“In the future, the sales strategy for mutual funds will head toward two extremes: the first one relies on low fees through online platforms and the other focuses on investment consulting services,” said Zhou Xiaoming, vice president of Alibaba subsidiary Tianhong AM, at the 2016 Wealth Management and Fund Portfolio Investment Forum in Beijing earlier this month.
“The traditional offline commission-dependent sales model is unlikely to see strong growth in the future.”
Zhou pointed out the challenges faced by product development and sales teams. “Products are almost saturated with little space for innovation. Among the 3000-plus mutual funds in onshore China, they nearly cover all investment targets and strategies.”
Meanwhile, those young and new customers who prefer buying funds online tend to have less investment experience and wish for simple advice.
“At the beginning stage, products that are simple, easily understood with relatively objective performance, such as index funds, quant funds and smart-beta funds, are preferred.
“Funds that rely on the ability of fund managers or an investment team might not be suitable for online advisory.”
China Merchants Bank wealth management assistant general manager Wang Hongdong, meanwhile, said in a roundtable at the same forum that the bank’s current model is client management with the help of robo-advisory services.
It may launch a robo platform directly to customers at the end of this year.
“At the moment, there are only relatively simple steps to try to calculate the customers’ investment behaviour, such as information on volatility, duration and redemption.
“But it might not be accurate client investment behaviour. Instead, using ‘big data’, banks have some advantages in analysing the clients.”