Rebooting the global asset management industry

Rebooting the global asset management industry 19 Theme 8: Investors’ Goals Will Not Change but Their Means Will The asset management industry’s advance into the digital age will likely be marked by continuity and change. Some aspects will change the least and others change the most, duly separating the ends and the means. The ends relate to the three time-honored goals of the industry’s clients: good consistent risk-adjusted returns, a value-for-money fee structure and excellent client service. They are least likely to change. What is likely to change the most are the means that will be used to deliver competitive differentiation, as AI and GenAI open the gap between leaders and followers. To remain relevant in this evolving landscape, small and medium-sized asset managers have set stretch corporate goals that fall into three clusters (Figure 1.8). The first one aims to improve the alignment of interests: financial alignment by adopting meritocratic fee structures; and non-financial by assuming the role of a trusted advisor. This is someone in clients’ inner circle of confidants, offering proactive investment ideas as well as education that raises clients’ financial literacy. The second cluster seeks to enhance investment expertise by blending human talent, systems thinking and new technology to generate alpha via actionable insights. New lenses are being developed to look at markets from perspectives as diverse as politics, psychology and philosophy in this era of rising geopolitical risks. The third cluster entails forging distribution partnerships or having proprietary D2C platforms that combine predictive analytics as part of the product offering for self-directed investors. These goals are now being overlaid by efforts that deliver visionary business leaders with a can-do mindset, a client-centric culture that puts client interests above all else, and a deep talent pool capable of harnessing the potential of AI and GenAI. Only time will tell what kind of industry emerges as a result. Only time will tell what kind of industry emerges as a result. Figure 1.8 What will your business model aim to achieve over the next three years? Source: Citi/CREATE-Research Survey 2025 Interest alignment • Become clients' trusted advisor (66%) • Deliver proactive investment ideas & education (63%) • Adopt meritocratic fee structures (60%) Investment expertise • Have a deep talent pool for alpha generation (61%) • Blend intuition with technology (57%) • Master return drivers & correlations (49%) Distribution capabilities • Partner with top asset gatherers (60%) • Provide predictive analytics (51%) • Have proprietary D2C platforms (49%) “The rising personalization of risk requires asset managers to be their clients’ trusted advisor and tackle ‘wrong time’ risks.” “Cultures wax and wane. They require regular reality checks on non-financial KPIs like client satisfaction, complaints and churn rate.” Interview Quotes