How does bank wealth management "change"?
"China Economic Weekly" reporter Xie Wei丨 reported from Beijing
Recently, bank deposit interest rates have been lowered again, and the five major state-owned banks and a number of joint-stock banks have lowered their deposit interest rates. After this round of interest rate cuts, the interest rates of the five major banks on 1-year, 3-year and 5-year time deposits are 1.45%, 1.95% and 2.00% respectively.
This is the third time since 2023 that commercial banks have taken the initiative to adjust the listed deposit interest rate. The 3-year fixed deposit listed interest rate has officially entered the "1 era", which is a big impact for many investors who only rely on time deposits to "lie and earn".
It's not just investors who face the challenge. The general trend of downward trend of market interest rates has also led to a "downward adjustment" in the performance benchmark of bank wealth management products.
In December 2023, a number of banks' wealth management subsidiaries, including CMB Wealth Management, ABC Wealth Management and China Post Wealth Management, intensively lowered the performance benchmarks of their products. At the same time, a number of bank wealth management companies have announced "preferential rates" for some products to attract investors.
Under the "new trend" of interest rates, will bank wealth management be okay in 2024? As the main force of the wealth management market, how will wealth management subsidiaries be deployed?
The "first brother" of the wealth management market is translocated
In 2023, when bank wealth management enters full net worth, many investors seem to have adapted to the fluctuation of wealth management net worth.
At the beginning of 2023, Ms. Liu, who also called "the first time I found that bank wealth management can still break the net", told the reporter of "China Economic Weekly" that her main wealth is still in financial management, "Those who lost money before have risen back later, and bank wealth management is still more stable than stocks and funds." ”
2022 is the first year of netting wealth management products. After a three-year transition period, the "New Asset Management Regulations" were officially implemented on January 1, 2022. In that year, the two "net tides" were repeatedly "educated" by practice, and the era of bank financial management and capital preservation is no longer there, "low risk does not mean no risk, let alone capital preservation". At the end of 2022, bank wealth management also encountered a wave of "redemption wave".
In 2023, bank wealth management will gradually come out of the haze of "breaking the net", and investor sentiment seems to return to rationality. However, the market environment of low interest rates and the volatility of the capital market have caused banks to lose the "top spot" in the asset management market.
According to the data released by 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, a decrease of 8.35% from the end of 2022. According to data from the Securities Investment Fund Association of China, at the end of June 2023, the scale of public funds rose to 27.79 trillion yuan. For the first time, the scale of bank wealth management was surpassed by public funds.
The popularity of listed companies to "buy wealth management" is also declining.
According to Wind data reviewed by a reporter from China Economic Weekly, as of December 31, 2023, listed companies disclosed that their respective companies held a total of 14,798 wealth management products, a decrease of 5,615 from 2022, and a total subscription amount of 979.339 billion yuan, a decrease of 522.223 billion yuan from 1.5 trillion yuan in 2022.
However, with the continuous reduction of bank deposit interest rates, the trend of "deposit moving" is expected to be good for the wealth management market.
Many institutions are still optimistic about the future of the bank wealth management market, and it is expected that the bank wealth management market is expected to come out of the trough of the previous two years in 2024.
CITIC Securities expects that the advantages of wealth management income will be more prominent in 2024, and the scale of wealth management is expected to grow slightly and steadily to about 28 trillion yuan in the first half of the year. In the second half of the year, under the impulse of wealth management subsidiaries, the overall scale of wealth management is expected to regain its position at the 30 trillion yuan mark. Everbright Securities predicts that the growth rate of wealth management scale in 2024 may be 5%~10%, and the center of wealth management scale will reach 29 trillion yuan.
Small and medium-sized banks take the "admission ticket" of the wealth management market again
Under the requirements of the new asset management regulations, wealth management subsidiaries have gradually become the main body of banks' wealth management business. On January 1 this year, the wealth management subsidiary added new recruits.
On January 1, Zheshang Bank announced that it received the relevant approval on December 29, 2023, and according to the approval, Zheshang Bank was approved to establish Zheshang Wealth Management Co., Ltd.
To a certain extent, a bank's wealth management subsidiary is also a "new thing".
After the implementation of the new asset management regulations in April 2018, the domestic wealth management market has opened a new era. In order to strengthen the risk isolation of wealth management business, after the introduction of the new regulations on asset management, it has become an inevitable trend for banks to establish wealth management subsidiaries. In May 2019, CCB Wealth Management was the first to open, followed by the mushrooming of bank-based wealth management subsidiaries.
At present, 31 wealth management companies have opened in China. Zheyin Wealth Management is expected to become the 32nd wealth management company in China. If the subsequent opening is successful, it means that the wealth management subsidiaries of the 12 national joint-stock commercial banks in China will all be "complete".
Asset allocation should change from time to time, and bank wealth management is still a "battleground".
At the annual meeting of the China Wealth Management 50 Forum held recently, the leaders of a number of wealth management companies reviewed and looked forward to it.
According to Pan Dong, General Manager of Everbright Wealth Management, in the past four years, bank wealth management has undergone tremendous changes. Before the implementation of the new asset management regulations in 2018, individual investors had to spend more than 50,000 yuan at a bank before they could purchase wealth management products. After the new regulations on asset management, the purchase threshold for net-worth wealth management products has been lowered to 10,000 yuan. In 2019, a wealth management subsidiary of a bank was established, and the purchase threshold for bank wealth management products was reduced to 1 yuan. In 2020, many wealth management subsidiaries of banks issued products with a minimum purchase of 1 cent, ensuring that the general public can access wealth management services through a low threshold and achieving fair access.
