2024-07-26
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Reporter of China Business Network: Li Lei Editor of China Business Network: Xiao Ruidong
In the past two years, "salary cuts" and "salary caps" have becomeRaised fundsThe key words of salary reform. Especially recently, with a lot of discussions, "salary withdrawal" has become a reality, and a public fund under a central enterprise has begun to implement a salary withdrawal plan.
The significance and impact of salary reform in the public offering industry go far beyond the salary level. For example, in the rumors and the final implementation plan, 3 million yuan became a watershed. The news that annual salary of more than 3 million yuan must be refunded instantly set off the market, and the successive resignations of star fund managers were also speculated to be related to salary. However, in the eyes of many investors, this income level is still too high. For some fund managers who have high salaries but poor performance, investors have called for salary cuts and retrenchments.
Behind the huge gap and misalignment, what is actually reflected is the biggest crisis facing the public offering industry - lack of trust.
The mutual fund industry, which has grown rapidly in the past few years, has reached a crossroads and is continuously transforming and moving towards high-quality development. Against the backdrop of the continued deepening of salary reform, how to balance efficiency and fairness, how to strike a balance between "tightening the belt" and retaining outstanding talents, and how to regain the trust of investors have become urgent issues to be resolved.
"The company has asked for salary refunds, but some people who have received the notice have not yet refunded their salaries."Regarding the recent news that some public funds have demanded salary refunds, an informed source told the reporter of the "Daily Economic News" (hereinafter referred to as the "Daily Economic News reporter") this.
In early June, the Daily Economic News exclusively reported that the news of retroactively requiring full refunds for public fund employees with an annual salary of more than 3 million yuan was true. "It is said that those who have already left the company will also have to refund, but it may not be mandatory. They are just notified of the refund, and the retroactive time and scope are not clear." This immediately triggered the market, and most public fund practitioners were shocked.
Half a month later, the hammer dropped: some public fund companies affiliated with central enterprises have started the salary refund process, requiring those whose annual income exceeds the standard to be refunded starting from 2022. Those whose annual income exceeds the standard are mainly senior executives and fund managers of fund companies.This standard line is reportedly around 3 million yuan.
From the initial salary cuts, to the spread of salary cap rumors and the reporting of salary plans, to the recent salary refunds, the salary reform in the public offering industry is entering deep waters, and every step has a profound impact on the development of the industry and the mentality of practitioners.
In April 2022, the China Securities Regulatory Commission issued the "Opinions on Accelerating the High-Quality Development of the Public Fund Industry", which mentioned that it is necessary to urge fund managers to strictly implement the deferred compensation system and strictly prohibit short-term incentives and excessive incentives. The public fund industry has begun to implement salary restrictions.
In June 2022, the China Securities Investment Fund Association officially issued the "Guidelines on Performance Appraisal and Remuneration Management of Fund Management Companies", which put forward specific requirements on salary structure, salary payment, performance appraisal, internal control management of salary, etc.
In April this year, the State Council issued the "Several Opinions on Strengthening Supervision, Preventing Risks and Promoting High-Quality Development of the Capital Market", further emphasizing the importance of improving the remuneration management system in the securities and fund industry, and requiring it to be in line with operating performance, business nature, contribution level, compliance risk control, and social culture, and further deepening remuneration reform.
Almost simultaneously with the new regulations,Reports on compensation plans by various companies.The reporter from the China Business Network learned that the annual salary cap reported by the industry ranges from 2 million to 5 million yuan, which is also the source of the salary cap market news that "the annual salary of fund managers of a certain bank-affiliated public offering is capped at 1.2 million yuan."
More importantly, the salary cuts in the public offering industry had already begun before the relevant policies were introduced.Three new boardLet’s take the compensation of listed fund companies as an example for comparison:
Looking at the changes in the company since 2020, while the number of employees has remained basically the same or even increased, wages payable to employees have shown a downward trend year by year, and the annual decline has exceeded 10%.
What is more intuitive is the payment of year-end bonuses. 2024 is about to enter August, but according to the reporterThere are still a large number of companies that have not issued year-end bonusesEven for those that have already been issued, a 20% to 30% drop is common.
In addition, since June, the National Audit Office has entered more than a dozen public funds for on-site audit inspections, and will audit all relevant documents and materials, focusing on issues such as expenses. Some public fund personnel said that after this round of audits is completed, their institutions may decide whether to reduce or refund their salaries, and "salary cuts may be on the way."
The public offering industry, once the brightest jewel in the crown of the financial industry, has fallen into an unprecedented embarrassing situation.
In the financial industry, there is precedent for "salary refund".
Taking the banking industry as an example, in 2021, the former China Banking and Insurance Regulatory Commission issued the "Guiding Opinions on Establishing and Improving a Mechanism for Recovery of Performance-Based Remuneration for Banking and Insurance Institutions", which pointed out that for senior management and key personnel who have violated laws, regulations, discipline, etc., part of their performance-based remuneration within the corresponding period shall be recovered up to all of it depending on the severity of the circumstances.
