Rebooting the global asset management industry

Rebooting the global asset management industry 41 Key Findings a. Becoming Trusted Advisors The role entails being in clients’ inner circle of confidants and requires: • offering impartial proactive investment ideas, research outputs and financial education • adopting meritocratic incentive models with equitable sharing of pain and gain • creating in-house independent client protection panels that safeguard client interests • performing regular pulse surveys to understand clients’ risk tolerances and elicit feedback on outcomes. b. Forming Distribution Alliances This entails having a good track record of investment performance and client satisfaction that earns shelf space on popular distribution platforms. It means: • forming alliances with top distributors and asset gatherers • providing a suite of predictive analytics to self-directed investors • having a proprietary D2C platform to broaden the client base. c. Boosting Investment Expertise The cult of alpha is likely to remain alive and well in this era of high geopolitical risks. That means: • having a deep talent pool with actionable insights into the intersection of economics and politics • blending human ingenuity with data, technology and models • adopting scenario-based systems thinking in the investment process. d. Key Growth Engines Today’s investment scene is shrouded in unusual uncertainty that favors broad diversification. Growth engines are likely to be somewhat muted. On the asset class side, they are likely to include: • alternative investments • U.S., European and Asian equities • sovereign bonds. On the geographical side, they are likely to favor elements of: • U.S. assets • European assets • Asian assets. Key Messages To capitalize on the great wealth transfer, asset managers are acting to improve performance and client experience in order to access top-rated distribution channels. Among small and medium-sized managers, some expect to remain independent on account of their proven investment and client service excellence; others may well become part of larger asset managers operating a multi-boutique model. “There are no shortcuts to any place worth going.” Beverly Sills