PROJECT REPORT ON

HOW DO YOU SELECT YOUR FINANCIAL ADVISOR ? LIC AND PRIVATE SECTOR OF LIFE INSURANCE RECRUITMENT OF FINANCIAL ADVISOR FOR ING VYSYA LIFE INSURANCE
UNDERTAKEN AT:

ING VYSYA LIFE INSURANCE LTD. (BARODA)

(FROM 1ST MAY 2008 TO 30TH JUNE 2008)

Prepared By:

MAKWANA AMIT K.
(Pursuing Master in Business Administration) Dharmsinh Desai University College Road,

Nadiad,Gujarat

Location of ING Vysya life insurance Company office in INDIA

ING VYSYA HEAD OFFICEBANGLORE PREFACE

Life brings with it many surprises, some pleasant and some not so and a Life Insurance Plan ensures that you are better prepared to face uncertainties. You need life insurance to be there and protect the people you love, making sure that your family has a means to look after itself after you are gone.

It is a thoughtful business concept designed to protect the economic value of a human life for the benefit of those financially dependent on him. Thats a good reason. Supposing you suffer an injury that keeps you from earning? Would you like to be a financial burden on your family, already losing out on your salary? With a life insurance policy, you are protected. Your family is protected.

Life insurance makes sure that you have regular income after you retire and also helps you maintain your standard of living. It can ensure that your post-retirement years are spent in peace and comfort.

Insurance is a means to Save and Invest. Your periodic premiums are like Savings and you are assured of a lump sum amount on maturity. A policy can come in really handy at the time of your childs

education or marriage! Besides, it can be used as supplemental retirement income!

Life insurance is one of the best tax saving options today. Your tax can be saved twice on a life insurance policy-once when you pay your premiums and once when you receive maturity benefits. Money saved is money earned!

Hence, my project focuses the current scenario in the insurance market. Many Indian companies in collaboration with foreign companies have started their business in the life insurance field and are doing very well. It also throws light on the strategies that companies should employ in acquiring insurance advisors for their business. Also I have tried my best to identify how should a financial advisor be for the people.

ACKNOWLEDGEMENT
I would sincerely like to acknowledge some of the prominent personalities for their help in the summer project at ING VYSYA LIFE INSURANCE LTD (BARODA). First, and foremost I am thankful to Mr. Mukesh Jagwani, the Area Manager of Ing Vysya Life Insurance Ltd. (Baroda) for giving me an opportunity to undertake the project. Then I am sincerely thankful to Mr. Tejendrasingh Suryavanshi, the Branch Manager. I would also like to thank Mr. Ankur Gaur, the Marketing Manager Last but not the least, my special thanks to Mr. Brijesh C. Bhagat, the Sales Manager at Ing Vysya Life Insurance (Baroda). I am also thankful to Mr. Neeraj Yagnik, my Guide during the project work, to Mr. Hitesh Bhatt, Head of the MBA Department, for their useful insights into the project.

INTRODUCTION

About ING Group :

ING is a global financial institution of Dutch origin offering banking, insurance and asset management to over 60 million private, corporate and institutional clients in over 50 countries. With a diverse workforce of approximately 120,000 people, ING comprises a broad spectrum of prominent companies that increasingly serve their clients under the ING brand.

Fortune 500, July 2007 has ranked ING Group as the worlds thirteenth largest company. As per the ranking, ING Group is the worlds largest financial service provider.

The Annual Inter brand Report 2007 which ranks global brands across all categories has ranked ING among the top 100 global brands. INGs ranking has risen from 85 to 81 compared to last year.

ING Groups Presence in India :

ING operates through three businesses in India, ING Vysya Life Insurance, ING Vysya Bank and ING Investment Management. ING Vysya Bank is a premier private sector bank with over 76-year heritage and 1.5 million satisfied customers. ING Investment Management comprises of two operations: ING Fund - a mid sized asset management company with a retail investor focus and Optimix a fund of funds business.

ING Vysya Life - An Overview

ING Vysya Insurance Company Limited a part of the ING Group the world's largest financial services provider* entered the private life insurance industry in India in September 2001. Headquartered at Bangalore, ING Vysya Life is currently present in 246 cities and has a network of over 300 branches, staffed by 7,000 employees and over 51,000 advisors, serving over 5.5 lakh customers.

Product Portfolio ING Vysya Life follows a "customer centric approach" while designing its products. The Company's product portfolio offers products that cater to every financial requirement, at all life stages. In fact, the company has developed the LifeMakerTM a simple tool which can be used to choose a plan most suitable to a specific customer based on his needs, requirements and current life stage. This tool helps you build a complete financial plan for life at every lifestage, whether the requirement is Protection, Savings, Investment or Retirement. Suitable products from ING Vysya Life Insurance's product portfolio for each such requirement, makes selection of your plan an easy exercise.

The Company aims to make customers look at life insurance afresh, not just as a tax saving device but as a means to live life to the fullest. It believes in enhancing the very quality of life, in addition to safeguarding an individual's security

Partners in ING Vysya life insurance company ltd.

