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A New Journey of Asset Management: Promoting High-quality Financial Development and Building a Financial Power
Wu Xiaoling, Deng Huanle, etc
Published by CITIC Publishing Group
Introduction
Comprehensively discuss the new challenges, new missions and new future of the asset management industry, give full play to the functions of asset management business, and escort the development of finance with Chinese characteristics
Since the implementation of the new regulations more than five years ago, the asset management industry has moved from disorderly expansion to orderly development, with assets under management exceeding 100 billion yuan, becoming the second largest financial format after bank credit business, and playing an increasingly prominent role in the modernization of China's financial system. At present, the reform of financial supervision is progressing in an orderly manner, and how to further deepen the reform of the system on the basis of the full implementation of the new regulations on asset management, and shift from managing the risks of asset management business to giving full play to the functions of asset management business, has become a strategic issue related to the modernization of China's financial system and the direction of financial development with Chinese characteristics.
This book takes the full implementation of the new asset management regulations as the starting point, takes into account the problem-oriented and goal-oriented, evaluates and summarizes the implementation of the new asset management regulations, finds out the potential risks and deep-seated problems of China's asset management business, and puts forward policy recommendations to promote the healthy development of China's asset management business on the basis of in-depth analysis of the causes of the problems, and looks forward to the future of China's asset management business. It is hoped that by deepening the reform of the system, we will give full play to the function of asset management business, so as to fully implement the registration system, increase the proportion of direct financing, and take the road of financial development with Chinese characteristics, so as to better coordinate development and security, and prevent and resolve financial risks. better serve the real economy and achieve high-quality economic development; Better increase residents' wealth and contribute to common prosperity.
About the Author
Wu Xiaoling
Former Executive Vice President of China Society for Finance and Banking, Former President of China Financial Accounting Society, Member of China Economic 50 Forum, Academic General Counsel of China Wealth Management 50 Forum. Principle Director, Researcher, Adjunct Professor, and Doctoral Supervisor of PBC School of Finance, Tsinghua University. Member of the Standing Committee of the 11th and 12th National People's Congress, Vice Chairman of the Financial and Economic Committee, former Vice Governor of the People's Bank of China, and former Director of the State Administration of Foreign Exchange.
In 1994, she was awarded the Sun Yefang Economic Science Award, in 2004 and 2005, she was named one of the "50 Most Interesting Business Women in the World" by the Wall Street Journal, in 2006 and 2007, she was named one of the "100 Most Influential Women in the World" by Forbes, in 2009 she was selected as one of the "100 Economists Who Influenced the Economic Construction of New China in the Past 60 Years", and in 2011, she was awarded the "CCTV China Economic Person of the Year" award.
He has been engaged in the practical and theoretical research of monetary policy, financial market and financial supervision for a long time, and has published books such as "Bank Credit Management and Money Supply", "Research on Debt Restructuring of Banks and Enterprises", "The Great Era of Asset Management" and "New Era of Platform Finance", and has published many articles on finance, monetary policy, financial market, inclusive finance, financial law, etc. in journals. During his work at the National People's Congress, he participated in the revision of important laws and regulations such as the Securities Investment Fund Law of the People's Republic of China and the Securities Law of the People's Republic of China.
Deng Huanle
He is an invited researcher of the China Wealth Management 50 Forum, and vice president of Hang Seng Electronics Co., Ltd. From 2002 to 2018, he worked in the China Securities Regulatory Commission and its subordinate Asset Management Association of China, engaged in securities supervision and self-discipline management of the fund industry, and was awarded the "Laura Shi Scholarship" by the China Securities Regulatory Commission. From 2018 to 2023, he worked at Morgan Stanley Fund Management Co., Ltd. He graduated from the School of Economics and Management of Tsinghua University with a bachelor's degree, and studied finance at Peking University and London Business School.
