Spring and autumn fruits, three years of cold and heat, the first batch of wealth management subsidiaries have passed the initial stage, and bank wealth management is entering a new stage of comprehensive net value development.
Agricultural Bank Wealth Management opened in August 2019. As a wholly-owned wealth management business specialty organization, Agricultural Bank Wealth Management established a strategic deployment of "three steps" to consolidate the foundation, improve capabilities, and comprehensive development at the beginning of its establishment. In the past three years, ABC Wealth Management has taken the first step firmly, and has demonstrated its characteristics with its stable business philosophy and professional investment operations. Especially in the case of violent fluctuations in the stock and bond market in the first half of this year, it has achieved "zero net breaks" of redeemed products, and the net breaks and net breaks of existing products have maintained the lowest level of comparable peers.
On the occasion of the third anniversary of the founding of Agricultural Bank of China Wealth Management, Lin Li, member of the Party Committee, executive director and vice president of Agricultural Bank of China, shared some of his experiences with us. Lin Li introduced that the peak product scale of ABC Wealth Management has reached 2.2 trillion yuan, maintaining the "first group" of wealth management industry; the professional operation of large-scale funds has always been a huge challenge for asset management institutions. Based on the fundamental pursuit of creating value for customers, since the establishment of ABC Wealth Management, it has created more than 200 billion yuan in investment income for customers; based on the mission of ABC , ABC Wealth Management continues to serve the rural revitalization strategy, and the county customer wealth management scale accounts for 46% of the company's issuance product scale.
It is reported that last year, Lin Li put forward four requirements for Agricultural Bank of China Wealth Management to “more diversified products, more competitive business, wider customer coverage, and greater market influence.” In the first half of this year, Agricultural Bank of China Wealth Management also took the initiative to turn its cutting-edge and carried out reforms in organizational structure, business processes and human resources management to optimize departmental division of labor, improve incentives and constraints, and release development potential. Recently, the "6" in the original "6+N" product system has been re-divided and interpreted, further improving the product map, and according to the business characteristics of different product lines such as cash management and fixed income, the "Six Heart" product brands of Agricultural Bank of China's wealth management have been launched, including Anxin, Craftsmanship, Tongxin, Perseverance, Jingxin, and Shunxin, further optimizing customers' cognitive experience.
Lin Li emphasized that from asset management to wealth management, it reflects the great trust of customers in the organization. Therefore, in addition to living up to their responsibilities with stability and professionalism, it is crucial to accompany them throughout their life cycle. In the future, ABC Wealth Management will adhere to the concept of "steady and protect value and professionally drive growth", continue to strengthen the construction of investment research, channels, risk control, systems, etc., pursue "more professional, more adaptable and more accurate" in product research and development, better meet customers' diversified financial management needs, and continue to create positive property income for residents. In the future, wealth management business will determine the development level of retail banks. Agricultural Bank of China will give full play to the group's joint efforts to forge four core capabilities: organically integrated business resources, scientific and professional asset allocation, dedicated customer service, and lasting and constant customer companionship, and create a "grape pot" for residents' wealth.
1. Stable and professional demonstrate the people's financial background
Agricultural Bank Wealth Management has gone through three complete business years. How do you evaluate the development of Agricultural Bank Wealth Management in three years?
