Author | Zhao Jinjin (Columnist of jiugua financial circles)
Source | Nine Trigrams of The Financial Circle
Edit | Wu Wenmei edited | Yang Wenhua
Under the new regulations on asset management, bank wealth management to break the rigid payment has become the norm, since 2020, bank wealth management has a number of product losses, at that time, mainly the fluctuations in the bond market caused some bank wealth management products to fall below the net value, but at that time there was also capital protected wealth management, but a small number of engaged in equity wealth management products investment, the impact is not large.
In fact, as early as before, bank wealth management has suffered losses, but in order to prevent reputational risks, banks will smooth out the short-term fluctuations in the market through various means, and eventually most of them can guarantee the expected returns, after all, for banks, other products can still obtain excess returns, when the loss is only a few, you can get excess returns from other products to make up for the loss, will not be lost because of small losses.
Overall, before 2021, the loss of bank wealth management products can be controlled, but since entering 2022, open the wealth management page of each bank, the net value of many wealth management products has fallen below 1, which is not a good sign, although "financial management is risky, investment needs to be cautious", but as a bank is a performance appraisal, on the one hand, can not say with conscience, financial management is not risky, on the one hand, can not let customers do financial management, what should banks in a dilemma do?
The fall of net wealth management value is controversial
It seems refreshing to gradually transfer the risks taken by the banking system for many years to the outside world, and banks finally no longer bear losses alone, but how can investors accept product losses with peace of mind?
Bank wealth management products do not protect the principal and do not guarantee the income, but the people still trust the bank will not lose, at least can protect the capital, the income is less, but the situation that is really less than the principal has begun to appear. Whether online or offline, it has caused people a hot discussion. The author commented on the "bank wealth management loss" on Weibo:
Entering 2022, the transition period of the new asset management regulations has ended, bank wealth management products have officially entered the era of net worth, and the proportion of equity products is gradually increasing, which means that the purchase of bank wealth management needs to bear their own risks and bear their own profits and losses. The capital market in 2022 made an unfavorable start, with the adjustment of the equity and bond markets, the volume and price of bank wealth management products fell together, and the wealth management products with a high equity allocation ratio suffered losses. The net value of many products has declined, and some have even fallen below the initial net value.
The income of wealth management products fluctuates, investors can understand the expected rate of return, but it has fallen below the net value, there is a bank for more than half a year, the principal is still a loss, investors are really difficult to accept, although in the purchase of wealth management products, let customers fill in "wealth management non-deposit, investment risk", but for loss-bearing customers or can not accept, there is a difference between the bank and the investment in the stock market?
So why has the net breaking rate of wealth management products risen sharply recently? Combining various factors, the author summarizes as follows:
1, product transformation, short-term "pain" began to appear. From the principal guaranteed interest or principal guarantee floating income type accounted for the main proportion to almost all of the net worth products, the product structure of the wealth management market changed, in addition, the previous bank disguised the bottom, so that the break was not made public, resulting in the market wealth management products as stable as Taishan's "illusion", now the "illusion" is unveiled, no one is bottom, resulting in a sharp increase in the net break rate in the short term.
2. Affected by the continuous correction of the A-share market. The establishment and operation of wealth management subsidiaries not only effectively isolates the risk from banks, but more importantly, the funds raised can directly enter the stock market, and since the beginning of the year, the continuous downturn in A-shares has also had a greater impact on wealth management products, especially equity wealth management products. Among the wealth management subsidiaries that have been opened, many have adopted the method of investing in equity investment funds and direct investment projects. Statistics have found that since the beginning of this year, more than 160 equity/hybrid wealth management products with data have negative returns within 60% of the year, especially the equity net value drawdown is the largest.
3. Change of capital operation mode. In 2022, the asset management industry ushered in the first year of the new asset management regulations, and bank wealth management began to enter the era of comprehensive net worth. Many banks have begun to set up wealth management subsidiaries, the risk is separated, before the bank self-operated wealth management, in the risk control grasp is strict, and now the wealth management subsidiary directly into the shares, in order to seize customers, in the project selection and risk control capabilities are not thorough. In addition, compared with funds, securities companies and other years of deep ploughing in the equity market, bank wealth management sub-"qualifications are still shallow", equity investment and research capabilities are generally weak, so in the face of the broad equity market, it is also necessary to cultivate "internal strength" and create core competitiveness.
