More than three quarters of asset managers say they are embarking on a fundamental shift in their overall business strategy in response to changing client demands for innovation, distribution and front office solutions, says a report by State Street.
Although asset managers are positive about the future, they say success will be defined through investing in new capabilities, long-term investments and the right mix of talent, transformation and tools.
“Although nearly all of the managers surveyed are optimistic about business growth over the next twelve months, few believe they are well equipped to provide the solutions their clients need,” says Joseph Antonellis, vice chairman at State Street. “To close the capability gap, the top areas of investment over the next three years will include risk analytics, performance analytics and data integration.”
The report also found:
- 48% of respondents say developing new products for their existing country markets offers the greatest growth opportunity;
- 42% will target growth from new client segments
- 32% expect to expand number of distribution channels
- 47% plan to expand into new markets over the next three years, and of these, 60% are focused on Asia Pacific.
- 85% say regulatory barriers are the top challenge in new markets
- 55% say distribution challenges deter them from expanding into otherwise attractive new markets
Multi-asset solutions are expected to be a major source of growth for the businesses of 67% of those surveyed over the next three years. This reflects the shift toward more outcome-based investment solutions for investors. However, 74% believe that few managers are equipped to excel in providing these solutions.
“More than ninety percent of respondents agreed that those managers offering the greatest degree of transparency will have the upper hand in attracting new assets,” says Antonellis.