Future Outlook for the Brokerage Wealth Management Track after the New Capital Management Regulations: Take CICC Wealth Management as an Example

Since the development of China's capital market, it has followed the path of many developed countries for a couple of centuries in just a few decades, and while it has achieved fruitful results, problems have also gradually emerged. Taking asset management as an example, a series of problems such as rigid exchange, excessive leverage, and regulatory arbitrage have existed simultaneously for some time in the past. In order to prevent and address the systemic risks in the asset management industry, on April 1 2018, the People's Bank of China, the China Banking and Insurance Regulatory Commission, the China Securities Regulatory Commission, and the State Administration of Foreign Exchange jointly issued the Guidance on Regulating Asset Management Businesses of Financial Institutions (hereinafter referred to as the New Regulation on Asset Management). The new regulations on asset management will prohibit banks from offering risk-free and high-interest rate products and will also restrain the phenomenon of "rigid exchange" in trusts, which, combined with the implementation of the policy of "no speculation in housing", will shift the focus of wealth allocation to the wealth management business. At present, China's wealth management business is still in the initial stage of development and is still a blue ocean market. Commercial banks are still the first choice for most residents in China due to their well-established and mature systems that have been in operation for many years. However, some outstanding head brokerages and third-party institutions are growing rapidly, winning the favour of some high net-worth individuals with their advanced and unique financial products, and small and medium-sized brokerages are also following suit. This paper takes CICC Wealth Management as the subject of study, focusing on how it has taken the opportunity to broaden its wealth management track after the new regulations on asset management, and how it has used high net-worth individuals as the launch point to gradually reach the general population. At the same time, this paper explores the future development direction of brokerage firms' wealth management. The paper concludes that brokerage firms should take advantage of the opportunities that arise in the market after the new asset management regulations, vigorously cultivate the professionalism of their staff and businesses, and persist in digital reform. These firms should also take over the market space left by commercial banks and trust institutions under net worth reform, and persist in developing wealth management as an important profit growth point in the future.