Lin Li: Since its opening in August 2019, ABC Wealth Management has gone through three years of initial development. Overall, under the guidance of regulatory authorities, with the increasingly fierce competition among peers and the constantly changing market environment, Agricultural Bank of China Wealth Management has fought a "final battle" in the transition period of the new asset management regulations, and has also ushered in a "good start" of the comprehensive net value of the financial management industry. The company's mechanisms are operating well, the business transformation is stable and orderly, the product scale is leading among peers, and the brand effect is becoming increasingly prominent. It has successfully completed the task of laying the foundation and strengthening the foundation, and maintained a market position that matches the parent bank. It is mainly reflected in the following four aspects:
First, strive to be the leader in the industry in transformation. After the establishment of Agricultural Bank of China Wealth Management, it strictly implemented the new asset management regulations and relevant systems and measures, and accelerated the completion of corporate, net value, specialization and market-oriented transformation tasks. At the same time, it actively cooperated with the parent bank to promote the rectification of existing wealth management business. At present, the net value rate of wealth management has reached 91%. The expected income-type old products entrusted by the company have been reduced to about 160 billion yuan, and all guaranteed products have been cleared.In the first half of this year, the total assets and owner's equity of ABC Financial Management both exceeded 16 billion yuan, and financial indicators such as operating income, net profit, return on capital (ROE), and return on assets (ROA) were all at the forefront of comparable peers; the peak scale of the product managed by the company reached 2.2 trillion yuan, maintaining the "first group" of wealth management interbank; there were about 35 million wealth management contracted customers; there were 28 products with a scale of over 10 billion yuan, ranking first in the peers. In 2020, he won the "Bank Financial Management Company Golden Bull Award" award in the "2020 Golden Bull Award" selection event held by China Securities Journal. In 2021, he won the "2021 Excellent Financial Management Subsidiary" award in the "2021 14th Golden Bear Award" selection event held by 21 Century Business Herald . At the summit forum held by the " Economic Observer " in July this year, Agricultural Bank of China Wealth Management won the "Worth Entrusting Bank Financial Management Institution" award.
The second is to focus on serving the real economy. In terms of serving rural revitalization, based on the characteristics of the Agricultural Bank of China, it practices the rural revitalization strategy and green development concept, and has launched a series of special products such as rural revitalization and ESG. Among them, the scale of exclusive products for rural revitalization to benefit farmers has exceeded 50 billion yuan. In terms of serving the real economy, we actively support the real economy through financial management funds. Since the company was established, the scale of credit bond investment has remained above 700 billion yuan, and the cumulative investment of wealth management and financing business has been invested by nearly 100 billion yuan, effectively meeting the diversified financing needs of real enterprises; actively integrating into the development of the capital market, and continuously supporting financing of high-quality listed companies in line with economic transformation and upgrading through project private placement, special account new investment, etc.
The third is to focus on serving common prosperity in the product side. We will wholeheartedly manage our customers' "wallets" and have created more than 200 billion yuan in investment income for customers since its establishment; the peak scale of county-level customers' financial management exceeded 900 billion yuan; in response to the need to redeem customers in advance due to major diseases and the production of anti-epidemic materials, an emergency exit mechanism for unexpired financial management products is established to reflect the responsibilities and humanistic care of major banks; based on the advantages of traditional channels, we will open up diversified digital channels, steadily expand out-of-bank agency sales channels, and reach more customers with high-quality financial services.
Fourth, focus on smoothing market fluctuations in the risk control terminal. Based on the wealth management business, , the high-quality development of is , and the people are optimistic about the "wallets" and better make the right choices in the selection of coupons and timing of asset allocation, flexibly respond to the market, travel through cycles, smooth out the fluctuations, and the net-breaking rate and net-breaking quantity are the lowest among comparable peers, ensuring that no redeemed wealth management products have been "breaking the net-breaking"; multiple fixed income and mixed products rank at the top in the financial management monthly income list released by third-party institutions, establishing a brand image of steady operation.
While achieving the above achievements, we also know that compared with advanced peers, ABC Financial Management still needs to be improved in many aspects. After the start-up period, ABC Financial Management should further move towards a track of high-quality development, protect value stably and drive growth with professionalism, and deliver high-quality financial management services to thousands of households. To this end, last year I put forward four requirements for ABC Wealth Management's four aspects: "more diversified products, more competitive businesses, wider customer coverage, and greater market influence". ABC Wealth Management has carried out organizational structure, business processes and human resources reforms based on this to further release development potential. In the next step, ABC Wealth Management will focus on the two major positionings of ABC as the leading bank serving rural revitalization and the main bank serving the real economy, continue to support the national strategy, serve the real economy, continuously enrich service means, serve people's livelihood, and continuously promote ABC Wealth Management to move towards high-quality development.
2. Bank wealth management naturally has the attribute of stable returns
Faced with violent fluctuations in the stock and bond markets this year, ABC Wealth Management's product breaking net ratio and breaking net number as of the end of June both remained at the lowest level of comparable peers. This performance is closely related to ABC Wealth Management's stable investment style and strict risk control measures. Will it continue to strengthen and adhere to such style and positioning in the future?
