How to Buy High-Yield Deposits After Maturity? Wealth Management Products Look Beautiful in Demos, But Drop Right After Purchase

This is a report (chinatimes.net.cn) by journalist Hu Jinhua, Shanghai

Three years ago, deposits with interest rates exceeding 3% matured. Should they be rolled over or invested in some high-performing net value financial products? Now, this has become a dilemma for many.

“Earlier this year, several large fixed deposits matured. Considering that the current one-year fixed deposit interest rate is less than 1.5%, and three-year large-denomination certificates of deposit offer about 1.8% return, but fixed deposits are too rigid, so I looked at many types of financial products on the bank’s app. From low-risk R2 to high-risk R5 products, I finally chose three low-risk products with historical yields between 2.5% and 3%. But after two months, the daily dividend annualized yield is less than 1.8%, and from the yield curve, it has been declining since I bought in. Now, buying bank financial products feels like buying stocks—when you don’t buy, the product looks promising; once you buy, the returns start to decline. I also bought a closed-term financial product with a one-year lock-up period, and after nearly a month, it’s actually showing negative returns,” said Wang Xia (pseudonym), a VIP client of a certain joint-stock commercial bank in Shanghai, to Huaxia Times.

Many clients with similar experiences have reported that the bank app’s interface for financial products seems misleading, with actual returns vastly different from past performance. Feedback from banks states that past returns do not guarantee future results, and customers still need to bear the risks when subscribing to bank financial products.

Does the display show the “highest” returns for financial products?

On March 13, a senior figure in the bank financial market said that since the implementation of the new asset management regulations, bank financial products have experienced significant fluctuations. Investors have suffered painful losses, with some net value products losing over 40%. Currently, the returns of stable, low-risk financial products on the bank app do not meet expectations, which is not considered false advertising. However, as risk-free rates continue to decline, how to allocate hundreds of trillions of yuan in bank deposits to adapt to the low-interest-rate era remains a frequently discussed topic.

“Latest brokerage research reports show that up to 70 trillion yuan of fixed deposits will mature this year. Some are two-year deposits, others three-year. At that time, deposit interest rates were between 2.85% and 3.25%. After these high-yield deposits mature, their liquidity has attracted attention. From the banks’ perspective, they certainly hope to retain most deposits. Even if they don’t roll over, subscribing to some net value financial products with slightly higher interest rates than fixed deposits is a preferable option. Therefore, many bank wealth management subsidiaries have started designing and configuring stable, low-risk products over the past year. Past performance data is definitely real. But from the depositors’ perspective, converting fixed deposits into financial products creates a large gap between actual and past returns, leading to an unpleasant experience when purchasing, which is also true. This situation is not new; it existed in previous years too,” said Cai Bin, head of product design at a bank wealth management subsidiary, to Huaxia Times.

Cai Bin believes that the “information gap” between the two is not about exaggerated product yield claims. Customers must carefully review the past yield trend from establishment to the most recent month, and also check the actual annualized yield. The expected annualized yield shown on the bank app’s homepage is likely a screenshot of the product’s best-performing period, leading customers to believe the product can achieve the displayed returns.

“The bank app interface may indeed have some ambiguity regarding the gap between actual and projected yields. But once customers click to subscribe, they accept the risk themselves. So, although they may be dissatisfied, there are no better, more stable investment channels. They can either continue to roll over or not be too picky about the returns of financial products,” said Xie Fang, a senior financial planning expert in Shanghai.

Reviewing multiple bank app interfaces, the reporter found that on the homepage of a certain joint-stock bank’s app, a low-risk R2 product displayed an “annualized return since inception of 4.5%,” but upon further inspection, the recent one-month annualized return was only 1.59%. On another major bank’s app, a similar R2 low-risk product showed an annualized return of 5.09% since inception on the homepage, but after clicking to buy, the performance benchmark was shown as 2% to 2.5% (not actual yield). Further hiding the page revealed that the recent one-month annualized return was only 1.79%.

“Most customers now choose R2-type fixed deposits for conversion, with fewer opting for higher risk levels,” said Wang Airan, a wealth management manager at a branch of a city commercial bank in Shanghai, to Huaxia Times.

He added that there are more than a dozen ways to display bank financial performance, lacking a unified disclosure standard, which can confuse ordinary investors. Especially since last year, bond market volatility increased, causing actual performance of some bank financial products to deviate significantly from displayed yields and benchmarks, leading less experienced investors to misinterpret expected returns.

“On one hand, the terminology and concepts used to describe performance are complex, making it hard for investors to understand and choose; on the other hand, banks selectively switch performance display dimensions, often only showing the best yields, creating a false impression of ‘looking very good,’ which worsens the user experience. Additionally, some newly issued products are ranking products. Due to small initial scale and more flexible, aggressive asset allocation, financial companies may concentrate on boosting yields within the first 10 days or during the lock-up period, making the displayed returns look impressive. But once many investors buy in and the product scale grows, the yield often drops sharply. For VIP clients I manage, I usually give appropriate reminders. Many bank app financial products are also agency products, and a significant portion are not issued by our own bank’s wealth management subsidiaries, so we can’t explain everything to every client,” Wang Airan said.

Why do returns start high and then decline?

Many investors say that high returns are visible but not accessible; if they manage to buy, the returns tend to drop quickly.

In response, Ai Yawen, senior analyst at Rong360 Digital Technology Research Institute, said, “Some banks tend to highlight the best periods when displaying financial product performance, aiming to attract investors, but this can mislead because it may not fully reflect the product’s long-term performance or market fluctuations.”

Dong Ximiao, chief researcher at Zhaolian, believes that the difference between the benchmark and actual yield of bank financial products is a normal phenomenon after the transition to net value management. This difference reflects market volatility and the complexity of product management, testing investors’ understanding as well as the product development and investment capabilities of commercial banks and financial companies.

“When all financial products must be evaluated based on true net value, the true ability of managers will also be tested by the market. This is an important part of purifying the order of the asset management market,” Dong Ximiao said.

So, for investors, must they endure the “dilemma” of the gap between projected and actual returns in current bank net value financial products?

“If we really go to the bank for explanations, we have no sufficient reason. Conversely, at least lower returns are better than suffering losses before. Even if most R2 products’ actual annualized yields are not better than large fixed deposits, they are more flexible. I can redeem whenever I want, and the returns are higher than the bank’s liquid money management. Also, although large-denomination certificates of deposit can now be transferred, if you need money urgently, you might not be able to transfer, and even if you can, you’ll have to accept a discount on the interest,” said Wang Xia.

On social media, the reporter also found investors with experience in subscribing to bank financial products sharing tips: don’t just look at the recent one- or three-month yields; also check the net value trend. Many products look very attractive, but after buying, the value stops rising. After three months, the annualized yield drops to a single digit. This is mainly because before purchase, the product often experiences a rapid increase over one or two days, boosting the net value curve. If you see a sharp rise in the net value, avoid subscribing, as it might be a trap.

Editor: Xu Yunqian Chief Editor: Gong Peijia