Who is affected by the intensive reduction of bank financial products?
2024-08-05
52 CommentsAccording to media reports, since the beginning of June, bank wealth management companies have once again set off a "fee reduction wave," with many wealth management product fees reduced to 0.10% or even zero. In addition, since 2023, many wealth management products have successively initiated multiple rounds of fee reductions.
1. What are the main fees charged by bank wealth management? How have the fees and changes of bank wealth management products been this year?
Answer: The fees charged by bank wealth management include fixed management fees, custody fees, sales fees, performance fees, subscription fees, purchase fees, and redemption fees. Subscription fees and purchase fees are charged when investors buy wealth management products, and redemption fees are charged when redeeming products, but currently, the vast majority of wealth management products do not charge these fees. According to statistics from Puyi Standards, this year, the proportion of wealth management products that charge subscription and purchase fees is less than 1%, and the proportion of products that charge redemption fees does not exceed 5%. Currently, the main fees charged by bank wealth management are concentrated on fixed management fees, custody fees, sales fees, and performance fees. Among them, the rate of fixed management fees is the highest; performance fees are generally charged at a certain proportion for the income of the product that exceeds its performance benchmark after the wealth management product matures, and their impact on the overall performance of the product is relatively small. This year, the rate of fixed management fees and the proportion of performance fees for bank wealth management have shown a downward trend, while the rates of custody fees and sales fees have shown an upward trend.
2. What are the reasons for the recent significant reduction in fees for bank wealth management products? What impact will it have on the bank wealth management market?
3. Will the "phase-fee reduction" of wealth management products become a trend in the future? Is there still room for further reduction in the fees of bank wealth management products?
4. What role does fee reduction play in enhancing the competitiveness of wealth management companies and wealth management products? Besides fighting "price wars," how should wealth management companies expand sustainable customer acquisition channels?
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5. What impact does fee reduction have on investors?2. What are the reasons for the recent significant reduction in fees for bank wealth management products? What impact will this have on the bank wealth management market?
The recent reduction in fees mainly targets fixed-income and cash management products, including fixed management fees, sales commissions, and custody fees. The resurgence of the "fee reduction wave" by bank wealth management companies is primarily due to the recent multiple cuts in deposit interest rates by banks, which have put significant pressure on the returns of cash management and fixed-income products. This is compounded by the continuous decline in expectations for Federal Reserve rate cuts, poor performance in the domestic capital market, and the increasingly severe "asset scarcity" in wealth management investments, leading to a general decline in the performance of product returns. By reducing fees, wealth management companies can, on one hand, enhance the market competitiveness of their products and maintain customer loyalty. On the other hand, fee reduction is also a form of compensation for the general lowering of recent product performance benchmarks.
This fee reduction further promotes competition in the wealth management market, making wealth management products more attractive when competing with similar products, which helps wealth management companies to expand their market share and attract more capital inflows. In the short term, the fee reduction will directly affect the income of wealth management companies, squeezing their profit margins. In the long term, to compensate for the profit loss caused by fee reduction, wealth management companies may increase their efforts in product innovation, developing more differentiated and customized wealth management products, thereby enhancing their R&D and operational capabilities for wealth management products.
3. Will "phase-based fee reduction" of wealth management products become a trend in the future? Is there still room for further reduction in bank wealth management product fees?
In the short term, before the realization of a global interest rate cut trend, the domestic "asset scarcity" situation is unlikely to change, and the improvement of product returns lacks the necessary asset support. At the same time, with the continuous opening of the financial market and the development of financial technology, the competition in the wealth management product market is becoming increasingly fierce, and the "phase-based fee reduction" of wealth management products may become a norm.
Regarding whether there is still room for further reduction in bank wealth management product fees, market opinions vary. On one hand, the fees for some wealth management products have indeed been reduced to a relatively low level, and due to profitability constraints, there is limited room for further reduction. On the other hand, the cost of reducing fees for bank wealth management is not too high compared to the value brought by maintaining customer stickiness. In the context of poor product returns, it may be a reasonable choice for wealth management companies to attract investors through fee reduction. Therefore, the "phase-based fee reduction" of wealth management products will still occur, but the reduction will be limited.
4. What role does fee reduction play in enhancing the competitiveness of wealth management companies and their products? Besides engaging in a "price war," how should wealth management companies expand sustainable customer acquisition channels?Facing the increasingly fierce industry competition, how financial management companies maintain and expand market share and quickly form economies of scale has become an inescapable issue. Concentrated fee reduction and profit sharing is an immediately effective method, which can not only enhance the attractiveness of financial products to a certain extent, promote product sales, but also strengthen the interest binding between managers and investors, helping financial management companies to build a responsible and trustworthy brand image.
In the current economic environment, the performance of the capital market is generally not optimistic, and the "asset scarcity" is difficult to alleviate in the short term. It is a reasonable choice for financial management companies to attract customers and compete in the market through fee reduction. Fee reduction can not only give customers a direct and intuitive sense of profit gain, but also is a relatively low-cost, easy-to-operate, and fast-acting competition method for financial management companies. However, in the long run, merely participating in market competition through fee reduction is not sustainable. More importantly, it is necessary to empower through technology, achieve digital and intelligent transformation, continuously attract and cultivate professional talents, enhance their own research and development and operational capabilities, and promote continuous innovation and sustainable development of products.
5. What impact does fee reduction have on investors?
The direct impact of fee reduction and profit sharing on investors is phased and relatively limited. Rational investors will not solely base their purchase and continued holding of financial products on the level of fees. In the long run, the realization of investors' expected goals is more important, and good performance can truly increase customer stickiness. Since July 2023, the rapid advancement of public fund fee reform in the asset management industry has had a profound impact on the wealth management industry. Financial management companies' follow-up to reduce product fees conforms to this important market regulatory trend. The reduction of comprehensive fees and the standardization of compensation systems will force financial management companies to reduce costs and improve efficiency in the long term, focus on enhancing investment research capabilities, and investors are also expected to benefit from this trend.