Wealth Management, Bangalore

Wealth Management, Bangalore

January 10^th, 2013

Continuing Education is an integral part of the CFA program. The institute encourages its members to spend certain number of hours on learning activities every year. This fact was also emphasized by speakers of the event organized on 10^th January, 2013 at the Bangalore Chapter of IAIP. Both speakers, Lovaii Navalakhi, CEO, International Money Matters and Joanna Kwok, Director, Society Relations, Asia-Pacific, CFA Institute, have been following this concept in their own professional life for almost over last quarter of the century.  The Bangalore Chapter of IAIP hosted both of them in January.

Wealth Management Session:

Lovaii Navlakhi chose to indulge the audience in a discussion rather than a simple talk. The topic covered asset allocation dilemma in an emerging market context. Audiences were treated to insightful information about social reasons for an inclination in Indian society to allocate a huge portion of one’s assets to real estate and also to maintain a large cash balances. He noted that real estate is embedded in Indian household psyche and to actually convince his clients to lower the allocation has not yielded much result.

Lovaii said that he would target the cash balances in the bank accounts of most house-holds first and help families allocate money to other assets classes. Equity and mutual fund products, to a large extent, have very little allocation in most households. Given the young work-force and the trajectory of the demographics in the country, he thought it was appropriate to allocate more toward equity products.

Insurance has a history which is linked to tax breaks given by the government to promote the products. This incentive structure needs to be looked at from a different perspective where allocation to insurance products must take into account the need to negate events mostly falling outside the normal bell curve. Apart from term life insurance products, health insurance needs to be looked at more meticulously and that most families are under educated about the details of coverage, terms and conditions of the product their employers offer. The critical illness coverage was not looked into by most people and shared instances when it had helped his clients go through difficult situations. According to him, gold has disastrous value and that allocation should not exceed more than 10.0 percent of most portfolios.

Retirement planning should be done at very early stage of one’s personal life and person should diversify over various asset bases. This helps when they cannot understand the entire universe of products available in the market. Lovaii explained that discipline is the key in retirement planning. According to him, moving among asset classes to take advantage of tactical opportunities can be detrimental to the whole portfolio and goals of individuals. In this situation, insurance pension schemes help to a certain extent, i.e., once money has been committed, it becomes difficult to pull it out. Products which lock in capital could help maintain discipline.

While explaning the international market investing, Lovaii note that negatively correlated returns need to be looked into, person should invest through feeder products and explained that exposure to other markets can be achieved in rupee terms.

Finally Navlakhi provided historical perspective, social context, current trends and strategies for Wealth Management. The speaker also emphasized on continuous learning, attending workshops, networking and improving financial literacy in our immediate surroundings.

Information Session on resources available at the CFA Institute:

Joanna Kwok educated the IAIP society members and candidates in Bangalore about the benefits of the CFA charter and how we could take advantage of the institute’s website starting from the “my page” section. She educated the audience about strategic initiatives of the institute in promoting causes of its members. Ms. Joanna also provided audience insight into what the benefits of membership are for a CFA charter holder and how one could espouse continuous education via available resources on the CFA institute’s website. She highlighted the availability of live webcasts, recorded presentations, journals and other online learning tools*.

Alluding to the Career Resources available via the CFA institute website, Joanna noted that this platform is globally integrated. Since the program was an established gold standard in educating investment & finance professionals, this platform is a great resource even if people moved to other countries and continents. She also walked us through how the JobLine services worked*.

Joanna then drew audiences’ attention to the volunteering opportunities within the CFA community and noted that there were only about 600 employees managing the not for profit global operations and that a major driving force around the world were a great team of volunteers. The volunteer program all over the world was prompted by the mission of the CFA institute which is “To lead the investment profession globally by promoting the highest standards of ethics, education and professional excellence for the ultimate benefit of society”

Finally, the speaker shared with the audience about other forms of membership for candidates who have passed the level III exams but do not fulfill all requirements of a regular membership. Affiliate membership and retired membership are two other forms of membership discussed for candidates who do not have the necessary work experience or have been unemployed due to structural reasons and otherwise. She noted that the institute was aware of the regional difficulties in fulfilling all the requirements and that they had relaxed some norms including the one needing professional endorsement, which previously required three references and has now been reduced to two. It was also noted that the society was initiating contact with employers in India to see if there could be other ways of providing experience to candidates who have fulfilled all other criteria.

Contributed by: Abhimanyu J L and Deepak Mundra, CFA

Photo Courtesy: Sreeraju Nichenametla