It is hard to believe that it has been an entire year since the COVID-19 pandemic forced asset managers fully into the realm of virtual selling with a heightened focus on digital engagement. Some firms were better prepared for this transition than others. But overall, asset managers managed to pivot quickly and flourish amid the unprecedented environment of uncertainty.
Where are we today? There are several trends that are defining the intense and rapid acceleration of disruption of the asset and wealth management industry:
- The acceleration of digital and virtual engagement, which in turn is driving operational changes to the sales, marketing and service models of asset managers
- The fragmentation of market demands and the increasing threat (and opportunities) around new product needs (and innovation) in the intermediary market
- An evolving workforce, which requires careful attention to culture and talent management
So what comes next as the world slowly transitions out of the COVID-19 pandemic? What do firms do in the face of change? We believe that there are three broad foundational elements that distribution organizations need to account for in order to increase their efficiency, effectiveness and focus, and ultimately grow assets in an increasingly challenging environment.
- Identify and prioritize: You cannot create an efficient path to cost-effective asset growth unless you have a clear picture of where you want to go. Having a clear picture of the destination also means knowing which customers are most likely to help you reach those goals. An intense focus on where to align your capital resources (from the home office to the field), understand their unique needs/demand, and customize engagement and delivery of investment solutions will separate the winners from the losers. This can only be done with a well-defined and purposeful business intelligence strategy (data and sales enablement).
- Align resources: Identifying the most valuable relationships—from the home office to the field—is a good start. But as firms evolve their distribution models—integrating business intelligence, sales and marketing to customize their value proposition to the intermediary community—they must also align their distribution resources to support their best relationships and opportunities. This includes aligning both sales and marketing coverage to the value, behaviors and preferences of each segment. In the future, every salesperson will be a hybrid to some degree; in-person meetings will remain important, but remote and virtual engagements will increasingly become standard practice for sales organizations. The “virtual first” philosophy needs to be not only embraced, but also refined to each asset manager’s unique position in the market.
- Incentivize and measure: The right strategy is essential to cost-effective asset growth. But even the best strategy needs good management to align teams around shared goals, monitor results, and make changes where necessary. To execute on a “one team, one goal” approach, metrics and incentives need to be aligned across distribution organizations. Firms need to measure what matters and move away from archaic sales-based KPIs and reward mechanisms. Focusing on metrics that deliver real impact, and aligning those metrics across the distribution organization, can ensure firms stay on track with their strategic goals.
Over the last few years, executives from virtually every firm have mentioned a desire to modernize their distribution operations and compete more effectively in the ever-changing landscape of the asset management industry. Starting to leverage data and technology has helped. But firms also need to make significant changes in strategy and culture—which are often the hardest types of change to create.
The COVID-19 pandemic gave firms the rare opportunity to jumpstart their modernization, by forcing them to rely more heavily, or even entirely, on virtual and digital engagement.
Now, firms need to institutionalize the practices and processes that proved to be most efficient and effective across their database of advisors to create a new “status quo” of strategy, operations and culture—instead of going back to the old one.
Combining data, technology and alignment of critical capital and resources in the more sophisticated and precise ways outlined in the three steps of this report will enable firms to keep building on those gains—and deploy resources much more intelligently to grow assets under management.
Written by Matt Fronczke
Senior Director, Strategic Business Consulting