Asset management is continuing to evolve at a rapid pace, and 2024 does not appear to be slowing down this progression whatsoever.
The Investment Association released their annual report ‘Investment Management in the UK’ back in September last year, and it is chalked full of statistics and information related to the challenges facing the sector in the previous year, as well as throughout the decade.
Notably, the report reveals that total AUM in the UK stands at £7.7tn, second only to the US worldwide.
Upon further reflection of the report, three areas appear to stand out as key contributors to the development of asset management. These are:
- Technology
- Regulation
- Pricing
These three areas all need to be considered by fund managers if they are to be successful in the foreseeable future.
Enhanced technology in asset management
There is no doubting the fact that technology has and will continue to greatly affect most professional industries, and asset management is no different.
While asset management has typically been slow to adopt and embrace the latest innovation compared to other sectors like banking, the largest corporations are using it to their advantage. According to Deloitte, asset management firms that place technology at the centre of their distribution strategy can enjoy dramatic improvements in efficiency compared to firms that do not.
This, of course, is down to the fact that there is a vast array of software available for businesses to be able to store, manage and distribute data seamlessly. Pair this with increased metrics and analytics related to specific management funds, and technology can prove to be extremely beneficial for companies of all sizes.
Regulation in asset management
Regulatory changes and considerations are disrupting the wider investment management sector more than ever.
Following the announcement from the Securities and Exchange Commission (SEC) that they had voted to modernise the regulation of exchange-traded funds (ETFs), firms should find it easier to navigate operational barriers when it comes to allocating resources between processes, whether related to compliance or not.
In light of this, we are beginning to see a significant shift in operations. In fact, Patrick Henry, Vice Chairman & US Investment Management Leader at Deloitte even commented: “Regulatory change is driving many firms to commit resources to evaluate and change their operating models to meet their plans for growth and efficiency.”
Increased pricing pressures in asset management
According to PWC, fee pressures, product innovations and the continuing realignment of existing distribution channels are creating several challenges for fund management businesses all over the world, particularly when it comes to profitability.
Specifically, when it comes to rising fees and increasing pressures from stakeholders, it is critical to the continuity of any firm to ensure that their operating model is designed to meet growing expectations and investor demands in order to survive. Merely being reactive to market developments is not enough.
MDA Training’s approach to fund management training
At MDA Training, we believe that being passive and reactive to market trends and developments is not enough. That’s why we have created an interactive, simulation-led training programme ‘Introduction to Asset Management’.
In our simulation, employees step into the shoes of a fund manager and experience the challenges they face first-hand. Our tried and tested approach enables key learning to be embedded through short, user-led discussions.
In the simulation, teams attempt to outperform the benchmark and the competition by investing client money and making asset allocations over a specific period. The decisions they make are based upon real-time economic and market information.
Following the simulation, we are able to sustain the learning by bringing it all together and analysing the performance of each team, linking it back to the model of the fund management business they work for. For more information, please download our brochure here.
While the asset management sector continues to undergo a significant shift globally, there is no doubt that the strongest corporations will be adjusting their operational models and processes to stay in line with increasing demands and ultimately reduce costs.
As the Investment Association report summarises, the UK remains one of the largest centres of investment management in the entire world, showing no signs of slowing.