If you think things have been changing quickly in the asset management industry, buckle up. Industry experts say the speed of change will continue for the near future and will likely accelerate, according to The Road Ahead for Asset Management: The Experts Weigh In, a new e-book from Broadridge. Customers, regulators, stakeholders and investors want constant information and absolute transparency. So firms seeking future success must respond rapidly to ongoing change.
In the e-book, industry experts openly discuss the changes and challenges they expect asset management firms to experience soon as well as the various solutions that will help firms successfully adapt and forge ahead. Based on their input, we’ve developed three wide-ranging predictions about what we can expect to see in the industry during 2017 and beyond.
- More firms will transform operations to stay ahead of compliance and operations issues. As transactions continue to become more complex and regulations evolve, firms will rethink their operations processes. While some firms have adapted their legacy processes to meet new, faster-paced requirements, “there are still quite a number of pockets of operational inefficiency,” says Paul Fehre, Chief Operating Officer at Muzinich & Co., Inc. And in today’s environment, asset management firms face tremendous pressure to cut costs and increase margins. “The only way to wring out costs is to become much more efficient in producing your product and servicing your clients,” Fehre says.
“Integration results in actionable business intelligence that can help firms improve their reliability and agility.”
“Saving money isn’t the only benefit. By streamlining operations, firms also can reduce errors and risk. Integration frees staff to focus on analysis rather than information and data, which then results in actionable business intelligence that can help firms improve their reliability and agility.”
- Firms will look to technology to meet an increasingly complex operating environment. Firms must keep up with regulations and complicated transactions. They also must meet an increasing demand for data analytics and reporting. Clients and regulators have a “smartphone mentality,” Fehre says, demanding information on an almost daily basis, as opposed to the monthly or quarterly reporting process that was once the industry standard.
Technology will help synthesize and communicate that information on a moment-to-moment basis. It also can help solve other operational challenges across the asset management business. With an appropriate technology solution, firms can increase the efficiency of complex operations “by eliminating manual processes, cutting costs and [focusing] on their core competencies,” says Lou Longhi, leader of Broadridge’s global sales efforts for Investment Management, Reference Data and Risk Solutions. “As the industry consolidates, more asset management firms seek to replace one-asset-class solutions with comprehensive solutions that handle multiple asset classes, with built-in portfolio risk management and business analysis capabilities.”
- Outsourcing of mid- and back-office systems will continue to expand. More firms are realizing that many of the operational components they have managed in house are not core to the asset management business and are more cost-effectively outsourced.
“There is a strong business case for outsourcing operations,” Fehre says. “To be effective, outsourcing needs to be smart and strategic. Modular approaches are gaining favor with many firms because of their flexibility. At its best, outsourcing can offer a solution that you can plug-and-play wherever it will best serve your business—a component, a function or a platform.”Firms considering outsourcing to relieve cost pressure and better meet the demands of a changing marketplace should “take a hard look at their current systems, as many asset managers are burdened with numerous best-of-breed systems that require significant internal staffing and out-of-sync upgrade schedules,” Longhi says.“Consider alternatives with partners that offer integrated situations with external hosting in the form of software as a service (SaaS) or managed services. You then can eliminate fees for multiple, separate vendors and salaries of onsite staff. This allows firms to focus on what they do best, which is attracting more capital to grow their business and manage their funds.”
The asset management industry continues to face change, and firms that want a competitive edge must be prepared. To learn more about how Broadridge can help your asset management firm streamline its operations and lay the groundwork for future growth, contact us or download our eBook “The Road Ahead for Asset Management”, to read how industry experts view the challenges facing asset managers.