The Research On Reconciliation Between The Product Risk Classification And The Customer Risk Tolerance Ability Of Banking Wealth Management

Over recent years, with the continued heating up of the financial market, many kinds of new wealth management products have emerged. This is not only to meet the investment demands of customers, but also to bring about the stable profit growth of banks. Meanwhile, negative information and complaints related to wealth management products have been frequently mentioned in the press.. Some banks even entered into litigation with their customers. There are many reasons and we will only choose one of the key reasons, the Risk Reconciliation Management, to study and analyse in this article.Risk Reconciliation Management means that the bank will classify the wealth management product according to different levels based on their risk natures. On the other hand, banks will classify the customers according to different types based on their risk toleration abilities. Finally, banks will sell the wealth management products in different risk levels to customers in different risk toleration abilities respectively. The purpose is to avoid customer purchasing a wealth management product with a higher risk level than the customer’s risk toleration ability.During this study, we have found some flaws on the risk Reconciliation management in different banks’practices. For example, there is no continued or dynamic risk assessment on wealth management products, there are some factors that impact the accuracy of customer risk toleration abilities and the risk reconciliation process could be affected by sellers due to their personal incentive linked to the products. Because of the existence of the above issues, the risk is not fully aligned. Selling the incorrect product to a customer can cause potential conflicts in the future.Starting from the analysis of the different risk natures of different kinds of wealth management products, this article will discuss the two sides of risk reconciliation management, the current status of wealth management products risk level and the customer risk toleration abilities and point out the shortfalls in current risk reconciliation process. We will introduce the wealth management market in United Kingdom and Singapore, using their practices in risk reconciliation management for our reference and analysis of feasibility. Furthermore, we will introduce the concept of VaR (Risk at Value) to discuss how to enhance the existing wealth management risk level classification process. We will also introduce theRisk Appetite Theory to fix the customer risk toleration abilities evaluation questionnaire process with Objective Factors Devaluation process. Finally, we will discuss and forecast the application that bank wealth management product risk reconciliation process can be improved by Big Data Analysis Technology, the new technology as we have seen on the internet.