Fund investment advisory business mainly refers to that financial investment advisory institutions with relevant qualifications accept clients’ entrustment, and within the scope of the client’s authorization, in accordance with the agreement, make the choice of specific types, quantities and trading timing of investment funds for clients, and replace clients Make application for fund product purchase, redemption, conversion and other transactions. This means that fund investment advisory is different from securities investment advisory. The first is that it can make decisions and conduct account operations on behalf of customers, rather than just provide advice.
For investors who are not stocks, the fund investment advisory business may have more important significance. Funds are an important product category for many family financial management, but how to choose, when to buy or redeem, and how to combine a large number of different types of fund products in the market have become investment obstacles for non-professional investors. Therefore, we often see that many investors buy funds by buying stocks, fast in and out, chasing the rise and the fall, and the phenomenon of “funds make money, but the citizens do not make money”.
In fact, fund investment advisory business can help solve this problem to a certain extent. We can entrust professional fund investment consultants to help us in fund investment and portfolio management to obtain more stable returns. This is closer to the investment advisory business of the United States and other countries, which is the so-called “buyer investment advisory”.
Because of its importance, my country has imposed strict license restrictions and regulatory requirements on fund investment advisory business. In October 2019, the China Securities Regulatory Commission issued the “Notice on the Pilot Work of Investment Fund Investment Advisory Business”, the fund investment advisory business set sail, and the pilot work has been carried out for nearly two years.
At present, 59 institutions have obtained the filing letter for the pilot fund investment advisory qualification, including 24 public funds, 29 securities companies, 3 banks, and 3 Three independent sales agencies. From the perspective of supply, the current services provided by fund investment advisors have achieved good results in terms of the number of users covered, the scale and the repurchase rate. According to data, as of the second quarter of this year, the investment advisory service assets of the first batch of pilot financial institutions exceeded 50 billion yuan, and more than 2 million investors were served. The reinvestment rate of fund investment advisory clients with more than 3 months exceeded 40%.
But in actual operation, there are still many entities without business qualifications who provide investment advice on fund portfolios on the Internet platform, and some even allow platform users” One-click follow-up vote”. This kind of business model is similar to the fund investment advisory business and is not subject to the regulatory framework. It not only brings unfair competition to the pilot institutions, but also risks that there is nowhere to supervise and protect rights when the professionalism cannot be guaranteed and the interests of investors are harmed. . For this reason, the securities regulatory bureaus in many places have recentlyThe issuance of the “Notice on Regulating Fund Investment Recommendation Activities” has aroused widespread concern.
The “Notice” requires that “institutions that do not have the qualifications of fund investment advisory business shall not provide fund investment portfolio strategy investment advice”, expressly prohibiting the above service mode. In addition, the “Notice” also conducts negative list management for fund investment advisory business, and clearly restricts business details such as business development entities, target funds, service targets, contract signing, and charging models, and facilitates the standardized and professional development of business.
This is obviously a good thing. Licensed operation in financial services is a basic measure to protect the interests of customers and an important way to regulate industry behavior. For the fund investment advisory business that has been piloted for two years, it is an important confirmation and protection for qualified entities.
The pilot projects of fund investment advisory business continue to expand, followed by the continuous matching of market demand and the continuous improvement of investors’ professional awareness. The “2021 China New Affluent Wealth Health Index Report” jointly released by Shanghai Advanced Institute of Finance and Charles Schwab shows that new affluent individuals are gradually moving towards the professionalization of wealth management and investment, and their trust in investment consultants and professional financial institutions has been increasing year by year. In 2017, only 57.8% of Xinfu investors expressed their trust in investment advisors and financial institutions; this year, this figure climbed to 75.5%. The deepening of trust in investment specialization shows that investors’ concepts are constantly maturing.
If investors’ trust in investment advisors is a subjective condition for the development of investment advisory business, are the objective conditions for the development of fund investment advisory business mature in the market? How far is the fund investment advisory business from us?
Objectively speaking, the institutional pilot program in the past two years has provided investors with opportunities to try out fund investment advisory services. The gradual joining of institutions also brings healthy competition, prompting institutions to continuously improve the quality of their investment advisory services in order to win the favor of more investors. On the other hand, what we still need to see is that at present, the pilot institutions still show a gap in the level of “investment” and “gu”. From the perspective of “investment”, fund investment advisors need to match appropriate investment strategies on the basis of a full understanding of the investor’s personality, preferences and goals, provide more personalized choices, and help investors find more suitable solutions; from From the perspective of “Gu”, it is more about the companionship of customers and the education of investors. However, different investment institutions have certain differences in investment capabilities, soft service processes and management investment.
From these two points, there is still a gap between us and overseas.For example, in practice, from the perspective of “investment”, the types of products that can be invested are limited, and the number of products that can be invested in specific categories is limited; from the perspective of “gu”, the establishment of the customer service system has not been completed, and there are also deficiencies in customer companionship and investor education. In fact, overseas markets are currently actively seeking to transform the business model from traditional investment advisors to robo-advisors. We started late, but stood at the intersection of technological and institutional changes. Perhaps we can simultaneously complete the two transformations from seller advisory to buyer advisory and traditional investment advisory to robo advisory.
For institutions, there is no doubt that the market potential of fund investment advisory business is huge. The fund investment advisory business in the financial markets of many developed countries has long been mature and has further promoted the prosperity of the fund market. 49% of households in the United States purchase mutual funds directly through investment advisors, 80% of households purchase mutual funds through pension accounts (mostly through investment advisors), and only 19% of households directly purchase through fund companies. From this point of view, China’s fund investment advisory business still has huge room for development. At present, many institutions that have obtained pilot licenses are actively deploying fund investment advisory business, and after this rectification, many unlicensed institutions have also expressed that they are actively applying for investment advisory related business licenses. Increase in supply brings intensification of service competition, and sufficient service competition can bring about efficiency and quality improvement.
Individual investors can expect the investment advisory business to bring changes to residents’ investment and financial management, and subsequently have more trust in professional financial institutions. However, in specific operations, when choosing an investment advisory business, you still need to try carefully, pay more attention to the degree of matching between the business and yourself, improve your ability to identify and select institutions, and avoid investment risks brought about by the transformation process.
(The author Wu Fei is a professor at Shanghai Advanced Institute of Finance, Shanghai Jiao Tong University)