Pan Dong said that in addition to "whether there is any", the question that inclusive financial management needs to answer is whether it is expensive or not, and whether it is good or not. Financial inclusion is not simply a matter of lowering the barriers to entry, it is only a part of access. In order to truly do a good job in inclusive finance, it is necessary to ensure the benefit of the results through the appropriateness of the process, and let investors have a sense of gain. The asset management industry should do a good job in the management and service of the whole process.
"Now there are 100 million customers in bank wealth management, which means that in the past four years, the number of customers in the whole industry has increased by three times. Pan Dong said that this also means that the industry only serves one-fourteenth of the country's population, and there is still a lot of room from the perspective of inclusiveness. At the same time, wealth management customers still mainly invest in R1 and R2 products, and have not established sufficient awareness of products above R3. In the future, the asset management industry will face many opportunities and challenges in terms of breadth and depth of inclusive finance.
Wu Jianbing, chairman of CMB Wealth Management, said bluntly that at the end of June 2023, the scale of public funds also exceeded that of bank wealth management for the first time. Fundamentally speaking, such changes are mainly caused by the gradual weakening of the traditional advantages of bank wealth management companies on the asset side and the channel side, and the failure to establish new core competitiveness advantages (such as equity investment and research capabilities). On the product side, due to the contradiction between the customer's rigid redemption thinking and the net value of wealth management products, the risk tolerance of customers is very low, and the acceptance of the net value drawdown of products and principal loss is not high, resulting in the increasing volatility of the scale of bank wealth management products and the obvious increase in investment difficulty. Since 2022, it has become quite difficult for bank wealth management subsidiaries that have experienced the non-standard "three kills" of stocks and bonds. "Compared with public offering and insurance asset management, bank wealth management has some uniqueness in terms of customer service, operation mode, and investment and research capabilities. Yuan Zhihong, chairman of Huaxia Wealth Management, said that it also has a unique internal logic in asset allocation.
"In the past, bank wealth management was called guaranteed principal and guaranteed returns, but now it aims to pursue absolute returns and pay more attention to the stability of income. Yuan Zhihong said that from the perspective of customers, the bank's wealth management subsidiaries are currently mainly serving public investors with low risk appetite, and are inclusive financial products, which should provide customers with safe assets and bear important responsibilities for the preservation and appreciation of residents' wealth.
The competitiveness of banks' wealth management needs to be reshaped
Under the new trend, how to create differentiated advantages in bank wealth management has become a topic of concern for senior executives of wealth management companies.
In the view of Liu Xinghua, the former chairman of CCB Wealth Management, the current demand for wealth appreciation has been replaced by the demand for value preservation, and wealth management is not only the pursuit of high-income classes, but also the normal pursuit of ordinary people. China's wealth management has shown a new characteristic of shifting from emphasizing income to emphasizing security, from value creation to risk management, from domestic market to global allocation for high-income households, and from real estate to financial assets.
"Financial institutions, especially wealth and asset management institutions, have shifted from focusing on high-net-worth individuals to inclusive wealth management for the general population. It has become a consensus to provide low-risk, stable wealth products for more general customers. Liu Xinghua said.
Liu Xinghua believes that China's wealth market is facing three major changes: one is to break the rigid payment and shift to the safety of principal, the second is to shorten the term of asset management products, and the third is to shift investor education to consumer protection. In the future, there are five major trends in inclusive wealth: first, banks can assume more responsibilities for inclusive wealth; second, inclusive wealth products should consider four elements, namely, low risk, stable net worth, good liquidity, and moderate term; third, the structure of inclusive wealth management should be simple and understandable to the general public; fourth, the inclusive wealth management mechanism should keep up; and fifth, the financial supervision of inclusive wealth management needs to be continuously strengthened.
In Pan Dong's view, from the perspective of bank financial management, it is necessary to deal with three relationships to do a good job in inclusive finance: first, the relationship between the low threshold for product access and consumer rights protection and investor education; second, the adaptation relationship between products and investment strategies and the diversity and differentiation of investors' customer groups; and third, the relationship between inclusive finance and business sustainability. At the same time, asset management institutions should take advantage of technological progress and digital transformation to continuously improve their ways to reach customers, and strive to improve the effectiveness of inclusive financial services.
Wu Jianbing said that at present, the customers served by wealth management companies are mainly bank customers, and bank customers have expectations for low volatility and stable returns on wealth management products. Wealth management products need to achieve the agreed returns within the agreed period, which is a significant difference between wealth management companies and other asset management institutions (which pursue relative return rankings). Therefore, wealth management companies should adhere to the development orientation of comprehensive asset management institutions, establish cross-market and full-category asset investment capabilities, and form investment concepts and investment capabilities that are compatible with them, so as to support long-term business success with strategic determination.
"In terms of development stage, wealth management companies are still very young, and their operating history as independent legal persons is very short, and we need to learn from the experience of mature asset management markets at home and abroad, because they have experienced long-term practice verification. Wu Jianbing said, but at this stage, learning from the experience of other institutions must be combined with the characteristics of the financial industry and their own characteristics, otherwise it is easy to "adapt to the soil". Wealth management companies should have an open mind and dare to innovate, and it is also recommended that regulators encourage wealth management companies to explore more and continuously improve their business models and business models. In terms of customer characteristics, the process of netting wealth management products has been deepened, but customers' cognition of wealth management products is still relatively lagging behind, and investor education needs to be carried out persistently. At the same time, on the premise of adhering to the net-worth operation, considering the current situation of customer acceptance and market conditions, some phased or transitional policy arrangements should be allowed, such as exploring valuation methods and risk mitigation measures under the premise of controllable risks.
(This article was published in China Economic Weekly, Issue 1, 2024)
