Transformation Ability Test (Part 2): Can the "Long-term Capital" Influx Be Handled by Buy-Side Investment Advisors?

Ask AI · How can buyer-side investment advisors use technology to achieve precise asset matching?

China Business News reporter Luo Ji, reporting from Beijing and Shanghai

As “long-term capital” becomes the mainstream incremental driver in the buyer-side advisory market, the real test for buyer-side investment advisory firms lies in professional capability.

Can an asset portfolio support cross-cycle allocation? Can risk management hold the line for stability? Where are the strengths and where are the weaknesses?

China Business News interviewed more than ten institutional practitioners and experts and scholars, providing a panoramic view of the capability range currently available for buyer-side investment advisors to take on “long-term capital.”

Capability Answer Sheet 1: What core capabilities are in place to meet demand?

Fund companies

China Europe Fund

For allocation needs of “long-term capital,” buyer-side advisory institutions have already initially developed systematized investment capabilities in asset portfolio construction. In the strategy allocation stage, China Europe Fund uses quantitative models for global multi-asset allocation, clusters asset return characteristics at the individual fund level through machine learning, selects seven major low-correlation asset classes—China fixed income, US fixed income, China equities, US equities, overseas equities, commodities, and more—then dynamically adjusts the mix according to a risk budget rather than adhering to a fixed equity-bond allocation ratio.

In product selection, China Europe Wealth adheres to a “quantitative + qualitative” approach to optimize funds across the entire market.

Prudential? (Note: original is 嘉实财富)

Current buyer-side advisory institutions have built a certain degree of systematic professional capabilities, with their exploration of a framework for globalized, multi-asset allocation taking shape. Currently, in research, Jia shi wealth’s investment advisory coverage already extends across global macro, industry trends, and equities, fixed income, alternatives, and other areas, forming standardized strategy labels and product profiles to match client needs through a buyer-side proxy and account-based thinking.

On the income needs side, use “fixed income + commodities” and “fixed income + quantitative” to enhance allocation resilience. On the value-add needs side, adopt a “core—satellite” strategy: use macro, enhanced index strategies, and discretionary stock selection to build the core holdings, and use industry theme ETFs/index funds to capture tactical opportunities.

Experts and scholars

Jiang Ping / Professor, International Economics and Trade College, University of International Business and Economics

In professional advisory institutions, a relatively scientific allocation framework has already been formed in terms of equity-bond allocation ratios. Clients’ holdings show scientific and balanced characteristics: the proportions of money market funds, bond funds, equity funds, and hybrid funds remain stable, without the phenomenon of over-concentration in a single asset.

In cross-market asset allocation, leading institutions demonstrate strong execution capability, achieving global layouts through multiple approaches, such as QDII funds, the Shanghai–Shenzhen–Hong Kong Stock Connect, ETFs covering major global markets, overseas subsidiaries, or partner institutions.

In alternative asset allocation, buyer-side advisory institutions’ capabilities are still in a development stage. At present, some leading institutions have begun to lay out alternative asset allocation businesses, gradually improving their allocation capability in alternative asset areas such as REITs, commodity futures, and hedge funds.

Tian Xuan / Distinguished Professor, Peking University Boya

Currently, in terms of asset portfolio construction, leading buyer-side investment advisory institutions have basically built the capability for dynamic equity-bond rebalancing, forming an allocation framework centered on equity-bond balance and supported by multi-asset instruments. Their ability to include cross-market assets has improved significantly; instruments such as Hong Kong stocks, US stocks, and commodity futures have become regularly embedded in portfolios. Alternative assets such as convertible bonds, interbank certificates of deposit, and REITs have become important supplements.