ING Group Exide Industries Limited Gujarat Ambuja Cements Limited Enam Group

ING Group ING Group is known for its philosophy of keeping it simple. This thought is the result of ING Groups 150 years of understanding of customers needs and fulfilling them. ING is a global financial institution of Dutch origin. It has 150 years of experience, and provides a wide array of banking, insurance and asset management services in over 50 countries and is trusted by over 60 million customers. Its 1,13,000 employees work daily to satisfy a broad customer base individuals, families, small businesses , large corporations, institutions and governments. The ING Group has gone from strength to strength year after year and is the world's 13th largest company*. The ING Group is the world's largest financial institution* with over US $ 1 trillion# in assets and profits of US $ 8.5 billion in 2005#. Over the last 150 years, ING Group has grown to become the largest insurer in the world*. Today it touches the lives of millions of people established successful life insurance companies in 15 countries contributing to the development of insurance services in these countries successfully. NG Group has wide and deep experience in setting up companies in new markets, which require substantial investments underlining ING's long-term commitment. In the last 20 years, ING Group has

Exide Industries Limited With eight manufacturing plants strategically located across the country, Exide is Indias largest producer of automotive and industrial batteries. Its range of products covers everything from the smallest batteries required in motorcycles to the giant batteries powering submarines. For the fiscal year 2004-05, the company registered a sales turnover of Rs. 1,482 crores and a net profit of Rs. 77 crores. Boasting an uninterrupted dividend payment track record of 58 years, the company has a global presence through its subsidiaries in Singapore, Sri Lanka and the United Kingdom. It is the market leader in the organised sector in both the automotive and industrial segments. 'EXIDE' and 'SF(Standard Furukawa)', the flagship brands of the Company, are also the leading battery brands in the country.

Gujarat Ambuja Cements Limited Gujarat Ambuja Cements Limited. is the fastest growing cement company in India and considered one of the most reputed companies in India. GACLs brand Ambuja Cement is considered a premium brand in the Indian market. Apart from domestic sales, Ambuja Cement is also the largest seller of Indian cement in countries including Sri Lanka, Dubai and Kuwait. Its plants are some of the most efficient in the world, with environment protection measures that are on par with the finest in the developed world. It is the most profitable cement company in India, and the lowest cost producer of cement in the world.

Enam Group Enam Group is one of Indias leading financial service providers reputed for its ability to perceive the true potential of businesses and enhance their value. The culture at Enam Group is deeply rooted in ethics, innovation and financial sobriety.

Board of Directors (as on January 18, 2008)

Mr. Rajan Raheja : Mr. Kshitij Jain Mr. N.N. Joshi :

Chairman of the Board Managing Director & Chief Executive Officer

: Director

Mr. Satish Raheja : Director Mr. Rajesh Kapadia : Director

Mr. S.B. Ganguly : Director Mr. Ron Van Oijen : Director Senior Management Team

Kshitij Jain Amit Gupta Hemamalini Ramakrishnan Marco Fredriks Priya Gopalakrishnan Rahul Agarwal Ravishankar Subramanian

: Managing Director & CEO : Director - Marketing & Communication

: Appointed Actuary & Chief Investment Risk Officer (CIRO) : Financial Controller : Director Human Resources : Director - Customer Services & Risk

: Director Information Technology & Corporate Services

Rene van der Poel : Director Alternate Channels T K Uthappa : Director Sales, Tied Agency

Y V D V Prasad

: Director Business Development

Corporate Objective
At ING Vysya Life, we strongly believe that as life is different at every stage, life insurance must offer flexibility and choice to go with th at stage. We are fully prepared and committed to guide you on insurance products and services through our well-trained advisors,

backed by competent marketing and customer services, in the best possible way. It is our aim to become one of t he top private life insurance companies in India and to become a cornerstone of INGs integrated financial services business in India.

Mission
To set the standard in helping our customers manage their financia future

COMPANY BUSINESS.

ING Vysya Life grows 312% in 2004, premium income crosses 150 crore We are growing faster than the market in a high growth category, says Frank Koster. Delhi, February 15, 2005: ING Vysya Life today announced its performance for the calendar year 2004. Highlights include:
1Premium income increased by 312% to Rs. 151 crore 2New business ANP increased 280% in 2004 to Rs. 126 crore 3Total income increased by 292% to Rs. 167 crore 4Total sum assured is Rs. 2,804 crore (up 215%) 5With 1,58,789 life policies in force 6Additional infusion of capital to the tune of Rs. 90 crore takes

total

shareholder equity to Rs. 290 crore 7Network expanded to 63 branches in 30 cities 8Tied agency advisor force grew to over 10,000 agents 9Distribution through the ING Vysya Bank network contributed 21% of new business The Managing Director and CEO of ING Vysya Life Mr. Frank Koster made a presentation of the companys results in calendar year 2004 in Delhi today. Speaking of the companys performance in Jan Dec 2004, Mr. Koster said We are growing at a faster rate than we did last year and that too in a rapidly growing category (private sector life insurance). We have more than tripled our premium income in 2004. We are still expanding our distribution infrastructure, product portfolio and reach and are confident that the growth momentum will continue. We are looking forward to doubling our business through the year 2005 too. Since Mr. Koster took over as the MD & CEO of ING Vysya Life in April 2004 he has focused on building distribution capability to handle the challenge of explosive growth. We have put in place a structure to manage distribution expansion both geographically and through all the different channels with a full suite of products. I am fully aware that

our insurance advisors make this business happen and our focus will be on managing, motivating and empowering our agency force. 1 Mr. Koster also spoke of INGs continuing commitment to building the business in India ING has fully committed to building the life insurance business in India. In fact India may be the fastest growing ING Greenfield insurance company in 2005. ING would like to increase its stake in the company beyond 26% as and when regulations allow. On the outlook for 2005 Mr. Koster said We are confident of achieving a strong growth performance in 2005 too. This will be achieved through: 1! Geographical expansion (to about 50 cities) 2! Strengthening and expanding the tied agency distribution 3! Building the distribution through the ING Vysya Bank network 4! Expanding our reach through alternate distribution channels e.g other bank tieups, corporate agents, etc. ING Vysya Life is targeting an income of over Rs. 300 crore and a customer base of over 2,50,000 in calendar year 2005. Key Highlights: New Business Annualised new premium increased by 280% to Rs. 126 crore from Rs. 45 crore in the previous year. The number of individual new policies sold was 123,202 up 222% from 55,372 the year before. New business growth was driven by the expansion in branch network (63 branches in 30 cities as on date), insurance advisors (10,345 insurance advisors) and introduction of new products (the unit linked products - Freedom Plan and Future Perfect plan). Total Business

