“Financial Health” might sound like an abstract academic concept, but it actually hits close to home. Recently, the launch of the Embracing Financial Health: Pathways and Practices of Wealth Management Facilitating High-Quality Development of Inclusive Finance (referred to as the ”White Paper“), jointly held by CICC Wealth Management and the Chinese Academy of Financial Inclusion (CAFI) at Renmin University of China, took this concept out of the dusty archives and placed it squarely onto the “household ledgers” of average people and small business owners.

From the daily portfolios of over 200 million retail investors and 700 million fund holders, to the survival and development of over 300,000 innovative small firms, industry experts are attempting to help us clarify: how the public can make their finances more robust, and how small business owners can ensure their ventures stay on a steadier, more sustainable path.

Public Financial Health Matters

“We’ve reached the tipping point where ‘quality’ must trump ‘coverage,’”says Dr. Duoguang Bei, President of CAFI. Reflecting on his decade-long experience in the industry, Bei argues that inclusive finance is no longer just about “whether the service is available” but the “how good it is.” In his view, the focus has long been fixated on metrics like loan volumes and headcounts, while the “financial health” of the everyday citizen has been overlooked.

What is “Financial Health？” Bei cited only one standard: “It is not about how much money you have; it’s about whether you can manage what you have, survive a crisis, and see a path forward.”

Tao Yang, Deputy Director-General of the National Institution for Finance & Development (NIFD), puts it bluntly: “We’ve solved the ‘funding gap’ with 36.5 trillion RMB in loans to small and micro-businesses, but we haven’t yet mastered the ‘service gap’.” He argues that banks must do more than just lend; they must ensure capital is productive and prevent the trap of over-leverage. “True inclusion means making residents feel secure and small businesses feel resilient. That is the heartbeat of financial health.”

The Key Lies in “Three Things”

“Financial health essentially boils down three things, which we call ‘The Three Days’,” explained a CAFI expert. “First, ‘day-to-day’—can you smooth out daily income and expenses, and balance rents, mortgages, and living costs? Second, ‘a rainy day’—if someone in the family suddenly falls ill or loses a job, can you produce emergency funds? Lastly, ‘one day’—when children need an education or you need to retire, have you planned far enough ahead?”

The White Paper, based on a survey of over 1,000 investors, presents a mixed picture. While 70% of respondents scored above 60—attaining a “passing grade”—the details tell a different story. Some are under-insured and vulnerable to major medical crises; others have no roadmap for retirement; and many manage their money haphazardly, either hoarding cash in low-yield accounts or gambling on stocks.

First, investing in stocks should not be a “gamble,” but a way to help you become more “resilient.” While many believe that “stock trading is less safe than a bank account,” the data suggests otherwise: 82.36% of stock investors hold at least six months of emergency liquidity—far exceeding non-investors. Their insurance coverage is also more comprehensive. “It’s not that stock trading made them rich, but that they have a better grasp of risk management,” explained Hou Liming. The research shows that exposure to market volatility often prompts individuals to better prepare for emergencies and secure sufficient coverage, naturally bolstering their overall resilience.

The White Paper outlines three “Don’ts” for individual investors in the equity market: don’t chase rallies and sell off in panics, don’t trade excessively, and don't put all your eggs in one basket. “The most effective strategy is investing in index funds, such as ETFs, to capture market averages. This eliminates the need for stock picking and significantly reduces the margin for error,” Hou Liming added. According to the survey, investors in index funds report a much lower loss ratio compared to those who select individual stocks.

Second, financial literacy is less about “mastering finance” and more about “avoiding pitfalls.” A detail in the report caught reporters’ attention: even among respondents with a bachelor's degree or higher, the accuracy rate for three basic questions— “time value of money,” “inflation,” and “risk diversification”—remained surprisingly low. Hong Zhu, Executive Head of the Strategic and Digital Capability Development Center and Head of the Strategy Department at CICC Wealth Management, stated: “Financial literacy isn’t about turning you into an expert; it’s about helping you ‘not fall into traps’.” To this end, CICC Wealth Management has conducted significant investor education work in recent years. In 2025 alone, the firm produced over 7,100 original educational pieces and hosted nearly 4,000 events. “We have been committed to elevating financial literacy among retail investors by reaching them through an extensive range of online and offline channels,” Zhu said.

