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Asset managers can’t be complacent: KPMG Canada report

Asset managers can’t be complacent: KPMG Canada report

Nearly half of asset managers are realizing they need to turn data into insights


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Faced with fee compression, rising costs, compliance burdens, and shifting investor demographics, Canadian asset managers are quickly coming to realize the role big data and advanced analytics can play in their operations, finds a new KPMG in Canada report. Nearly half (48 per cent) now view data and analytics (D&A) as the industry’s most significant opportunity to understand their clients and retain business, up 18 per cent from last year.

"In an era of digital revolutions, crowded markets, and regulation creep, now is not the time for complacency," says James Loewen, Partner and National Sector Lead for Asset Management, KPMG in Canada. "If you’re a retail fund manager, it’s getting harder to compete, so you have to innovate either your product lineup or technology to be able to survive."

Called It’s decision time, the report is an annual survey of the risks and opportunities in the Canadian asset management industry.

The key findings include:

  • 48 per cent of asset managers cite D&A as the industry’s most significant opportunity (40 per cent in 2018)
  • 60 per cent say the top risk to the industry is the push for a lower management fee environment, versus 53 per cent in 2018.
  • Almost two-thirds (64 per cent) identified the increasing complexity of regulation and compliance costs as their top organizational risk, compared to 43 per cent last year.
  • 51 per cent are unsure or will not make use of liquid alternative products
  • Cyber security risks to the organization remain top of mind, 48 per cent versus 45 per cent last year

The asset management industry in Canada has been slow to adopt big data despite the real and actionable insights other industries are already using to their competitive advantage, the report says.

Traditionally, D&A investments were focused on achieving back office cost and process efficiencies. Today, as digital transformation blurs the lines between the front office and the back office, companies are leveraging data and advanced analytics to mine client data, unlock market insights, and design informed investment strategies.

"Bringing D&A into an organization isn’t an overnight task; it’s not like you can flip a switch and change your entire operating model in a day," says Peter Hayes, Partner and National Leader for Alternative Investments, KPMG in Canada. "Even the big shops that are making noticeable investments in technology are doing so cautiously to make sure it’s being done right and will achieve their specific business objectives."

Firms are cautious of doing too much with client data amid cyber threat and regulatory concerns, the report explains.

"This is a key area that, if not done properly, poses a very strong risk to organizations not realizing their overall return on investment," says Joseph Micallef, National Tax Leader, Financial Services and Asset Management, KPMG in Canada. "As such, I expect tech implementation will be a catalyst for further industry consolidation, or partnerships."

Standing room only

The industry consolidation is raising the table stakes, pressuring all asset managers to offer better deals, products, and services than the firm down the street, the report says.

"Players are being challenged to stand out from the crowd," says Mr. Loewen. "Although the competition from fintechs and disruptors like robo-advisors is still relatively small in the Canadian space, this trend can change very quickly and can’t be ignored."

Further, competition from outside Canada’s borders is also a concern, adds Mr. Hayes. "You have to consider that monolithic players like Google or Apple or Amazon have the financial wherewithal and brand recognition to become billion-dollar managers in short order."

"They could easily turn around tomorrow and say, ‘Here’s an EFT and we’re going to charge you two basis points, give us all your money.’ In theory, it would be relatively easy," he says.

The 2019 Canadian Asset Management Industry’s Top Opportunities and Risks

Top 3 industry opportunities

  • Data analytics to enhance product design, marketing, and pricing | Enhanced operational processes and use of technology
  • Enhancing investment yields through investing in new investment strategies
  • Launching new product types/services | increased penetration of existing client base

Top 3 industry risks

  • Push for a lower management fee environment
  • Increasing complexity of regulation and cost of compliance
  • Cost challenges and squeezed profit margins

About the 2019 Canadian asset management industry opportunities and risks report

Now in its fourth year, the cross-sectional survey asks Canadian asset managers to weigh in on the opportunities and risks they see for their organizations and the industry as a whole. The report also taps into KPMG’s network of asset management partners and professionals to contextualize and better understand the results. Download the report here.

About KPMG in Canada

KPMG LLP, an Audit, Tax and Advisory firm ( is a limited liability partnership, established under the laws of Ontario, and the Canadian member firm of KPMG International Cooperative ("KPMG International"). KPMG has over 7,000 professionals/employees in 38 locations across Canada serving private and public sector clients. KPMG is consistently recognized as an employer of choice and one of the best places to work in the country.

The independent member firms of the KPMG network are affiliated with KPMG International, a Swiss entity. Each KPMG firm is a legally distinct and separate entity, and describes itself as such.

For more information, please contact:

Caroline Van Hasselt National Communications KPMG in Canada  (416) 777-3288

© 2021 KPMG LLP, an Ontario limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.

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