Brokers grab the fund to sell cakes in addition to fee reductions need to be bright new tricks

Beijing, 16 Dec (Xinhua) -- On 16 December, "China Securities News" published an article entitled "Securities Firms Grab Funds to Sell Cakes on Behalf of Funds and Reduce Fees, And Need to Brighten New Tricks." The article said, "More than 3,000 Class A share funds have reduced their subscription rates to one discount, and more than 2,000 Class C share funds have achieved zero subscription fees." The reporter of China Securities News recently saw the above information on the official news account of Guosen Securities.

With the gradual expansion of the scale of the fund sales market, securities companies have also joined the "price war" of fund sales. Previously, CICC Wealth Securities, Debon Securities and Hengtai Securities announced that the subscription rate of public funds was 0.1 discount, and then head securities companies such as China Merchants Securities and Huatai Securities also joined the camp of fee reduction.

In the eyes of industry insiders, although low rates have a certain attraction for investors, investors are most concerned about the appreciation of wealth and the experience of purchase, which requires brokers to continue to enhance their active management capabilities and research and service capabilities.

(Photo caption) Data chart, xinhua news agency

Reduce fund subscription rates

On December 14, Guosen Securities' official news number "Guosen Headlines" said that the subscription rate of more than 3,000 Class A share funds will be reduced to a discount, and more than 2,000 Class C share funds will achieve zero subscription fees, and will continue to increase the layout of Class C share funds. After this adjustment, the rate of public funds sold by Guosen Securities will stand on the same starting line as the Internet platform and maintain a low rate level in the brokerage camp.

With the gradual expansion of the scale of the fund sales market, the competition between banks, third-party Internet platforms, securities companies and other institutions is becoming increasingly fierce, and in the stage of product sales, institutional fee reductions and discounts are not a new thing.

In September 2020, Hengtai Securities fully promoted the subscription rate of public funds from 0.1 discount; in June 2019, Debon Securities announced that it would implement a preferential front-end subscription rate of 0.1 discount for some open-end funds; and CICC Wealth Securities launched a 0.1 discount subscription rate fund pool in October 2019. In 2021, there will be head brokers to join the camp of fee reduction. China Merchants Securities announced on its official website on July 30 that it will reduce the subscription rate of more than 3,000 Class A share funds to a one-fold discount, and more than 1,200 Class C share funds will achieve zero subscription fees. Huatai Securities and Tianfeng Securities also announced that the subscription rate of some of its public funds has been reduced to 10%.

Regarding the phenomenon of securities companies taking the initiative to reduce fees, Chen Li, chief economist of Chuancai Securities and director of the research institute, told the China Securities News reporter that the rate reduction has both subjective factors of securities companies and objective factors of external competition. In the past two years, the fund sales business of securities companies has shown explosive growth and has become an important channel for the issuance of funds outside banks.

"At present, some securities companies take the initiative to reduce fees as a result of market competition." Tian Lihui, dean of the Institute of Financial Development of Nankai University, said that fund companies, third-party sales agencies and Internet platforms are fiercely competitive, and all parties have reduced their rates, won customers, and enhanced their channel advantages. At the same time, fee reductions and discounts can form a differentiated rate system, which can prepare for the investment advisory layout of securities companies.

(Subtitle) Power Fund Consignment Track

In the view of industry insiders, securities companies take the initiative to reduce the fund subscription rate, mainly to compete for the "cake" of fund sales. In fact, in the field of fund sales, the competitiveness of brokers is no longer what it used to be.

According to the data on the ownership scale of public fund sales agencies in the third quarter of 2021 disclosed by the Asset Management Association of China last month, in the list of the top 100 "stocks + mixed public fund ownership scale", the number of securities companies is 49, accounting for almost half of the top 100 list. Among them, CITIC Securities, Huatai Securities, GF Securities, CITIC Construction Investment Securities, China Merchants Securities and other leading securities companies ranked high.

However, from the perspective of the size of a single company, banking institutions are still in the "C position", and CITIC Securities, which ranks first among securities companies, only ranks 14th in the overall list.

Industry insiders said that in the past, securities companies mainly relied on channel-type business such as stock transaction fees, but in recent years, the channel business of securities companies has tended to be "zero commission". At the same time, with the growth of the scale of customers in the investment advisory business market and the increasingly rich investment products in the financial market, the consignment financial products business has gradually become an important source of profit for the wealth management business of securities companies.

In the view of Wei Xing, executive general manager of the asset management business of CITIC Securities and head of the FOF business, the asset management of securities companies has certain advantages in carrying out public offering business. Research is a long board of securities companies, which is convenient for transforming various research strategies into asset management products; as a broker, securities companies are convenient for contacting public funds and private funds in the whole market, and have more advantages in obtaining resources and researching managers.

"Securities companies have advantages in brand image, investment research consultants, sales channels, etc., and are strong competitors in the fund sales market." Tian Lihui said.

Professional service capabilities are upgraded again

In the eyes of industry insiders, although low rates have a certain attraction for investors, investors are most concerned about the appreciation of wealth and the experience of purchase, which requires brokers to continue to enhance professional service capabilities, including active management capabilities and research and customer service capabilities.

"It should be emphasized that customers are paying more and more attention to the active management capabilities of asset management products, and the requirements for research and services are getting higher and higher, so it is imperative to continuously improve the level of this aspect, and at the same time, we must balance risks and benefits." Chen Li said.

How can brokers improve their active management capabilities? Wei Xing said that CITIC Securities has improved its active management capabilities from three aspects: strategy, asset and personnel. Strategically, the advantages of platforms such as the research institute are brought into full play, so that the strategy is continuously enriched and put into product management, and at the same time, on the basis of the product line, the strategy is made distinctive. On the asset side, give full play to the advantages of securities companies in obtaining assets and evaluating assets, obtain high-quality assets, and make correct pricing for assets. In terms of personnel, establish a refined, systematic and industrialized investment team to reduce dependence on individuals.

The relevant person in charge of Guosen Securities said that the essence of the measures taken by Guosen Securities to reduce the rate is still customer-centric, through a differentiated rate system to enhance customer experience, give up some short-term interests, use a longer-term concept to change the way of operation, and truly achieve deep binding with customer interests.

In Tian Lihui's view, in the reform and transformation of the public offering of securities companies' large collection of products, focusing on active management capabilities and building differentiated core competitiveness have become the key to victory. Securities asset management should give full play to the advantages of investment research, provide customers with asset allocation solutions, investment strategy selection, investment advisory suggestions, IT platforms and operation support services, etc., to form a system solution; give full play to the advantages of the investment banking platform, carry out comprehensive services in the whole value chain; promote product innovation, develop characteristic products, increase product genealogy; promote the development of financial technology, and continuously improve efficiency. (End)