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