9th January 2012

Market Confidence - Equity

After a dismal 2011, where do you see the Sensex in 2012? Are we looking at a year of a big crash or a year of a spectacular rally or are we looking at a range bound year with the market drifting around the current levels? This is what some of India's leading advisors believe will be the Sensex level by December 2012 :

On the whole, the equity pulse of the leaders seems robust - with a full 70% of advisors believing that the Sensex will close 2012 above 17,500. 23% of advisors believe the market will be stuck in its present range and only 7% are bearish that the market will close 2012 at a level lower than its 2011 close. Despite a bad 2011, its heartening to note that advisor confidence in equities for 2012 continues to be quite healthy. The task at hand is to get clients to buy into this confidence.

Advisors from the West seem to be a lot more bullish than others. Is proximity to the scene of all market action anything to do with this bullishness? The East in contrast, has the largest proportion of advisors bearish on equity markets - though their numbers are still quite small. A large proportion of North based advisors seem to believe that markets will be stuck in the same rut as they currently are - perhaps in a similar fashion to the rut in which we find the nation's politics, which also gets shaped in the same region!

Market Confidence - Debt

After many false starts during 2011, duration funds (income and gilt) staged a splendid end-of-the-year rally, igniting hopes once again of a bull market in bonds and gilts. How optimistic are advisors of this bull run sustaining in 2012? Where will the benchmark 10 year G-Sec yield be by Dec 2012? Here is the pulse of leading advisors on debt markets :

A huge 79% of all advisors believe that yields will be moderately or significantly below current levels by the end of the year - which translates to a clearly bullish view on gilts and bonds. This bullishness is most pronounced in the West - with an overwhelming 96% believing in a lower interest rate environment by the end of the year. Advisors from the East seem to be relatively the more cautious lot, with as many as 13% actually looking at higher interest rates by the end of 2012. In overall terms though, only 2% of advisors appear bearish on interest rates. For those of you advisors who are not yet focusing on income funds - whether dynamic or long duration - there is a clear message here from the leaders of your fraternity : its time to get bullish on income funds - and look for some capital appreciation in 2012.

Business Mantras for 2012

2011 was a challenging year for the MF industry and for the distribution fraternity. 2012 does not promise to be a bed of roses. Distributor regulations are a certainty in 2012. Margin pressures do not seem to be easing. And yet, as entrepreneurs, your focus as always is to find ways of growing your business. What are the key business mantras that leading advisors are adopting in 2012, to help them navigate through challenging times and emerge stronger? Here are a few mantras of some of India's leading financial advisors - more will follow in subsequent parts of these survey results :

Nilakshi Louzado, InTrust Advisors, Pune

• If traditional products/services are no longer working, upgrade skills, knowledge levels, offer alternate financial and investment products as well as services like estate planning, etc

• Be in continuous touch with investors to keep a pulse on what needs to be tweaked and amended in our service proposition.

• When the Going gets tough, the tough get going.- create wider prospect lists, look at new segments

• Honesty, Humility, Persistence.- Demonstrate these consistently.

Ramesh Bhat, Aniram, Chennai

• Go online to become cost effective

Aniruddha Sengupta, Arthashashtra Financial Planners, Mumbai

• Self education

• Investor education

• Leverage technology to increase efficiency in delivery of information & service

Bharat Bagla, Bees Network, Kolkata

• I'm building a lot of money in ultra short term funds, FMPs, Fixed deposits, NCDs, etc. as I see a lot of money going away from under our jurisdiction. Hence, if we continue to hold on the our clients' mind and wallet share we'll be able to sail through.

• It is a difficult situation and we have to handle it with intelligence. Any goof ups can be lethal.

• The regulator can throw a lot more surprises and we have to be able to guess it.

• Considering the way things are I suggest we remain passive and wait for a more clear environment to emerge.

• Technologicaly also a lot is gonna emerge so lets await that and in the mean time keep ur costs under check.

Dhiraj Mittal, Prime Capital Services, Delhi

Religiously follow the process listed below:

• Risk profiling

• Asset Allocation, monthly reporting to clients

• Rebalancing as and when due

• Strictly recommend the best schemes

• Hire the best people

• Aggressively ask for referrals from clients, AMC, friends and associates

Lovaii Navlakhi, International Money Matters, Bangalore

• Continue focus on long term financial goals of clients; stick to asset allocation; increase communication with clients

• Be more proactive with tactical asset allocation (profit booking & opportunistic buys), esp. with no entry loads.

• Continuously upgrade knowledge and with it competencies, so that you can always offer what's best for your clients.

