Core Viewpoint - A wave of "deposit migration" is sweeping the wealth management market as deposit rates continue to decline, leading to a significant shift of funds from traditional bank deposits to wealth management products and non-bank financial institutions [1][10]. Group 1: Trends in Wealth Management - Wealth management companies are adopting various strategies in response to the influx of funds, including lowering fees, introducing floating fee rate products, and offering customized wealth management solutions [1]. - The emergence of floating fee rate products, such as the one launched by China Merchants Bank, links management fees to performance, which has garnered strong market interest, with products selling out on the first day [3][4]. - The rise of "interest-subsidized wealth management" strategies, where additional yield is provided by partner institutions, is becoming popular, although it may pose risks to other investors [1][11]. Group 2: Market Dynamics - The wealth management market is undergoing structural changes, with a record increase in non-bank financial institution deposits, indicating a shift in investor behavior towards money market funds and cash management products [10]. - Despite the growth in the market, there is a contraction in the supply of quality assets, leading to a situation where the demand for high-quality assets exceeds supply, putting pressure on product yields [10]. - The competitive landscape is intensifying, with firms innovating to differentiate their products, as even small yield advantages can significantly influence fund flows [10]. Group 3: Risks and Challenges - The introduction of floating fee rate products raises the bar for investment research and risk management capabilities within wealth management firms, as they must adapt to more complex product designs [12]. - The "interest-subsidized" model, while attractive for growth, may harm the interests of other investors and could lead to liquidity risks if not managed properly [11]. - Firms face challenges in educating investors about the complexities of floating fee structures, which may lead to misunderstandings and potential disputes [12].

Core Insights - The article discusses the balance between innovation and risk in the financial management sector, particularly in response to the ongoing trend of "deposit migration" as deposit rates decline [1][7] - Financial institutions are adopting various strategies to attract funds, including lowering fees, introducing floating fee rate products, and offering customized financial products [2][3][6] Group 1: Market Trends - A significant increase in non-bank deposits was reported, reaching a near ten-year high in May, indicating a shift of funds from traditional bank deposits to financial products [1][7] - The bank wealth management market is experiencing structural changes, with a notable growth in the scale of bank wealth management products, which increased by 340 billion yuan to 31.6 trillion yuan by the end of May [7] Group 2: Product Innovations - Floating fee rate products are being introduced, linking management fees to performance, which has garnered positive market response, as evidenced by the rapid sell-out of such products [2][3] - Customized financial products are emerging, designed to minimize volatility while maintaining competitive returns, appealing to high-net-worth clients and institutional investors [6][7] Group 3: Competitive Strategies - Financial institutions are adjusting single-account holding limits to attract high-net-worth clients, with some products increasing limits from 5 million yuan to 100 million yuan [3][7] - The "currency enhancement strategy" is gaining popularity, allowing financial companies to achieve higher yields through timing differences in fund settlement, potentially increasing annualized returns by around 30 basis points [5][6] Group 4: Risks and Challenges - Some innovative strategies, such as "interest subsidies," may pose risks to other investors, as they can lead to conflicts of interest and potential liquidity risks in the market [8][9] - The introduction of floating fee rates requires enhanced investment research and risk management capabilities from financial companies, which may face challenges in adapting to this complexity [9]