According to data released by the former China Banking and Insurance Regulatory Commission in March 2023, more than 95% of banking and insurance institutions have formulated and implemented a system for deferred payment and recovery of performance-based remuneration.
At the beginning of this year, a number of listed banks became popular because they disclosed the amount of performance-based salary recovery in their annual reports. The highest amount of "reverse salary collection" was as high as 43.29 million yuan.
For securities firms, salary recovery is nothing new. In May 2022, the China Securities Association issued the "Guidelines for Securities Companies to Establish a Sound Remuneration System", which clearly stated that when securities companies formulate a remuneration system, they should establish a strict accountability mechanism to enhance the binding force of remuneration management, including but not limited to the suspension, recovery and deduction of bonuses, allowances and other remuneration.
In August 2022, the Ministry of Finance issued the "Notice on Further Strengthening the Financial Management of State-owned Financial Enterprises", requiring financial enterprises to establish and improve the deferred payment and accountability and salary recovery mechanisms for salary distribution. Based on this, from the end of last year to this year, many listed securities companies have issued relevant regulations to recover salaries.
However, in the public fund industry, since there has been no case of salary refunds before, this has caused some controversy.
Many interviewees said in an interview with the reporter of China Business Network that there is a lot of discussion in the industry about how to refund and to whom to refund, such as "I heard that all refunds will be completed by mid-August" and "It will definitely be refunded to the employer." But even for practitioners,There are also many doubts about the issue of "salary refund".
A senior public fund executive in Beijing told reporters bluntly that, first, what is the basis for salary refunds? Should all fund managers have their salaries refunded, or only some fund managers with poor performance need to have their salaries refunded? Secondly, in terms of the method of salary refunds, should the fund manager's annual salary be reduced directly, or adjusted through other means? Should it be a one-time refund, or done in stages? "There are no unified standards and answers to these questions in the industry."
Lu Da, senior partner of Zhilin Law Firm, analyzed that the employer must have a clear basis for recovering the wages that have been paid. If the wages that have been paid are in accordance with the provisions of the labor contract and in compliance with the company's rules and regulations at the time, then there is no legal basis for asking employees to return the wages. However, if there are illegal parts in the wages paid, such as paying kickbacks in the form of wages (paying them to employees in the form of bonuses, and then the employees withdraw cash to pay the kickbacks), or paying bonuses in the form of reimbursement of expenses, then according to the relevant provisions of the Criminal Law and the Tax Law, it is indeed illegal income and should be recovered by the relevant departments and the perpetrators should be held accountable for administrative violations or even criminal liability.
“The implementation of salary retirement needs to take into account the company's operating conditions, the performance and contribution of the fund manager, and the overall market environment, rather than a one-size-fits-all approach.Only through a reasonable salary refund mechanism can we find a balance between protecting the rights and interests of investors and protecting the interests of practitioners." Another Shanghai public fund person pointed out.
Under the influence of multiple factors, there is another very important change in the public offering industry this year.The increase in the number of fund managers leaving, especially the departure of star fund managers,It also concerns the market and investors.
According to Wind data, as of July 15, the number of fund managers who have left their positions this year has reached 182, reaching a small climax in the number of departures in the same period in the past decade.
Number of fund managers who left in the past decade
As of July 15th of each year, data from Wind
It is worth noting that this number cannot be viewed in isolation. Since 2015, the total number of fund managers has increased from just over 1,000 to about 3,800, so it is reasonable to expect more frequent turnover.The number of newly hired fund managers also saw a significant increase.
However, objectively speaking, when the market is more volatile and the industry is adjusting rapidly, the number of fund managers leaving their positions will increase significantly compared to previous years. A typical example is the sharp market fluctuations in 2015, when more than 200 fund managers left their positions. In the past two years, with the volatility and adjustment of A-shares, the number of fund managers leaving their positions has exceeded 160, and this year has exceeded 180.
Among them are many well-known fund managers in the industry, such as Qiu Dongrong, who just announced his resignation as deputy general manager and all funds under management this month. As the "golden signboard" of Zhonggeng Fund and with deep interests, the news of his resignation shocked investors and industry insiders. Although Qiu Dongrong himself posted on WeChat Moments that he resigned as a fund manager for personal reasons, there are many speculations in the industry about the reasons for his resignation, one of which is related to salary adjustments.
In early April this year, the resignation of Fan Yan, the former "top lady" of Yuanxin Yongfeng Fund, also attracted widespread attention in the industry and set off a wave of discussion on how to "retain people" in small and medium-sized funds. Looking at the resignation of fund managers this year, it can be found that the liquidity of small and medium-sized companies is indeed stronger than that of large platforms, which is closely related to the small scale of the company, the single business type, and the greater impact on the income of employees.
Since May, a number of well-known fund managers in the industry have announced their resignation or hiring additional fund managers for their managed products. A reporter from China Business News once asked one of them why he hired an additional fund manager, and the answer he got was "strong sense of responsibility and high pressure, and someone needs to share the burden." This is another option for fund managers besides leaving directly.