Ranjit Dani, Think Consultants, Nagpur

• WE SHOULD PLAY ONE BALL AT A TIME, INSTEAD OF WORRYING TOO MUCH ABOUT THINGS WHICH WE CAN'T

• GET THE BASICS RIGHT AND KEEP DOING THEM IRRESPECTIVE OF SHORT TERM RESULTS

• OVERCOMMUNICATE WITH CLIENTS

Sangita Jhaveri, Prescient Financial Solutions, Mumbai

• POSITIVE FRAME OF MIND

Pradip Chakraborthy, Right Choice Securities, Kolkata

• ENHANCE CUSTOMER COMMUNICATION AND BE WITH THEM DURING THE VOLATILE TIMES.

• HAVE A CLOSER LOOK AT EXISTING PORTFOLIOS AND REVIEW IN ORDER TO GENERATE HIGHER RETURN WHEN THE MARKETS IMPROVE.

• ADVICE INVESTING IN DEBT AND LIQUID.

• HIGH TIME TO FOCUS ON ASSET ALLOCATION - CONVERT INVESTOR'S INTEREST IN GOLD AND REAL ESTATE INTO BUSINESS.

• COST CONTROL AND ENHANCED USE OF TECHNOLOGY.

Vijay Hede, Shivranjani Securities, Panaji., Goa

EQUITY INVESTING IS A LONG TERM WEALTH CREATION PROCESS. THERE ARE BOUND TO BE HICCUPS IN SHORT TERM. THERE ARE CHANCES OF LOSSES EVEN ON A FIVE YEAR HORIZON. I HAVE THEREFORE NOT PARTICIPATED IN HAZARD OF FORECASTING A 1 YEAR RETURN. I DON'T BELIEVE ANY EXPERT CAN DO IT ANYTIME. WE SEEM TO HAVE SHORT MEMORIES. NO ONE COULD FORECAST THE TANKING OF THE MARKET IN 2008 NOR AN ASTRONOMICAL RISE A YEAR LATER. SUBJECT TO GLOBAL UNCERTAINITIES INDIA LONG TERM STORY WILL TRANSLATE INTO near 15%

Sharad Bindal, BFC Capital, Lucknow

• Charging Advisory Fee from clients

• Having a comprehensive and diversified basket of products

• Offering clients only products most suited to their requirement and therefore abiding with "Client Centric approach" rather than "Product Centric Approach".

• Educating clients to make them take informed decision.

Major Ashish Chadha, Chadha Investments, Delhi

Meet and review existing clients portfolios

Beg for references from satisfied customers

Keep service standards high

Siddharth Shah, Shalibhadra, Ahmedabad

I believe that

• There are new challenges on the way, few players (distributors) will not able to face, few will ignore it and they will let down giving more clear way to those people who are in field. So the time for me is challenging but there are big possibilities of getting more business from facing it, accepting it and finding out ways to come out of it.

• The recent SEBI move to direct distributors towards advisory, will create teething problems to all, but in long run, after survival of all these, we will be able to create such a business model to our heirs which they can run for years.

• I find that we have less control on investor's decision. SEBI, AMFI, AMC's, Wealth Forum and Distributors have lot to do to move them out from their psychological decision making barriers.

Shiney Sebastian, Affluenz Financial Services, Kochi

With bond funds offering superior tax efficient returns at lower risk, it would be a great time to bring in new clients who can be hand held into financial planning process.

Lalit Somani, Hyderabad

• Stay with the clients and hand hold them.

• Keep client returns & safety of their funds OVER the greed to earn more.

Amit Maheshwari, AKM Investments, Indore

• JUST KEEP ON FOLLOWING BEST PRACTICES, ADVICE CLIENTS PROPERLY.

• PRAY FOR MARKETS TO REMAIN OVER 20000 INDEX !

Sumeet Vaid, Ffreedom Financial, Mumbai

Client Focussed Fee based Financial Planning oriented Finacial advice business model targeted at Mass affluent/Middle class Indian families

Pihas Parikh, Sagar Investments, Ahmedabad

• KEEP YOUR COST LOW. BE INNOVATIVE. ACQUIRE NEW SKILLS. USE NEW TECHNOLOGY. KEEP NETWORKING.

• SHARPEN YOUR AXE DURING THE TURBULANT TIME AND BE PREPARED.

• HAVE PATIENCE AND CONFIDENCE.

Vikram Oke, One Stop Solutions, Nashik

• Do not do anything stupid.

• Just be visible to clients & stay in touch with them. Try and call them for review meetings.

• Try to arrange mass presentations on need for financial planning.

Kanak Kumar Jain, Suskan Consultants, Kolkata

• Will make as many financial plans as possible. Free for existing clients. Charge fee for new and referred clients.

• Have maximum ( one in a month) investor meet in various locations of Kolkata

• Involve in maximum social activities via Rotary Club and ASK circle

What are your business mantras for 2012?

What is your outlook on debt and equity markets? Do these mantras give you useful ideas and insights? What are your business mantras for 2012? What strategies are you planning to adopt to navigate challenging times and emerge stronger? Share your views by posting your comments in the box below - its YOUR forum !