Source: Securities Daily reporter Peng Yan
Recently, a number of banks and wealth management subsidiaries issued announcements to terminate their wealth management products ahead of schedule. After sorting out the relevant information, a reporter from Securities Daily found that since the beginning of this year, a number of bank wealth management products have announced early termination of operation.
Xue Hongyan, deputy dean of Xingtu Financial Research Institute, said in an interview with a reporter from “Securities Daily” that there are many reasons for the early termination of bank wealth management products, such as performance that did not meet expectations, serious shrinkage in scale, compliance risks, and product line adjustments. Wait. As far as this year’s situation is concerned, most of them are still dominated by performance factors. Affected by the sharp fluctuations in the capital market this year, the net worth of many banks’ wealth management products has been significantly lower than the performance benchmark. If there is no hope of catching up in the future, in order to avoid a large number of customer complaints and the scale of wealth management products shrinking due to a large number of product redemptions, banks may choose to advance. Terminate the operation of related wealth management products.
Industry insiders believe that under the management model of wealth management products’ net value, how to reduce the negative impact of market fluctuations on the income of wealth management products by improving the construction of the investment research system, do a good job in investor education, and guide investors to rationally view fluctuations in the net value of wealth management products. And the phenomenon of retracement is the biggest challenge faced by banks in the financial management field in the future.
Early termination of wealth management products of many banks
After the promulgation of the new regulations on asset management, bank wealth management products have been fully transformed to net worth. Since 2022, the vast majority of bank wealth management products have been rectified, and investors have clearly felt the impact of fluctuations in the net value of wealth management products. Especially in March of this year, affected by the short-term sharp adjustment of domestic and foreign equity markets, some bank wealth management products suffered losses, and even fell below their net value.
After some bank wealth management products fell below their net value, many bank wealth management products began to terminate their operation early. After sorting out the relevant information, the reporter found that in the past two months, many banks or bank wealth management subsidiaries, including CNCB Wealth Management, Agricultural Bank of China Wealth Management, Shengjing Bank, Rizhao Bank, Shanghai Pudong Development Bank, Zhongyuan Bank, etc. Wealth management products were terminated early.
On July 18, ABC Wealth Management announced that it plans to terminate the first phase of the “ABC Tongxin Two-Year Opening” value-selected RMB wealth management product (exclusive for new customers and new funds) on August 24. Before the adjustment, the product had a planned expiration date of August 26, 2030.
On August 5, CNCB Wealth Management issued an announcement on the early termination of CNCB Wealth Management Wisdom as fixed income enhancement FOF one-year fixed-open No. 15 wealth management product. The announcement stated that after careful evaluation, the company decided to terminate this wealth management product in advance on August 9, 2022, and at the same time close the subscription and redemption transactions on August 9, 2022. Prior to this, CNCB Wealth Management had terminated a number of fixed-income wealth management products in advance in July, including Wisdom Elephant Fixed Income Enhanced FOF one-year fixed-open No. 11 wealth management products, No. 12 wealth management products, No. 9 wealth management products, and fixed income wealth management products. Yingxiang fixed income is stable and will open the No. 1 wealth management product for half a year.
In addition, in the past two months, several fixed-income products of Shengjing Bank’s “Tianyi series of wealth management products” announced early termination. Shanghai Pudong Development Bank also has a “Xin Yiyi Series 546-day Pure Debt No. 6” fixed-income wealth management product that was terminated early. CMB Wealth Management, Hangyin Wealth Management, Shanghai Pudong Development Bank, Yunong Commercial Wealth Management, and Rizhao Bank also experienced early termination of wealth management products.
The “Securities Daily” reporter noticed that most of the wealth management products that have been terminated early in the near future are fixed-income products. From the perspective of risk level, they are mainly R2 and R3. As for the reasons for the early termination of bank wealth management products, many banks have mentioned in their announcements. After sorting out the relevant announcements, the reporter found that the reasons for the early termination of bank wealth management products are mainly as follows: First, due to the subsequent uncontrollable market factors, early termination of products is more conducive to protecting the rights and interests of product holders than maintaining product operations; It is because the net worth fluctuates greatly when the existing scale is small, the performance benchmark is not reached and the gap is too large, which leads to large-scale redemption; the third is to avoid investment losses due to the reduction of management scale.
