Asset managers reveal their top challenge

In news that likely won’t surprise industry participants, a poll finds that regulation is a top challenge for Canadian asset managers.

In the poll of 82 managers by RBC Investor and Treasury Services, respondents selected increased regulation as their top near-term challenge, garnering 16% of choices, says a release. Increased regulatory obligations have also created a heightened sense of awareness of reputational risk among managers, it said.

To address regulatory challenges, managers are enhancing their service offerings (22%) and improving efficiencies (22%).

The release says that “regulations requiring asset managers to disclose details of their costs to end investors” may be a factor in the increased attention around improved efficiency.

That’s likely a reference to increased scrutiny of trailing commissions paid by managers and the trend of total cost reporting, proposed by the MFDA.

Read: Proposed class action lawsuit on trailing commissions filed against CIBC

A more efficient operation can also allow for an enhanced service offering, says the release.

While increased regulation remains the top challenge, most respondents believe that proper data management is a positive. For example, 95% say data can benefit their firms, enabling them to make more informed investment decisions (32%) and to better anticipate client needs (27%).

Other poll highlights:

• 45% of managers don’t plan to introduce new products in the next year; those who do will focus on ETFs (21%)
• 37% of managers say clients most value service; 23%, high returns
• 92% of managers at firms with more than $5 billion in assets under administration say environmental, social and governance is important, versus 44% of managers at firms with less than $1 billion in AUA.

About the poll: RBC Investor and Treasury Services conducted an online poll of 82 Canadian asset managers in the second quarter of 2018. Results represent their aggregate responses.

Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.