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Asset Management CEO’s must adopt new skills or face reduction in ‘size, profitability and influence

April 4, 2019 by Lape Runsewe

Asset Management CEO’s must adopt new skills or face reduction in ‘size, profitability and influence

The asset management leaders of tomorrow need to adopt new skills in order to develop a competitive advantage, in an environment where it is predicted one-quarter of fund firms risk becoming unprofitable by 2028, according to research carried out by Investment Week.

The research found that between 2014 and 2017, only 30% of asset management firms in the US and Europe benefited from profitable growth, with the median peer reporting 4.6% organic growth, 12% revenue accretion and 7% cost expansion. Meanwhile, 35% of firms engaged in cost-cutting to no avail: the median peer could only shrink costs by 0.4%, while revenue dropped 6% and assets shrank by 3% through redemptions. The remaining 35% are slowly melting while searching for growth.

The research also adds that the firms with the most competitive advantage will be those that embrace and understand how to strategically use advancing technology to boost and drive efficiency and support research and development.

As Digiterre continues to work with the leading lights in the asset management world, we are also seeing a move towards greater insights and the need to drive efficiencies through these businesses. As mergers and acquisitions are predicted to increase over the next 5 years (as we have seen with the likes of Aberdeen Standard) the need to be able to have a ‘single view of the truth’ increases as these businesses become larger and the pressure to cut costs intensifies.

 

To learn more, contact robs@digiterre.com

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