Third, buy-side advisory is not about “helping you trade stocks,” but “helping you plan.” Faced with over 5,400 listed companies in the A-share market and over 15,000 public funds, how should investors choose? The White Paper recommends engaging a “professional consultant,” namely a buy-side advisor. Zhu explained that the core difference between the buy-side advisory and the traditional sell-side sales model lies in their paradigms. By charging AUM-based fees (fees linked to the scale of assets under management), the buy-side model aligns the wealth manager’s incentives with the investor’s outcomes. This ensures a client-centric approach that truly puts the investor first. Furthermore, advancements in AI and digitalization have made buy-side advisory services accessible to more people.

A Collective Push from Policy, Industry, and Individuals

Financial health cannot be achieved by a single person or institution; it requires policy to set the stage, the industry to take action, and individuals to exert effort.

Policies must “build the framework” to instill investment confidence and ensure retirement security. Min Ji, Counselor of the People’s Bank of China, mentioned at the launch: “Current personal pension scheme offers a 12,000 RMB annual tax deduction, with a mere 3% tax rate upon withdrawal. There is room to push these incentives further.” He believes that to encourage residents to commit their savings to the capital market for retirement, they must “see tangible rewards”—for example, by increasing tax incentives or providing more benefits for long-term investors.

Liming Hou，CAFI’s research fellow，further suggested adopting “financial health” as a key metric for inclusive finance: “We must move beyond measuring success solely by loan volume. Instead, we should assess whether residents possess adequate emergency buffers and whether small businesses enjoy sustainable lifecycles. Only then can we provide meaningful support to the public.”

The financial industry must “abandon the pursuit of quick profits” and commit to creating genuine value for its clients. Tao Yang proposed that “financial institutions should not only focus on ‘how much business was done,’ but also ‘how many problems were solved for the client’.” For example, when a bank lends to a small business, it shouldn’t just look at collateral, but also at the company’s technological edge and market potential. Similarly, brokerages in wealth management must transcend product-pushing to offer holistic planning. True wealth management is only possible when the interests of the institution are aligned with those of the client.

Jianli Wang, President of CICC Wealth Management, stated: “CICC Wealth Management is steadfast in its transition toward a buy-side advisory model. By leveraging professional asset allocation, we aim to foster long-term, value-oriented, and rational investing, fulfilling our role as the ‘guardian’ of household wealth.”

For individuals and businesses alike, the message is clear: avoid reckless moves and focus on the fundamentals. To average investors, Hou offers three practical tips: “First, master the basics of financial literacy. Second, never put all your eggs in one basket—embrace diversification. Third, engage a buy-side advisor to make your financial plan.” For SME owners, his advice centers on financial discipline: “Separate your personal finances from your business accounts. Even the smallest firm needs standardized accounting. While optimizing your financing structure, learn to leverage integrated financial services and broader industry resources.”

The Ultimate Yardstick: Peace of Mind

Dr. Duoguang Bei concluded the conference with a poignant reflection: “Financial health is not a measure of wealth; it is the ability to sleep soundly without money worries, the confidence that an emergency won't derail your life, and the certainty that your future is secure.”

For individuals, financial health means balancing the monthly books, having a “rainy day” fund, and securing a reliable pension. For entrepreneurs, it means steady cash flow, the discipline of separating personal and business accounts, and access to a broader network of resources. Ultimately, this is the true essence of inclusive finance for society: ensuring that every individual and every business can tangibly benefit from financial services, living with greater security and poise. As the White Paper eloquently puts it: “Embracing financial health is not a quest for more money; it is about anchoring our lives today and securing our hope for tomorrow.”