On July 18th, China Merchants Bank hosted the "Jointly Building Capabilities, Co-creating Value, and Winning the Future - 2024 Wealth Partner Forum", gathering over 80 financial institutions including funds, wealth management, insurance, and private equity. The bank and its partners discussed how to provide a high-quality value service ecosystem for more than 200 million retail customers.

In his speech at the forum, Wang Liang, the president of China Merchants Bank, stated that to build a strong financial country, various financial institutions such as commercial banks, investment banks, and wealth management organizations need to develop in coordination. Currently, although China's financial institutions are comprehensive, there is a situation where "commercial banks are large in scale, investment banks and wealth management are relatively dispersed, and financing is mainly indirect with weak direct financing." Only by promoting positive interaction and joint development among these institutions can a more balanced, resilient, and competitive financial system be built, thereby better serving the real economy, meeting the financing needs of different types of enterprises and the wealth management needs of residents, promoting the healthy and coordinated development of the capital market, bond market, and credit market, and better supporting the construction of a strong financial country.

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The successful holding of this forum by China Merchants Bank marks its steady steps in promoting the wealth management industry towards high-quality development. This move not only consolidates the bank's leading position in the field of wealth management but also enhances its competitive strength in the market. At the forum, representatives from different financial institutions deeply discussed the development trends of the wealth management industry under the background of the new era and conducted strategic analysis on how to achieve high-quality development of the industry. The forum also effectively promoted cooperation and innovation among financial institutions, injecting new momentum into the sustainable development of the industry. China Merchants Bank, together with its partners, is actively building an open, innovative, and efficient wealth management ecosystem. This move will help promote the continuous development of China's wealth management industry and lay a solid foundation for the long-term stability of the industry. Through this platform, all parties can share resources, promote cooperation, jointly respond to market challenges, and achieve a win-win situation.

Standing at a new starting point of 14 trillion yuan in AUM

With the transformation of China's economic growth model, the banking industry is facing multiple challenges such as the scarcity of high-quality assets and the narrowing of net interest margins. The traditional growth strategy of following macroeconomic trends and scale expansion has shown fatigue, and the industry is entering a new stage of deep differentiation. At the same time, financial technology, especially represented by artificial intelligence, big data, and cloud computing, leads the wave of digitalization and intelligence, which brings both innovation opportunities and severe challenges to the financial industry. If banks fail to enhance their technological strength and promote digital and intelligent transformation in time, they may fall behind the pace of technological evolution. In view of this, many banks are focusing on exploring new business growth poles to cope with the current complex and changeable market environment.

In recent years, the field of large wealth management has become a focus of competition and layout among banks. However, against the background of continuous fluctuations in the capital market and the comprehensive transition of financial products to net value management, investors' demand for risk avoidance and anxiety have become particularly sensitive and strong. In the face of this situation, wealth management institutions and asset management institutions are generally under pressure, which is an undeniable fact. However, China Merchants Bank continues to maintain a leading position in the field of wealth management through its stable strategy and innovative service model.

China Merchants Bank attaches great importance to wealth management and asset management business, and continues to enhance the "four major capabilities" of value creation, "people + digitalization", risk management, and symbiosis and prosperity of the ecosystem. This year, despite the fluctuations in the equity market, the total assets managed by China Merchants Bank for retail customers have maintained a relatively fast growth rate, and the basic competitiveness of retail business has been further consolidated. At present, China Merchants Bank serves more than 200 million retail customers, among which more than 50 million are wealth customers, and the total assets managed by retail customers (AUM) have exceeded 14 trillion yuan. The bank has carried out in-depth cooperation with 157 partners on the wealth open platform, and the scale of public fund and wealth management sales ranks at the forefront of the industry, among which the scale of retail sales of wealth management has exceeded 3.8 trillion yuan. At the same time, China Merchants Bank actively promotes common prosperity, promotes wealth inclusiveness, and currently the proportion of products with a purchase point below 100 yuan accounts for nearly 90%; next, the bank will also implement a preferential policy of a full discount on the purchase fee rate of retail public fund sales, actively promoting the healthy development of the wealth and asset management market, benefiting the livelihood of the people.