The reporter of the Economic Daily learned that in recent years, with the deepening of salary reform, fund companies are also adjusting and changing the way they evaluate fund managers. The above-mentioned Shanghai public fund person revealed to the reporter of the Economic Daily that in terms of performance evaluation, the main reference is the one-year, two-year and three-year performance rankings, among which the three-year performance has the highest weight, which can reach about 50%, and the one-year and two-year performances each account for about 25%.
"We also look at the scale, but the assessment of the scale of new products is mostly due to the sales team. The investment research team will have a higher weight on the new volume of the operating products. Other factors include coordinating sales roadshows, compliance and risk control, etc. Overall,Gradually shift from the past performance-oriented approach to comprehensive assessment。”
Another public fund manager in South China also told the reporter that in recent years, they have been advocating long-term performance, so in the assessment of fund managers,Three-year performance (relative ranking) is becoming increasingly important, while the weight of one- and two-year performance is decreasing, and adjustments are made every year.In addition, like other employees of the company, fund managers will also be evaluated and divided into different levels, such as A, B, C, and D, and there will be differences in income between different levels. "In fact, the same set of talent evaluation standards is used, but under this standard, the details of the evaluation of different positions are different."
One obvious change is that the number of outstanding employees in Grade A has decreased significantly in the past two years, while the number of employees ranked in Grade C and D has been on the rise, and the last-in-first-out system has been more strictly enforced.
Various factors are forcing fund managers to re-examine their career development paths. Some are forced to switch to other positions, while others leave the public offering industry and switch to private equity or other financial institutions. Those who stay choose to face the most core issue - how to regain the trust of investors.
As an important representative of inclusive finance, public funds shoulder the responsibility of serving residents' financial management and the real economy. In this sense, the starting point and end point of the high-quality development of public funds should be to enhance investors' sense of gain and happiness and support the development of the real economy.
In the past few years, public funds have achieved rapid expansion in scale, and the latest asset management scale of the industry has exceeded 31 trillion yuan. However, at the same time, the poor investment experience of investors has always been a shortcoming that affects the long-term development of public funds, especially in the past few years, with the significant weakening of the profit effect of active equity funds and the emergence of some risk events.Lack of trust has become the biggest crisis in the public offering industry today.Not only investors, but even some sales channels no longer trust active equity funds. Active fund managers, who have always been the representatives and signature of the fund industry, are rapidly losing their luster.
A senior executive of a leading public fund company once said in an interview with a reporter from China Business Network that the core of high-quality development of public funds is to enhance investors' sense of gain, and making investors make money is a comprehensive question with no simple answer. "One of the important connotations of investors' sense of gain is the impact of the level of returns. The growth of the net value of the fund itself comes from the average return level given by the market and the excess returns brought by the fund manager through his own investment and research capabilities. Public funds should strive to promote the conversion of fund investment returns into returns for fund investors."
The above-mentioned public fund executives in Beijing also pointed out thatWhether active fund managers can regain investors' confidence again depends on many factors, including the fund managers' business capabilities, the fund company's governance structure, and the market environment.For example, in terms of incentive mechanisms, companies should encourage fund managers to take long-term rather than short-term actions, while setting reasonable remuneration standards.
"The emergence of the salary withdrawal phenomenon is not only a reflection on the past high salary model, but also an exploration of the future public offering salary structure. High salaries are definitely unreasonable, but an inappropriate salary system will also lead to talent loss and affect the company's medium- and long-term development. ThereforeIt is quite challenging to motivate and retain truly outstanding people, continue to create value for customers, and avoid harming ordinary employees.”
Yingmi Fund told the reporter of China Business Network that in the long run, the financial industry is based on the trust of customers, and building trust requires a long process. Institutions need to have the concept of "focusing on the interests of customers", insist on standing on the side of customers, and change from "seller" thinking to "buyer" thinking.
Specifically, we can work together from the two aspects of "asset management" and "wealth management".
First, as an important investment layout, public funds will face the challenge of client fund fluctuations in terms of liability stability. Buyer power can help public funds form long-term funds, so it is very important to establish buyer values, actively develop investment advisory business, and strengthen liability service capabilities. In a volatile market, it is very important to help investors improve their cognition, understand market fluctuations, and ultimately help clients achieve returns through investment advisory services, which is very important for rebuilding investor confidence.
Secondly, it is necessary to establish a closed loop of cognition, transaction and relationship. Investment is the realization of cognition, and investors can only obtain returns within the scope of cognition. The core of cognition is customer expectation management.
In the past, the asset management industry did not do well enough in "expectation management". Institutions should work together to strengthen the management of customer expectations, promote the concept of "return = time + volatility", enhance investors' risk awareness, and use account fund planning and asset allocation to guide customers to allocate funds to products with different risk-return characteristics to reduce volatility. On the basis of managing investment expectations well, lead and accompany customers through market fluctuations to avoid being affected by market fluctuations and buying high and selling low, but not making money. At the same time, through the long-term companionship of investment education content, help investors build an investment framework and correctly understand market risks, so as to ultimately gain the trust of investors and grow together with investors.
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