Long-term planning awareness has declined for three consecutive years, and the "guaranteed repayment" mindset remains stubborn: the "glamour" and "hidden concerns" of Chinese residents' financial literacy

Caixin 3月25日讯 (Editor Wang Wei) Seven years since the implementation of the new asset management regulations, the rigid mindset of “guaranteed principal and returns” still stubbornly persists among over 30% of Chinese investors— their understanding of “breaking the guarantee” is insufficient, their financial literacy level is significantly below the average, and they are more inclined to make investment decisions through non-professional channels.

In addition, the long-term financial planning awareness of Chinese residents has declined for three consecutive years, with only 44% of respondents setting long-term financial goals. Among those with long-term goals, the account opening and purchase rate of personal pensions is as high as 48%, 2.5 times higher than those without long-term goals.

Caixin learned of these survey results from today’s release conference of the “2025 Chinese Residents’ Financial Literacy Report,” hosted by Shanghai Jiao Tong University Shanghai Advanced Institute of Finance and co-organized by Charles Schwab.

This indicates that the overall financial literacy level of residents in China is steadily improving, but structural shortcomings still stand out. At the same time, the report delves into the profound impact of artificial intelligence on financial literacy, revealing the huge potential of AI in empowering residents’ financial education and the urgent challenges to be addressed.

“Breaking the guarantee” for seven years, over 30% of investors still lack understanding

Data shows that more than 30% of respondents have insufficient understanding of “breaking the guarantee.” This group’s financial literacy level is significantly below the overall average, and they are more inclined to obtain information and make investment decisions through non-professional channels.

“Educating investors in the era of breaking the guarantee is a heavy task,” said Wu Fei, a professor at Shanghai Jiao Tong University Shanghai Advanced Institute of Finance. He pointed out that, years after the implementation of the asset management new regulations, residents still have large blind spots regarding net value products, which directly affects their investment behavior and risk tolerance.

Meanwhile, there is a significant mismatch between residents’ understanding of investment advisory services and their willingness to purchase them. Older investors are more likely to recognize the service attributes of investment advisors, but this recognition is hard to translate into willingness to pay; younger groups, although willing to pay for advisory services, tend to see them as “products” rather than “services.” Wu Fei suggests that service providers need to deeply understand the needs of clients at different life stages and focus on improving service quality to bridge this cognitive gap.

Long-term planning awareness has declined for three years: only 44% have long-term goals

Another warning sign comes from residents’ long-term financial planning awareness. Only 44% of respondents have set long-term financial goals, a decrease of nearly 8 percentage points from last year, continuing a downward trend for three years.

This trend is directly reflected in retirement preparation. Data shows that only 28% of respondents are aware that they can use long-term investment funds to supplement the basic pension—this proportion has also decreased for three consecutive years. Among those with long-term goals, 48% have opened accounts and purchased personal pension products; in contrast, only 19% of those without long-term goals have done so.

“Fostering long-term awareness and truly implementing it into wealth practices can help residents better navigate cycles,” Wu Fei said. “Young and middle-income groups are the most active participants in personal pensions, but they face pressures such as home buying and parenting, and urgently need reliable plans to provide certainty in life.”

How can long-termism be implemented?

Thomas Pixley, General Manager of Charles Schwab (Shanghai), pointed out from overseas experience that long-termism in the U.S. is not naturally formed but is the result of institutional cultivation. The introduction of personal retirement accounts and 401(k) accounts in the 1970s forced residents to plan for retirement. He believes that the foundation of long-termism is setting a specific long-term goal, such as “how much income is needed per month after retiring at 65,” then developing investment plans based on this goal and adjusting regularly. With this foundation, even in bear markets, educated investors are less likely to exit easily.

Professor Yan Zhipeng of Shanghai Jiao Tong University Shanghai Advanced Institute of Finance provided investors with a practical thinking framework: estimate the monthly funds needed after retirement (e.g., 100k yuan per year, 4 million yuan over 40 years), compare with current wealth (e.g., 2 million yuan), identify the gap (200,000 yuan), and then plan how to bridge it from now until retirement, considering basic pension and enterprise annuities as supplements. He summarized, “This logic helps people clearly understand how much wealth they need to accumulate and the probability of achieving their goals at retirement.”

Zhaocai Securities President Zhou Lefeng interpreted the essence of retirement planning from the perspective of cash flow management. He believes that the core issue of retirement is losing stable cash flow, and those with basic financial literacy will pay attention to household assets and liabilities and cash flow statements—cash flow sources are mainly work and long-term stable investments. He suggests that encouraging the public to do long-term retirement planning is an effective way to reduce the national fiscal burden and is currently the most valuable focus. However, he also reminds that “wealth management, health management, and legal awareness are interconnected, but wealth management itself is the icing on the cake.”

The report points out that improving residents’ financial literacy requires multi-party cooperation to build a three-dimensional system led by financial regulatory authorities, involving financial institutions and social sectors. At the same time, it is necessary to keep pace with the times and establish a regulatory framework for the financial industry in the AI era. The goal is not to restrict AI technology applications but to regulate how they are used, promoting healthy development of digital financial literacy. 90% of people are willing to spend more time learning about AI elements, but accuracy remains a pain point.

This report systematically focuses on AI’s impact on financial literacy, with results both inspiring and thought-provoking. Up to 90% of respondents said they would spend more time learning financial knowledge if AI elements were introduced into financial education. Among them, 46% are willing to increase 30 minutes weekly, and 44% believe they would spend an hour or more weekly.

However, the implementation of AI in financial education is still in its early stages. The report shows that less than 30% of financial institutions have piloted or applied AI in financial education, mainly in basic functions such as service responses and information push. Meanwhile, evaluating the effectiveness of AI-based financial education remains a challenge—among those who regretted following AI investment advice, 69% believed the information provided by AI was inaccurate.

“Data-cost-compliance” is considered the three major core challenges faced by financial institutions in large-scale, deep AI application. Pixley said, “Financial institutions should consider the diverse needs of different groups, expand service breadth while focusing on service quality and customer experience, so that AI development and application truly benefit a broad range of investors.”