Lin Li: This question involves the fundamental question of how to view bank financial management.Bank wealth management naturally has the attribute of steady returns. Net value transformation does not mean that bank wealth management can be a "hands-off boss" at this point, but must fulfill the obligation of honesty, trustworthiness, diligence and responsibility for the interests of the client based on the contract spirit of "being entrusted by others and managing wealth on behalf of customers". This is the expectation of customers for us and the requirements of supervision for us. Especially considering that my country is still the developing country of , the per capita income level, especially the median income, is relatively low. On the road to common prosperity, commercial banks, as the cornerstone of my country's financial system, have the responsibility to continue to find more diversified investment options for residents between basic savings and professional investments, and help residents maintain and increase their wealth. Only by adhering to "steady and safeguarding value" and striving to manage customers' "wallets" can the general public believe in bank wealth management, and thus continuously strengthen the confidence of my country's financial system with banks as the main body.
First of all, stability comes from correct values. I have read a book in the past called "Behind Integrity", which deeply reveals cases in which some American financial institutions are willing to let their customers take great risks in order to make quick money, which ultimately leads to huge losses. This shows that compared with product design, financial technology, and business models, corporate values are the fundamental factors. As the state-owned commercial bank led by the Party, Agricultural Bank of China has always adhered to the "people's finance" heritage. As a wholly-owned subsidiary of Agricultural Bank of China, Agricultural Bank of China Wealth Management has always adhered to the core values of "establishing business in good faith and traveling far and far" by the parent bank. Starting from the maximization of customer interests, it adheres to a stable business style, and relying on professional operation management and team guarantees to maximize the safety of customers' funds and enhance the customer's sense of security and happiness.
Secondly, stability comes from a prudent and stable investment system. Agricultural Bank of China Wealth Management has always adhered to a prudent and stable risk preference. On the basis of solid investment and research, a collective decision-making investment and decision-making system was established at the beginning of its establishment: the company's senior management investment decision-making committee held a quarterly meeting to review the next stage of investment strategies, and front, middle and back office departments such as product, marketing, research, investment, risk control, etc. participated together; between quarterly meetings, the company's president held a monthly strategy discussion meeting to trace the quarterly strategy views and adjust them according to the situation; in the event of major emergencies, a meeting will be held temporarily to discuss special events to ensure that financial investment always adapts to the latest changes in the macro and market situation.
Third, the robustness comes from the full process, embedded risk management system . On the premise of adhering to the integrated risk control requirements of ABC Group, the ABC wealth management risk control department will participate in various business access management decisions before investment, and the Investment China will review and approve the business according to its authority. After investment, we will conduct daily monitoring with the front desk department to deal with risks in a timely manner. In addition, ABC Wealth Management has also taken the lead in the industry to establish a management mechanism for financial investment cooperation institutions that are separated in management and business and have full supervision. The access, use and supervision of cooperative institutions belong to different functional departments, which can not only give full play to the role of cooperative institutions as the "outside brain" and prevent risks and hidden dangers in the institutional process.
3. Use your professionalism to build the "Six Hearts" product brand of Agricultural Bank of China Wealth Management
. You just emphasized that Agricultural Bank of China Wealth Management is committed to "steady and protecting value", and through a stable investment style, hard work to manage customers' money bags. How should we understand "professional-driven growth" and what overall plan does Agricultural Bank of China wealth management have in the future?
Lin Li: High-quality development cannot be separated from professional people and professional teams to do professional things. In the highly specialized field of investment and financial management, ABC Financial Management has always adhered to "professional-driven growth". Through a professional talent team, a professional investment and research system, and a professional innovation model, we strive to improve our investment and research and product research capabilities. Our goal is to smooth the circulation of social funds through flexible investment strategies and scientific asset allocation, guide more funds to invest in the real economy on the investment side, and create stable investment returns for customers on the product side, so that the customer groups on both sides of the supply and demand of funds share the dividends of China's high-quality economic development.