directory
Foreword
Chapter 1 General Introduction
1. Comprehensive assessment of the implementation of the new asset management regulations
2. New challenges faced by the asset management business
3. Causes of risks and problems in asset management business
4. Prospects and suggestions for asset management business
Chapter 2 Evaluation of Results
1. Background of the introduction of the new regulations on asset management
2. The implementation effect of the new asset management regulations after they are promulgated
3. New challenges faced by the new asset management regulations
Chapter III: Laws and Regulations
1. The current development of the asset management business of the two major regulatory lines
2. Current regulatory policies in all aspects of asset management business
Chapter 4 Asset Allocation and Investment
1. The current asset allocation of various types of asset management business
Second, the main problems faced by the asset allocation business
3. Causes of asset allocation business problems
4. Solve the problems existing in the wealth management market and related suggestions
Chapter 5 Risk Assessment
1. Risk assessment of current asset management business
2. The main risks faced by the asset management business
3. Analysis of risk spillover in the wealth management market
4. Suggestions on promoting the risk of wealth management market
Chapter 6 Sales
1. Problems and suggestions on the current sales side
2. Current problems and suggestions from investors
Chapter VII Trusteeship
1. The main problems faced by the fund custody industry
2. Causes of problems in the fund custody industry
3. Suggestions for promoting the fund custody industry
Chapter 8 Investment Advisory
1. Problems and suggestions faced by the current investment consulting industry
2. Problems and improvements in information disclosure in the investment consulting industry
3. Problems and improvements in product evaluation in the investment consulting industry
4. Suggestions on the design of supplementary indicators for information disclosure and product evaluation
Chapter IX: Overseas Experience and Reference
1. Experience in the development and legislative practice of the overseas asset management industry
2. Unified regulatory model for public asset management products in the UK
3. The institutional supervision model of the trust business of U.S. banks
Appendix
Excerpts from the manuscript
The new regulations on asset management are emergency and targeted institutional arrangements made in 2018 due to the chaos and danger of the "big asset management" business, which has the characteristics of phased and transitional.
Over the past five years since the implementation of the new asset management regulations, the high-risk shadow banking business has been accurately dismantled, and a unified and coordinated regulatory system has been gradually constructed, and the asset management industry has moved from disorderly expansion to standardized development.
Among them, the focus of the new regulations on asset management is to control the high-risk shadow banking business hidden behind the chaos of the "big asset management" business, and is committed to breaking the rigid payment, reducing product leverage, compressing non-standard assets, and removing layers of nesting. According to the disclosure of the China Banking and Insurance Regulatory Commission, by the end of 2022, after the full implementation of the new regulations on asset management, the scale of high-risk shadow banking with "quasi-credit" has been reduced by nearly 30 trillion yuan, and the risk of shadow banking has continued to converge.
However, the new regulations have fundamentally reversed the shadow banking chaos caused by regulatory arbitrage, and achieved phased governance results. However, compared with the promulgation of the new regulations in 2018, the external environment and the situation of the asset management business have undergone tremendous and profound changes, the transformation and upgrading of the asset management business is still not in place, the deep-seated problems left over from history have been continuously exposed in the downward cycle, and the functions of the asset management business in preventing financial risks, serving the real economy and improving investment returns have not been fully utilized.
01 What are the new challenges facing the asset management business?
Wu Xiaoling concluded in "A New Journey of Asset Management" that the current asset management industry is facing three new challenges:
First, from the perspective of preventing financial risks, the transformation progress of the asset side and the capital side is lagging behind, and some asset management products are still leveraged.
The new asset management regulations aim to break the rigid payment, but the risk appetite of customers on the capital side has not changed, and they are still looking forward to rigid payment. Although the asset side has been adjusted, real estate and urban investment platforms are still important sources of funds, and liquidity and asset quality have not changed substantially. Banks and other financial management companies smooth the fluctuation of net worth through technical means, but in fact do not really solve the risk problem. On the product side, there has been a phenomenon of hidden liability transfer, and the leverage ratio has not improved significantly.
Second, from the perspective of serving the real economy, it has failed to effectively promote equity capital formation and has insufficient capacity to support innovative economic activities.
The book argues that asset management business is a bridge connecting residents' wealth and capital markets, but in reality, its function of promoting capital formation has not been fully utilized. The proportion of direct financing in the real economy in mainland China is low, the financing structure provided by the asset management business is poor, the financing period is short, and the proportion of equity financing is low. In addition, the asset management business does not provide sufficient support for innovative enterprises, making it more difficult for private equity and venture capital funds to raise funds. The increase in the proportion of government and state-owned enterprise funds in private equity funds is impacting and changing the logic and market-oriented operation mode of private equity venture capital.
Third, from the perspective of investment returns, investors lack a sense of gain, and there are still many blockages in increasing residents' property income and promoting common prosperity.
