• News
• 2024-09-09

Fund Advisory Pilot Turns 5: Steady Progress, Enhanced Investor Experience迈向"From 1 to N" Phase

In October 2019, the China Securities Regulatory Commission (CSRC) issued the "Notice on Doing a Good Job in the Pilot Work of Publicly Raised Securities Investment Fund Investment Consulting Services," marking the beginning of the pilot for fund investment consulting services.

Over the past five years, the publicly offered fund investment consulting business has grown rapidly from scratch in practice, with a steady increase in the scale of consulting services, serving over a million customers; various pilot institutions have actively explored distinctive development paths to enhance investors' sense of gain; the professional buying intermediary forces have continued to expand, effectively improving customer investment behavior and enhancing customer experience.

At present, the transition of publicly offered fund investment consulting pilot to regular operations is "imminent," and in the future, more wealth management institutions will join the consulting market, bringing more differentiated investment strategies and service models, injecting new vitality into the fund investment consulting business.

Steady Development

Several institutions have consulting scales exceeding ten billion yuan

In the five years since the pilot of fund investment consulting, the number of pilot institutions has increased from the initial five to nearly 60, covering a variety of types of institutions such as banks, securities firms, fund companies and their subsidiaries, and third-party sales.

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In the past few years, amidst the fluctuating A-share market, the scale of fund investment consulting business has grown steadily.

Data from the CSRC shows that as of the end of March 2023, the asset scale of fund investment consulting services was 146.4 billion yuan, with a total of 5.24 million customers, and individual investors with less than 100,000 yuan accounted for 94%.

The semi-annual report of listed securities firms in 2024 shows that the fund investment consulting preservation volume of CICC, Guotai Junan, and Orient Securities all exceeded 10 billion yuan.

As of the end of June this year, the scale of CICC's buying investment consulting products was about 80 billion yuan; the cumulative coverage of innovative personal trading services exceeded 300,000 customers, with signed customer assets exceeding 300 billion yuan.Guotai Junan's semi-annual report indicates that its "Jun Xiang Tou" investment advisory business has a customer asset base of 16.571 billion yuan, a 30% increase from the end of the previous year.

Orient Securities' "Yue" series and "Ding" series of product systems have a combined scale of approximately 14.6 billion yuan, a 1.67% increase from the beginning of the year. The number of served customers is about 129,000, with a customer retention rate of 64% and a repurchase rate of 77%; customer profitability is better than single product investment.

As of the end of June this year, Guolian Securities' fund investment advisory has a total of 319,400 signed customers, a year-on-year increase of 13.35%, with an authorized account asset scale of 6.958 billion yuan, and a cumulative online cooperation channel of 30.

Investment advisory institution Yingmi Fund, as of July 31, 2024, has an investment advisory scale exceeding 31 billion yuan.

In the past five years, a large number of innovative businesses have emerged in the fund investment advisory. For example, the "Investment Advisory Butler" service of Tiantian Fund has attracted many licensed institutions such as Jiashi Wealth, Huaxia Wealth, Zhongou Wealth, Yifangda Fund, Guangfa Fund, Nanfang Fund, Guolian Securities, and Galaxy Securities to participate, creating a "three-shop comparison" fund investment advisory supermarket.

When talking about the achievements of the past 5 years, the relevant person in charge of Zhongou Wealth's investment advisory business said that during the business pilot process, the form of fund investment advisory has undergone a transformation from standardization to diversification and personalization, paying more attention to providing investment advisory services that are tailored to each person and tailored to customers.

Fuguo Fund stated that in the past 5 years, the fund investment advisory business has developed rapidly in practice, the customers enjoying the service are becoming more and more extensive, and the asset scale managed by accepting advisory services is steadily increasing. The development of these 5 years has laid a solid foundation for the transformation and upgrading of China's wealth management industry and is of great significance for promoting the healthy development of the capital market.

Fuguo Fund also pointed out that the fund investment advisory business is still in the development stage and there are still some problems and challenges. With the advancement of the pilot to the routine, the fund investment advisory is expected to usher in a broader development space.

Investment advisory services enhance the profitability of positions

After 5 years of pilot, the value of fund investment advisory is gradually being reflected. Investment advisory institutions guide investors' trading behavior and harvest the return of "patience" + "mean reversion", allowing investors to obtain a better experience of position profitability.For instance, the "All-Star Smart Follow Investment Plan" of Zhong Ou Wealth, which was launched on July 28, 2022, has accumulated a total investment period of 805 days. With the market recovery, the account managed by the principal investor had a profit of 11% as of October 8th; nearly half of the users participating in the follow investment plan have started to make profits.

In response to this, a person related to Zhong Ou Wealth's investment advisory business stated that the fund advisory has greatly improved the users' holding profit experience through personalized services and optimization of customer investment plans. In the long run, the fund advisory has played a positive role in improving user behavior through continuous investment education and guidance in asset allocation concepts.

