning part is completely overlooked and that has added to confusion. Clients must be willing to pay the fees for impartial advice, just the way they pay doctors for diagnosis. The onus of a successful financial advisory system lies in the hands of the people.

What information should one bring along to get maximum value for time spent with the planner?

Financial planning is all about achievement of one`s financial goals. So before a person reaches a planner he should ask himself: What are my financial and life goals? Where am I standing today in relation to my goals? How will I reach my goals from where I stand today? The best way I think is that he should write these questions and the answers on paper. He should also carry the supportive documents. I think this can become the foundation of client - planner relationship.

How would you suggest a common investor ensure that their accounts are protected and not invested in dubious instruments?

Mis-selling is making new peaks every year and for common investors it`s very tough to identify what is right or what is wrong. With the agents, even manufacturers are trying to milk naive investors. Best way is one should have a written financial plan .This helps in two ways. First is that your focus moves away from - ``What is new in the market?`` to ``Will this product be helpful to achieve my goals?`` Secondly, it will eliminate the risk of mis-selling as the advisor is giving recommendations in writing.

How many fund houses do you deal with? In which fund house do you have the maximum AUM (in terms of percentage)? Tell us your favorite all-time MF schemes and fund managers.

We don`t think this way. We deal with almost all mutual funds and financial products. But suggestion for product is according to the client`s need. In mutual funds, we have some good fund houses with consistent fund management but as such there is no favorite kind of thing. We have designed our internal fund selection criteria and once it matches to client`s objective we suggest a particular fund. For example, at times we say no to even Reliance Growth Fund - undoubtedly best performing fund till date, if it doesn`t fit in our scheme selection criteria.

Has the no-load regime affected your business?

Yes it has; but in positive way. This was a path breaking decision by the SEBI. It was very much required. Clients now know they have to pay for the advice but how much, is still a general question. Earlier in India fees for advice was an unheard word for clients. Once a person knows he has to pay, he starts looking for advisor who can guide him in a right way.

What three books related to personal finance would you recommend every person read and why?

I have read 100 plus books on personal finance & investments but there is no single book which I can recommend as `Nirvana`. And the problem is you hardly will find a good Indian book on this subject. Still if I have to recommend 3 books first will be - ``The Cash Flow Quadrant`` by Robert Kiyosaki. This book tells about difference between assets & liabilities and also tells how to manage your cash flow which is very important for any person to achieve his financial goals. This is a must read for everyone and will change the perception about money. Second will be - ``The Rule of Wealth`` by Richard Templar. This book talks about very simple but important concepts about money. Finally, here comes the investment bible - ``The Intelligent Investor`` by Benjamin Graham. Even Warren Buffett recommends this book by quoting, ``By far the best book on investing ever written``.

What is your take on current market situation? What are the key factors that will drive the stock markets in 2011? What is your advice to retail investors now?

We work on asset allocation model & hardly concentrate on day to day market ups and downs. Even we ask our clients to keep their eyes on goals rather than markets. Timing market or checking its direction is futile exercise which is not actually worth anyone`s time & energy. India is a growing economy and its equity markets can easily deliver 2-3 times of actual inflation figures in next 20 years. Equity gives returns in long term but will investor will be able to get it? Investor`s financial behavior will answer this question.

Is there anything else you would like to share with our readers?

We wish to say that financial literacy is very important as we miss this in our education system. We dream for a day when investor will be financial educated before he reaches his financial advisor. Financial literacy is the key to financial freedom. Being financially aware means client will understand his questions and will definitely understand the solutions. It is really painful to see when a client is mis-sold for penny benefits. And best way to avoid mis-selling is to get armored with financial literacy. We also run a blog: The Financial Literates (www.tflindia.in). We want to give our society back what we have earned from it. This is a web place where we write about concepts, trends, guidance in the field of personal finance.

Source: http://www.myiris.com/newsCentre/storyShow.php?fileR=20101225120305173&dir=2010/12/25&secID=livenews

Investor friendly: Nilesh Shah - ICICI AMC

“If you want to understand the investor pulse, travel by Mumbai’s evening local trains.” That’s a statement that Nilesh Shah, the deputy managing director at ICICI Prudential Mutual Fund, often makes.