Preferential pricing wars at wealth management rates
At the same time as the fluctuation of the net value of bank wealth management products has intensified, the preferential rate activities of wealth management products have emerged, perhaps to make up for the losses of customers, appease customers, or perhaps for the more healthy and transparent development of bank wealth management products.
At the beginning of 2022, after the full implementation of the "New Asset Management Regulations", the competition in the wealth management product market has become increasingly fierce, and in order to grab customers and retain customers, banks and wealth management subsidiaries have opened the "preferential rate" policy. A number of banks and wealth management subsidiaries, including China Merchants Bank, Rizhao Bank, Huaxia Bank, Everbright Wealth Management, etc., have issued rate adjustment announcements, reducing the product rates of wealth management products or wealth management subsidiaries sold on behalf of the bank, and some product rates have been reduced to 0%. The essence of the rate concession is to dilute the impact of product performance fluctuations on investors after the new asset management regulations, and increase the market competitiveness of wealth management products.
However, it is worth noting that the reduction of the rate of wealth management products to zero does not mean zero fees. Banks only exempt subscription fees, redemption fees and other fees, and the overall operation of bank wealth management products requires a number of fees, including: subscription/subscription fees, redemption fees, management fees, sales service fees and custody fees. At present, the phased preferential treatment launched by bank wealth management is mainly concentrated in sales fees and fixed management fees, and the recognition/subscription fee and redemption fee of most bank wealth management products are 0. The fee is still concentrated on the net worth wealth management products, similar to the operation mode of the fund, the bank charges a fee for the excess performance remuneration of the wealth management product, generally between 50% and 95%.
The adjustment of the rate, there are rate reductions or even zero, but there are also products to increase the rate, so customers can not look at the level of the rate when buying products, even if the rate is low, but can not guarantee that there is no loss, the test is still the profitability of the product, even if the fee is high, but the yield to the customer is also high, this is a win-win strategy.
Development of wealth management subsidiaries
Recently, BOC Wealth Management announced that it has been approved to open for business, and the number of wealth management subsidiaries that will open from then on will increase to 25. Since the end of 2018, a number of bank wealth management subsidiaries have been approved for establishment, and as of now, a total of 29 bank wealth management subsidiaries have been approved for establishment, including 25 bank wealth management companies and 4 Sino-foreign joint venture wealth management companies, and the wealth management subsidiaries of the six major state-owned banks have been opened.
Among the wealth management sub-branches of the joint-stock bank, there are currently three wealth management subsidiaries approved for establishment, Named Minsheng Wealth Management, Boyin Wealth Management and Hengfeng Wealth Management, which have not yet obtained the business license, while in the head city commercial banks, the current wealth management of the Bank of Beijing is still far away.
The opening of wealth management subsidiaries to some extent for the wealth management business has brought new blood, due to the divestiture with the parent company, the policy in terms of product operation and other aspects is much looser, but the development of each wealth management subsidiary is also uneven, obviously state-owned banks and other large banks due to strong strength, investment research capabilities and scientific and technological capabilities are higher than other wealth management subsidiaries, in the income and risk control is also controllable. At the same time, some wealth management subsidiaries have many problems in product operation due to congenital deficiencies.
From the perspective of product structure, the main way for wealth management companies to participate in equity allocation is still the FOF model, but more than 1/5 of the products have fallen below the net value. According to reports, on the one hand, the overall net value growth rate of all hybrid products currently issued by wealth management subsidiaries in the past Three months was -0.46%, the volatility rate was 2.40%, and the maximum drawdown rate was 1.53%. On the other hand, SPDB Wealth Management, which has just opened this year, has recently sold two explosive models, of which Ruihong set sail to "absorb gold" of 12 billion yuan a day.
It can be seen that the ability to invest in research is very critical. Even when the market is down, not all wealth management products are losing money, there are still many products that are running steadily and have considerable returns. It's not just investor habits and risk tolerance that need to change, but also the strength of banks.
