At the intersection of profound adjustments in household wealth structures and the capital market's transition towards high-quality development, China's securities investment advisory industry, once driven by traffic and trapped in homogeneous competition, is undergoing a deep transformation fueled by regulatory reshaping, demand upgrades, and business model transitions. The year 2026 is regarded as a critical juncture, marking the beginning of the industry's 15th Five-Year Plan period. The sector stands at a crossroads where outdated models are proving unsustainable, and new frontiers await exploration. Similar to the shift to a buyer-centric model completed by the U.S. advisory industry between 1990 and 2000, China's investment advisory market is experiencing growing pains on the starting line of a multi-trillion-yuan track, trading short-term discomfort for long-term renewal and rebuilding value through professionalism.
A Tale of Ice and Fire: Structural Contraction Amid Industry Reshuffle Industry data reflects a reality of stark contrasts. According to Choice data, the total number of securities practitioners dropped from 352,100 at the end of 2023 to 331,400 by the end of 2025, a decrease of 20,700 over two years, representing a decline of 5.88%. In sharp contrast, the number of investment advisors bucked the trend, rising to 89,400 by mid-2025, an increase of 22,000 compared to 2023. This divergence highlights the underlying logic of the industry's shift from a "mass manpower" strategy towards one prioritizing "high quality and efficiency."
A closer examination reveals that deep-seated contradictions stem from institutional constraints. Currently, the business scope of securities investment advisory licenses is strictly limited to stock investment advice, making it difficult to conduct full discretionary account management. This "dancing in chains" situation has led most institutions into homogeneous competition, such as selling stock recommendation software and pushing short-term trading strategies. More critically, the marketing-driven model fundamentally conflicts with the principle of investor suitability—some institutions, in pursuit of short-term performance, recommend high-risk products to investors with low risk tolerance, fostering malpractices like exaggerated promotions and excessive marketing.
The trust crisis has intensified due to multiple factors. On one hand, illicit "proxy rights protection" operations systematically extort compliant institutions by inciting investors to file unreasonable complaints and fabricate evidence. On the other hand, self-media accounts use short-video platforms to spread "stock-picking myths," prioritizing traffic monetization over investor rights. According to regulatory announcements, customer complaints received by 110 securities companies in the third quarter of 2025 increased by 28.2% year-on-year, severely testing the industry's reputation amidst a flood of false information.
This apparent industry contraction is, in reality, a structural clearing out of "hollow hype" to "strengthen the core." As a CICC report pointed out, the U.S. advisory industry also went through a similar phase of fat-tail competition, eventually nurturing leading institutions like Vanguard, Betterment, and Wealthfront through standardized operations—the growing pains in the Chinese market are a prelude to value restoration.
Early Signs of Spring: Positive Trends Driven by Demand, Policy, and Technology Dawn is breaking on the horizon. On the policy front, CSRC Chairman Wu Qing explicitly called for "strengthening alignment with investor interests" and promoting the transformation of brokerage business towards wealth management at the 2025 Securities Association conference. The "Measures for the Implementation of Securities and Futures Market Supervision and Management," released at the end of the same year, further clarified regulatory bottom lines. This combination of "strict supervision + clear guidance" provides institutional soil for the buyer-advisor model.
Changes on the demand side are more fundamental. As pension fund entry into the market accelerates and the proportion of household financial asset allocation moves from the current 20% towards the 40% level seen in developed countries, professional asset allocation services are transitioning from being "exclusive to high-net-worth individuals" to a "mass necessity." This demand upgrade closely resembles the U.S. mutual fund explosion in the 1980s—when, driven by IRA account tax incentives, the advisory industry entered a golden decade.
Technology is redefining the service radius. Hybrid models combining robo-advisors and human services (like Vanguard Digital Advisor) are breaking service bottlenecks: algorithms handle standardized allocations, while humans focus on emotional support, reducing advisory service costs from the traditional 1% to below 0.3%. Notably, this "human-machine collaboration" is not a simple replacement but enables deeper services like investment behavior correction and tax-loss harvesting through digital tools. According to a forecast by consultancy Statista, global assets under management for robo-advisors are expected to reach $2.38 trillion by the end of 2029, with user numbers projected to hit 34.05 million.
The turning point lies in a fundamental shift in the business model. Drawing on the mature U.S. experience, where buyer-side fees account for over 90% of advisor revenue, Chinese institutions are moving from "sales commissions" to "AUM-based fees." This shift represents a reshaping of the value logic—only when income is tied to client asset growth rather than transaction frequency can advisors truly align with investors.