But Shah is the kind of man that walks the talk — or in this case rides it: Many recall him actually travelling by a local train when he headed fixed-income funds at Franklin Templeton to hear people’s take on the markets.

Shah is just as involved in issues that impact the MF industry as a whole. During the liquidity squeeze of October 2008, following the collapse of US financial services giant Lehman Brothers, the degree and pace at which investors withdrew money from financial instruments was so staggering, it shoved the domestic MF industry to verge of a collapse.

Shah then took the lead in convincing Reserve Bank of India to lend the industry a helping hand. For the first time on October 14 that year, RBI introduced a Rs 20,000-crore, 14-day credit window for fund houses. Shah's efforts at reasoning with the Securities & Exchange Board of India paid off, too.

Though not an effective stock picker, consistency and steady bets have been Shah’s mantra. This may not have resulted in high-yielding gains for his investors, but their losses too were contained. “I believe in protecting the downside for investors,” he says.

Usually soft-spoken, the 42-year-old fund manager is a much sought-after speaker. Though rarely annoyed at the volley of questions at these functions, on one occasion he asked a member of his audience to shut up. “People have come to hear me and not you,” he had said, snubbing the gentleman.

ICICI’s assets under management have risen to over Rs 70,000 crore in September, from around Rs 15,000 crore when Shah joined the fund house as a chief investment officer in June 2004. ICICI's Discovery, Dynamic and Infrastructure schemes under his watch have delivered higher-than-average returns in the past 3-5 years.

When Shah put in his papers last week, citing “personal reasons”, the industry was curious what he had planned next. His exit comes at a time when MFs are yet again grappling with the regulator on various issues.

Source: http://www.business-standard.com/taketwo/news/investor-friendly/419261/

Market expected to be stock driven in 2011: Lakshmi Iyer

Growth in the domestic equity market is expected to be more stock, rather than sector driven, said Lakshmi Iyer, Head- Fixed Income and Product, at Kotak Mahindra Mutual Fund talking about her expectations from markets in 2011.

The equity market may as such post a largely consistent growth trend, with reduced volatility-bouts, and lesser divergence in the sectoral growth. The returns may consequently reflect the nominal growth in the economy, she added.

The domestic debt market performance would remain a function of liquidity conditions and inflation outlook. The interest rates, which now are largely at pre-2008 crisis level, may remain unchanged initially and subsequently react to events globally as also domestic. Resultantly, Indian bond yields may move sideways for most of the year.

Citing about her favorite sectoral picks for 2011 she said, For various analytical reasons, we believe that Banks with high CASA, Pharma companies that have a wide FDA approval and diversified product portfolio, and Media with a deeper reach, may be the key sectors in the following year. Also, the FMCG and the IT sectors too could look positive in the following year.

Source:http://www.myiris.com/newsCentre/storyShow.php?fileR=20101223162527707&dir=2010/12/23&secID=livenews

L&T Mutual Fund ties up with Central Bank of India

L&T Investment Management Ltd. - Investment managers for L&T Mutual Fund one of the prestigious mutual funds in the country has formalized its tie-up with Central Bank of India, a leading public sector bank, to qualitatively enhance its reach in the category of mutual fund investors across the country.

On the Occasion, Mr. Sanjay Sinha, Chief Executive Officer, L&T Invest Management Ltd. said, “With this tie up, L&T Mutual Funds schemes will be available at all 3600 retail branch locations of Central Bank of India. This partnership will substantially strengthen our distribution network.”

About L&T Mutual Fund
L&T Mutual Fund is one of the premier asset management companies in the country that serves the investment needs of investors through a suite of mutual fund schemes. With proficient investment management practices and an equally competent fund management team, L&T Mutual Fund helps its investors reach their financial goals

L&T Mutual Fund is backed by one of the most trusted and valued brands L&T Finance Ltd., incorporated as Non Banking Finance Company in November 1994. L&T Finance Ltd. has earned the trust of thousands of investors by adapting well to the changing market dynamics and emerging as a profitable venture despite the turbulences in the financial market over the past few years.

L&T Mutual Fund is present in 55 cities through its network of dedicated 58 branches and is continuously increasing its footprints across the country.

