The position of "Big Brother" in asset management has changed! Is bank wealth management still feasible? Wealth Management Products | Survival | Throne

A stone stirs up a thousand waves. Bank wealth management has lost its position as the top asset manager, attracting widespread attention.

Why has the scale of bank wealth management decreased? What will be the future pattern of the asset management industry? Is bank wealth management still a "good industry"? Is it still worth buying?

In the view of the interviewees, the decline in the size of the bank wealth management market in the first half of this year was mainly influenced by factors such as the volatility of the bond market at the end of 2022 and the deposit surge at the end of June this year. However, in the long run, the industry and product repositioning of bank wealth management needs to be put on the agenda, breaking away from the previous positioning of "deposit like" or "deposit substitutes", and establishing advantages that truly distinguish it from public funds and bank deposits. At the same time, it is also necessary to optimize the product structure of fixed income, which stands out on its own, to lay a solid foundation for the stable scale of the industry.

Weak scale growth

Data shows that as of the end of June, the size of the bank wealth management market reached 25.34 trillion yuan, compared to 27.65 trillion yuan at the end of 2022. If compared to the peak of 30 trillion yuan at the end of September 2022, the size of the bank wealth management market has declined by more than 4 trillion yuan, showing a different trend from public funds.

What is more concerning to practitioners is that as of the end of June, the size of the bank wealth management market has been lower than the size of public funds.

The scale growth is weak, and even top wealth management companies are not immune.

On August 8th, Agricultural Bank of China Wealth Management disclosed its wealth management business report for the first half of 2023, which showed that as of the end of June, the scale of its wealth management products was 142066 billion yuan, a decrease of over 350 billion yuan from 1775.721 billion yuan at the end of 2022.

According to the research conducted by reporters, there are three main reasons for the sluggish growth of the bank's wealth management market: firstly, under the background of net asset value, bank wealth management is no longer guaranteed, and the advantages of wealth management products are lost for investors; The second is the rectification of huge cash management products, providing space for the growth of public monetary funds; Thirdly, the bank's wealth management product system is single, and its scale is easily affected by short-term factors.

Data shows that as of the end of June, the scale of cash management wealth management products was 7.21 trillion yuan, a decrease of 1.55 trillion yuan from 8.76 trillion yuan at the end of 2022.

In contrast, money market funds and bond funds have good suction effects. As of the end of June, the size of monetary funds and bond funds was 11.48 trillion yuan and 4.77 trillion yuan respectively, an increase of 1.02 trillion yuan and 0.5 trillion yuan compared to the end of 2022.

The volatility of the bond market at the end of 2022 also affected residents' preference for financial products in the short term, resulting in an impact on product size. According to Zhou Yiqin, founder of Guantiao Consulting, the bank wealth management market experienced the most severe net asset value drawdown after the new asset management regulations at the end of 2022, with a large number of customers redeeming.

Single product system and investment structure

What makes practitioners more concerned and puzzled is that the relative advantages of bank wealth management products are no longer obvious. This is also an important reason for the significant increase in bank deposits and the popularity of savings insurance products in the past year or two.

"In the context of net asset value, especially after experiencing fluctuations in the bond market at the end of 2022, many people feel that the returns of bank wealth management may not be as good as deposits." A person from a subsidiary of a joint-stock bank wealth management told reporters that investors currently need more products that are guaranteed to break even and have stable returns that are higher than deposits, and bank wealth management is not "exposed" to this preference among residents.

It is worth mentioning that the current product structure of bank wealth management is still not very reasonable, and does not have much risk resistance and stability. On the premise that the education level of investors still needs to be improved, once the net value of wealth management products fluctuates, there is a tendency for funds to return to the balance sheet or flow out.

As of the end of June, the existing scale of fixed income products was 24.11 trillion yuan; The existing scale of mixed products, equity products, and commodity and financial derivative products is 1.11 trillion yuan, 0.08 trillion yuan, and 0.04 trillion yuan, respectively.

"Unlike bank wealth management products that rely solely on fixed income products, public funds have a complete product system and a reasonable layout of return and risk characteristics from high to low. In the rotating environment of the stock and bond market, they can form an effective cycle." Zhou Yiqin said.

There is still room for growth in the consignment channels

In the first half of the year, when the industry size dropped by over 2 trillion yuan, many practitioners admitted that the pressure in the second half of the year was even greater. Firstly, it is whether the industry scale can expand, and secondly, whether the company scale can achieve growth.