First of all, in terms of investment and research capabilities, ABC Wealth Management has initially established a top-down research system covering "macro-strategy-industry-target" that combines qualitative and quantitative research. It should keep the direction and trend at the macro-strategy level, judge the prosperity and sentiment at the meso-industry level, and implement hierarchical list management at the micro-target level. Relevant market analysis, institutional norms, access lists, etc. are agreed in the form of the Senior Management Investment Decision-making Committee and implemented by each department. The investment department strictly invests within the whitelist according to the corresponding limit. In the next stage, we will continue to base ourselves on the development concept of stable returns, always put customer interests first, strictly control investment access, and build market-leading professional investment and research capabilities. There are three main tasks: First, accelerate the construction of multi-level investment and research capabilities. Based on the accumulation of macro and major asset research, we will build an efficient investment and research platform, improve the allocation and strategic framework of major asset classes, build a three-dimensional investment strategy system, and improve the strategic guidance mechanism in the investment and research process. The second is to deepen the research and evaluation of investment cooperation institutions. Taking FOF and MOM as the starting point, steadily increase the proportion of equity assets allocation and expand equity investment varieties; establish an investment manager database of asset management institutions, based on the existing fund product pool, and preferably set up an investment guidance list and maintain it regularly. The third is to steadily expand the scope of bidding. Based on its own characteristics, further improve fixed income investment plans such as public REITs, convertible bonds, and pure bond funds, while continuously innovating equity investment strategies to increase the overall return level.
Secondly, in terms of product research and development, ABC Wealth Management has formed the "Liuxin" product brand based on the original "6+N" product system. Specifically, according to the business characteristics of financial management, the "6" in the original "6+N" product system has been further optimized and improved: six major products including Anxin (cash management and pure fixed income), Craftsmanship (fixed income enhancement), Tongxin (mixed), Perseverance (equity), Jingxin (commodity foreign exchange derivatives and alternative investments), Shunxin (oldering), etc. The brand positioning is clearer, aiming to achieve "famous recognition of products", that is, customers can first understand the investment type and risk level of the product from the name of "Agricultural Bank of China Liuxin", and then choose according to their own risk preferences and risk tolerance. In the next stage, Agricultural Bank of China Wealth Management will adhere to professional leadership and innovation-driven development, and continuously launch more products that meet customers' diversified financial management needs, and specifically achieve "three mores". First, it is more professional. By building an integrated team of industry, investment and research, we will continue to improve our analytical and judgment capabilities of macro policies , macroeconomic , and major markets, and work hard in investment strategies, risk levels, customer group structure, product functions, etc. The second is more adaptable. Regularly conduct visits, surveys and customer seminars, closely monitor customer needs and peers' trends, promote supply-side reform from the demand side, and improve the level of customized and personalized product research and development. The third is more accurate. By strengthening technological empowerment, scientific and multi-dimensional data analysis models are introduced into various support systems to provide more and more comprehensive data support for investment management decisions, and continuously improve the refined management level of product research and development.
4. Promoting common prosperity is the right thing to do in wealth management
You have rich financial management experience and a very good understanding of the financial management market. In your opinion, what problems still need to be solved in the wealth management industry at present? In addition to increasing property income for residents, what room does wealth management institutions have for development?
Lin Li: First of all, we need to clarify a concept: What is wealth management? Wealth management is an inevitable result of the development of modern economic and the maturity of the financial system. It is a new type of intermediary service. Specifically: in the early stages of the development of the capital market, investment bank designed financial products for the funding provider, that is, investors, to purchase directly. Subsequently, asset management institutions appeared to provide standardized investment portfolios such as fund , financial management, etc. for investors to choose from, and investors do not need to directly hold underlying financial assets.With the development to the present, more and more investors require that in a wider range of fields, fully combine their own needs, provide advice from professional institutions, and build a personalized asset allocation portfolio from various institutional investment portfolios in the entire market, and wealth management services have emerged. Looking back at the birth logic of wealth management services, it is not difficult to see that the essence of wealth management institutions is buyer's brokers, and has three major characteristics: "customer-oriented, customized services, and channel is king". The essence of wealth management services is customer-centric asset allocation, and their starting point and ending point are customer needs. To develop wealth management business with Chinese characteristics, we should pay more attention to inclusiveness, people-orientedness and adaptability, and contribute modern financial strength to achieve common prosperity. This is not only the future development direction, but also points out the current shortcomings and development space.