The total premium income increased by 312% to Rs. 151 crore from Rs. 48 crore in the previous year. The total Sum assured by the company is Rs. 2,804 crore, an increase of 215% over Rs. 1303 crore last year. The total income of the company (including investment income) was Rs. 167 crore in the year ended 31st December 2004. This is a growth of 292% over the previous years Rs. 57 crore. The company has 1,58,789 individual life policies in force on 31st December 2004. Capital The shareholders equity increased by Rs. 90 crore from Rs. 200 crore at the end of last year to Rs. 290 crore at the end of the current year in line with the increase in new business and expansion of distribution network 2 Distribution Network During the year ING Vysya Life expanded its tied agency distribution reach to 30 cities (from 20 cities last year) and 63 branches. The cities in which ING Vysya Life has a presence through its insurance advisors are Bangalore, Delhi, Mumbai, Kolkata, Hyderabad, Chennai, Chandigarh, Ludhiana, Vizag, Vijaywada, Mangalore, Mysore, Pune, Nagpur, Cochin, Coimbatore, Ahmedabad, Jaipur, Guntur, Hubli, Trivandrum, Gurgaon, Goa, Bhopal, Indore, Baroda, Surat, Quilon. The total number of insurance advisors has grown to 10,300 from about 6,200 last year. Individual Life Product Portfolio The product portfolio of ING Vysya Life Insurance has grown to a total of 12 individual life products and 4 individual life riders. The major new product initiative last year was ING Vysya Lifes twin product offering in the unit-linked segment the Freedom plan and the Future Perfect plan. The products have been well accepted by the customers.

Outlook for 2005 The growth momentum will be sustained in 2005 with a 100% growth over 2004 to Rs. 300 crore of income and 2,50,000 policies in force at the end of this year. The distribution network will expand to 50 cities (85 branches) and a tied agency sales force of 12,000 insurance advisor

Brief History Of Insurance

The story of insurance is probably as old as the story of mankind. The same instinct that prompts modern businessmen today to secure themselves against loss and disaster existed in primitive men also. They too sought to avert the evil consequences of fire and flood and loss of life and were willing to make some sort of sacrifice in order to achieve security. Though the concept of insurance is largely a development of the recent past, particularly after the industrial era past few centuries yet its beginnings date back almost 6000 years. Life Insurance in its modern form came to India from England in the year 1818. Oriental Life Insurance Company started by Europeans in Calcutta was the first life insurance company on Indian Soil. All the insurance companies established during that period were brought up with the purpose of looking after the needs of European community and Indian natives were not being insured by these companies. However, later with the efforts of eminent people like Babu Muttylal Seal, the foreign life insurance companies started insuring Indian lives. But Indian lives were being treated as sub-standard lives and heavy extra premiums were being charged on them. Bombay Mutual Life Assurance Society heralded the birth of first Indian life insurance company in the year 1870, and covered Indian lives at normal rates. Starting as Indian enterprise with highly patriotic motives, insurance companies came into existence to carry the message of insurance and social security through insurance to various sectors of society. Bharat Insurance Company (1896) was also one of such companies inspired by nationalism. The Swadeshi movement of 1905-1907

22

gave rise to more insurance companies. The United India in Madras, National Indian and National Insurance in Calcutta and the Co-operative Assurance at Lahore were established in 1906. In 1907, Hindustan Cooperative Insurance Company took its birth in one of the rooms of the Jorasanko, house of the great poet Rabindranath Tagore, in Calcutta. The Indian Mercantile, General Assurance and Swadeshi Life (later Bombay Life) were some of the companies established during the same period. Prior to 1912 India had no legislation to regulate insurance business. In the year 1912, the Life Insurance Companies Act, and the Provident Fund Act were passed. The Life Insurance Companies Act, 1912 made it necessary that the premium rate tables and periodical valuations of companies should be certified by an actuary. But the Act discriminated between foreign and Indian companies on many accounts, putting the Indian companies at a disadvantage. The first two decades of the twentieth century saw lot of growth in insurance business. From 44 companies with total business-in-force as Rs.22.44 crore, it rose to 176 companies with total business-in-force as Rs.298 crore in 1938. During the mushrooming of insurance companies many financially unsound concerns were also floated which failed miserably. The Insurance Act 1938 was the first legislation governing not only life insurance but also non-life insurance to provide strict state control over insurance business. The demand for nationalization of life insurance industry was made repeatedly in the past but it gathered momentum in 1944 when a bill to amend the Life Insurance Act 1938 was introduced in the Legislative Assembly. However, it was much later on the 19th of January, 1956, that life insurance in India was nationalized. About 154 Indian insurance companies, 16 non-Indian companies and 75 provident were operating in India at the time of nationalization. Nationalization was
23

