Begin comprehensive self-assessment and rectification: financial management companies face a major rating "test"

◎Reporter Xu Xiaoxiao, Huang Kun

With the implementation of the Interim Measures for the Supervisory Rating of Wealth Management Companies (hereinafter referred to as the “Measures”), wealth management companies are now facing a systematic “major test.”

Shanghai Securities News reporters learned from multiple sources within the industry that many bank wealth management subsidiaries have already begun conducting self-assessments and rectification in line with the rating framework. Practitioners at frontline banks generally feel that the industry’s competitive logic is undergoing a fundamental shift—what used to rely on a path of scale expansion is gradually giving way to competition based on overall strength, and “heavy investment, slow returns” areas such as investment research and risk control are becoming the key variables determining the level of ratings.

“This can’t be handled by ‘cramming at the last minute’ alone”

As the reporters found out through research, currently some wealth management companies, according to the requirements of the Measures, have already designated lead departments, coordinated related special work, assessed their current scoring status, and developed follow-up optimization strategies. In addition, some leading institutions have already taken the lead in launching transformation and adjustment, and are proceeding to optimize their own business layout in accordance with the rating requirements.

A person in charge of a wealth management subsidiary of a joint-stock bank told reporters that, currently, within the company, optimizing the product structure has been established as a core task. Specifically, there are three main directions: first, reduce the scale of cash management-type products; second, increase the issuance力度 of wealth management products with long tenors; third, strengthen the layout of “fixed-income+” wealth management products.

Wealth management subsidiaries of banks are an important component of China’s asset management industry. The 32 wealth management subsidiaries collectively manage more than 30 trillion yuan in assets under management, accounting for over 90% of the entire bank wealth management market, holding an absolute dominant position. For them, the supervisory authorities have already clarified the rating direction. How each institution can obtain higher scores within this framework depends on their actual implementation.

“This can’t be handled by ‘cramming at the last minute’ alone.” A staff member from the investment research and risk control department of a bank wealth management subsidiary told reporters candidly that some of the assessment content is difficult to improve through short-term blitz campaigns. In designing the indicator system, regulators have already fully considered this and closed off possible avenues for regulatory arbitrage. Overall, the regulators aim to guide the industry toward sound and high-quality development, and the setting of assessment indicators and evaluation systems will drive wealth management companies to continuously optimize and adjust over the medium and long term.

The person in charge of the aforementioned joint-stock bank wealth management subsidiary said that the core challenges most wealth management companies face include whether their investment in human resources, material resources, and financial resources is sufficient. For example, in the assessment of consumer rights and interests protection work, and in the allocation of personnel dedicated to consumer protection, different institutions’ investment will inevitably lead to differences in work outcomes.

Rate by Quality, Not Scale

Industry insiders had long expected that wealth management companies would be rated. Several interviewees said that for wealth management companies, this is a systematic assessment and a review of overall capabilities.

“This is not simply a matter of scoring, but a ‘full-body checkup’ of the company’s overall capabilities.” A related person from another joint-stock bank’s wealth management subsidiary said.

The Measures clearly states that regulators will rate wealth management companies across six dimensions: corporate governance, asset management capabilities, risk management, information disclosure, protection of investors’ rights and interests, and information technology. The rating results will be divided into levels 1 to 6 and an S level. The larger the number, the greater the institution’s risk, and the higher the degree of supervisory attention required.

Among the rating dimensions, asset management capabilities and risk management together account for 50%, focusing on quality-related indicators such as investment research capabilities, product performance, and risk control.

“This basically matches the industry’s earlier expectation of ‘emphasizing quality rather than scale.’ Making quality indicators a key focus of assessment is the key to measuring a wealth management company’s comprehensive strength.” Zhou Yiqin, a senior expert on financial regulatory policies, said in an interview with reporters. “This also establishes a quality-centered rating system from the perspective of institutional design.”

Industry Divergence May Intensify

Influenced by factors such as interest rate changes and market competition, wealth management companies’ development paths are showing clear differentiation. Leading institutions will proactively reduce their scale, shifting their focus to optimizing product structure and improving quality. Some small and medium-sized institutions, constrained by scale anxiety, still rely on their parent bank’s channels to push volume with difficulty.

Guided by the details of the regulatory rating rules, this differentiation trend may further intensify. Tian Lihui, a professor of finance at Nankai University, told reporters that wealth management subsidiaries of large banks have clear advantages in corporate governance, risk management, and information technology, and will most likely concentrate in levels 1–2, prioritizing the acquisition of innovation business qualifications such as pension wealth management. Meanwhile, wealth management subsidiaries of medium-sized cities, rural commercial banks, and other small and medium-sized banks are prone to fall into a negative cycle of “low ratings—business constraints—shrinking scale” due to shortcomings in investment research capabilities, system development, and compliance in information disclosure.

Zhou Yiqin said that institutions with high ratings can enjoy conveniences such as pilot programs for innovative businesses like pension wealth management, while institutions with low ratings will be restricted from incremental business growth, gradually compressing existing inventory.

When asked about strategies for wealth management companies of different sizes, Tian Lihui advised: large wealth management companies should seize opportunities in innovation pilots, break through in areas such as equity investments and cross-border allocation, and move from “scale leadership” to “capability leadership.” Wealth management subsidiaries of joint-stock banks can focus on specific segments, build distinctive product lines, and form differentiated competitive strength. Small and medium-sized wealth management companies should take a practical approach—either deeply cultivate their region, provide more in-depth customer services, or cooperate with leading institutions to make up for shortcomings—so as to avoid blind expansion of “small but comprehensive” operations. No matter the scale, improving investment research capabilities, strengthening risk control, and delivering genuine protection of investors is a required course for responding to the “major test” of ratings.

(Editor: Qian Xiaorui)

Keyword: