Investment managers are prioritizing the quality and accuracy of their products to enhance the investor experience and grow their distribution in the next two years, according to a survey of 300 global asset management firms sponsored by Northern Trust.
The Northern Trust white paper The Next Chapter in Driving Growth in Asset Management 2024 illustrates how asset managers are enhancing the investor experience through increased quality and accuracy, targeted distribution strategies, better data management and outsourcing.
Less than half (46%) of respondents identified controlling costs as their top strategic priority in the next two years, while 72% chose enhancing quality and accuracy, improving the investor experience (70%), and expanding product set (60%) as their top concerns.
The results marked a shift from manager priorities in Northern Trust’s prior survey in 2022, when just 45% of managers identified enhancing quality and accuracy as the top priority, behind efficiency and cost controls.
“Asset managers are focused on honing their distribution channels, and having access to high-quality, consistent data is crucial in driving those decisions,” said Ryan Burns, Head of Global Fund Services (GFS), North America.
“It’s important that managers have a deep understanding of their clients’ needs so they can find them the right product at the right time, because there is no one-size-fits-all solution.
The survey, conducted for Northern Trust by WBR Insights, highlighted that 83% of respondents plan to change their product strategy in the next two years, with a focus on meeting diverse investor needs.
“Managers who over the last few years have focused on removing cost from their operating models have recalibrated their focus toward their investors,” says Caroline Higgins, Head of Global Fund Services (GFS), APAC. “In the Australian market especially, managers are tweaking their strategies to service an aging demographic. As the demographics of investors change, they must be flexible with product offerings to meet the demand.”
While managers continue to face cost pressures, the impact of T+1 and a challenging economic environment are influencing the ways that managers approach outsourcing non-core activities. Namely, 59% of respondents are looking to outsource securities finance and a similar trend emerges when it comes to liquidity management, trading and foreign exchange.
Data management was overwhelmingly identified as the area where asset managers are considering outsourcing (83%), and almost half (42%) of respondents identified their biggest challenge with data management as ensuring that the data is easily understandable/consumable and insightful.
“Many of the challenges we’re seeing today come back to the same core issue: data,” says Clive Bellows, incoming President of Northern Trust in Europe, Middle East, Africa (EMEA). “As a result, managers are looking to leverage new technology, and the survey found that many managers are looking to enhance their data management strategies by engaging their custodians for outsourced solutions.”
The white paper The Next Chapter in Driving Growth in Asset Management 2024 can be accessed here.