Since the official launch of the Golden Sunflower service system in 2002, China Merchants Bank has gradually covered customers at all levels from basic retail, mass affluent, to high-net-worth customers, and has solidified the foundation of the "King of Retail". Over the past 20 years, the bank has witnessed and participated in the development process of China's wealth management market from scratch, from small to large, together with many cooperative institutions. In 2023, the total scale of China's asset management products exceeded 142 trillion yuan, growing by nearly 7% compared to the previous year, and it is expected to reach 300 trillion yuan by 2030.

"Wealth management and asset management are important directions for the transformation of China's financial industry and have huge development space." China Merchants Bank believes that China's financial industry has entered a new stage of high-quality development. In the low-interest-rate, low-interest-spread environment, traditional deposit and loan business faces great challenges, while the demand for wealth management is strong, bringing huge opportunities for asset management. Although the capital market faces great growth pressure and the growth of equity assets is affected, various assets continue to rotate, and the demand for fixed-income and cash assets is strong; pension finance has just started, and the demand space for pension financial products in an aging society is broad.

Enhancing the sense of gain for investorsThe true value of a wealth management platform lies in its ability to significantly enhance investors' opportunities for profit. In the ever-changing financial market, the platform needs to improve the investment experience by increasing the probability of customer profitability, thereby demonstrating the essential advantages of its services. The key to measuring the effectiveness of a platform is its ability to achieve tangible results in this goal. At the same time, this is also a key factor for wealth management institutions to gain market recognition and competitive advantage.

However, in recent years, the domestic wealth management market has faced profound transformations, and it is becoming increasingly challenging to continuously create satisfactory returns for investors.

Kang Le, Director and General Manager of Jing Shun Great Wall Fund, stated at the forum that the rapid development of the public fund industry has also been accompanied by a series of challenges: significant performance fluctuations, widespread product homogenization, and unmet diversified customer needs. In addition, the issue of insufficient customer satisfaction is becoming increasingly prominent, especially during the market adjustments of the past three years, where the holding experience of equity products has been affected. The overall excess return performance of active equity funds has been poor, leading to a continuous decline in the proportion of active equity funds, and the industry structure is gradually tilting towards directions such as money market funds, bond funds, and passive index funds, reflecting the market's increased demand for stable investment products.

Zhou Xiangyong, Chairman of Guotai Fund, pointed out at the forum that although the scale of public funds has reached a new high, during this growth process, the proportion of money market funds, fixed-income products, and bond funds has increased, while the proportion of equity products has decreased. This change reflects the change in investors' risk preferences, showing that the market's demand for stable investment products is on the rise.

"Professional ability is the core competitiveness of wealth management institutions. Globally excellent wealth management institutions are all institutions with outstanding professional capabilities, which have been able to seize opportunities and avoid risks in the global economic and financial ups and downs, continuously create value for customers, and achieve their own long-term development." China Merchants Bank believes that wealth management institutions should adhere to a customer-centric philosophy, prioritize customer interests, and continuously improve and optimize the quality and efficiency of various aspects such as investment returns, demand matching, information notification, and transaction efficiency, so that customers can truly experience a sense of security and gain, thereby gaining customer trust and laying a solid foundation for development.

Banks with single financial service capabilities are facing survival challenges. At present, becoming a comprehensive service provider has become the strategic goal of leading banks in the industry. Banks need to not only expand their product lines but also develop service capabilities that can meet the diverse needs of customers, effectively connecting customers' needs for asset preservation and appreciation with financial plans. When customers choose China Merchants Bank as their main bank for wealth management, their focus may not be limited to pursuing specific short-term returns but rather achieving more comprehensive financial goals, such as preparing for future retirement, planning for children's education funds, or preparing for significant expenses such as purchasing real estate and vehicles. By deeply understanding and clarifying these personalized needs, banks can accurately judge customers' risk tolerance and expected holding periods for each investment, and then provide more suitable, high-cost-performance asset allocation advice to ensure that financial plans are seamlessly connected with customers' long-term financial plans.

KPMG's research shows that more and more wealth management institutions have shifted from the past "product sales-oriented" mindset to a wealth planning service model that covers the entire life cycle of customers and is based on customer goals. They provide a series of richer services and experiences, including wealth inheritance, retirement planning, medical planning, and integrated investment and financing. Understanding customer needs, providing solutions closest to their goals, and differentiated products and services will become one of the core competencies for Chinese wealth management institutions to stand out in the future.

