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SGSS Global Investment Management Survey - Conclusion

31/10/2018

As a conclusion to this survey aiming to identify the main trends shaping the buy-side landscape in 2025, three preeminent ideas have emerged.

Firstly, large players are well placed to benefit from the main evolutions, and will continue to increase market share through mergers, acquisitions, fee competition and the ability to invest
in new strategies as well as new asset classes. Consequently, times will become harder for mid-size generalists.

Secondly, size is not the only driver of this new world, and it is clear to everybody that the ability to leverage new technologies and promote highly specialised expertise are key factors for success. Regarding this aspect, there is clearly room for data management experts, robo-advisors promoters, UX specialists but also for conviction-driven investment managers, i.e. players with strong business models promoting value propositions with unique tipping points.

Lastly, all respondents stressed the issue of customer knowledge. Building large databases on clients enables patterns to be discovered and behaviour to be predicted. At the same time, web-based platforms make it easier for consumers to search for products, compare and learn from other customers and suppliers. They also remove barriers between investment managers and end
clients, notably retail, allowing mass-marketing as well as tailored relationships with investors.

All in all, it is likely that nobody has discovered the definitive solution that would secure development in this highly challenging and ever-changing business context. What is sure, though, is that we collectively have the keys. Besides, it is crucial to select the right partners that will help make and deliver the best choices.

 84% of respondents consider digital and new technologies as the key driver of their business strategies. Nevertheless, it is worth mentioning that few of them have already a clear view of impacts in their activity and therefore of the roadmap they need to implement;
 they put at a similar magnitude (82%) the regulatory burden that has been impacting their business for the last 10 years but they still require investments and skilled resources and, therefore, the support of their business partners.

On the contrary, Brexit is a no-brainer, which does not mean that they think it will change nothing, but rather that they will be able to adapt!

Considering those challenges, business orientations defined by our panel demonstrate a clear commitment to alter their strategies and harvest all market opportunities:

 20% of Asset Managers stated that they have a retail distribution strategy to strengthen or launch;
 42% of interviewees want to diversify their investments, with passive investment, illiquid assets and loans being prioritised over Private Equity/Real Estate;
 ESG and Carbon-free investments are confirmed as becoming mainstream: 39% of those surveyed mentioned it as a key issue in their management strategy;

Profitability stakes are not forgotten and, in this matter, two trends are particularly outlined:

 Market consolidation is perceived as being a key catalyst of today’s evolutions by Asset

 Managers: 42% of them evoked it, the mid-size segment logically being the most heated part;

 Finally, the outsourcing of operational functions is endorsed by 64% of respondents, setting Middle Office or regulatory reporting at the top of their list in this domain.

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