Next three years crucial for wealth management sector

Yang Dong, CEO of Star Wealth Co, speaks at 2015 Real Estate Financing Summit in Beijing, July 29, 2015. [Photo provided to China Daily]

Wealth management services should be customer-driven, other than product-driven. Right now many platforms in China still focus on selling wealth management products they have in hand. Investors may not even be clear about their investment objectives or risk preference. I believe that's where professionalism is needed most.

Investors need tailor-made wealth management advices that address to their individual situation. Of course the innovation and diversification of wealth management products should evolve all the time, on the other hand, financial planners should help them choose the most suitable ones.

Q: Will there be new rounds of rate cut? As China is moving to interest rate liberalization, what impacts will it have on asset management industry?

Yang: There should be another rate cut in the next six months. And next three years will be crucial for China's wealth management industry.

The boundary-breaking Internet financial services will thrive and grow rapidly, whereas interest rate liberalization will shepherd the industry to healthier development. With asset price moving to be more reasonable, players will finally be able to walk away from price war and implicit guarantee, and compete with their niche professionalism.

Asset management industry in China will develop in two directions. Some will strive to provide one-stop comprehensive financial services, while others will be specialized in acquiring, managing and disposing non-performing assets. Urbanization offers great market opportunities in terms of promoting asset capitalization and diversified financing.

Q: Central bank unveiled a guideline targeting online financing activities in July earlier. How will the regulation help reshape the Internet finance industry?

Yang: This year's main trend would be to close a few, bankrupt a few, make do a few and achieve a few among China's Internet finance companies.

Players with lawful products and long-time operation plan would applaud regulations. Differences in operational costs are very limited. However, if some Internet financing platform offer customers an annual gain of 18 percent, I would say those won't stay in business for long. The regulations will force unlawful platforms into closure and therefore pave ways for the rest.

Mergers and acquisitions will be commonly seen in the coming years, and Internet financing companies with healthy customer outreach will become the targets. Many Chinese today still lack right investment perspectives. They either focus too much on profits over risk and seek to get rich overnight, or remain passive on wealth management and simply invest along with others.

Therefore, the market welcome regulations and hopes to help investors better understand and manage risks behind their investors. It is only when the tide recedes, can people see the importance of risk management and innovation.