Overall, the current development of China's wealth management market still faces three prominent constraints: one is the issue of concepts. On the one hand, the "customer-centric" business philosophy needs to be further implemented and strengthened. To truly achieve "customer-centered" knowledge is easy to do, it is difficult to do it. It requires innovative changes in the fields of business model, operational architecture, product research and development, assessment incentives, organizational culture, etc., from internal perspective to customer perspective, from seller thinking to buyer broker thinking, thereby breaking the constraints of product homogeneity and lack of independence. On the other hand, the concept of long-term stable wealth management needs to be further deepened and established. Doing a good job in investor education is not just a simple saying "sellers do their duty, buyers are responsible", but it is to cultivate, promote and establish a correct wealth management concept of long-term and stable value-added through long-term and professional customer companionship and tangible performance returns, and guide residents, enterprises and other investors to establish concepts such as value investment, long-term investment, and rational investment. The second is the issue of ability. Especially in improving the professionalization and customized level of wealth management services, wealth management institutions should carry out end-to-end value chain reshaping, cultivate core professional investment and analysis and asset management capabilities, strong product research and development and selection capabilities, professional asset allocation capabilities and digital promotion and application capabilities, and truly improve the professionalism and adaptability of high-quality wealth management services. The third is the market environment. my country's capital market has a short history of development. In recent years, it has made historic achievements in deepening capital market reform. There is still a lot of room for development in terms of depth and breadth of the capital market, construction of laws and regulations, and investor shareholding experience. Behind the mature wealth management market is a multi-faceted, diversified and multi-level capital market ecology. Investors’ trust in long-term investment value and professional institutions, the professionalism and independence of wealth management institutions, and the healthy and sustainable development of the capital market. These three constitute a positive cycle of mutual promotion, requiring the joint efforts of regulatory departments, financial institutions, investors and public opinion.
Looking to the future, through continuous efforts in the above three aspects, wealth management institutions must first be good wealth managers for their customers, but institutions must do much more than that, and they must play a unique role in the high-quality development of economy and finance. First, we must be a new hub for resource allocation. By selecting asset management products or underlying assets and providing them to customers for asset allocation, wealth management institutions can effectively play the role of optimized allocation of funds, guide social funds to support policy encouragement, and face future industry fields, thereby serving the transformation of new and old kinetic energy and helping economic transformation and upgrading. The second is to be a stabilizer of the capital market. By effectively gathering social funds, establishing a long-term investment orientation, guiding the market to be rational, and abandoning retail investors' "chasing ups and selling downs", it will help improve the depth of the capital market and its ability to resist risks, and ensure the smooth operation of the market. Third, we must be a new engine for the transformation of financial institutions. Whether for commercial banks, securities investment banks or asset management institutions, wealth management businesses that naturally have strong customer stickiness are powerful tools to help financial institutions upgrade their business models and better serve their customers.
5. Build four core capabilities and build a large wealth management system
Agricultural Bank of China has nearly 900 million individual customers and has its own clear strategic positioning. Agricultural Bank of China Group also has the comprehensive strength of multiple licenses.How to exert joint efforts in the future to meet residents’ wealth management needs?
Lin Li: If my country's wealth management market is a blue ocean, then the mission of Agricultural Bank of China's wealth management business is to Pisha Jianjin, strive to discover the resources treasures in the sea and create a "grape pot" for residents' wealth.
