德勤-2019年投资管理行业展望（英文）-2019.2-24页_2mb

2019 Investment Management Outlook Summary

Core Content

The 2019 Investment Management Outlook highlights the evolving landscape of the industry, emphasizing the balance between opportunity and challenge. With the end of a long bull market, investment managers face increasing pressure to manage costs, deliver value, and adapt to changing customer expectations. The report outlines key strategies for growth, operational efficiency, and customer experience enhancement.

Main Viewpoints

• Investment Management is in a period of rapid change, driven by shifting investor preferences, margin compression, regulatory developments, and technological advancements.
• Passive funds are growing rapidly, with the potential for global ETF assets to reach $25 trillion by 2025.
• Active managers face challenges in demonstrating alpha generation, as most underperformed their benchmarks over the past decade.
• Private equity (PE) has seen strong performance, leading to increased capital inflows and record dry powder, especially in the US.
• Customer preferences are diverging, with younger investors (Millennials and Gen Z) favoring digital and mobile-first platforms, while older segments prefer professional advice and transparency.
• Regulatory fragmentation remains a challenge, particularly in the US, Europe, and Asia, with firms needing to build regulatory-ready organizations.
• Technology is disrupting traditional models, with new entrants leveraging digital capabilities to offer low-cost services and compete for younger investors.
• AI and alternative data are becoming critical tools for enhancing investment decision-making, portfolio customization, and customer service.
• ESG investing is on the rise, driven by social awareness and regulatory changes, with 90% of US investment managers planning to integrate ESG into their product development.
• New pricing models, such as the "fulcrum fee" model, are emerging to align fees with performance, offering benefits for both investors and fund managers.

Key Information

Growth Strategies

• Organic and inorganic growth are both being pursued by investment managers.
• Strategic acquisitions are common, especially in the ETF space, to enhance capabilities and market share.
• Minority stakes are also used to enter new markets and diversify distribution channels.
• China and Asia Pacific are key growth markets, with regulatory changes and a growing middle class driving interest in investment products.

Operational Efficiencies

• Cloud migration is a major trend to reduce fixed costs and increase operational scalability.
• Advanced analytics are being used to process structured and unstructured data, improving decision-making and risk management.
• Talent development is crucial, especially in data science and technology integration.
• Compliance processes need to be aligned with new regulations, and firms should leverage existing systems where possible.

Customer Experience

• Digital transformation is essential to meet the expectations of younger investors and institutional clients.
• Customized portfolios and real-time insights are becoming standard, driven by AI and alternative data.
• Shelf-space rationalization is a key tactic for mutual fund distributors to remain competitive.

Regulatory and Tax Developments

• Regulatory changes are increasing compliance complexity, especially with the introduction of new rules and the impact of Brexit.
• The 2017 Tax Act has influenced PE strategies, including the use of equity capital and asset leasing instead of debt.
• Robo-adviser models are being regulated in China, with potential for similar actions in other regions.

Predictions for 2019

• Proprietary indexing will increase, leading to lower expense ratios for ETFs.
• Alternative data will become more widely used by both PE and long-only managers.
• Fulcrum fee models are expected to gain traction, especially among active funds.
• Brexit-related regulatory changes will impact the UK's role as a financial hub, potentially shifting operations to EU cities like Dublin and Frankfurt.

Key Actions for C-Suite Leaders

• Invest in data storage and analytics to enhance alpha generation and decision-making.
• Be aggressive in acquiring new capabilities aligned with strategic goals.
• Adopt a "zoom out/zoom in" approach to technology investments, balancing long-term vision with short-term execution.
• Build trust among stakeholders when implementing new technologies.
• Fine-tune compliance processes to align with new regulations and improve operational efficiency.

Conclusion

In 2019, investment management firms must navigate a complex environment by focusing on growth, operational efficiency, and customer experience. The integration of technology, particularly AI and alternative data, will be central to success. At the same time, regulatory and tax changes, especially in the US and EU, will shape business strategies. Firms that adapt strategically and execute effectively are likely to thrive.