Disruption across the asset and wealth management industry has forced industry players to navigate enormous upheavals over the last several years. Despite this disruption, many firms have been slow to adapt—or at least adapt quickly—until the COVID-19 pandemic forced firms to radically change how they function at the most basic levels.
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Asset managers that assume every advisor in a distribution channel (e.g., “Wirehouse” or “RIA”) is the same are missing opportunities to better connect with their customers. Enhanced data and segmentation can help segment advisors for better coverage, more meaningful engagements and an improved customer experience. In our advisor surveys, conducted in association with Horsesmouth, we ask advisors across the wealth management landscape about their portfolios, their experience with asset managers’ product offerings and wholesaling teams, and other topics relevant to trends in distribution. In our most recent survey, we asked advisors “Please select what best describes your operational model/practice affiliation” and compared their answers to the ones they gave when asked “What type of firm do you work for” and found several variations.
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Despite the fact the markets have largely recovered most of their losses from late Q1, it is likely the rest of 2020 will remain challenging for passive and active managers alike. A variety of product wrappers, including traditional mutual funds, passive and smart beta ETFs, and SMAs will be tested. Already, there are once again calls to examine whether traditional mutual funds that invest in hard-to-trade assets such as high yield bonds should allow daily investor withdrawals.
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The COVID-19 pandemic has had a dramatic impact on the day-to-day activities of asset management salespeople. While the shift to virtual-only advisor meetings is the most obvious change, sales leaders have also had to figure out how to manage remote teams effectively and how to keep morale and engagement high amidst challenging times.
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Client and performance reporting is central to a manager’s ability to compete and differentiate; investment performance and quality of service are consistently ranked at the top of plan sponsors’ wish lists. However, these two functions are less automated and scalable than other less-differentiating functions. Adox Research data shows that a majority of firms struggle to exceed automation levels of at least 60% for these mission-critical activities, which clearly leaves value on the table in terms of automation headroom. If firms were able to reach 90% or higher automation rates, costs would go down, but more importantly, the risk of errors and customer dissatisfaction would be reduced.
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Amidst the COVID-19 pandemic, asset managers have done an excellent job of adjusting their service and communication response—in both strategy and execution—even if some scrambling has been involved.
In speaking with executives, following press coverage and observing third party communications, we have spent significant time thinking about our clients working through “digital transformations.” Although this pandemic brings more pressure, the timing enables firms to strategize and tactically plan their digital transformations.
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Investment performance teams require a comprehensive and highly customizable performance and attribution solution to provide informed analysis to their investment managers. Right now, investment analysts are poring over recent market activity and comparing the results to ex-ante (forecast) risk models employed to predict likely outcomes during extreme events. To conduct this analysis, accurate, detailed and meaningful ex-post (actual) performance and risk results are critical.
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There have been several changes to industry regulations that can help better position firms in a post-COVID-19 environment. Recently, we asked a panel of SS&C experts to discuss these changes facing the financial industry. While firms have universally shifted to a remote, work-from-home model, our experts outline potential regulatory impacts.
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