Can a holistic approach to cost transformation deliver greater long-term benefits?
Tackling cost drivers individually risks missing the big picture.
A global asset manager was embarking on an initiative to unlock sustainable cost efficiencies. This included removing cost, adding flexibility by shifting to a more variable cost model, and achieving greater scalability. Alongside these objectives, the asset manager wanted to enhance cost control and incentivize better behaviors around spend.
The asset manager was concerned that it had an operating margin lower than the relevant peer average of 32%. While the company had previously undertaken some actions to address its operating margin, there was more left to do if it was to deliver on commitments it had made to stakeholders to improve efficiency. A more strategic approach was required, one that achieved the immediate cost transformation objectives and positioned the manager for growth.
EY has deep experience conducting strategic cost transformation projects within the wealth and asset management industry in support of end-to-end transformation programs. “Many wealth and asset managers were already engaged in transformation initiatives before the pandemic, but these initiatives were often narrowly defined and focused on tactical cost reduction,” says Reema Kotecha, Director, EY Wealth & Asset Management. “The level of disruption from COVID-19 increases the need for firms to think more strategically in order to emerge as winners.”
With 30,000 wealth and asset management practitioners globally, EY has extensive knowledge of the industry. Our approach combines both benchmarking and practical implementation experience and draws on insights from our different practices: strategy and transactions; business, technology and people consulting; tax and assurance. Through a combination of skillsets, we help companies understand cost drivers and strategic, structural and tactical cost transformation opportunities across their value chain. In implementation, we build accountability for each line item of the business case and focus on benefits tracking.
EY supported the asset manager with all three stages of its strategic cost transformation program. The first phase identified opportunities and built a business case outlining the likely benefits; the second phase conducted program set-up and detailed implementation planning; and the final phase implemented the chosen initiatives from early wins to more strategic and structural change.