2021 Predictions for the Asset Management Industry

  • Kevin O’Neill, Global Head of Buy-Side at Fenergo

  • 21.12.2020 08:30 am
  • Asset Management

Asset management firms will to continue to focus efforts on retaining existing investors and capturing the new investors in 2021. Increasingly, some firms are making strategic moves to educate and attract younger investors.

Old guard vs. new guard in asset management

Firms arefocusing on redefining their distribution models to provide digital experiences that will appeal to tech-savvy usersvia robo-advisors and online investment advice. While theyounger generation of investors prefer to receive information digitally, they still like to have a bit of that old-fashioned “handholding” according to a recent report from Vanguard.  Because this generation is accustomed to using services such as Netflix and Amazon, they want their financial services experience to be accessible in a similar fashion so asset management firms need to ensure that they provide this low-touch, personalized experience digitally.

With an increasing number of investors (young and old) being concerned with how their investment strategy impacts the greater good(it’s not just about making money), firms will be looking to deploy more Environment, Social, Governance (ESG) investment strategies and placing more emphasis on Client Lifecycle Management (CLM) solutions to automate ESG ratings/scoring during investor or product onboarding.This shift will have an impact on regulation – particularly in Europe where ESG istop of the agendaamongst various regulatory authorities. We expect to see and hear more from global regulators on this topic in 2021.

No longer a nice-to-have;digital transformation will be bigger than ever

The global health and economic crisis will only accelerate transformation in the asset management and the asset servicing space.In circumstances such as these, firms will need to improve their focus on driving additional operational efficiencies anddelivering better digital client experiences, liberatingfirms to focus their efforts on more value-added tasks. To achieve this, they must fully embrace innovative and highly automated technologies that can helpdigitaliseinvestoronboarding workflows to enhance the client experience while streamlining regulatory compliance.Furthermore, a better investor onboarding experience will help drive more brand loyalty, secure longer lasting relationships and accelerate time to revenue for future up selling and cross selling opportunities.

Will this be the year of artificial intelligence? 

For most asset management firms, artificial intelligence (AI) hasn’t even begun to reach its full potential. In 2021, I expect to see more firms really start to properly investigate and discover the potential power of AI across many of their business functions and investment offerings. AI will be used to help managers drive efficiencies in customer onboarding through improved personalization andorchestration of all dataand documents as well as the automation of risk assessments/scoring and regulatory compliance rules aroundanti-money laundering (AML) and know your customer (KYC). AI will also help firms with the prevention of fraud and cyberattacks because it has the ability to identify irregularities in patterns that would otherwise go unnoted by humans.

Brexit’s impact

The UK market is critical for asset management firms with the financial industry contributing 12 percent to the UK’s total GDP. So, while financial institutions are faced with multipleBrexit-related regulatory changes, which will introduce added costs that they don’t need right now, expect to see them adopt and change. For example, at the end of the year, the free movement of people will end and be replaced with third-party country rules. This will have a massiveimpact on staff so, asset management firms will need to rethink how they retain and attract talent.

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