Bank finance no longer guarantee capital, can you still buy?

2022-04-26 0 By

China Banking and Insurance Regulatory Commission (CBRC) said recently that the banking and insurance industry has basically completed the transitional rectification task of the new rules on capital management.So some people worry that “bank financial management is no longer guaranteed, can not buy”……Bank finance no longer guarantee capital, can you still buy?Industry insiders said that bank wealth management is not a deposit, its essence is asset management products, should not and cannot guarantee the principal.The reason for capital preservation was the alienation of bank wealth management products into “deposits”.The essence of asset management is to manage money on behalf of clients entrusted by others.If you are an investor who lacks financial knowledge, the most rational thing to do is to give your money to a professional institution and let the institution invest it for you.The money earned belongs to you, and the loss of money is also borne by you. Professional organizations only charge the “wages” for your investment, that is, investment service fees.This is what the asset management business looks like.The outstanding advantage of this model is that the single investor with small amount of capital can realize diversified investment and reduce risks.For example, it is difficult for an investor to buy multiple stocks at the same time with 20,000 yuan, but if he buys an equity asset management product, the product can invest a large amount of funds raised in multiple stocks at the same time, thus reducing the market risk of investing in a single stock.Bank financial management capital preservation, alienation into deposits, investors seem to “earn”, but in most cases “loss”.For example, a bank financial product promises a 1-year return of 6% and capital protection.The investor’s money is invested and the one-year real return may be as high as 15 per cent. The extra 9 per cent is taken by the fund manager and not given to the investor.Conversely, if the one-year real yield is minus 2 per cent, the money manager will fill the 8 per cent hole with money.In the context of rigid payment, it seems that investors have obtained stable earnings, but they have lost another part of their excess earnings virtually.After the bank financial management no longer guarantees the principal, although there may be losses in a certain period, but if the market rises, all the gains also belong to investors.The regulatory authorities have issued “new rules on asset management” and “New rules on financial management”, aiming at preventing and resolving financial risks and guiding banks to return to the origin of asset management business of “managing wealth on behalf of customers”.Among them, the transition period of “new rules on asset management” will end in December 2021.Facing the new changes, investors should bear in mind that the benefits and risks are proportional.If you can’t bear any market risk at all, you should choose deposit products.If risk preference is low, you can choose to invest in fixed income financial products in the money market and bond market.If you have a high risk preference, you can choose to invest in equity financial products in the stock and futures markets.The most critical is that investors should focus on the investment research and development capabilities of the proposed wealth management company.The core of financial management lies in assets, and the core of assets lies in allocation management.”In the past, banks’ financial products had a simple structure and serious homogeneity. Under the guarantee of ‘rigid payment’, they could attract most stable customers.”Pan Guangwei, full-time vice chairman of the China Banking Association, said financial institutions must restructure the attractiveness of wealth management products through diversified asset allocation as their asset management businesses transform.Source: Economic Daily Read: Sun Shijian