Event Summary: The Future of Asset Management

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Asset Management

Nandini Rao

Nandini Rao

Investment Writer

Copylab


Six supertanker trends that are likely to transform the industry

Amin Rajan – the CEO of Create Research – talked about the changes ahead for the asset management industry. These include:
• The rise of passive funds – This is likely to be accelerated by rates being “lower for longer” and the inclusion of these in core portfolios.
• Increased regulation – Regulators are keen on ensuring investors get value for money, and in some cases, this involves passive funds being mandated for retail investors.
• The rise of ESG – The sustainability element is becoming almost mandatory. Moreover, ESG is increasingly being used as a tool for managing fat-tailed risks.
• Demographic shifts – These include the much-talked of rise in millennials, a shift which is likely to foster the popularity of ESG investments, while adding to the pressure on intermediaries. With the rise in defined contribution (DC) schemes and the aging populations in many developed economies, the demand for good “decumulation” products (which let you use savings to fund your retirement) is likely to rise.
• The digitisation of the investment value chain – This trend is likely to increase the power of networks. Companies are increasingly looking to combine machine learning with factor investing.
• The gradual bifurcation in distribution – Direct selling is on the rise. Intermediaries are likely to find the advisory channel a lucrative means to add value for their clients.

How are investors and companies likely to respond to these changes?
• Investors are likely to want to know more about asset managers’ investment capabilities, especially in a low-return, high-volatility environment, where products which can help clients capitalise on the downside are likely to be popular.
• Asset managers need to take steps to foster the alignment of their interests with those of investors. As well as providing fit-for-purpose products, this should involve ensuring investors understand the time horizons of the products they invest in.
• Finally, companies need to adopt a more client-centric focus. Make marketing content more educational and increase client engagement to raise awareness and manage investors’ expectations. Asset managers also need to demonstrate how their brands live up to their promises.

The retail-institutional divide – Magnus Spence, Director at Broadridge Financial Solutions
• Asset managers have a different marketing strategy for retail and institutional clients based on perceptions that both segments view products and pricing differently.
• Some segments have both retail and institutional characteristics.
• The dividing line between what constitutes a retail investor and what constitutes an institutional one is changing as the market is becoming increasingly institutionalised.
• Scale, rather than whether clients are retail or institutional, determines buying behaviour. For example, large clients need tailored strategies, even if they fall into the retail category.

Content may be king, but what about advertising and sponsorship?

John Cooper from Editions Financial and Richard Watts from Kurtosys made the case for content. Their key points were as follows:
• In the industry, it is easier for a company to use content to set itself apart from its rivals, rather than advertisements or sponsorship.
• For firms who get the right content across, the rewards are rich.
• Content can be used across various touchpoints and channels, but consistency is important.
• Content shouldn’t be overly sales focused, as this is likely to put off clients.
• When it comes to content, originality is important. Focusing on a niche segment can pay off.
• Targeted content is important.

Kirsty Maxey from TeamSpirit talked about why advertising is important:
• Asset managers are struggling to get their content out – advertising can help here.
• Both content marketing and brand building drive long-term growth and profit.
• Creative campaigning is important as is the consistency of the messaging and product positioning.
• Advertising can help a company increase its reputation as well as market share, enhance the effectiveness of marketing campaigns and make its products less price-sensitive.
• Asset managers need to expand their advertising beyond price and performance parameters.

Jos Stokhuyzen from CSM highlighted why sponsorship can help:
• Companies can use sponsorship to strengthen their brands.
• Sponsorship can help companies reach potential clients through their passion points, setting the stage for emotional connections. This can also build trust.
• Successful firms are using sponsorships to make partnerships.
• Sponsorship is cost effective.
• The benefits can be long-lasting.

Winning in the boardroom – Vincent Hooplot, Hooplot Associates
• Typically, it is difficult to quantify the results of marketing activities.
• Marketers should focus on understanding executives’ challenges.
• High-level trends are what keep executives awake at night, rather than detailed figures such as cost per click.
• Marketers should focus on addressing these trends, particularly those that have the potential for transformation
• Technology can be used to capitalise on key trends.



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