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

This newspaper (chinatimes.net.cn) reporter Hu Jinhua, Shanghai report

Three years ago, deposits with interest rates over 3% matured. Should I roll them over or choose some net value financial products with good historical returns? 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 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 app. From R2 low-risk to R5 high-risk products, I finally chose three R2 low-risk products with historical yields between 2.5% and 3%. But after two months, the daily dividend annualized return 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—before buying, the product looks good, but once invested, the returns start to decline. I also bought a closed-term financial product with a one-year lock-up, and after nearly a month, it’s actually negative yield,” said Wang Xia (pseudonym), a VIP customer of a joint-stock commercial bank in Shanghai, to Huaxia Times.

Many customers with similar experiences have reported that the financial products displayed on bank app interfaces are somewhat misleading, with actual returns vastly different from past performance. Bank feedback states that past returns do not guarantee current yields, and customers still need to bear risks when subscribing to bank financial products.

Are the “highest” returns displayed for financial products?

On March 13, a senior figure in the bank financial market said that since the implementation of new asset management regulations, bank financial products have experienced significant fluctuations. Investors have suffered losses exceeding 40% on net value products. Currently, the yields of low-risk, stable financial products on bank apps are below expectations, which is no longer considered false advertising. However, as risk-free interest rates continue to decline, how to allocate hundreds of trillions of bank deposits in a 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, others three-year deposits. 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 definitely want to retain most of these deposits. Even if not rolling 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 been designing and allocating stable financial products for over a year. Past performance data is certainly real. But from the depositors’ perspective, the large gap between their fixed deposits converted into financial products and the actual returns leads to a poor experience, which is also true. This situation is not new; it existed two years ago,” said Cai Bin, head of product design at a bank wealth management subsidiary, to Huaxia Times.

In Cai Bin’s view, the “information gap” between the two is not about exaggerated product yield claims. Customers must carefully review the past yield trend from inception to the most recent month, and also check the actual annualized return. The expected annualized return shown on the bank app’s homepage may be based on the product’s best-performing period, leading customers to believe the product can achieve the displayed performance.

“The bank app interface likely has some ambiguity in 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 stable investment channels—either continue rolling over or not be too picky about the returns,” said Xie Fang, a senior financial planning expert in Shanghai, to our reporter.

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

“Most customers now convert fixed deposits into R2 products, with fewer choosing higher-risk ones,” said Wang Airan, a wealth management manager at a city commercial bank branch in Shanghai, to Huaxia Times.

He added that there are over 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 some bank financial products’ actual performance to deviate significantly from displayed yields and benchmarks, leading less experienced investors to have false expectations.

“On one hand, the terminology and concepts used to present bank financial 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 ‘beautiful’ appearance, which worsens the user experience. Additionally, some newly issued products are ‘ranking’ products. Due to small initial scale and more flexible, aggressive asset allocation, the 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 scale grows, the yields often fall sharply. For my VIP clients, I usually give some reminders. Many bank app financial products are also sold through agents, 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 fall?

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 of performance when displaying financial product results, aiming to attract investors. But this can mislead investors because it may not fully reflect the product’s long-term performance or market fluctuations.”

Dong Ximiao, chief researcher at Zhaolian, believes that the discrepancy between the performance benchmark and actual yield is a normal phenomenon after the transition to net value-based management. This difference reflects market volatility and the complexity of product management, testing investors’ understanding and the product development and investment capabilities of commercial banks and wealth management firms.

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

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

“If we really rely on banks for explanations, we have little reason. On the contrary, at least lower yields are better than suffering losses before. Even if most R2 products’ actual annualized returns can’t match large fixed deposits, they are more flexible. I can redeem whenever I want, and the returns are higher than bank liquidity management. Also, although large certificates of deposit can now be transferred, if you need money urgently, it might not be possible to transfer, and even if it is, you’ll face interest discounts,” said Wang Xia.

On social platforms, 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 attractive initially, but after purchase, the value stops rising. After three months, the annualized yield drops to a single digit. This is mainly because before buying, the product often experiences a sharp increase over a day or two, pulling the net value curve up. If you see a steep rise in the net value, avoid subscribing—it might be a trap.

Editor: Xu Yunqian Chief Editor: Gong Peijia