At the turn of 2023 and 2024, the turmoil in the stock and bond markets has made wealth management a hot search.
This year, the net value of bank wealth management products was basically completed, and the net value of bank wealth management products has been deeply rooted in the hearts of the people.
This year, the net failure rate of bank wealth management products decreased significantly, but the scale of bank wealth management was surpassed by public funds for the first time.
This year, most of the equity products that fluctuated with the market made investors sad.
This year, in the non-stock fund distribution market, the absolute leading role of banks was shaken.
This is an interesting phenomenon discovered by the New Finance Research Center of Southern Weekly after a year of research, tracking and statistical analysis.
To this end, the New Finance Research Center of Southern Weekend suggested that wealth management institutions should strengthen investment and research capacity building and innovate management models as they shift from product-centric to customer-centric.
The net failure rate of bank wealth management products has decreased significantly
Under the clear guidance of regulatory orientation, bank wealth management products have basically completed net worth.
According to the data of the banking wealth management registration and custody center, as of the end of June 2023, the scale of the bank wealth management market was 25.34 trillion yuan. Among them, net worth wealth management products accounted for 95.94%, and the proportion gradually increased.
In fact, the scale of net-worth wealth management products has reached 92.97% in 2021. This means that after several years of adjustment, the bank's wealth management products have basically completed the net worth.
According to data from the Asset Management Association of China, as of the end of June, the total net asset value of mainland public funds was 27.69 trillion yuan, and the scale of public funds exceeded the scale of bank wealth management for the first time.
Although the scale of public funds exceeded the scale of bank wealth management products for the first time, from the perspective of serving customers, bank wealth management has obvious advantages. On the one hand, in the bank-dominated financial market in mainland China, wealth management companies backed by their parent banks have inherent customer advantages, covering a wide range of customer groups and high customer trust; According to the data of the banking wealth management registration and custody center, in the first half of 2023, bank wealth management will create 331 billion yuan of income for investors, and the average rate of return of wealth management products will be 3.39%.
The net value of banks' wealth management products has been continuously restored, and the net failure rate has decreased significantly. According to Puyi Standard data, as of the end of November 2023, the average net value of effective products has increased by 2.06% year-to-date, of which 2.8% of products with a net value decline compared with the end of 2022, and the net failure rate has decreased significantly. In December 2022, the cumulative net value of products accounted for 21.2%, which also led to a wave of redemptions of bank wealth management products.
The new products are mainly fixed
The New Finance Research Center of Southern Weekend found that in the case of large fluctuations in the equity market, a "secret" of the sharp decline in the net failure rate of bank wealth management products - the new products are mainly fixed income. This is also the traditional advantageous product of wealth management companies, which can better meet the needs of wealth management investors for stable income in a low interest rate environment.
From the perspective of the product issuance market, since 2023, the proportion of fixed income products in the new products issued by banks has increased significantly. According to the data of Puyi Standard, from January to November 2023, the average amount of new fixed-income products issued by bank wealth management products reached 405.2 billion yuan, occupying an absolute leading position among all kinds of new wealth management products issued by banks.
According to the analysis of the Southern Weekly New Finance Research Center, on the one hand, this is related to the advantages of banks' wealth management fixed income products. Bank wealth management products have always been dominated by low- and medium-risk fixed-income products, and the proportion is increasing.
Although the asset allocation of bank wealth management and mutual fund products is dominated by bonds, bank wealth management invests more in low-risk assets such as cash, bank deposits, and interbank certificates of deposit. As of June 2023, the largest scale of wealth management companies' existing products is fixed income products, accounting for 96.23% of all products. followed by mixed products, accounting for 3.39%. Equity products and financial derivatives accounted for less than 1%.
On the other hand, it is related to the reduced risk appetite of residents. In 2023, residents' deposits will continue to increase, and there will be a trend of regularization. Southern Weekend's New Finance Research Center compared data from 20 major banks and found that in the first half of 2023, the proportion of personal time deposits generally increased. Among them, Industrial Bank increased by 45.4% year-on-year. (For details, please refer to Southern Weekly App: "20 Banks' Net Profit Accounts for More Than 1/3 of A-Shares, and the 'Profit King' Fights the Differentiation of Interest Rate Spread Pressure Intensifies")
At the same time, in 2023, savings policies will be selling well, and the proportion of insurance agency income of commercial banks will increase. Taking China Merchants Bank as an example, in the first three quarters of 2023, insurance agency handling fees accounted for 52.44% of wealth management fees and commission income, a year-on-year increase of 16.94%, and it was the only major category of products that increased.
Although this is related to the fact that the increased whole life insurance with a predetermined interest rate of 3.5% was required to be removed from the shelves at the end of June, and the marketing efforts have been increased, to a certain extent, it also reflects the scarcity of high-quality wealth management products in the market, especially stable and low-volatility products.
Mutual fund companies are also aware of the importance of the allocation of different risk products under market fluctuations. At the 2023 Wealth Management 50 Forum attended by the New Finance Research Center of Southern Weekly, Zhan Yuyin, chairman of E Fund, believes that according to the risk-return benchmark, the product investment of public funds presents a "dumbbell" distribution. There are more low-risk, low-return currency and short-term debt products, high-risk, high-yield stocks and allocation products, while there are fewer medium-return and medium-risk products.
In the non-cargo-based consignment market, the protagonist is changing
Although the scale of wealth management has been surpassed by public funds, banks are still the main channel of the wealth management consignment market.
Emerging Internet platforms make full use of technological advantages, reach through efficient channels and diversify product portfolios, seize the financial needs of young customers, and quickly enter the wealth management market, but the important position of banks in the field of personal wealth management is still difficult to shake in the short term.