accomplished in two stages; initially the management of the companies was taken over by means of an Ordinance, and later, the ownership too by means of a comprehensive bill. The Parliament of India passed the Life Insurance Corporation Act on the 19th of June 1956, and the Life Insurance Corporation of India was created on 1st September, 1956, with the objective of spreading life insurance much more widely and in particular to the rural areas with a view to reach all insurable persons in the country, providing them adequate financial cover at a reasonable cost. LIC had 5 zonal offices, 33 divisional offices and 212 branch offices, apart from its corporate office in the year 1956. Since life insurance contracts are long term contracts and during the currency of the policy it requires a variety of services need was felt in the later years to expand the operations and place a branch office at each district headquarter. reorganization of LIC took place and large numbers of new branch offices were opened. As a result of re-organisation servicing functions were transferred to the branches, and branches were made accounting units. It worked wonders with the performance of the corporation. It may be seen that from about 200.00 crores of New Business in 1957 the corporation crossed 1000.00 crores only in the year 1969-70, and it took another 10 years for LIC to cross 2000.00 crore mark of new business. But with reorganisation happening in the early eighties, by 1985-86 LIC had already crossed 7000.00 crore Sum Assured on new policies. Today LIC functions with 2048 fully computerized branch offices, 100 divisional offices, 7 zonal offices and the Corporate office. LICs Wide Area Network covers 100 divisional offices and connects all the branches through a Metro Area Network. LIC has tied up with some Banks and Service providers to offer on-line premium collection facility in selected cities. LICs ECS and ATM premium payment facility is an addition to customer
24

convenience. Apart from on-line Kiosks and IVRS, Info Centres have been commissioned at Mumbai, Ahmedabad, Bangalore, Chennai, Hyderabad, Kolkata, New Delhi, Pune and many other cities. With a vision of providing easy access to its policyholders, LIC has launched its SATELLITE SAMPARK offices. The satellite offices are smaller, leaner and closer to the customer. The digitalized records of the satellite offices will facilitate anywhere servicing and many other conveniences in the future. LIC continues to be the dominant life insurer even in the liberalized scenario of Indian insurance and is moving fast on a new growth trajectory surpassing its own past records. LIC has issued over one crore policies during the current year. It has crossed the milestone of issuing 1,01,32,955 new policies by 15th Oct, 2005, posting a healthy growth rate of 16.67% over the corresponding period of the previous year. From then to now, LIC has crossed many milestones and has set unprecedented performance records in various aspects of life insurance business. The same motives which inspired our forefathers to bring insurance into existence in this country inspire us at LIC to take this message of protection to light the lamps of security in as many homes as possible and to help the people in providing security to their families.

Some of the important milestones in the life insurance business in India are:

25

1818: Oriental Life Insurance Company, the first life insurance company on Indian soil started functioning. 1870: Bombay Mutual Life Assurance Society, the first Indian life insurance company started its business. 1912: The Indian Life Assurance Companies Act enacted as the first statute to regulate the life insurance business. 1928: The Indian Insurance Companies Act enacted to enable the government to collect statistical information about both life and non-life insurance businesses. 1938: Earlier legislation consolidated and amended to by the Insurance Act with the objective of protecting the interests of the insuring public. 1956: 245 Indian and foreign insurers and provident societies are taken over by the central government and nationalised. LIC formed by an Act of Parliament, viz. LIC Act, 1956, with a capital contribution of Rs. 5 crore from the Government of India. The General insurance business in India, on the other hand, can trace its roots to the Triton Insurance Company Ltd., the first general insurance company established in the year 1850 in Calcutta by the British.

Some of the important milestones in the general insurance business in India are:

26

1907: The Indian Mercantile Insurance Ltd. set up, the first company to transact all classes of general insurance business. 1957: General Insurance Council, a wing of the Insurance Association of India, frames a code of conduct for ensuring fair conduct and sound business practices. 1968: The Insurance Act amended to regulate investments and set minimum solvency margins and the Tariff Advisory Committee set up. 1972: The General Insurance Business (Nationalisation) Act, 1972 nationalised the general insurance business in India with effect from 1st January 1973. 107 insurers amalgamated and grouped into four companies the National Insurance Company Ltd., the New India Assurance Company Ltd., Oriental Insurance Company Ltd. and United India Insurance Company Ltd. GIC incorporated as a company.

HOW

DO

YOU

SELECT

YOUR

FINANCIAL

ADVISOR?

To know that how to select a financial advisor we should have to know that:

27

WHAT IS A FINANCIAL ADVISOR?

A financial adviser is a professional who renders investment advice and financial planning services to individuals and businesses. Ideally, the financial advisor helps the client maintain the desired balance of investment income, capital gains, and acceptable level of risk by using proper asset allocation. Financial advisers use stocks, bonds, mutual funds, REITS, options, futures, notes and insurance products to meet the needs of their clients. Many financial advisers receive a commission payment for the various financial products that they broker, although "fee-based" planning is becoming increasingly popular in the industry. A further distinction should be made between "fee-based", i.e., they charge fees and collect commissions, and "fee-only" advisers. Fee-only advisors receive 100% of their compensation directly from their clients and have no conflicts between their own interests and those of clients created by commissions or referral.

First, let's start with how not to select a financial advisor. Many financial planners agree that references and recommendations from your friends, neighbors, and relatives may not be of much use. On what basis did they select their financial advisor? What do your friends know about investments? Some of the biggest investment frauds in history were perpetuated by well-meaning people unknowingly recommending crooked advisors to their friends and loved ones.

28

Since you can't rely on a referral, you'll need to do your own research and evaluation. There are three questions to answer: 1) "Is the financial advisor competent?", 2) "Is he honest? Are his recommendations in your best interest?", and , 3) "Is he overcharging for his services?" One quick and easy test for competence is offered by California-based financial planner Errold Moody. He calls it the "HP 12C" test. He claims that at least 75% of "financial advisors" cannot operate a financial calculator capable of determining things like the "present value of an annuity." (The "HP 12C" is a financial calculator manufactured by the Hewlett-Packard Company.) This is a good test that will eliminate incompetent advisors from consideration. Unfortunately, it still leaves the dishonest ones in the pool. A dishonest advisor skilled in the use of a financial calculator can cheat you that much faster.