Consignment sales have become mainstream
By the end of 2021, 21 wealth management companies with existing products have cooperated with consignment agencies, and the balance of consignment products totals 17.07 trillion yuan. Specifically, the wealth management products of 3 wealth management companies are only sold by the parent bank, and the wealth management products of 18 wealth management companies in addition to the parent bank sales, but also open up the sales channels of other banks, with an average of about 14 cooperative sales agencies per wealth management company.
Through the sale of wealth management products, banks can avoid their own shortcomings, create new profit growth points, and achieve an increase in intermediate business income while enriching product lines and revitalizing customers.
As the king of retail, CMB has built a "wealth open platform" to introduce wealth management products from other banks for consignment sales. Relying on the China Merchants Bank App, in the bank side of the market to package the excellent asset management institutions and products in the whole market, so that customers can buy any one of the products in the market, from the past monopoly of a product to the whole market of products, the customer base expanded, the traffic is more; in the client, customers can not only enjoy the services of CMB, but also enjoy the professional services of excellent asset management institutions, customers do not need to constantly switch different bank APP, compare the products of each bank, just browse the products of the whole market at CMB. And get the service behind the corresponding product.
Large banks with the help of consignment sales to expand their own traffic and improve product quality, for small and medium-sized banks need to be more so, because most of the small and medium-sized banks may not be able to independently set up wealth management subsidiaries, can not sell wealth management products, will gradually return to credit business, return to local business, more and more small and medium-sized banks choose to continue to participate in the financial market through consignment business, give full play to their unique advantages in customer resources, sales channels and other aspects, to create their own characteristics of wealth management products "supermarket", and gradually become an important force in the sales of wealth management products.
By the end of 2021, the product survival scale of "clean start" wealth management companies accounts for nearly 60% of the total market, and has developed into an important type of institution in the wealth management market, at the same time, it continues to participate in wealth management business through product consignment sales, and the wealth management market has shown a pattern of wealth management companies as the mainstay and banking institutions as a supplement.
Wait for the willows to fade
1. Increase the investment and research capabilities of wealth management products
In terms of product system, it is expected that "fixed income +" products will become the mainstream, and the types will be more abundant, from the original "+ equity" to "+ commodities, derivatives and alternative assets". At present, a number of wealth management companies are preparing for the pilot of pension wealth management products, customizing exclusive financial management for different customer groups, extending the product period, so that the product has a longer time to adjust, even if the withdrawal income, there is a chance to pull back the situation, while the market research and judgment and the ability of products to increase the position need to be specialized, real-time follow-up of the situation, timely adjustment, avoid dependence, increase innovation.
2. Increase investor financial education
Some investors still harbor the "faith of just redeeming", mistakenly believing that banks will "go to the bottom" if there is a loss in bank wealth management products, and it is not uncommon for them to complain about the loss of wealth management products. This requires the industry to take the time to educate investors. Banks can try to help wealth management customers increase their professional knowledge through comics, videos, games and other forms. It is necessary to let customers change their mentality and understand the "principle of seller responsibility and buyer responsibility". Only customers have increased their cognition of financial management, breaking the inertial thinking that bank wealth management is to protect the capital, improving their comprehensive financial management capabilities, diversifying investment, even if the situation of falling below the net value on a certain product, but in other products still obtain high returns, banks help customers improve their comprehensive income, formulate financial planning, not just financial products.
3. Increase the disclosure of financial information
The asymmetry of information makes the distance between banks and customers widen, and once the wealth management products are broken, customers will naturally be unacceptable. Banks continue to improve the functions of the information disclosure platform, continuously improve the level of service, regularly publish the operation of wealth management products and changes in net value on the official website, wealth managers through the community, do a good job in the maintenance of daily customers, regularly communicate with customers the overall situation of the products they purchase, let customers know the overall operation of assets under the name in advance, not just a product, improve customer satisfaction, increase customer stickiness.
Looking forward to 2022, under the background of accelerating the construction of a new development pattern of domestic and international "double circulation" and deepening the structural reform of the financial supply side, the bank wealth management industry will enter a new stage of quality improvement and upgrading.
Reference: China Banking Wealth Management Market Annual Report 2021