How to Insure a Bankrupt Client

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					Russia presentation

   Natalia Smirnova
  editor@kdostatku.ru
   +7(916)842-73-86
               Russia: key information

•   Territory: 17.075.260 sq.m, 65% of it belongs to permafrost

•   Overall quantity of cities, towns, villages etc. - 157.895 (nearly 20% of them
    don’t have telecommunications)

•   Population: 132.000.000 people, 81% of which live in cities and big towns.
    Nearly 10% of the population leave in Moscow.

•   61% of population are pensioners.

•   81% of population either don’t work or work in the budget sphere, so less than
    20% of population provide state budget with income.

•   Average income per person - $ 250
                 GDP of Russia


                                          GDP, mln. $
                                          (according to
                            №   Country   International
                                          Monetary Fund,
                                               2008)
                            1   USA       14,264,600
                            2   China     7,916,429
                            3   Japan     4,354,368
                            4   India     3,288,345
                            5   Germany   2,910,490
Russian GDP statistics, %   6   Russia    2,260,907
GDP: dependence on oil and gas export
              State budget income structure




                                   43%
                                              Oil and gaz
                                              other sources
        57%
    GDP and inflation forecast for 2009-
                   2011
2009

•    GDP $ 1 608,6 billion
•    inflation - 8,5%

2010

•    GDP – $ 1 848,3 billion
•    Inflation – 7%

2011

•    GDP - $ 2112,8 billion
•    Inflation – 6,8%
History of financial market in Russia:
          the USSR period
•   1 bank in the country (Sberbank)

•   1 insurance company in the country (Gosstrakh)

•   Zero inflation rate

•   No stock market or FOREX, no mutual funds

•   Any operation with foreign currency is forbidden. Foreign financial
    instruments are forbidden.

•   No pension programs. Everyone has the same state pension.

•   No private equity

•   People have no experience in personal finances management
History of financial market in Russia:
the “perestroika” period (1989-1994)

•   Financial pyramids

•   Privatization

•   Incredible inflation

•   Economic collapse

•   Incredible unemployment

• Loss of trust to the government and any
financial organizations
History of financial market in Russia: pre-
             millenium period
  •   Denomination of ruble (1997)

  •   Foundation of Russian stock market and two main indices – RTSI and MICEX

  •   First investment companies launch first mutual funds

  •   First private pension funds are founded

  •   A lot of private banks are founded, however after the default in 1998
      significant part of them went bankrupt. Collapse of the stock market in 1998.

  •   Lack of trust to banks, investment and any other financial instruments
             Major Russian stock indices




MICEX – Moscow interbank currency exchange   RTSI – Russian Trade system index
Date of foundation - 22.09.1997              Date of foundation - 01.09.1995
(however, it has been calculated             It is based on 50 Russian stocks
since 1.03.1999)                              with the highest liquidity
It is based on 30 Russian stocks
 with the highest liquidity
History of financial market in Russia: 21
                 century
 •   Pension reform in Russia (2002 and 2008)

 •   Rapid development of stock market, FOREX, real estate market, credit market

 •   Bank crisis (2004)

 •   First financial advisors appear in the market

 •   Financial crisis (2008-2009), devaluation of ruble.
Personal finances in Russia now: key
               figures
•   About 60% of people don’t have any savings

•   50% of people either used credits or intend to do this in the nearest future.

•   Less than 5% of people in Russia invest in stock market either using mutual
    funds or via their broker trade account

•   Less than 50% use bank accounts and/or bank deposits

•   Less than 2% have life insurance policies

•   About 50% of those who have an auto, an apartment or house and other
    property don’t insure it against accidents, damage etc.

•   Less than 30% are more or less concerned about their pension
Financial planning in Russia: market and
               regulation
 •   First financial planners appeared in Russian market in 2004-2005

 •   There are less than 400 financial planners in Russia

 •   Financial planning activity in Russia is not regulated in any way, is not
     licensed and not certified.

 •   There is no limitations for a person to become a planner: one could even have
     no bachelor degree and no experience in financial sphere

 •   Planners don’t have any proper software for calculating financial plan

 •   There are no standards for financial plan: it may differ significantly depending
     on the planner
Financial planning in Russia: average
           business model

                   •Financial planning
                   •Consultations concerning
   Income from     investment, credit and other financial
     consulting    instruments


                    Financial planners get commissions
                    for selling:

   Commission       •mutual funds
   from partners    •credit products
                    •life, medical and property insurance
                    •real estate
                    •pension programs
Financial planning in Russia: list of most
             popular services
   1.   Investment planning, choosing appropriate investment instruments and
        preparing all the documents for investing

   2.   Financial planning

   3.   Choosing appropriate credit instruments and preparing all the documents
        for it

   4.   Choosing appropriate instruments for property insurance and preparing all
        the documents for it

   5.   Pension planning , choosing appropriate pension instruments and preparing
        all the documents for investing

   6.   Tax planning and assistance with tax declaration
  Cooperation between financial
corporations and financial planners
  Real estate        Life,        Pension               Foreign funds       Credits              Other services
                     medical,     products
                     property
                     insurance

                                             Commission


                                        Financial
                                        planning
                                        company


                                     Х % from commission



 Bank                            Investment company                     Private pension fund

  Bank’s          Products        Investment        Products              Pension          Products
  products:       from            products:         from                  products:        from
                  financial       •Funds            financial             •State           financial
  •Deposits       planning        •Broker           planning              pension          planning
  •Accounts       company:        trade             company:              •Private         company:
  •Credits        •Financial      accounts          Financial             pension          Financial
                  plan                              plan                                   plan
                  •Investment                       Credits                                Investment
                  funds                             Pension                                funds
                  •Pension                          products.                              Credits.
                  products.



                Client                         Client                                 Client

				
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