Liu Yuzhen / Distinguished Professor, Peking University Boya

The core capabilities that buyer-side investment advisory institutions have for taking on “long-term capital” mainly lie in constructing asset allocation frameworks and building advisory service processes. Among them, leading institutions have built a full-spectrum solution covering “cash management—stable wealth management—equity-bond balance—aggressive investing,” to adapt to clients’ needs under different market environments. And through measures such as dynamic reallocation, reverse operations (e.g., reminding clients to take profits when the market overheats), and enforcing allocation discipline, customer asset long-term value-added experience is gradually enhanced.

Brokerage firms

CITIC Securities

For clients with different needs, buyer-side investment advisory services have established a combination of advisory and management business models, such as securities advisory (stock and ETF portfolios), fund advisory (public fund portfolios), and Wealth 50 (private fund portfolios).

In terms of asset portfolios, they build a strategy system with different volatility levels to meet the needs of different groups with different “risk—return” preferences. They also build different risk control systems for different strategies to ensure that the volatility and drawdowns of clients’ assets can be controlled within their respective ranges.

Taking stock and ETF advisory services as an example, CITIC Jianwei? (Note: original is 中信建投证券财富管理业务) wealth management business of CITIC? actually is 中信建投证券财富管理业务: it adheres to a “customer-driven development new model,” building a multi-strategy, cross-market asset approach covering major asset categories such as stocks, bonds, and commodities, with a product system of stock and ETF advisory products featuring different return-risk profiles.

CICC Wealth

To meet “long-term capital” needs, CICC Wealth mainly builds capabilities in five areas: continuously strengthening asset supply with “higher odds of winning in the long term”; developing “lifecycle-type” products around residents’ retirement needs and similar requirements, and helping investors dampen short-term volatility through mechanism design; better integrating inclusive finance and the buyer-side investment advisory philosophy while making more innovations in service models; actively laying out global allocation; and further extending the scope and reach of buyer-side investment advisory, so it focuses not only on product allocation but is also committed to continuously improving investors’ sense of gain through an innovative service system and ecosystem collaboration.

Guangfa Securities

To address the trend and demand of “long-term capital” entering the market, it has initiated a series of strategy adjustments and plans a mid- to long-term product line optimization方案.

On the product side, it has already established a “Qiji” series buyer-side investment advisory brand with different entry thresholds, and laid out multiple multi-asset strategy lines and specialty strategy lines so investors with different risk preferences can choose allocation according to their capital situations.

In macro asset allocation, it captures rotation opportunities among major asset classes in real time across different economic cycles. To focus on deposit-based allocation needs, it will expand the scale of fixed-income+ solutions products, with a key upgrade to the “fixed income+” product line, increasing the allocation proportion to the dividend/low-volatility segments, high-grade convertible bonds, and public REITs to enhance return uplift capabilities.

In the investment research and advisory (投研) segment, it continuously strengthens asset allocation capabilities in periods of falling interest rates, dynamically tracks fund flows and market sentiment; within the compliance framework, it includes related high-quality assets in the product investment scope, balancing safety and return; simultaneously optimizes the risk control system and, based on risk preference characteristics of the incoming funds, sets strict drawdown control thresholds.

In investor companion services, it gradually builds an integrated “product + service + ecosystem” comprehensive onboarding system, and constructs a client companion service system; through services such as periodic market interpretation and asset allocation planning, it improves client retention rates.

Third-party institutions

Yingmi Fund

The core capabilities of investment advisory institutions are reflected in the scientific and dynamic nature of their asset allocation. In response to “long-term capital” allocation needs, current buyer-side investment advisory institutions have already established a clear funds planning and asset allocation framework, upgrading their capability from single-dimension allocation to full-spectrum allocation.

Represented by Yingmi’s “Simu money” (“active money,” “stable money,” “long-term money,” and “insurance protection”) framework on the platforms under Yingmi, it completes classification management on the liability side. This is not only the starting point of asset allocation but also the first line of defense for risk prevention. By matching fund strategy portfolios across different capital cycles, investment advisory institutions can ensure that every cent of the client is invested in instruments whose attributes match its intended use. Among them, for “long-term money” with investment horizons typically exceeding three years, the goal is to pursue long-term capital appreciation on the basis of strictly controlling drawdowns.