Wu Xiaoling pointed out in the book that the total amount of asset management products is insufficient, which is difficult to meet the needs of residents' wealth growth, resulting in a large space for savings to investment. At the same time, the supply of product varieties is insufficient and homogeneous is serious, more than 80% of the public offering products are concentrated in cash management, fixed income and "fixed income +" and other varieties, and a large number of assets are allocated to the interbank market and bond assets, so that the asset allocation is in the same direction, the lack of counterparties, the formation of risk resonance and financial idling, investors have limited choices, and it is difficult to meet their diversified risk appetite.
In addition, investors do not have a strong sense of gain, and the phenomenon of "management institutions guaranteeing income in drought and flood, product performance fluctuating sharply" and "funds making money, but people not making money" have long plagued the asset management business. In 2022, public funds will suffer a comprehensive loss, with an annual loss of 1.45 trillion yuan. Therefore, the asset management industry needs to increase product supply, enrich product categories, and improve investors' sense of access to promote the healthy development of asset management business.
02 In the face of new challenges, what should the asset management industry do?
China's asset management business has broad prospects. In the next 10 years, the scale of investable financial assets of mainland residents is expected to achieve a compound growth rate of 9%, and by 2030, the scale of investable financial assets of residents will reach 486 trillion yuan. According to the structure of the financial system in developed markets, the total scale of asset management business will exceed 300 trillion yuan, of which nearly 50% will be allocated to equity assets. The super-large-scale asset management business will definitely produce a strong wealth management investment advisory industry, and together with the asset management product business, sales business, custody business, evaluation business and other industrial clusters, it will form a rich asset management business ecosystem, providing investors with a wide range of products and services such as public offering, private placement, sell-side sales, and buy-side investment advisory.
The function of the asset management business will be fully utilized, providing investors with maximum returns, promoting capital formation, increasing the proportion of direct financing, implementing the innovation-driven development strategy, and entering a new stage of high-quality development. The only way to connect the ideal goals with the real problems is reform. In order to achieve a better future, it is necessary to focus on the causes behind the problems and risks, make overall plans, treat both the symptoms and the root causes, combine the near and far, and promote various institutional reforms in a coordinated manner.
In the book "A New Journey of Asset Management", Wu Xiaoling put forward many forward-looking and pertinent opinions and suggestions on the challenges faced by the asset management industry and the problems in practice. Among them, Wu Xiaoling suggested, "Build a wealth management investment advisory service system centered on the interests of investors." That is, the wealth management investment advisory industry should take the interests of investors as the core and establish a comprehensive and full-cycle service system. ”
First, it is necessary to introduce a system of wealth management investment advisers that embodies the consensus of different regulatory systems as soon as possible, clarify the concept and business scope of wealth management investment advisory business in the Asset Management Regulations, and clarify the conditions and procedures for applying for licenses. It is necessary to regulate and protect the business logic of the wealth management and investment advisory industry to serve investors, charge investors, and bind the interests of investors through laws and regulations.
Second, it is necessary to encourage all kinds of qualified financial institutions and shareholders, including banks, securities companies, asset management institutions, fund sales companies, insurance companies, Internet platforms, private equity institutions, specialized institutions, etc., to apply for wealth management investment advisory licenses, make full use of their respective advantages to conduct business, and quickly fill the market gap.
Third, it is necessary to increase the diversified supply of products and services, and increase the standard financial products and services that wealth management investment consultants can allocate for investors' family assets.
Fourth, it is necessary to follow the people-oriented law of the wealth management and investment advisory industry, and establish a level certification, follow-up training and registration management system for practitioners.
Fifth, we should attach importance to the application of science and technology, while accelerating the construction of the wealth management investment advisory industry, promote digital transformation, encourage qualified institutions to develop TAMPs (full trust asset management) platform, and provide small and medium-sized institutions with full wealth management services in the middle and back office, which not only effectively reduces the operating costs of small and medium-sized institutions, but also helps to prevent the risks of small and medium-sized institutions, so as to improve the overall efficiency of asset management business.
Due to the limited space in this article, it is not possible to present the highlights of the book "A New Journey of Asset Management", and readers are advised to read it carefully for more and more comprehensive insights.
(The content of this article is an excerpt from the manuscript of CITIC Publishing Group's book "A New Journey of Asset Management", and is published with permission.) ）
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