The best way to test the honesty of a financial advisor is to look at the fees and expenses associated with his recommendations. With the wide variety of no-load mutual funds available today, you should never pay a sales load or a 12b-1 marketing fee. If your advisor recommends a fund with any of these fees or charges, he may not have your interests at heart. Some financial advisors who are actually quite honest will on occasion recommend funds with 12b-1 fees or sales loads. They may argue that the performance of the fund over the last 5 or 10 years more than makes up for the added fees. That may be true, but past performance is no guarantee of

29

future performance. Eliminating from consideration all funds with sales loads or 12b-1 fees may be "throwing the baby out with the bath water", but it's the prudent thing to do. You may miss the 1 in 1000 chance of finding a good "load" fund, but you'll eliminate the likelihood that you'll overpay for a mediocre performer. Is my financial advisor overcharging me? If you're paying more than 1% of assets, he probably is. It's much cheaper to do the easy stuff yourself, then pay a financial professional by the hour to advise you on the more complicated items. An honest and knowledgable financial advisor who won't try to "pad" his hourly charges might be worth as much as $300 an hour. The key is to be educated and organized. Read a couple of books on financial planning. Read through the web sites listed below. Fill out the budget and client questionaire listed below. Getting your records organized makes it easier to effectively make use of your advisor's time. The meter's running, make sure you get your money's worth. Perhaps the best approach is to prepare your own financial plan, then hire a financial planner to review it and suggest improvements. It's important to remain fully engaged in your financial affairs.

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CHOOSING A FINANCIAL ADVISOR

Many investors feel uncomfortable working with investment professionals. This isn't surprising, given the cloudy haze surrounding much of the financial services industry. For instance, many investment professionals receive commissions from companies for selling those firms' products -- creating an inducement for some financial salespeople to sell products that puts money in their pocket, but may or may not be the best choice for you. But for many investors -- particularly those who don't have the time or incentive to manage their own financial situations by themselves -- a wellchosen advisor can be an important ally in creating and carrying out a longterm financial plan.
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Where to Find a Financial Advisor

Most people find their financial advisors through referrals from friends, coworkers, accountants, or attorneys. Although this is a comfortable method for most people, it has two major pitfalls. First, in today's litigious society, professionals and laymen alike are less willing to refer you to others due to the implied endorsement. This is especially true for accountants and attorneys. They simply don't want to take the risk that you will have a bad experience and hold them at fault. Second, people often make a referral because they like an advisor personally -- not because they are qualified to judge an advisor's skill and knowledge about investing.

Evaluating a Financial Advisor

Referrals are a good place to start, but you've got to do your homework. Ask any potential advisor plenty of questions. Your advisor should be prepared to meet you in an initial interview and explain his or her approach to investing and planning. In particular, make sure of the following points:

The advisor should be compensated on a fee-only basis rather than by brokerage commissions. Advisors who work on commissions are more likely to recommend frequent transactions in your portfolio. A fee-only advisor has fewer conflicts of interest and is more likely to have your best interests in mind. The advisor should focus on risk in selecting your portfolio. Reviewing historical portfolio performance in bad markets is the best way to get a feel for the potential volatility of a particular asset mix. Paying attention to risk will give you the best chance of staying invested

32

throughout your time horizon since your portfolio will be consistent with your risk tolerance.

The advisor should work with you to set target rates of return -- the returns you will need to achieve your objectives. A fee-only advisor can show you different models and mixes of investments that have the highest probability of achieving your goals. The advisor should write an investment policy statement for you. This statement should provide specific instructions covering the following objectives and constraints: target return, risk tolerance, time horizon, anticipated withdrawals or contributions, tax constraints, and regulatory issues, if any.

The advisor should rebalance your portfolio periodically. If an asset differs significantly from its original target allocation, the advisor should either buy or sell some of the assets until its target percentage is restored. Your advisor should provide you with a quarterly assessment of the portfolio?s performance and market values. He or she should determine whether the market value of your portfolio is growing fast enough to achieve your objectives and whether any adjustments need to be made. Some investors and inexperienced advisors believe that once they build a portfolio, particularly an asset class portfolio, they won?t need to make any changes. If we look back just five years, we see that asset class investing has improved dramatically. Researchers have identified new asset classes leading to the development of many new asset class funds. Value and emerging market funds are two recent introductions, for example. Over the next five years, it is likely that we will see even greater changes. It would be foolish for any investor not to take advantage of
33

new knowledge and products. Finding an advisor to help you keep informed of new developments will add tremendous value to your portfolio.

What should you expect from your financial advisor?

Advice comes in all shapes and sizes. These 8 things should not be negotiable in your relationship with your financial advisor.
1. A Comprehensive Plan :

A financial advisor is not advising if they are not utilizing a plan. The plan provides a foundation for your relationship. It provides clarity and direction; it also adds an element of expectation for both the client and the advisor.
2. Regular Reviews :

A review should be conducted at least annually (can be more frequent if there is concern or change). A plan is great, however if it is not updated or modified it will get stale. These reviews should consider your investment objectives, tax considerations and estate planning issues. Regular reviews should be scheduled in advance by the advisor.
3. Accreditation and Experience

You should work with a financial advisor who is committed to a path of learning. A certified financial planner (CFP), a registered financial planner (RFP), a certified life underwriter (CLU) and an elder

34

planning counselor (EPC) are meaningful designations and demonstrate a commitment to learning. An advisor may be experienced but without obtaining recent education credits to maintain their professional designation, this experience may become outdated.
4. Service Standard

Your financial advisor should provide you with a service standard. This should meet your expectations of service. It is important for you to understand what you should do if you have a question, concern or request. Often times a financial advisor will have an assistant who is well equipped to answer many of your queries. You should not feel uncomfortable calling if/when you have a question or concern.
5. Transparency of Fees & Costs

Before your advisor implements any recommendations they should provide you with a full explanation of fees and costs. You should not have to ask how they get paid.
6. Language

The bond of any sustainable relationship is often determined by communication. Our industry is famous for acronyms and buzz words. Whether you are a sophisticated, experienced, investor or just starting out, your advisor should always speak to you in a language that you understand.