Shanghai Qihui Technology

In asset portfolio construction, mainstream buyer-side investment advisory institutions have already built dynamic adjustment portfolio strategy plans based on models for large asset-class allocation, market valuations, and so on, meeting the stable allocation needs of “long-term capital.” Centered on core needs around long-term retirement planning, children’s education, and wealth appreciation, they launch thematic portfolios such as retirement target portfolios, stable value-add portfolios, and technology-innovation long-term layout portfolios, achieving the matching of “funding needs and portfolio allocation.”

Ant Investment Advisor

The “Help You Invest” investment research team provides recommendations for asset allocation through quantitative analysis across dimensions such as macro, large asset classes, sub-style, returns and risks, and qualitative research and in-depth investigation regarding strategies, industries, duration, interest-rate credit, and more. It emphasizes the accumulation of long-term excess returns, achieves “small wins for big wins,” and delivers the effect of consistently outperforming the target over the long term.

Capability Answer Sheet 2: What core mechanisms have already been established?

Third-party institutions

Yingmi Fund

In terms of the risk control system, current buyer-side investment advisory institutions are upgrading from product-level risk controls to whole-cycle risk controls. That is, the core of risk control is no longer to cater to an institution’s short-term performance, but to match the client’s true risk tolerance.

Based on this, combined with allocation capabilities, the digital foundation and behavioral finance are becoming the deep “moats” of buyer-side investment advisory institutions. This capability enables “precise matching between funds and assets.” Moreover, digital insights built on behavioral finance are the underlying support for solving the “fund investors lose money” problem.

Ant Investment Advisor

The “Help You Invest” platform has built a systemized, end-to-end compliance risk-control regime. On the pre-investment side: prudent onboarding and strict control of underlying instrument quality, using “blacklist—gray list” tiered governance, and setting risk-control rules across multiple dimensions such as fund companies, fund managers, and product details. During the investment stage: centralized management and control, using system rules + an investment decision committee to jointly ensure the reasonableness of investment operations. Post-investment: all-weather monitoring, continuously conducting daily tracking and early-warning handling of fluctuations in advisory portfolio performance, investment proportions, fund risks, and client account situations, to ensure the portfolio runs smoothly.

Shanghai Qihui Technology

Regarding the risk control system, for buyer-side investment advisory’s mainstream institutions, most have already established compliant risk-control management to effectively control drawdowns, through prior-position controls, dynamic rebalancing during the process, and take-profit and stop-loss after the fact.

Fund companies

China Europe Wealth

During China Europe Wealth’s ongoing account management process, at the beginning of each year, the investment research team uses an asset allocation model to predict the distribution of asset returns, thereby determining the asset allocation intervals for seven categories of assets and conducting risk budget management.

In addition, it evaluates the optimization of asset allocation plans on a quarterly basis. It monitors daily whether the correlations and volatilities among the seven asset classes experience significant changes, and then determines the corresponding response strategy.

Jia shi wealth (Note: original is 嘉实财富)

Jia shi Wealth’s investment advisory has deeply embedded “compliance” into the entire business process. By establishing an independent risk-control middleware, it regularly evaluates the risk of fund advisory portfolios and investors’ suitability, and gradually builds mechanisms for drawdown management and stress testing. It incorporates key indicators such as maximum drawdown and volatility into the portfolio monitoring system, and completely shifts toward an assessment framework that deeply binds evaluation to investors’ interests, with long-term investor returns as the core evaluation orientation.

Brokerage firms

CITIC Securities

What CITIC Securities essentially provides to clients is a “risk-return profile,” not a single product or strategy. This enables configuration and risk control to proceed in sync.

On the asset side: first, building an asset portfolio using a “Lego model,” balancing personalization, stable quality, and efficiency.

Second, building a full-process risk control system: controlling the risk-asset central deviation and using a six-step asset allocation process to find the optimal risk-return ratio within a specified risk budget.

