The expectations of business and individual clients continue to magnify. Australian asset managers are being simultaneously tasked with delivering consistent and increased performance, while being expected to reduce fees. At the same time, demand for sustainable investment is not dwindling, ESG considerations are under increased focus and clients are seeking greater transparency into investment decisions. Technology will be key to the required transformation of asset manager firms – reducing unnecessary costs, supporting innovation and managing investment risks.
Australian superannuation (retirement funds) which have 3 trillion dollars under management, are entering a stage where their first major demographic cohort will be entering a drawdown phase. Superannuation trustees are under pressure to drive performance outcomes in an uncertain climate, at the same time as their clients are increasingly demanding ethical and sustainable investment approaches.
1. Redefining business and operating models
What it means
COVID-19 has crystallised the need for asset managers to transform business and operating models to become more resilient, agile and flexible in a challenging environment.
Potential impact on asset managers
What to think about:
2. Accelerating digital, transforming through technology
What it means
The industry has been slower to adopt new technologies than many other sectors. COVID-19 has been an awakening
Potential impact on asset managers
What to think about:
3. An evolving risk & regulatory landscape
What it means
Regulators want to encourage recovery and growth, but ensure that happens in a controlled way that protects financial stability and takes greater care of customers.
Potential impact on asset managers
What to think about:
4. Redesigning the future of work
What it means
Operating in a more decentralised environment has focused minds on the need for change as a new future of work emerges.
Potential impact on asset managers
What to think about:
5. Embedding ESG across the investment approach
What it means
The shift towards sustainable finance has markedly accelerated. In the wake of COVID-19, this trend will be even more pronounced.
Potential impact on asset managers
What to think about:
6. Look East: navigating business opportunities in China
What it means
China has long been recognised as the biggest single opportunity for new business and growth in the asset management industry – COVID-19 hasn’t changed that.
Potential impact on asset managers
Beyond a world dominated by COVID-19-related restrictions on economic activity, we anticipate opportunities for fund managers to either expand their existing footprint or enter China for the first time.
What to think about:
Whatever the strategy and model may be, it is clear a considerable amount of investment is needed for entering the Chinese market, meeting local regulations and guidelines, setting up infrastructure, building up brand recognition, hiring the right talent and adapting to the local culture. But given the potential size of the reward, many (if not most) non-Chinese asset managers are thinking long and hard about what it will take to succeed in this growing, dynamic and volatile market.