Asset managers need to find a new way to navigate uncharted territory

After a stellar year in 2019, fund managers will have to create ‘world-class’ client experiences and use data-driven intelligence to generate more meaningful insights if they want to survive in the post Covid-19 world, according to a new report by Boston Consulting Group – Global Asset Management 2020: Protect, Adapt, and Innovate.

Lubasha Heredia, BCG

“Overall, the market storm of early 2020 has only intensified the industry’s challenges, as asset managers find themselves in uncharted territory,” said Lubasha Heredia, a New York–based BCG partner and c-oauthor of the report. “After the crash of 2008, the asset management industry benefited from a market rebound that produced the longest bull market in history. In 2020, however, firms must recover flows and profitability through more fundamental changes to their business models. This is both a challenge and an opportunity to accelerate and shape what the future of asset management could look like.”

In practice, the report noted that successful firms will be those that refocus their product portfolio, transform cost structures and invest in innovative technologies that will drive the business forward over the long term. Information will continue to be key and firms can carve out an edge by building data science capabilities that gather, clean, synthesise, and visualise vast amounts of client information.

Moreover, the report advises fund managers to strengthen their distribution capabilities as well as pursue M&A opportunities and strategic alliances. It said, “A reshaped operating model may include technology that provides a standardised, fully digitised ecosystem to support insurance partners and their distribution networks to enhance client experience. Another key will be a tailored approach to embedding ESG factors in the asset manager’s investment processes.”

According to the report, last year, Europe, the second largest region by assets, saw its assets under management jump by 13% to $22.8tn. The UK, which is Europe’s biggest market, accounting for a 27% chunk or $6.1tn, experienced an expansion of 13% despite Brexit uncertainty.  However, research from UBS showed that the gains were wiped out in March when European fund managers suffered outflows equal to 3.1% of AUM, as much as the previous nine months combined.

©BestExecution 2020

 

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