Third, implementing diversified allocation across multiple markets, multiple assets, and multiple strategies, smoothing volatility without reducing long-term returns.

On the wealth side, in daily staff training and client service, CITIC Securities emphasizes helping clients accurately evaluate their own risk tolerance and risk-return objectives objectively and professionally, and matching them with appropriate wealth allocation solutions.

CITIC? (Note: original is 中信建投证券)

As for CITIC? Jianwei? (Note: original is 中信建投证券): currently, on risk control, for individual stocks and ETFs, CITIC? Jianwei? has established standardized, digital and intelligent risk prevention and control systems. Through systematic intelligent risk-control approaches such as a blacklist/whitelist mechanism, position limits for single underlying instruments, and drawdown limits for single underlying instruments, it effectively controls the volatility and drawdowns of the ETF advisory strategies.

Experts and scholars

Tian Xuan / Distinguished Professor, Peking University Boya

In risk control systems, leading institutions generally establish drawdown early-warning lines and automatic rebalancing mechanisms. Stress testing mechanisms cover multi-dimensional scenarios such as interest rates, inflation, and liquidity; however, they have not yet achieved real-time scenario simulation and dynamic response to extreme “black swan” events and systemic financial risks.

Tian Lihui / Dean, Institute of Financial Development Research, Nankai University

In the industry, the leading buyer-side investment advisory institutions’ core capabilities are currently shifting from “single-product research” to “asset allocation from an account perspective.” They simultaneously handle allocation and risk control needs of long-term capital. On one hand, leading institutions have built diversified portfolios across markets and assets, including some alternative assets, and actively manage drawdowns using tools such as risk-budget models. On the other hand, the assessment system has also begun to place outcome indicators such as “proportion of client profits” and “risk-adjusted returns” at the core.

Capability Answer Sheet 3: What gaps or shortcomings still remain?

Third-party institutions

Yingmi Fund

First, on the asset portfolio construction side, there are not enough tools and not enough depth; diversified allocation still has bottlenecks. For example, the categories of fund advisory products currently in pilot are still relatively single. Second, toolization, platformization, and industrial capabilities are insufficient. Currently, most buyer-side investment advisory institutions still remain at the stage of scattered strategies, manual-based services, and non-standardized investment research and advisory. They have not yet built an advisory underlying support system that can be reused, iterated, and output at scale. Third, the contradiction between scalable services and personalized needs still needs to be resolved. Finally, it is necessary to accelerate filling these shortcomings in alternative asset tools, depth of global allocation, behavioral risk control for clients, and long-term assessment mechanisms.

Ant Investment Advisor

On the asset allocation layer, the set of assets that buyer-side investment advisory can allocate urgently needs to be enriched. This mainly shows that on-exchange ETFs cannot yet be used for advisory purposes, and cross-border investment quotas are also relatively scarce.

Shanghai Qihui Technology

Currently, the main shortcomings of institutions in taking on “long-term capital” lie in a mismatch between “capabilities and demand”: “long-term capital” needs “diversified allocation, deep companionship, and a long-term perspective.” Some institutions still stay at the level of “single-asset, shallow services, short-term thinking,” making it difficult to truly meet the core expectations of long-term capital.

The industry’s biggest pain point is not on the asset side but on the client side. Domestic institutions’ professional investment capabilities are gradually approaching those of mature markets, but their professional service capabilities lag significantly, leaving huge room for improvement.

Fund companies

China Europe Wealth

The investment thresholds and cognitive difficulty for overseas equities, commodities, and other assets are relatively high, and the professional sophistication required for concepts such as asset allocation and quantitative models is also higher.

For investment advisory institutions, how to help users improve their asset allocation ability and understanding in simple and easy-to-understand ways, and how to guide “long-term capital for long-term investing,” still needs improvement.

