Commercial Bank Personal Financial Services Risk Study

This article starts from the following four sections:The first part, commercial bank personal finance business and the general theoretical basis are introduced. First it discusses the concept of commercial bank personal finance, classification and characteristics. Personal Financial Services, also known as wealth management, is an extension of personal banking business, provided by commercial banks and other financial institutions to help individuals maintain and add value to their assets. According to the different management methods, personal finance service is divided into financial advisory and general financial service. Then, it discusses the personal finance business, including introduction of involves the classical finance theory, economics of the life cycle hypothesis, portfolio theory, capital asset pricing model, behavioral finance theory as well as marketing theory of market segmentation, target market selection, product Location theories.The second part describes the development of commercial bank personal finance business, the external environment and internal motivation, personal finance business current situation and problems.Sustainable and stable development of China's economic development, rapid growth of household savings deposits, directly promote the rapid increase in household assets, and gradually forms a mass wealthy class. The emergence of wealthy class calls for better financial services than ever before. Chinese commercial banks then attempt to provide investment advisory and personal financial services from the late 1990s.Although the Personal Finance has developed rapidly, there are still some problems:a long tradition under the planned economy mode of operation left us inadequate understanding of personal financial services; a lag in marketing concepts; no brand efficiency; less proportion of Financial Services; lack of professional knowledge and skills in financial management personnel; low customer acceptance; lack of individual financial planning; homogeneity; low R & D capability; lack of risk control. Chinese financial industry restrictions limit banks' ability to provide full range of financial services, product innovation was restricted, all these make it difficult to meet the customer's financial needs. Moreover, Chinese people don't want to let other people know their wealth, and do not understand the relevant procedures, making it problematic in personal finance business.The third part is an analysis of risks faced by commercial banks in carrying out personal financial business, including legal risk, market risk, operational risk and reputation risk.The article focuses on legal risk. At present there is theory of legal relations as borrowing, legal relations, commission contract, trust and other legal relations. The author confirms that the legal relationship is more suitable for commercial bank's personal finance, through an in-depth study as commercial banks and trust share the same legal root cause, and share all basic characteristics. Moreover, the article describes relevant legal elements of the business, and analysis personal financial management in the commercial bank aligned with the trust based on qualitative analysis on basic rights and basic obligations.The fourth part, take United States and Australia as an example, describes the business in developed countries. In viewing domestic commercial banks, it relevant risks faced by banks from external environment and internal aspects.The innovation of this paper is the combination of classical financial theory and current personal finance practices, while the classical finance theory is an important guidance for personal finance practice; the article figures out relevant risks faced by personal finance businesses, and puts forward a relationship of trust as the basic legal relationship, and finally proposes a strategy for risk management in personal finance for commercial banks.The article addressed four fundamental issues in risk management of personal finance for commercial banks, however given the limitation of author's understanding and perception, there must be some discussions less than unsatisfactory. I would appreciate our honor experts'comments and criticism, and continue to improve myself during working and studying in the future. Finally, I will devote myself in the sound business of risk management of personal finance for commercial banks all my life, thank you.