There are blue skies ahead for the asset management industry and asset managers. But, clouds are also looming.
The threat of disruption is imminent. Automation and robo-advisory offerings are commoditizing large parts of the business.
The quest for scale is likely to see a wave of acquisitions and strategic alliances with tech companies shaking up the market in the coming years. Changing demographics and markets will thrust the asset management industry to center stage.
The rise in the volume of investable assets is set to increase from around $64 trillion today to $102 trillion by 2020.
Inspired by platform models in other industries, clients are also advancing new demands regarding the immediacy with which they interact with their providers. At the same time, regulators are doing their best to prevent consumers from being sold inappropriate products, often the most lucrative for providers.
The result? Regulatory costs continue to climb while fees are falling and a battle rages over ownership of clients.
Fundamental drivers of the new asset manager are:
• A new emphasis on cost, scale, and efficiencies critical to global success.
• Economies of scale. Some global managers will become mega-managers.
• Fewer managers who rely on commissions. They will need to develop alliances with fee-only distribution channels.
• Large alternative managers will need to fund their expansion by tapping the capital markets, or through strategic relationships.
• The gap between specialist firms and mega-managers, who compete everywhere on everything, will widen dramatically.
The Future of Asset Management Talent
- Job seekers are no longer being asked to simply take standard data and analyze it better than competitors. Companies are now looking at the challenge of information itself – what to use, how to get it, and figuring out which questions it is best suited to answer.
- Technical skills are essential. Firms need people who can create efficient, scalable tools to organize and analyze data. STEM backgrounds and coding skills have long been critical attributes in research hires.
- Portfolio managers with expertise in investment and portfolio strategy across fixed income and equities will continue to be in high demand.
- Compliance managers and data specialists continue to be hired while regulations get tougher and investments in technology increase.
- If a volatile market prompts investors to pull their money, asset managers will face more pressure from competition.
- Asset managers will put attracting and developing talent at the forefront of their efforts to retain and enhance their
competitive position. - Across the firm, there will be the flexible use of technology allowing for economies of scale, specialization of needs and improved reporting.
Pressures on The Asset Management Industry
- COSTS – Rising costs of complying with regulation and commercial cost pressures will as firms grow their distribution networks.
- FEES – Fees will be under continued pressure amid the push for greater transparency and comparability.
- TECHNOLOGY – Investment in technology and data management will need to be maintained or increased to drive customer engagement, data mine for information on clients and potential clients, operational efficiency, and regulatory and tax reporting.
What Are The Gamechangers in Asset Management?
- Regulation will hinder banks and insurers by forcing them to abandon proprietary investing and other core businesses.
- As the world ages, retirement and healthcare will become critical issues that only asset management can solve.
- Asset managers who are willing to see the client as their compass are set to thrive in this environment, while the rest are likely to face accelerating headwinds.
Conclusion
How do you know what you want to be if the vast majority of jobs that will be available in a decade or so don’t exist now?
In a job market where change is the one constant, and today’s knowledge may be tomorrow’s ancient history, how do you retain and even increase your professional value? The same way that enterprises remain competitive amid constant change:
By being adaptable.” – DXC.technology
