Funds Europe, March 2018
“What are the key drivers that are shaping the future of the fund & asset management industry?”
Fee compression, margin decline & value for money
Increased focus by both institutional and retail investors on value for money as well as regulatory and political developments will continue to drive fees lower. Increase in regulatory spend and additional research expenditure will contribute to downward margin pressure.
“Value” is being redefined beyond “risk-adjusted net returns”, to focus on whether products are truly meeting investors` original savings objectives.
Brand & Trust
Global branded asset managers will continue to dominate both retail and institutional spaces for the foreseeable future. The top 10 brands attracted 70% of all net new money in 2016.
Notwithstanding this, nonfinancial services brands have a greater brand recognition and trust with the millennial generation. This will create an opportunity for the nonfinancial actors to play a “connector” role between the millennials and the global branded asset managers.
Macroeconomic factors will tend drive product innovation over the forthcoming decade. These include:
• Persistent low interest rates in the largest economies
• An ever increasing aging populations in developed countries, alongside a growing middle class in key emerging countries
• Growing focus despite certain political setbacks on the environmental and sustainability agenda
• The continued shift of retirement responsibility from state to employer to the individual
Technology innovation and talent
Technology will continue to innovate and re-shape all segments of the value chain. Firms will continue to invest in talent that deliver a competitive differential advantage.
FinTechs will continue to both innovate and disrupt the sector. Many will be acquired by the traditional asset management firms as a source for both technology infrastructure and innovating solutions.