3:06 pm - Sunday September 26, 3024

Current Trends in Asset and Wealth Management Industry

Environment

  • The industry is turning out enviable performance year after year
  • Overall profit margins have remained remarkably stable (around 30%?)
  • Customer needs are changing fundamentally
  • Looming retirement of demographic profile in some economies drive retail market
  • Worsening pension deficits and new approach to valuation compel institutional side
  • Top ten players in the market manage closer to $1 trillion in assets
  • The industry is now extraordinarily healthy
  • The profit gap between winners and losers continue to widen
  • Overall a more crowded and complicated industry landscape

Trends

  • Move from accumulation to income and risk management
  • Move from relative performance to outcome orientation
  • Separation of alpha and beta
  • Pension restructuring
  • Institutionalization of retail sales
  • Increasing role of marketing and client service
  • Convergence and evolution of alternatives
  • Changing sources of growth in retail and international

Impact

  • Unprecedented  demographic shift will lead to two thirds of all investable assets controlled by households in the income / protection / preservation mode from the earlier accumulation mode
  • Retirement wave is fuelling demand for investment products that mitigate risk
  • Outcome oriented funds are growing much faster than the mutual fund industry
  • Separation of alpha and beta is taking hold among institutional investors
  • Pension fund sponsors demand new products innovation
  • Pension fund sponsors seek more sophisticated solutions from asset managers

Forecast

  • In US, the IRA market will be the primary market for growth
  • Open architecture will take hold in European markets
  • Dominant business model could be multi-boutique
  • Promising growth in Asian Asset Management Markets
  • China and India will dominate the spotlight
  • Japan will present greatest near term growth opportunity
  • Bank channel will be the most promising source of growth in all markets
  • A shakeout in the alternatives industry
  • Significantly different earning profile for traditional asset managers
  • Large scale, mergers and acquisitions?

Agenda

  • Seize the retirement opportunity
  • Reengineer investment management process
  • Refocus wholesaling approach
  • Develop new businesses to catch the next wave of growth
  • Drive scale to generate operating leverage

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