8. Collaborate – and innovate – on regulation
As an organization or leader, we resolve to make better use of technology and innovation — and to partner with other market participants — to increase regulatory engagement, efficiency and quality.
Faced with varied regulatory regimes across different markets — and global investors with footholds across several jurisdictions — wealth and asset managers not only need to comply with a multitude of rapidly evolving rules, but they are also expected to handle regulatory complexities on behalf of their clients.
Wealth and asset managers are developing a more consistent approach to regulation. At one level, firms are working to make better use of technology, data and innovation to increase flexibility, address growing compliance burdens, and meet both global and specific local requests. At another level, players are increasingly collaborating to develop industry-wide solutions.
- Collaborate with peers and competitors to pool strengths and build collective frameworks, enhancing confidence in the ability to comprehensively comply with an evolving regulatory landscape.
- Take a transparent approach to new technology, including ethical artificial intelligence (AI); accelerate the adoption of digital wrappers, tokenization and distributed ledger technology; and advance environmental, social and governance (ESG) imperatives as an industry.
- Transform regulatory compliance through greater consistency and strategic innovation, instead of meeting evolving requirements through incremental additions.
7. Show transparent leadership on sustainability
As an organization or leader, we aim to develop a consistent, comprehensive and transparent approach to sustainability, optimizing investor alignment and taking an enterprise-wide view of implementation.
Wealth and asset managers face expectations to commit to more active participation in re-orientating global financial flows toward a more sustainable economy. In particular, the climate transition will become an ever-increasing area of focus. More broadly, firms need to ensure purpose-driven thinking in their activities and market investments, becoming active stakeholders and exhibiting leadership across ESG categories.
With approximately 85% of assets under management (AUM) currently not green,1 firms are expanding their focus on climate to include the wider green and blue (marine) economies, as well as renewing their commitments on themes like food security and economically inclusive cities. Transparency is key to making tangible progress in partnership with asset owners, while avoiding allegations of “greenwashing” or politicization.
- Develop a greater choice of thematic funds and increasing allocations to themes such as diversity, transition investing, biodiversity and the blue economy.
- Embed climate and environmental risks into strategy, governance and operations, and into investment products and portfolios — setting clear ambitions, scaling up sustainable finance and taking an iterative implementation approach.
- Understand how to have a real-world impact — not only in mature economies but also in developing markets. Blended finance, which entails blending public capital or funding by development financiers with private capital, will be critical to increasing wealth and asset manager's role in the climate transition, by taking first loss risk and facilitating at-scale mobilization of capital.
- Manage the whole firm in line with sustainability principles, including timely, accurate and transparent reporting to investors and regulators.
6. Optimize the value of talent
As an organization or leader, we resolve to maximize the value of new and existing talent through a strategic program of reskilling and upskilling — readying our people for changes in client demand, technology, products and industry practices.
Widespread talent shortages, coupled with rising expenses and competition from technology-enabled new entrants, are increasing the need for upskilled wealth and asset management executives. Attracting staff in emerging areas such as AI, and rapidly growing ones, like private credit, is important, but enterprise-wide talent enhancement is even more vital.
Wealth and asset managers are trying to recruit people with specialist skills in areas such as AI and other advanced technologies. At the same time, they are seeking to empower staff and advisors so they are ready to work with new products, new technology and new business models and confirm that end clients understand the solutions, investment risks and potential outcomes.
- Focus talent strategies on enhancing access to, and training for, key roles and more standardized positions by reskilling and upskilling existing talent.
- Realign talent based on their interests and strengths, with a continuous process to identify future skills needs and better leverage technology such as AI co-pilots and automation.
- Consider use of centers of excellence (CoE) and offshore delivery capability (which is no longer just a cost play but increasingly a capability play, too).
- Support staff members by offering a technologically-integrated work environment that streamlines operations and improves work-life balance.
- Be proactive about communicating the firm’s culture, values and purpose, particularly pertaining to ESG policies; prioritize empathy and human-centeredness.