About Central Bank of India
Central Bank of India can be truly described as an All India Bank, with its large network in 27 out of 28 States and presence in 4 out of 7 Union Territories in India. Central Bank of India holds a very prominent place among the Public Sector Banks on account of its network of 3600 branches and 195 extension counters at various centers throughout the length and breadth of the country.

Source: http://www.business-standard.com/india/news/lt-mutual-fund-ties-upcentral-bankindia/419320/

Bharti may exit Bharti-AXA Mutual Fund

Bharti-AXA Mutual Fund is most likely to sell its stake to Bank of India and the deal is to be finalised in the next one month. Earlier, public sector banks like Central Bank and Indian Overseas Bank were reported in the race to buy the stake in the mutual fund house.

According to the market participants, Bharti Enterprises which holds 25% stake in the venture is likely to exit from the mutual fund business. Sandeep Dasgupta, CEO of Bharti AXA investment manager said, “We are looking for a banking partner, but I can't comment whether it will completed within the next month, as there are several processes to go through.” He didn't comment on the share price at which Bharti will exit the business. “You will know it once the deal is done,” he said.

For the last two years, Bharti-AXA MF was looking for a partner to expand its asset management business, but talks were put on hold following financial meltdown of 2009. A senior official close to the development said, “valuations are still being worked-out as Bank of India is planning to buy more than 25% stake in the fund house.”

Source: http://www.indianexpress.com/news/bharti-may-exit-bhartiaxa-mutual-fund/728646/

Sundaram MF declares dividend for Select Thematic Funds Rural India Fund

Sundaram Mutual Fund has approved Dec.24, 2010 as the record date for declaration of dividend under dividend option of Sundaram Select Thematic Funds Rural India Fund.

The face value of per unit is Rs 10.

The quantum of dividend will be 30% (Rs 3 per unit) as on the record date.

The primary investment objective of the scheme is to generate consistent long term returns by investing predominantly in equity / equity related instruments of companies that are focusing on rural India.

Source: http://www.myiris.com/newsCentre/storyShow.php?fileR=20101222155045707&dir=2010/12/22&secID=livenews

10 stock picks of fund managers

Mutual Funds in November uploaded stocks like Indian Hotels and stocks in Construction & Engineering space. Tilkanagar Industries - the Indian made foreign liquor maker and a strong south bound player was second in the list in terms of number of shares added, according to report released by Religare Securities.

Mining stocks were in the crosshairs of the Fund managers on the back of big bang listing of Coal India. As many as 5 AMCs added Coal India. Electric Utilities also got top billing from fund houses. Power Grid was bought by 6 AMCs.

Top 10 most bought stocks by MF in November

Coal India (24 mn shares)

Tilaknagar Industries (2.89 mn shares)

TVS Motor Co (2.66 mn shares)

Power Grid Corporation of India (2.31 mn shares)

Texmaco Rail & Engineering (1.67 mn shares)

Chambal Fertilisers & Chemicals (1.15 mn shares)

Indian Hotels Co (0.93 mn shares)

Himadri Chemicals & Industries (0.85 mn shares)

Gammon Infra (0.82 mn shares)

JaiPrakash Associates (0.74 mn shares)

Top 5 sector exposures

Banks (11%)

Petroleum, Gas and petrochemical products (9%)

Engineering and Capital Goods (7%)

Auto & Auto Ancillaries (6%)

Steel and Ferrous Metal (6%)

Kotak Mahindra Mutual Fund announces conversion of its scheme into open ended

Kotak Mutual Fund has announced the conversion of it scheme - Kotak Indo World Infrastructure Fund, a three year close ended equity scheme into an open ended equity scheme, with effect from 27th January, 2011. There will be no changes to any other fundamental features of the scheme on being converted into open ended scheme except that scheme is converted from close ended to open ended scheme. The scheme will charge an exit load of 1 per cent if exited within 1 year from the date of allotment of units and nil if exited after 1 year from the date of allotment of units. The unitholders of the scheme who are not in agreement with the conversion may redeem their units at applicable NAV or switch to other open ended schemes of Kotak Mutual Fund without payment of exit load between 25th December, 2010 and 25th January, 2011.

Source: http://www.mutualfundsindia.com/news_viwe.asp?news_headline=Kotak+Mahindra+Mutual+Fund+announces+conversion+of+its+scheme+into+open+ended@MF037