The Breakthrough Path: Building a Professional Moat Emphasizing Both "Investment" and "Advice" The path to breakthrough lies in reconstructing the competency map. Excellent advisors need to master seven professional dimensions: information filtering, knowledge empowerment, behavior correction, strategy customization, concept shaping, risk control, and emotional support. This dual-drive of "investment" and "advice" requires institutions to shift from stock-specific research to broad asset allocation, and from short-term predictions to full-cycle companionship.
Model innovation is a key breakthrough point. Despite ongoing license restrictions, leading institutions are forging paths through two main approaches: first, by emulating Morgan Stanley's separately managed account model, collaborating with public funds to launch customized portfolios; second, by exploring integrated service solutions combining "investment advisory + insurance + trust," such as UBS's family office model. The essence is achieving interest alignment through account management—where decision-making power equals responsibility, forming the cornerstone of trust.
Fee models also need diversification, moving from traditional commissions to AUM-based fees or performance-based sharing, thereby deeply aligning interests with clients. Simultaneously, leveraging fintech to automate compliance processes reduces operational risks, while establishing evaluation systems centered on client retention rates and satisfaction replaces previous short-term sales metrics. Only in this way can a true "community of interest" and "community of trust" with clients be built.
Technology and compliance are becoming invisible barriers. By using AI for automatic portfolio rebalancing and automated compliance checks, leading institutions have reduced operational costs by 30% or more. Furthermore, establishing evaluation systems focused on client satisfaction and asset appreciation rates replaces old sales targets. Vanguard's practice shows that when advisory teams dedicate 40% of their time to investor education, client portfolio returns increase by an average of 2.3 percentage points—professional value ultimately reflects in account performance.
Third-Party Forces: The Rise of Independent Advisors Amid the industry transformation, third-party independent advisory institutions, leveraging their flexible mechanisms, professional focus, and proximity to the mass market, are breaking free from the mutual constraints faced by advisors within brokerage systems. They are becoming pioneers of industry transformation. The practice of JF SMARTINVEST, under the Hong Kong-listed company JF SMARTINVEST Holdings (09636), provides a vivid case study of a successful breakthrough.
The core advantage of independent advisors lies in their focus and flexibility. Unlike brokerage advisors constrained by brokerage and product distribution businesses, third-party institutions can concentrate on the advisory core, deeply cultivating niche client needs. With precise market positioning and lightweight service models, they fill the gaps left by traditional brokerages.
The lesson from U.S. platform-based advisors is synergistic coexistence. For example, Charles Schwab integrates 13,000 independent advisors through its "AdvisorSource" platform, solving client acquisition challenges for independents while preserving their professional autonomy. As a leading third-party advisor, JF SMARTINVEST's transformation journey is highly illustrative. Its development path reflects industry evolution: starting with technical analysis courses, progressing to a hybrid "smart allocation + human advisor" service, and recently upgrading towards comprehensive investment and financial planning solutions. Specifically, JF SMARTINVEST focuses on the mass affluent segment, building a service system combining "robo-advisory tools + in-depth human support." Through its self-developed smart investment research tools, it provides investors with basic services like market analysis and strategy insights, complemented by professional human advisors offering personalized advice, investment companionship, and risk warnings, effectively solving the "last mile" trust issue in advisory services.
In the future, independent advisors and brokerage advisors are not locked in a zero-sum game but will move from competition to coexistence. Brokerages, leveraging their channel and capital strengths, will focus on high-net-worth clients, while third-party institutions, relying on flexibility and expertise, will serve the mass market. The two will complement each other, working synergistically to build an open, diversified securities investment ecosystem and promote the high-quality development of the entire advisory industry.
Conclusion When the regulatory hammer fell with the revocation of Beijing Zhongfang Xinfu's license, and as firms like JF SMARTINVEST see results from deepening their "buyer-advisor" transformation, the path for the industry's rebirth has become clear. The essence of this change is not technology replacing humans, nor intelligence颠覆ing tradition, but a fundamental reset in practitioner mindset—from chasing short-term traffic to cultivating long-term trust, from selling products to safeguarding wealth. The U.S. advisory industry took thirty years to complete its transition from commissions to a buyer model, ultimately nurturing a multi-trillion-dollar market. The Chinese market is retracing this path at a faster pace. Those institutions that first build capabilities emphasizing both "investment and advice," and steadfastly uphold investor interests, will ultimately embrace a high-quality development frontier after the market clears. As Warren Buffett said, "You only find out who is swimming naked when the tide goes out." For the securities investment advisory industry, as the tide recedes, the true guardians are just beginning to take the stage.