35

7.

Saying No If you are asked to implement a recommendation and are not

comfortable doing so, it should be fine to say no. If this isn't the case you will feel like you are being sold. Your advisor should be consultative by providing multiple solutions and ideas. You should expect direction from them. However, if you fear push back from them, you are not working with an advisor but a salesperson. 8. Honesty & Objectivity The last but most important thing you should expect from your financial advisor is a combination of honesty and objectivity. Unfortunately some advisors are honest but not objective. The best financial advisors are honest and have access to the entire marketplace for financial services. If an advisor is honest but only represents one company, they can't be truly objective. If your existing advisor is not meeting all 8 of these non negotiable expectations, you should get more information on working with an IPC CARP certified advisor. As a member of CARP, you have a distinct advantage. You can benefit from a variety of discounts and other services from IPC available exclusively to CARP members. As examples, you are entitled to: A free financial review Free access to IPC's Estate Planning Specialists No appraisals or legal fees for IPC secured lines of credit (subject to some conditions) Access to the talents of the money managers who invest on behalf of high-net-worth individuals and pension funds (provided by Counsel

36

Wealth Management) Free educational seminars specifically for CARP members in various communities across Canada. Free newsletters and reports aimed at CARP members Free online services and access to your own personal financial website. For CARP members, IPC has developed a unique process called the Personal Wealth Management Strategy. Within this program, IPC covers all aspects of financial planning for CARP members, including portfolio management, retirement planning, tax minimization, estate planning, risk management and cash and credit management.

What Every Investor Should Know...

37

Choosing a Financial Adviser

When selecting a financial adviser, a first step is to familiarize yourself with what an adviser can do for you, how advisers are compensated, and the meaning and stature of the professional credentials advisers may seek to obtain. This fact sheet provides answers to some of the most commonly asked questions investors face when hiring a financial adviser. You can also learn more by reading other What Every Investor Should Know fact sheets from CFA Institute, such as Managing the Relationship between You and Your Adviser, Defining Your Investment Objectives, Unfortunately, the investment world attracts more than its share of rouges and thieves. Here's a few suggestions that should lessen the likelihood you'll suffer harm.

Use fee only advisors and pay them by the hour. Advisors usually prefer to base their fees as a percentage of "assets under management." This is unlikely to be in your interest.

Even when paying by the hour, you need to be careful. One Retire Early reader told me a Big Six accounting firm wanted $600 to perform a "Pre 59-1/2 early withdrawal" calculation for his IRA. This should be about 15 minutes of work for a competent professional. Retire Early even has a JavaScript IRA Withdrawal Calculator that allows you to make the calculation yourself for free. Another was charged $650 by a tax attorney to photocopy a few IRS private letter

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rulings. This kind of "advice" can quickly lead to the poorhouse. Like I said, you need to be careful.

Never give your financial advisor "power of attorney" over your investments. Make sure that the fees and commissions on all investments are reasonable and don't include sales charges or 12b-1 fees. Deal directly with the financial institutions recommended by your planner. Have all statements and correspondence sent directly to you.

Avoid buying mutual funds from banks or stock brokers. Mutual funds purchased from these institutions invariably charge sales loads or 12b-1 fees.

What questions should i ask myself before choosing a financial adviser?

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Part of choosing the right adviser is understanding exactly what you expect from the relationship. Finding an adviser who matches your investment approach is important, so be sure to do some self-evaluation first. Once you have selected an adviser, you can also ask him or her to re-evaluate your answers to these questions. For more information on this subject, be sure to read the CFA Institute fact sheet. Defining Your Investment Objectives. Here are some questions to ask: What are my investment objectives? What growth in my savings is needed to achieve those objectives? When will I need to draw out money? How do I define risk? How much risk am I willing to take? What is the range of approaches used by advisers in investing clients assets? Which approach is right for me? What other special circumstances affect my investments? Am I looking for a partner who will take more control and will work with me to manage my investments or for someone who will only execute and monitor my investment plan? What kind of communication do I want with my adviser?

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 Are my needs best met by formal reports, by telephone conversations, or by face-to-face meetings? Do I need an adviser who works nearby, or am I comfortable communicating with someone in another location? What are the individuals professional credentials? How will I evaluate performance?

What questions should an adviser ask of me?

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When meeting with an adviser, he or she should ask you several questions about your investing needs. Remember, its the advisers job to understand your investment objectives, tolerance for risk, investment constraints, and special needs.