Agricultural Bank has a wide customer base. Among the nearly 900 million retail customers of Agricultural Bank, there are both mass customers including county customers, which is the main goal of wealth management services; there are also high-end customers including private bank customers, which represents the direction of upgrading wealth management services. To provide such all-encompassing wealth management services, we must adhere to the integration of resources, innovative means, professional leadership and digital empowerment. Guided by the development concept of "financial for the people" and "high-quality services for thousands of households", since 2021, Agricultural Bank of China has unswervingly promoted the main context of "big wealth management" around the " one-in-one and two-wing " strategy, adhered to customer-centricity, highlighted asset allocation concepts, continuously enriched product shelves, optimized service processes, met customers' diversified wealth management needs, and built a complete "big wealth management" system. In the next stage, on the premise of firmly establishing the concept of wealth management for the people and promoting common prosperity, we will focus on building four core capabilities:
1 is an organically integrated business resource. From the perspective of wealth management supply side, the more sufficient the integrated resources, the higher the customer satisfaction. Agricultural Bank of China has multiple financial licenses such as wealth management, funds, insurance, overseas investment banks, etc. In addition to the Agricultural Bank of China Wealth Management we have just mentioned, there are also integrated operating subsidiaries such as Agricultural Bank of China Huili and Agricultural Bank of China Life . It has deep advantages in funds, products, majors and channels. Agricultural Bank of China will fully mobilize the strength of the entire group to serve customers. Through the close linkage of the whole bank, it will provide customers with diversified and comprehensive services with the attitude of "one Agricultural Bank of China". In addition to the strength of ABC Group itself, ABC will uphold the open mind of serving customers, strengthen strategic cooperation with leading peer institutions such as funds, securities, and trusts, and introduce high-quality off-bank products and services in accordance with the principle of complementary advantages, and integrate more resources to improve customer satisfaction.
The second is the asset allocation of scientific professionals. The core of wealth management is asset allocation, and the basis of asset allocation services is high-level investment and research capabilities. At present, the Agricultural Bank of China has formed a professional investment and research team covering outstanding talents of the head office and branch and the whole group. In the future, we will continue to base ourselves on the national strategy, cultivate core investment and research capabilities and professional insights, and strive to be "standing high, seeing accurately, and standing up". Combined with accurate knowledge and judgment of the macro economy and industry market, we will practice the long-term and stable asset allocation concept, and tailor asset investment and allocation plans for customers based on customers' risk preferences and differentiated needs, and targetedly match products and service combinations to meet customers' wealth preservation and appreciation needs.
The third is customer service with care and affection. For the general customers, the Agricultural Bank of China will continue to expand the coverage of wealth management services, take the digital transformation of application as a starting point, relying on the online and offline channel network spanning urban and rural areas and radiating across the country, accurately identify user needs, provide personalized and differentiated wealth management services, continuously optimize customer experience, and deliver high-quality wealth management services to thousands of households. Facing customers' higher-end needs, by improving and strengthening high-end wealth management business, it can radiate and drive the improvement of the overall business philosophy, talent team and service capabilities of wealth management. Therefore, the Agricultural Bank of China has always attached great importance to the development of private banking and high-end wealth management businesses. In the first half of this year, private banking assets managed exceeded 2 trillion yuan, and the scale of family trust business grew rapidly. In the next stage, the Agricultural Bank of China will accelerate the promotion of the "Show-On Plan" for the Private Bank and strive to become a family financial planner for customers. It must also have the ability to become a "shadow CFO" of customers' enterprises to better meet customers' comprehensive wealth management needs in all aspects such as asset allocation, wealth inheritance, and integrated home-enterprise services. At the same time, in the face-to-face team, we will accelerate the cultivation of professional capabilities, especially for front-line marketing service personnel such as account managers and wealth consultants, and continue to carry out professional training on asset allocation and complex products, improve the stability and professional level of the team, and form a good atmosphere of "the bank serves the front line and the bank serves customers".
4 is a lasting and constant customer companionship. For wealth management, it is a great trust for customers to hand over their life savings to wealth management institutions. We must be a good company for long-term investors, and companionship is our longest confession to customers. Agricultural Bank of China will earnestly fulfill its obligations of honesty, trustworthiness, diligence and responsibility, continue to strengthen the construction of professional wealth management capabilities and professional teams, strengthen communication with customers, and do a good job in consumer rights protection with careful and professional long-term customer service, cultivate wealth management awareness, transmit correct investment concepts, effectively guide customer funds to allocate their funds, reduce the interference of market sentiment on customers' wealth management goals through investors' companionship, stay calm when the market is improving, find confidence when the market is sluggish, and transmit the depth of professional services of wealth management and the warmth of careful service to customers, making due contributions to accelerating the high-quality development of my country's wealth management market. (This article is for reference only, financial management should be cautious)
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