According to McKinsey's estimates, about 40% of retail non-deposit financial investment products are still sold through banking channels.
In the product sales of wealth management companies, although the number of third-party sales agencies has gradually increased, the sales of the parent bank are still the core channel. According to data from the Banking Wealth Management Registration and Custody Center, in June 2023, 417 institutions sold wealth management products issued by banks' wealth management subsidiaries, an increase of 89 from the beginning of the year. However, its sales volume cannot be compared with the parent channel.
It is worth noting that in the non-monetary public fund offering market, brokerages and Internet wealth management platforms are gradually eating away at the share of banks. Wind data shows that in the first quarter of 2021, the market share of bank non-monetary fund distribution was 58%, and by the first quarter of 2023, the market share of bank non-monetary fund distribution has fallen to 47.16%. During the same period, the share of non-money market funds of brokerage firms reached 17.79%, while the share of Internet wealth management platforms in non-monetary funds expanded to 34.17%. It can be seen that the Internet wealth management platform has a greater advantage in the non-monetary fund market.
From the perspective of customer types, the main customers of emerging wealth management channels such as Internet wealth management platforms are mostly post-90s, while the average age of the main customers of bank wealth management is relatively high. Compared with younger customers, the latter has a relatively low risk tolerance, and their main financial goals are family protection, children's education and retirement, etc., and they also have a relatively high dependence on offline outlets and relationship managers.
According to the New Finance Research Center of Southern Weekly, the fee income from consignment wealth management is an important source of intermediate income for commercial banks, and commercial banks should actively promote digital and intelligent transformation and improve their comprehensive service capabilities. On the one hand, we should create a younger brand image and actively attract young customers, and on the other hand, we should strengthen cooperation with other institutions in investment advisory capacity building and product innovation, so as to play a greater role in promoting the healthy development of the wealth management market ecosystem.
Management model innovation is imminent
China is already the world's second largest wealth management market. According to E Fund's estimates, the scale of China's large asset management industry will reach 134.9 trillion yuan in 2023. In other words, the mainland's wealth management market is already a trillion-dollar market, second only to the United States.
According to the New Finance Research Center of Southern Weekly, although the wealth management ecosystem in mainland China has taken shape, there are still the following problems:
First, the financial market is weak in efficiency and highly volatile. In particular, in the capital market, the wealth management function is weak, the protection of investors is insufficient, and the major shareholders reduce their holdings. Compared with overseas mature capital markets, China's capital markets have low yields and high volatility. This is also a major factor that does not attract institutional investors for long-term investment and value investing.
Second, the alternative investment market is developing slowly, and the barriers to entry are high. The hedging tools for mainland investors to participate in the equity market mainly include securities borrowing and lending, stock index futures, SSE 50 ETF options, CSI 300 ETF options and over-the-counter customized derivatives. However, these hedging tools have entry barriers, and the cost of participation for ordinary people is high. Even for institutional investors with strong professional qualifications, there are proportion restrictions and quota approval requirements, so it is impossible to achieve effective hedging. The lack of hedging tools makes it impossible for investors to carry out effective risk management and hedging, and all kinds of asset management institutions are "difficult to cook without rice".
Third, investors are immature. Investor education is not a one-day effort, and in the past period of rapid economic development, the generation that benefited from reform and opening up accumulated a lot of wealth, and at the same time Xi the implicit promise of rigid payment by financial institutions. In the era of net worth, low-risk and high-yield wealth management products are hard to find, and they have a low tolerance for the volatility of wealth management products.
Fourth, asset management institutions used to attach importance to "investment" and ignore "care". The principle of investor suitability and investor protection are not in place. Financial intermediaries do not conduct in-depth customer surveys, do not disclose risks sufficiently, and recommend financial products or encourage investors to buy and sell frequently based on factors such as performance and assessment, and agency problems and trust problems are frequent.
Fifth, the consistency and coordination of regulatory policies are poor, which restricts the development of the wealth management market. In May 2023, the State Administration of Financial Supervision and Administration was officially inaugurated, marking an important step in the new round of financial regulatory reform in the mainland. This helps to enhance the consistency and synergy of the regulatory policies of different regulatory bodies. In October 2023, the Central Financial Work Conference proposed to "bring all financial activities into supervision in accordance with the law, comprehensively strengthen institutional supervision, behavior supervision, functional supervision, penetrating supervision, and continuous supervision, and eliminate regulatory gaps and blind spots". It can be seen that the wealth management market is gradually forming a comprehensive and systematic regulatory system.
At present, the wealth management market in mainland China is in a critical period of change from product-centric to customer-centric. Wealth management institutions in mature overseas markets have formed a consultative wealth management model with professional investment consulting as the core, which is different from product sales. Against this backdrop, the Southern Weekly New Finance Research Center puts forward three suggestions:
First, asset management institutions should strengthen investment and research capacity building. Investment and research capabilities are the foundation of a professional asset management institution, and it is also the key to achieving differentiated competitive advantages. While consolidating the investment and research capabilities of traditional fixed income products, asset management institutions should strengthen the construction of equity investment capabilities and output more stable equity asset management products.
The second is to innovate the management model. For example, the establishment of a deferred system for the remuneration of investment managers and a mandatory co-investment mechanism for products. These measures are conducive to the establishment of a close relationship of mutual trust between asset management institutions and their clients, fulfilling their fiduciary obligations, and preventing behaviors that harm the interests of clients.
The third is to strengthen investor education. Asset management institutions should strengthen investor education and companionship, advocate the concept of value investment, and help customers overcome short-term emotional fluctuations and obtain long-term stable returns.
Zhang Wenjing, a researcher at the New Finance Research Center of Southern Weekly
Editor-in-charge: Xie Yanxia