Many investment authorities recommend that you have an investment policy statement, a written document reflecting these goals, needs, and circumstances and the guidelines you wish to establish for the investment of your assets. Here are some questions you should expect a financial adviser to ask:

For a better understanding of your risk tolerance:

What does risk mean to you? Investment professionals measure risk in a variety of ways, e.g., as portfolio volatility or as the chance of achieving a return below some minimum level acceptable to you. You may have a personal perspective on risk that will help the adviser understand your capacity to bear risk your risk tolerance. Your willingness to take risk and your ability to do so affect your level of risk tolerance. An adviser may ask a number of questions to evaluate your willingness to take risk and the degree to which you can bear unfavorable investment outcomes: How much decline in your portfolio are you willing to accept in a given year? How large a loss is too much? What are your household income and current savings? How will losses affect your life style? A good adviser will seek to grasp your risk tolerance and construct a portfolio with a level of risk that is appropriate for you.

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LIC AND PRIVATE LIFE INSURANCE COMPANIES

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The insurance sector in India has come a full circle from being an open competitive market to nationalisation and back to a liberalised market again. Tracing the developments in the Indian insurance sector reveals the 360-degree turn witnessed over a period of almost two centuries. A brief history of the Insurance sector The business of life insurance in India in its existing form started in India in the year 1818 with the establishment of the Oriental Life Insurance Company in Calcutta. Some of the important milestones in the life insurance business in India are:

1912: The Indian Life Assurance Companies Act enacted as the first statute to regulate the life insurance business. 1928: The Indian Insurance Companies Act enacted to enable the government to collect statistical information about both life and non-life insurance businesses. 1938: Earlier legislation consolidated and amended to by the Insurance Act with the objective of protecting the interests of the insuring public. 1956: 245 Indian and foreign insurers and provident societies taken over by the central government and nationalised. LIC formed by an Act of Parliament, viz. LIC Act, 1956, with a capital contribution of Rs. 5 crore from the Government of India.

The General insurance business in India, on the other hand, can trace its roots to the Triton Insurance Company Ltd., the first general insurance company established in the year 1850 in Calcutta by the British. Some of the important milestones in the general insurance business in India are:

1907: The Indian Mercantile Insurance Ltd. set up, the first company to transact all classes of general insurance business. 1957: General Insurance Council, a wing of the Insurance Association 44 of India, frames a code of conduct for ensuring fair conduct and sound

Life insurance: LIC and private players

THE public sector insurance behemoth Life Insurance Corporation of India ran a catchy advertising campaign some time ago which featured a customer saying he had bought an `LIC' when he actually meant that he had bought an insurance policy. The corporation was trying to convey, in a not too subtle fashion, that `LIC' was a byword for insurance in the customers' mind. That may be. But it is a moot point if that image will endure for long. In the two years since the Insurance Regulatory and Development Authority (IRDA) licensed private players into the life insurance industry, customers have been treated to surfeit of choice in insurance products. The entry of private players into the insurance industry has seen a veritable explosion of products that offer customers a much richer menu of options. For a choice-starved customer, their entry has been a godsend. It has infused a new flavour into what was perceived as a sober industry and has resulted in the market leader LIC adopting a more market-friendly approach in its bid to retain its premier position.
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The action is mainly on the products front with companies spinning out innovative variants of basic plans. Take the case of a term plan, which is the most basic of insurance plans that provides for pure risk cover with no maturity benefits on survival up to the end of the term. Term plans with return of premiums on survival up to maturity, plans that specifically target non-users of tobacco with the benefit of lower premiums and term plans bundled with critical illness cover are just some of the variants that private players have unveiled.

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LIC still dominant force

To say that private players have some catching up to do with LIC would be an understatement of sorts. After all, given the massive headstart the latter has over the private insurers, coupled with its army of agents that gives it enormous distribution leverage, its strength is staggering, to say the least. Moreover, as the private players have been around for only about three years, it would not be possible for them to make a substantial dent in LIC's market-share either. A look at the business underwritten by all the players, including LIC, for the first nine months of this fiscal indicates that LIC continues to be the dominant player in the life insurance business. While LIC underwrote premiums worth Rs 2,790 crore, private players mopped up Rs 285 crore in the same period, giving the former an overwhelming 91 per cent market share. However, the picture acquires an entirely different complexion when one looks at the individual pension plans market, where private players have been aggressive. For the nine-month period ending December 2002, LIC acquired business worth about Rs 83 crore, even as the private players raked in close to Rs 40 crore, garnering a 33 per cent market-share in the process.

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Pension plans
The pensions market has been abuzz with activity with most of the private players offering a product. This is one area where the action is likely to hot up in the time to come, what with the extended lifespan possible now, given the vast improvement in medical facilities. Additionally, with the prospect of a post-retirement phase that could last almost as long as one's working life, the imperative of saving for one's twilight years cannot be emphasised enough. The Government too could step in to provide a fillip to this emerging market by granting a greater financial incentive for investing in such a plan. For instance, if one were to assume that a 30-year-old invests Rs 10,000 per annum (which is the upper limit for deduction under Section 80CCC of the Income-Tax Act) for the next thirty years in a pension scheme, the corpus on maturity could earn him an annuity of Rs 58,000 on the basis of current rates. This could prove insufficient if he hopes to lead the same kind of lifestyle as he did during his working years. An option could be to raise the limit substantially from current levels so that one has access to a sizeable corpus on retirement. Private players also have reason to feel left out from the pension plan to be floated by LIC and announced by the Government in the latest Budget. The plan, for those over 55, envisages a guaranteed rate of return of nine

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per cent, with the Government chipping in towards the difference between the actual return generated by LIC and the guaranteed return. If the growth of the pensions market is the focus, the Government could have broad based the plan to include private players and offer to pay a uniform rate of, say two per cent to all of them. The benefits of such a move would have been twofold: it would have ensured that all the players manage their investment prudently to try and achieve the targeted rate of nine per cent; it would also ensure that the Government does not cough up a huge amount to subsidise the poor investment performance of the organisation it is supporting.

