In this new era of investment advisory, why shouldn’t you believe that anyone recommending stocks to you will actually help you make money?

Why has the state maintained strict regulation over investment advisory licenses for so many years?

Why is the investment advisory sector in China plagued by constant controversy and an exceptionally high rate of client complaints?

Why are the words of investment advisors often untrustworthy?

Why do clients fail to make a profit after purchasing investment advisory products?

What is the future trajectory for China’s investment advisory and securities brokerage industries?

How can investment advisory firms fulfill their mission, social responsibilities, and commercial value?

Today, we will delve into these questions through a comprehensive, in-depth analysis.

At its core, the reason China’s investment advisory sector is fraught with issues—controversy, service challenges, and regulatory difficulties—is that the services provided lack a "closed-loop" structure. There is a critical absence of effective investment process management and standardized risk-control mechanisms. Furthermore, because the investment advisory business model offers low costs combined with high potential returns, many firms—or entities operating in this space—are driven by profit to exaggerate results or even make implicit promises of gains, all to entice clients into purchasing expensive advisory packages.

In practice, most investment advisors fail to conduct a rigorous assessment of a potential client’s investment style, risk appetite, the nature of their capital, trading proficiency, or the alignment between their available time/energy and the proposed strategy. Once a service is purchased, these advisors frequently rely on short-term, speculative strategies, often recommending stocks that are already experiencing visible, rapid price surges. Consequently, clients either struggle to keep pace, fall into erratic trading patterns, or suffer losses—whether temporary or sustained—due to the advisor’s poor judgment. Moreover, many investors and institutions purchase advisory services from multiple providers, attempting to cherry-pick strategies or assets that align with their own existing perceptions or methodologies; this ultimately leads to a chaotic and inconsistent decision-making framework.

Currently, global capital markets are undergoing an intelligent revolution—a transition from "human-intelligence-driven" investing to "silicon-intelligence-driven" (AI/algorithmic) investing. The period between 2025 and 2035 is expected to be a critical phase for this shift, characterized by the gradual replacement of human-led strategies with machine-driven capabilities. Meanwhile, China’s capital market still faces a long road of reform and opening-up as it evolves from a system prone to sharp, policy-driven, and systemic market swings toward a more mature, highly marketized environment defined by natural, trend-based cycles. Meanwhile, China’s investment advisory industry is undergoing a transition—evolving from traditional advisory services toward a standardized, highly quantitative, and closed-loop "intelligent" advisory model. Whether the Chinese capital market and its advisory sector can "overtake on a bend"—reaching or even surpassing international standards, while effectively enhancing the public’s investment literacy and portfolio management capabilities—will depend on whether leading innovative firms and relevant government bodies possess the determination and boldness to drive intelligent innovation and promote sound investment philosophies.

For instance, a major opportunity for today’s investment advisory firms lies in the adoption and widespread use of quantitative algorithms—specifically those focused on multi-cycle trend visualization. By standardizing decision-making criteria and investment process management, firms can deliver intelligent, quantitative advisory outputs, while also providing personalized, one-on-one support to help clients manage their investment journeys.

Furthermore, advisory services can be tailored to diverse client needs—accounting for varying risk preferences, capital scales, and investment horizons—by leveraging strategies such as short-term arbitrage, swing trading, and long-term trend or value-based investing. Additionally, there is a need to strengthen investor education regarding the operational mechanics of capital markets, underlying business logic, and the practical application of various investment strategies. For "qualified investors" who may lack the professional expertise, time, or energy to manage their own investment processes, firms can provide guidance to help them select and subscribe to investment funds that align with their specific needs.

This text is intended for research purposes only and does not constitute investment advice or a basis for investment decisions.

That concludes today’s discussion; see you in our next article.