Brokerage firms

CITIC Securities

In terms of taking on “long-term capital,” buyer-side investment advisory institutions still have some common shortcomings: insufficient supply of cross-market alternative assets, no widely established “long-term capital” exclusive risk-control models, and uneven development of global asset allocation capabilities—making it difficult to fully meet the deep needs of long-term capital for diversified hedging and global allocation.

CITIC? Jianwei? (Note: original is 中信建投证券)

The current shortcomings of the buyer-side investment advisory system are that the investor education and buyer-side advisor service framework is not yet mature enough, making it difficult to effectively and deeply uncover clients’ true “risk—return” needs and convert them efficiently into appropriate product and service matching.

CICC Wealth

From an entire industry perspective, the potential shortcomings currently may be in three areas: first, on the asset side: in the low-interest-rate era, the “effective supply” of financial products still needs improvement and enrichment. Meanwhile, local institutions’ experience in cross-market allocation capability and global allocation still needs to be accumulated. Second, on the client side: most investors are still easily trapped in the inertia of chasing short-term returns, and the transition to net-asset-value-based reporting still needs to further sink in. Third, on the investment advisory side: traditional advisors focus more on customer acquisition and sales. With the transformation to buyer-side investment advisory, requirements for the future core capabilities of advisors will further increase, and the training cycle for mature advisors will be longer.

Experts and scholars

Jiang Ping /

Professor, Department of Finance, School of International Economics and Trade, University of International Business and Economics

Overall, buyer-side investment advisory institutions need to strengthen professional capabilities in areas such as global asset allocation and alternative asset allocation—especially in complex derivative strategies and overseas market investments.

At the same time, institutions’ product innovation capabilities still cannot fully meet market needs. In particular, in customized products and structured products, the drivers and capabilities for innovation need further strengthening.

Although some institutions have begun to use technologies such as AI to improve service efficiency, their application of technology is still not deep enough in areas such as intelligent investment research, personalized services, and risk early-warning.

Tian Lihui /

Dean, Institute of Financial Development Research, Nankai University

Buyer-side investment advisory institutions still have the shortcomings of “capability fragmentation” and “insufficient depth”: first, a disconnect between investment research and advisory services, making it difficult to reach clients effectively and warmly; second, a talent bottleneck is prominent, with a severe shortage of advisors with integrated competencies in asset allocation and behavioral guidance; third, stress testing and response preplans for extreme scenarios are still under construction, and systematic risk management remains a long and arduous task.

Tian Xuan /

Distinguished Professor, Peking University Boya

Currently, the equity-bond allocation ratio model used by buyer-side investment advisory institutions for building asset portfolios is mainly based on overseas mature market theories. Regarding the characteristics of the Chinese market, its adaptability still needs further improvement.

Insufficient depth and breadth in cross-market asset allocation, lacking on-site research and in-depth analysis of overseas listed companies, and insufficient coverage of some emerging markets and niche assets.

In addition, most buyer-side investment advisory institutions have relatively limited professional capabilities and channel resources in alternative asset allocation.

Liu Yuzhen /

Distinguished Professor, Peking University Boya

First, there is insufficient supply of low-volatility assets in the buyer-side investment advisory market. Second, institutions’ ability to manage asset rotation is weak; for example, when facing fast market changes and strong styles (such as technology stocks and high-dividend stocks), forward-looking recommendations and stable allocation tools are still insufficient. Third, dynamic management capabilities are inadequate. Many services still remain at the level of portfolio recommendations, failing to truly realize cross-asset, cross-cycle dynamic planning, monitoring, and rebalancing of clients’ full-account assets. Finally, there is a lack of client companionship services, such as insufficient ability to manage investors’ emotions.

Hu Conghui /

Vice Dean, School of Economics and Business Administration, Beijing Normal University

Currently, the shortcomings of major domestic buyer-side investment advisory institutions lie in how to help more clients truly understand the inherent logic and scientific basis behind making money through portfolio investing and managing risk—so that clients dare to entrust more suitable capital to be managed through buyer-side investment advisory institutions.