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Guaranteed bonuses on their way out

The other area that has witnessed change is declaration of bonuses on savings-oriented plans such as money-back and endowment policies. All private players have adopted a policy of declaring bonuses depending upon their investment performance, without guaranteeing any returns to the customer, much like a mutual fund. A couple of private players do guarantee returns for the first four years of the plan, but that too pegged conservatively at four per cent. LIC, on the other hand, had a host of schemes that guaranteed bonuses at a high rate of eight per cent, which made them all the more attractive in an era of falling interest rates. LIC appears to have a taken a leaf out of the private players' book by making the transition to declaring bonuses on the basis of investment performance. As a result, high payout plans such as Bima Nivesh and New Jeevan Shree are being withdrawn, indicating the unsustainability of such schemes. However, guaranteed additions do come at a cost that manifests itself in the higher premiums one would have to pay over the duration of the term. LIC, for instance, continues to be competitive in term plans in case the life insured is below 30. In such plans, the premium to be paid is the only element of competitiveness as they provide pure risk cover and do not incorporate an investment component.

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For savings-oriented plans, a comparison of premium payments would be inappropriate and one would be required to look at their yield to maturity. It would be of interest to see if LIC recasts its premiums for savings plans after moving into a performance-based bonus declaration format.

Investment disclosures
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The IRDA has ensured a higher level of transparency among insurance companies, as statistics pertaining to their performance, in terms of policies sold and premiums underwritten, are made available regularly. Going forward, it would be beneficial from a customer standpoint if companies were asked to disclose investment performance pertaining to each of their savings-oriented schemes, much like mutual funds do. The launch of unit-linked schemes does address this issue but if it could be non-market linked schemes as well, it would enable customers to take an objective call on a company's investment performance before they make an investment decision.

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Qualitative changes
As is always the case with the advent of competition, LIC too appears to have got its marketing act together in its bid to retain the stranglehold over the Indian market. With private players embarking on an advertising binge to gain that vital bit of customer mindshare, LIC has shown that it is not to be left behind if its recent television commercials are any indication. Customer-centricity and transparency are the buzzwords for success in this evolving industry, and LIC is certainly leaving no stone unturned in its efforts to retain its top slot in the insurance sector. Finally, while it would be difficult to predict who would be atop the insurance heap a few years down the road, it can certainly be said that the collective efforts of all the players concerned would have added more than a fair dose of life to the insurance industry.

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CONCLUSION
As of now we understand the changing dimensions of insurance and how it is being value add in terms of investment alternative. And that the insurance policies are pegged high on the scale of an investment plan because they work as saving schemes give us guaranteed cash payments annually and also provide a risk cover to us and our family.

RECRUITMENT OF INSURANCE ADVISER FOR ING Vysya LIFE INSURANCE

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The recruitment of the insurance advisor for ING Vysya life insurance company Ltd. Is on the bases of the company criteria. The company recruits the advisors on the bases of

Age between 20 to 45 years The education qualification Rural area: Minimum SSC Urban area: Minimum HSC Company prefers Graduates Good communication skills

SAMPLE SIZE

The sample size of this project is 200 of both the gender male and female.

LIMITETIONS

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The area of my project was limited between ANAND and VADODARA. Personal Bias can also be the limitation.

HOW TO RECRUIT THE ADVISORS?

For the recruitment of the insurance advisor the company suggested to prepare a questionnaire and ask it to the sample and convince them to work for ING Vysya life insurance company ltd. So I prepared a questionnaire and surveyed 200 people.

DO you think every one should have the life 60% insurance?
50% 40% 30% 20% 10% 0% 18% 57%

25%

Y es

No

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D epends

Would you like to earn money in your free time with 10% to 40% commission + incentives?
80% 70% 60% 50% 40% 30% 20% 10% 0% Y es
57

77%

Y es No

23%

No

Do you know who can sale the Insurance policy?

6 0% 5 0% 4 0% 3 0% 2 0% 1 0% 0% 60% 40% A gen ts D on't k now

A ge nts

58 D on't k now

60% 50% 40% 30% 20% 10% 0%

Do you think you have enough convincing power?

y es 53% 36% 21% no D o n 't k n o w

y es

no

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D o n 't k n o w

Can you be able to sale the no. of policy given as target in given time by co.?

50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% y es no

60

y es 48% 39% 23% no D on't k now

D on't k now

Would you like to be an insurance advisor?

70% 60% 50% 40% 30% 20% 10% 0% yes no 37% yes 63% no

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Do you know what ING Vysya is?

80% 70% 60% 50% 40% 30% 20% 10% 0% ye s

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79%

21%

no

Which company would you prefer for being an insurance advisor?

60% 50% 40% 30% 20% 10% 0% L IC O t h e rs 55% 36% 9% IN G _ V y s y a L IC O t h e rs IN G _ V y s y

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Would you like to work in ING Vysya life insurance company ltd.?

100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 9% yes
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91%

yes no

no

Findings

People are not much more aware about the name of the company.

Company do not give more advertisement and do not strongly promote the brand.

Lack of awareness that how people can be an insurance advisor.

People dont know that there is not any fixed schedule of time for the advisors of the company to go for sale.

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Company does not influencing people to be the insurance advisor for the company by giving the ads like the LIC does to be LIC Agents.

Suggestions

company should pay attention on the promotion and advertisement so that people can be aware about the company.

They should focus on selecting skilled advisors.

They can arrange seminar for people who wants to join the company to give them details about the advantages and how they can influence others so that the can give the information to others.

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Company should also focus on advertisement about how people can earn money to becoming insurance advisor for the company.

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