Talking about the phenomenon that various banks and wealth management subsidiaries have successively terminated wealth management products in advance, the wealth management manager of a large state-owned bank in Beijing told the “Securities Daily” reporter that with the gradual progress of the transformation of wealth management products to net worth, the net worth of wealth management products will follow the market. There will be more and more market fluctuations and early termination of products, which are all normal phenomena. Taking into account factors such as customer demands, operating costs, investment returns, etc., banks usually terminate those wealth management products with poor performance, large fluctuations in net worth, and small scale of assets under management.
Su Xiaorui, a senior analyst in the financial industry of Analysys Analytics, said that terminating the operation of wealth management products in advance can adjust the bank’s wealth management business in a timely manner, and focus time and energy on more valuable work content. However, banks should also do a good job of explaining and explaining to investors, disclose the operation of products through relevant channels in a timely manner, and communicate with customers in a timely manner. In addition, the bank also needs to summarize the experience and lessons in the process of product operation. If its wealth management products are frequently terminated early, it may not only affect the experience of investors, but also negatively affect the brand and reputation of the bank in the minds of investors.
Seizing the wealth management market requires both internal and external training
In 2022, the bank wealth management market will enter a new stage of comprehensive net worth management. Facing the new financial management environment, what should banks and their financial subsidiaries do to gain a place in the financial management market? Xue Hongyan believes that the first step is to enhance the attractiveness of bank wealth management products. This requires the bank’s wealth management products to have a sufficiently high return. For this reason, the allocation of equity assets is the general trend, but the weak investment and research capabilities of the bank’s wealth management subsidiaries is an objective reality. Therefore, in the short term, bank wealth management subsidiaries mainly invest in equity assets indirectly by deploying products from professional institutions such as securities companies’ asset management and public funds; in the medium and long term, bank wealth management subsidiaries need to gradually consolidate their own investment and research systems and enhance active allocation. Equity assets capacity. Secondly, from the perspective of investors, investors who purchase bank wealth management generally have low risk appetite and weak tolerance for net worth fluctuations. The subsequent net worth wealth management products issued by banks should focus on reducing net worth fluctuations and improving holding experience. Work hard.
“In the first half of this year, due to the increased volatility in the capital market, the net value of many bank wealth management products retreated, and some bank wealth management products fell below the net value, which affected the experience of investors. This also affects the product design, sales, investment and research of wealth management institutions. In the era of net worth of wealth management products, it is necessary for wealth management institutions to improve the construction of investment and research systems, while ensuring the rate of return of wealth management products. Reduce the volatility of net worth as much as possible to meet investors’ “risk-averse” financial needs. At the same time, it is necessary to do a good job in investor suitability matching and investor education, implant the concept of net worth into the hearts of the people, and guide investors to look at it objectively and gradually adapt to the fluctuation of net worth of wealth management products.
Industry insiders pointed out that the early termination of bank wealth management products is largely related to the lack of changes in investors’ financial management concepts. Mingming believes that in addition to investor education and reasonable guidance on investor expectations, wealth management institutions still have a lot of work to do to retain investors. On the one hand, wealth management institutions should establish a sound investment research system, improve the yield of wealth management products, and reduce the fluctuation of the net value of wealth management products. On the other hand, when investors buy wealth management products, they must first clarify their risk preferences and choose products that are suitable for them. They must not choose products that exceed their risk tolerance for high returns; Thinking, accept the fact of net worth fluctuations and drawdowns, and fully realize the reality that “buying financial management may also lose money”.
Xue Hongyan said that under the NAV management model of wealth management products, the strategy of investors simply relying on performance benchmarks to select wealth management products will gradually fail. Choose a financial product that suits your risk appetite. If it is difficult to accept the volatility of the net value of wealth management products, purchasing deposit products may be a more suitable choice.