Asset managers face strong headwinds

asset managers funds management investment management

8 December 2016
| By Oksana Patron |
expand image

Asset managers worldwide will need to cut fees and adopt new business models in order to maintain the same long-term ratio of fees and returns, according to a white paper from Casey Quirk.

A practice of Deloitte Consulting LLP additionally noted that increasing government regulation of investment advice providers and disruptive technologies circumventing traditional asset managers would pose long-term challenges.

According to the study, the current state of the industry was dominated by lower capital market returns, shrinking growth in assets to manage, and widespread portfolio de-risking.

On top of that, the organic growth had slowed from an average rate of 3.5 per cent annually before the 2008-2009 financial crisis to 1.7 per cent from 2009-2014, with China's asset management market being an exception.

Casey Quirk also forecast that median profit margins for asset managers would drop from 34 per cent to 28 per cent in five years.

Therefore in order to survive, the asset managers should adopt the following changes to their strategies:

  • Allocate resources away from outmoded product lines and client segments experiencing outflows to new growth initiatives and buyers expanding more quickly;
  • Streamline operations for efficiency and ability to bring on new skills and technologies through mergers and acquisitions;
  • Differentiate investments with a broader array of active capabilities and strong product development processes;
  • Digitise distribution to reduce costs and more directly engage with customers; and
  • Build a consumer-oriented fiduciary brand.

"Asset managers face the strongest headwinds yet as an industry," Casey Quirk's principal, Ben Phillips, said.

"Nevertheless, one-third of asset managers are still growing their market share by embracing new, differentiated strategies that reflect changing realties, as well as supporting products and services that appeal to sceptical investors.

"Some future winners will be names the industry might not even consider now, and many of today's key players will face consolidation if they can't or won't change."

Read more about:


Recommended for you

sub-bgsidebar subscription

Never miss the latest news and developments in wealth management industry




Well done Keith and Neil, these Canberra Bureaucrats need to be stopped. ...

4 days 6 hours ago

WHEN I RETIRED A LOT OF GUY'S WERE STILL PRACTICING FORMS OF COLD CALLING. There nothing wrong with it as a way of estab...

5 days 6 hours ago

I thought you joined a dealer to be protected and have a better version of regulation explained, BUT The dealers themsel...

5 days 6 hours ago

ASIC has cancelled the AFS licence of a Sydney wealth firm, the fifth Sydney firm to see a cancellation since the start of the year....

1 week 5 days ago

A former financial adviser has been banned by ASIC from providing financial services for inappropriate advice, among multiple breaches....

3 weeks 6 days ago

More than 20 winners from the funds management industry have been crowned at this year’s awards....

5 days 13 hours ago