The asset management industry needs to commit significant time and resources to innovative product research and development in the future, to keep pace with growing consumer demands.
At the recent Investment and Financial Services Association (IFSA) conference Deutsche Asset Management global chief investment officer Dean Barr emphasised the need for research and development in the asset industry for reasons including the growing demand for knowledge by clients.
“In the future investors will want answers to questions that the industry may not be able to give them,” Barr said.
In his session Barr identified the minimal amounts of time and money devoted to research and development in the industry over the past 40 years, and raised the question as to how it has continued to thrive in such an environment. He suggests since 1974 to now, the industry has been focused on asset gathering and from 2001 onwards, innovation in product research and development similar to the levels of the technology and pharmaceuticals industries is what is needed.
A greater commitment of time and resources dedicated to research and development should not be difficult to achieve, considering Barr’s predicted estimate.
“The investment management spends close to zero on R and D,” Barr said.
Questioning the lack of time and spending on research and development in the past, Barr suggested it could stem from the industry either being too comfortable with its position of growth, or possibly attracting the wrong type of people.
“There is a level of complacency in the industry, but the same people are as attracted to other industries,” he said.
Looking towards the increasing wave of capital spending on research and development in the US, Barr said research projects set up by investment managers are being well received by clients.
“Clients are adopting research centres as a value add service”, he said.
