Challenges presented by the financial crisis have largely been met and firms need to focus on the positive long-term prospects despite short-term inhibitors to growth.
A new paper from SimCorp – ‘Pursuing Growth in Uncertain Times – Capturing the Long-term Opportunity’, presents new findings from analysts and industry experts about the main opportunities for growth in the asset management industry.
The report argues that many of the key pain points such as risk management, regulatory compliance, reporting and cost control, which have been consuming a significant amount of executive time since the onset of the Global Financial Crisis, are now being efficiently handled.
Despite short-term market turmoil and some ongoing inhibitors to growth, firms are in a position to devote more attention to long-term growth of their businesses – with a focus on assets under management (AUM), revenue and profitability. Growth in the latter two is seen as particularly important as, in contrast to AUM, this provides a true barometer of business performance.
“There is a developing consensus among buy-side firms that a focus on growth is coming to the fore once again,” says Martin Engdal (pictured), Director, Global Product Marketing at SimCorp. “In a climate of complex regulation, political and economic uncertainty, falling commodity prices and historically low interest rates, it could be argued that now is not the time for the industry to talk about growth. This would be wrong. Eight years on from the financial crisis, there is a strong case to be made to return to core investment activities and deliver long term growth.”
Steve Young, Principal at Citisoft, says: “The long term prospects for the asset management sector are very positive. But to realize the opportunities, there has to be an investment in re-engineering the technology infrastructure to meet the fast evolving needs of clients and regulators.”
The report identifies a number of trends underpinning the shift to a focus on growth. This includes changing demographics, which over the next 15 years will see more and more people living longer putting pressure on asset managers to meet greater disbursement obligations and client demand for products delivering higher returns such as exchange-traded derivatives, commodities and high yield bonds.
SimCorp's 'meta-study' amalgamates findings from industry analyst assessments, topical academic literature and other secondary research resources including, but not limited to, surveys and reports from Citisoft, EY, PwC, Boston Consulting Group, TABB Group and CEB Tower Group.