Unlicensed institutions streamline their proprietary wealth management transformation

The annual report on China’s banking wealth management market (2025), published by the Banking Wealth Management Registration and Custody Center, shows that as of the end of 2025, nationwide there were 159 bank institutions with outstanding wealth management products. This figure is clearly down from 218 at the end of 2024 and 258 at the end of 2023; within two years, nearly a hundred banks exited the bank’s proprietary wealth management market.

As early as 2018, the new asset management regulations required that “financial institutions whose main business does not include asset management businesses shall establish subsidiaries to carry out asset management businesses,” and the new wealth management regulations further clarified that “commercial banks shall carry out wealth management business through subsidiaries with independent legal person status.” With the issuance of the Measures for the Administration of Wealth Management Subsidiaries of Commercial Banks, the downsizing of businesses by institutions without wealth management licenses is an irreversible trend. In 2025, the National Financial Regulatory Administration issued the Measures for the Administration of Commercial Banks’ Agency Sales Business, providing compliance guidance for unlicensed mid-sized and small banks to “trim” their proprietary wealth management businesses and expand cooperation in agency sales. Gao Zhengyang, a special research fellow at the Bank of Suzhou, said that regulatory authorities’ requirements for risk isolation in wealth management businesses continue to increase, aiming to cut off the cross-market transmission paths of risk from a systemic level. Institutions that do not meet the conditions to set up wealth management subsidiaries have obvious weaknesses in capital strength, investment and research capabilities, and risk control systems, and therefore face greater pressure for compliant operations.

The reduction of proprietary wealth management by unlicensed institutions is the result of both regulatory requirements and market demand acting together. When the capital markets see volatile fluctuations, investors’ preferences for wealth management show differentiation under a broadly stable-seeking main tone. The report shows that as of the end of 2025, the outstanding scale of fixed-income products was 32.32 trillion yuan, accounting for as much as 97.09%. The “fixed income plus” product strategy has been favored, which raises higher demands on institutions’ overall capabilities. Lou Feipeng, a researcher at the Postal Savings Bank of China, said that the structure of bank wealth management products is transitioning from expected return-based products to net-value-based products; financial institutions’ investment strategies pay more attention to multi-asset allocation, and the risk preferences of wealth management clients are becoming more clearly tiered. As bank wealth management develops toward specialization and differentiation, institutions with strong investment research capabilities, product innovation capabilities, and client service capabilities will capture a larger share of the market.

By institutional type, wealth management subsidiaries have a higher share of scale, and the advantages of leading institutions are clear. As of the end of 2025, 159 bank institutions had 12.6k products outstanding, with an outstanding scale of 2.58 trillion yuan, down 29.12% year over year; wealth management companies had 33.7k products outstanding, with an outstanding scale of 30.71 trillion yuan, up 16.72% year over year, accounting for 92.25% of the whole market. Lou Feipeng said that the accelerated reduction in the scale of proprietary wealth management by unlicensed institutions has sped up the industry’s standardization process, driving resources to concentrate in licensed wealth management subsidiaries, which helps improve the industry’s professional level and its ability to prevent and control risks. For investors, in the short term the available options may narrow, and some investors who rely on local bank wealth management face product conversion issues. But in the long run, having wealth management products managed by professional institutions is beneficial for better protecting investors’ interests and for promoting high-quality development of the wealth management industry.

Against a backdrop of multiple factors, unlicensed institutions’ business models are shifting from proprietary issuance to channel agency sales. The report shows that in December 2025, across the whole market, 593 institutions engaged in cross-institution agency sales of wealth management products issued by wealth management companies, up by 31 from the beginning of the year. How should strategies be adjusted to adapt to industry development? Gao Zhengyang said that mid-sized and small banks can fully leverage their strengths of being rooted in their regions and staying close to local client groups, cultivate local client groups in depth to build tailored service plans, and by distributing high-quality products from strong institutions, shift to a channel-based and light-capital business model to effectively reduce their own risk exposure. In addition, by building a product screening system and providing professional asset allocation through full-cycle services, banks can push their business transformation from selling single products toward comprehensive wealth allocation, and use technological means to optimize the investment advisory process, better accompany investors, and enhance client stickiness.

Looking ahead to the wealth management market, improving the industry’s quality and protecting investors will accelerate the completion of relevant mechanisms. In March 2026, the National Financial Regulatory Administration released the Provisional Measures for the Regulatory Rating of Wealth Management Companies, which will evaluate wealth management companies’ regulatory ratings across six major dimensions: corporate governance, asset management capabilities, risk management, information disclosure, protection of investors’ rights and interests, and information technology. The China Banking and Insurance Asset Management Association also released the Self-Regulatory Code of Practice for the Appropriateness Management of Wealth Management Company Products, strengthening protection of financial investors’ rights and interests. Gao Zhengyang said that the regulatory system is expected to continue to improve, with an even greater emphasis on “look-through” supervision and risk isolation, and that overall industry transparency is likely to improve. Overall, the wealth management market will gradually shift from a scale-driven model to a capability-driven model, and the core of industry competition will increasingly focus on the ability to compare asset allocation and risk management. (Economic Daily reporter Shang Ci)