"In the past few years, through the pilot of the fund advisory business, both practitioners and customers have grown, improved, and changed at various levels from cognition to solutions, and 'creating a sense of gain for customers' has become a key word in the industry," said Lin Jiecai, Vice President of Yingmi Fund and head of the Qie Man business. The advisory business model has evolved from a sales model that simply pursued sales volume in the past to a more customer-value-oriented advisory model; the position and values have shifted from a seller's position that focused on its own interests in the past to a buyer's position that pays more attention to customer interests.

Wu Weijie, General Manager of Bo Shi Fund's Internet Finance Department, believes that in the past few years, the domestic wealth management industry has undergone significant changes. These changes are not only reflected in the industry structure and product forms but also have a profound impact on the service model and customer experience. In this process, the value of fund advisory has become increasingly prominent and has become one of the important forces driving the transformation and upgrading of the industry.

Wu Weijie further stated that the fund advisory not only guides customers to carry out scientific asset allocation but also adheres to long-termism and provides continuous companionship services. "This long-term companionship helps customers overcome the weaknesses of human nature, avoid blindly following trends and frequent trading, and thus achieve better growth of wealth."

Wu Weijie introduced that in the past three years, the A-share market has continued to fluctuate. As of June 30th this year, the average holding time of Bo Shi Fund's customers has reached 695.72 days. This data shows that the fund advisory business has played a good role in the complex market environment, and the concept of long-term investment and value investment has been recognized by more and more investors.

Main body diversity, institutional cooperation, and service differentiation

At the end of September this year, the Central Financial Office and the China Securities Regulatory Commission jointly issued the "Guiding Opinions on Promoting the Entry of Medium and Long-term Funds into the Market," proposing to "steadily reduce the comprehensive fee rate of the public fund industry and promote the regularization of the public fund advisory pilot." Many industry insiders said that as "pilot to regular" approaches, the future advisory business may present a competitive pattern of "main body diversity, institutional cooperation, and service differentiation."

Fu Guo Fund stated that first, after "pilot to regular," more wealth management institutions will participate in the advisory market, including banks, securities firms, fund companies, third-party fund sales institutions, etc., and the competitive entities will be more diversified; second, referring to foreign market experience, there will be more service-oriented institutions around the advisory service ecosystem, such as financial technology companies, third-party evaluation institutions, advisory training institutions, etc.; third, it emphasizes the differentiation of services more, and each institution will form differentiated competition based on its own advantages and characteristics in investment strategies, service models, customer groups, etc., to meet users' different advisory service needs.

"After 'pilot to regular,' the competitive pattern may be more prominent, and large-scale asset management institutions will take a leading position in the competition with their brand, customer resources, and professional capabilities. In addition, as the market continues to develop, advisory institutions will pay more attention to differentiated competition, attracting and retaining customers by providing unique investment strategies, high-quality service experiences, and personalized asset allocation plans," said Wu Weijie."As the 'pilot to regular' transition progresses, investment advisory institutions both compete and have room for cooperation, allowing for complementary advantages and mutual benefits, achieving healthy industry development through healthy competition," said Yao Xusheng, a wealth management consultant at Paipai Network.

Accelerating the Transformation of Fund Investment Advisory Services

The ongoing fee reform in the public fund industry has put forward new requirements and directions for fund investment advisory services. Lin Jiecai pointed out that against the backdrop of reduced fees for fund products, the "pilot to regular" transition will provide more professional institutions with opportunities for service transformation. This shift will move from the past standard product fee model to a personalized investment advisory service fee model, which will guide institutions to focus on whether their services are truly valuable and worth paying for by clients.

"Lower fees will have the following impacts on the investment advisory industry: First, it will promote industry innovation. In the context of declining fees, investment advisory institutions will pay more attention to innovation and service upgrades. By developing new investment strategies, optimizing asset allocation plans, and enhancing customer experiences, they can strengthen their competitiveness. Second, it will enhance customer satisfaction. Lower fees will directly reduce the investment costs for clients, increasing their sense of gain and satisfaction, which helps attract more investors to the market. Third, it will promote long-term investment. Lower fees will help guide investors to establish a long-term investment philosophy. With lower fees, investors pay more attention to long-term returns and the optimization of asset allocation, rather than short-term market fluctuations and transaction costs, ultimately contributing to the continuous and healthy development of the market," said Wu Weijie.

Fuguo Fund stated that with further optimization of fees, it will overall reduce investors' investment costs, increase their actual returns, and attract more investors to participate in fund investment advisory services. At the same time, it will help cultivate investors' long-term investment philosophy and promote the healthy development of the fund market. For service institutions, it can encourage fund investment advisory institutions to continuously improve service quality and efficiency, optimize and enhance management levels, and support high-quality development of the industry.

Zhongou Wealth believes that on the one hand, fee reduction will guide investment advisory institutions to give benefits to investors; on the other hand, it will also encourage the industry to focus more on improving its professional level and wealth management service quality. It will motivate practitioners to continuously optimize service models, enhance investment research capabilities, and create long-term stable returns for investors. Through professional investment management and in-depth customer service, it will promote the industry to develop in a more professional and standardized direction.