Building a Large Wealth Management Ecosystem

Faced with the increasing diversification and complexity of customer wealth needs, leading wealth management institutions are gradually realizing that it is difficult to fully meet the growing personalized needs of customers relying solely on their own resources and capabilities. Therefore, these institutions are abandoning the traditional isolated combat model and turning to build a comprehensive wealth management ecosystem to achieve resource sharing and complementary advantages, providing customers with more comprehensive, professional, and personalized wealth management services.

Building a comprehensive wealth management ecosystem means that banks, insurance companies, funds, trusts, securities firms, private equity, and other financial institutions need to cooperate deeply to form a broad and layered financial service network. In this ecosystem, all participants jointly explore and meet customers' needs in wealth appreciation, risk management, asset allocation, tax planning, estate inheritance, and other aspects through channel sharing, information sharing, operation sharing, and investment research sharing.For instance, banks can provide a stable cash flow and a broad customer base, while fund companies excel in asset management and investment strategies. Insurance companies can offer risk protection and wealth inheritance solutions, whereas securities firms and private equity have advantages in high-net-worth clients and alternative investment areas. By integrating these resources, wealth management institutions can provide clients with a full lifecycle service from wealth accumulation, preservation, and appreciation to inheritance planning, meeting the needs of clients at different stages and with different preferences.

Currently, financial groups with multiple licenses are increasingly deepening intra-group collaboration, focusing on customer needs and actively promoting cooperation across departments, business segments, institutions, and industries. They complement each other's resources and services, strengthen resource integration and synergy, and connect the upstream and downstream of the wealth management service value chain to build a wealth management ecosystem. This approach helps to construct a competitive moat and enhance long-term competitiveness.

Other institutions choose an open cooperation route, partnering with various licensed financial institutions and fintech companies through customer referral, product reciprocity, and technology empowerment. Together, they aim to create a more inclusive and innovative wealth management ecosystem to stand out in a competitive market environment and meet clients' comprehensive wealth management needs.

China Merchants Bank has always placed great importance on its relationships with wealth partners. As of now, the bank has established close cooperative relationships with over 90 fund and asset management companies, 19 bank wealth management subsidiaries, more than 40 insurance companies, over a hundred private equity institutions, and more than 10 gold companies, forming an extensive wealth management cooperation network. These collaborations not only enrich the bank's product line and meet clients' diverse wealth management needs but also promote resource sharing and complementary advantages with partners. In 2023, China Merchants Bank elevated "realizing partner value" to a strategic level, proposing that partner value is of paramount importance. Entering 2024, the bank has further deepened its cooperation models with partners based on this strategy, continuously promoting the construction of the wealth management ecosystem.

Ba Yin, a member of the Party Committee and Vice President of China Life Insurance, pointed out in the discussion that the cooperation between banks and insurance companies has gone through a long-term development path. With significant changes in internal and external environments, bank-insurance cooperation is facing new opportunities and challenges. Ba Yin believes that the future direction of cooperation should be centered on customer needs and deepen the integration of products and services. Banks and insurance companies should strive for deeper integration under the "product + service" model. Insurance companies can leverage their professional advantages in the field of health and elderly care, such as insurance trust funds, elderly care services, and health steward services, effectively integrating these services and products into the bank's "finance + life" ecosystem. Through this in-depth bank-insurance linkage, clients can be provided with a more comprehensive and personalized financial service experience.

"A single drop does not make the sea, and a single tree does not make the forest. To embark on the path of high-quality development in large-scale wealth management, it is necessary to follow the objective laws of modern financial development and to align with the actual development of characteristic Chinese finance. This requires the wisdom of many and the strength from all directions," Wang Liang called at the forum. Wealth and asset management institutions should adhere to the concept of win-win cooperation and continue to build a large-scale wealth management ecosystem. Given that different institutions have their unique industry positioning and customer groups, the future development path will inevitably show characteristics and differentiation, forming a pattern of staggered competition and mutual supplementation. This will promote a more diversified large-scale wealth management industry, and the cooperation and competition relationships within the ecosystem will become increasingly close. In the past, from product introduction, customization, to management, from channel distribution to wealth open platform cooperation, China Merchants Bank has explored multi-dimensional cooperation models with many partners. Looking forward, wealth and asset management institutions should join hands to delve into the potential needs of residents and enterprises in wealth management, further deepen the resource sharing mechanism, including collaboration in channels, information, operations, and investment research, and together create a symbiotic and prosperous ecological environment to strengthen the characteristic Chinese large-scale wealth management.