A person from a small and medium-sized bank wealth management company said, "The company's scale did indeed decline for a period of time in the first half of the year, and we are also very concerned about the recent situation where the scale of public funds has surpassed that of bank wealth management, so the pressure in the second half of the year is quite high." Another person from a state-owned bank wealth management company said that the company's scale has rebounded by about 100 billion yuan compared to the end of June, but there is still a small gap of several billion yuan compared to the beginning of the year.

A senior executive of a wealth management company once bluntly stated that in recent years, the market size of bank wealth management has not increased, but competition has intensified in the stock market. In this situation, an increase in the size of one company corresponds to a decrease in the size of other companies. In the past two years, in order to attract and retain customers, various wealth management companies have also increased their fee and profit reduction activities.

In the second half of the year, the industry generally believes that the scale of bank wealth management is likely to achieve growth. "The customer base for bank wealth management and public funds is not exactly the same. If a large amount of savings flow back later, it is likely to flow back to wealth management first, and then to funds or stocks, and it is unlikely to directly turn from deposits into stocks or funds." A securities analyst said that bank wealth management is still expected to hit the level of around 29 trillion yuan by the end of 2023.

From the observation of reporters, the expansion of sales channels has become an important factor in the growth of some wealth management companies. Related data shows that in 2022, the proportion of wealth management products sold by the parent bank on behalf of wealth management companies has shown an overall downward trend, and the importance of external channels from the parent bank has increased.

Wang Jian, Chief Financial Analyst of Guoxin Securities, believes that there are three breakthrough points for the further expansion of bank wealth management scale: first, to step on the right allocation rotation. With the gradual implementation of policy credit easing, the rotation of major asset classes has driven an increase in residents' risk preferences, and the current "fixed income+" products have the potential for expansion; The second is to innovate product structure and explore opportunities for profit growth in the volatile market conditions; The third is to expand sales channels, and currently, state-owned large banks need to continue to explore sales channels.

Wealth management repositioning is recognized

In the second half of the year, with more than four months left, can bank wealth management still regain its position as the "top brother" in asset management?

"At present, it is still unclear whether the reasons behind the rise and fall of bank wealth management and public funds are complex and diverse. It is difficult to say whether it is a long-term root cause or a short-term impact," said a person from a state-owned bank wealth management company.

In the view of industry insiders, the product characteristics and asset allocation structure of public funds and bank wealth management are different, and it is not appropriate to make a simple comparison, nor should we magnify the fact that the scale of wealth management is lower than that of public funds. How to achieve high-quality development of the wealth management industry and companies is more important. From the perspective of product design, how to create products that yield higher returns than deposits and more stable returns than public funds has become a must answer question, and it is also a winning strategy to attract investors.

This requires banks to set aside their previous positioning as "deposit like" or "deposit substitutes" for wealth management. Wu Yaodong, Chairman of China Post Wealth Management, stated that if bank wealth management adopts the customer positioning of "accepting savings fund diversion" in the past to determine the investment field, due to the low risk awareness and ability of customers, the investment field will inevitably be limited, which will lead to insufficient product innovation and in turn affect the development of new customers, especially high-quality customers.

Industry insiders analyze that bank wealth management is familiar with asset allocation in various categories and is derived from the banking system, with natural channel advantages. Investment advisors or wealth management may be the areas where bank wealth management excels.

When it comes to how to provide good wealth management services, Wu Yaodong said that firstly, we need to provide good financial products, secondly, we need to improve the comprehensive financial services for channels, and thirdly, we need to promote the digital operation of channels that reach customers more widely. In line with the trend of industry development, we need to explore the construction of B2C model differentiated direct sales platforms and more explore providing services directly to customers.

Looking ahead to the future asset management landscape, industry insiders believe that even if the scale of bank wealth management is not as good as public funds, it does not mean that the industry is not good or the products are not good. Bank wealth management still has many advantages.

A person from the research department of a wealth management company stated that the investment scope of bank wealth management products is more extensive, including non-standard products that can flatten product returns. The product fee rate and investment starting point are also lower, making it more inclusive compared to other financial products. And from the perspective of returns, due to adhering to the concept of absolute returns, the possibility of obtaining positive returns is also greater.