Ask any business leader about their strategic objectives, and their answer will likely include commentary about achieving year-over-year growth and managing margin. But defining the goal is the easier part―the challenge is in the execution. This is especially true for more mature industries like asset management, where competition is strong and there is a high degree of product similarity.
To better manage margin, asset managers have historically leaned into cost management, looking to drive improvements in operational and process solutions and negotiate lower fees. Margins may temporarily improve, but absent growth, they will eventually plateau. Those firms that maximize outcomes across both growth and expense are the ones best positioned to succeed.
Growth has its own set of increasingly complex and multi-dimensional considerations. It is no longer about having the best performing fund or the one with a competitive expense ratio. Growth aspirations are now embodied in changes in the product roadmap (including moves towards active ETFs, model portfolios and separately managed accounts), and the diversification of asset classes (in particular, the move to private assets). But beyond that, long-term sustainability requires asset managers to re-visit what distribution channels they target―wealth platforms, direct-to-consumer and advisors/intermediary―as well as how they interact and transact via those channels through the use of AI and digital tools and portals. These changes will redefine the registers that asset managers run and the types of account structures they service.
It’s increasingly about simultaneously having the right product, available through the right distribution channels, that meets the needs and expectations of any given market and buyer. It’s about having products of all types and allowing investors to build model portfolios around their specific needs using instruments and investments of all types. Asset managers need to cater to the whole demand to continue growing. But given the variables of a myriad number of funds, distribution channels and buying patterns, how can asset managers customize the most effective product and distribution strategy? And how can they do that in a way that it is targeted to each market’s customs and practices?
Many asset managers are finding that the secret to their growth is looking at the role of their transfer agent in a new way. They are taking a forward-thinking, holistic, solution-based view that isn’t limited by platform or channel. Leading transfer agents like ÌìÃÀ´«Ã½ are poised to fuel growth for asset managers by uniquely providing technology and connectivity with services that bridge institutional, digital and individual investor channels. Transfer agency is also the one function that touches the end client and the client experience (taking a key role in brand reputation and image). As such, the transfer agent should be viewed as more than just a vendor or outsourced solution. Transfer agents like ÌìÃÀ´«Ã½ also have access to shareholder data, which allows them to deliver a client book of record (CBoR) that can deliver insights on what products are bought, where and through which channels.
And that data can be used in multiple ways. It can deliver insights to better define product development and the types of products that advisors promote―and investors want. It can be used to understand how funds are bought and who is selling them. This specialized information delivers a by-product benefit, with asset management firms able to optimize their marketing efforts. Relevant data on what products are viable in a specific market, and/or through which distribution channels and to what demographic means better allocated resources. Data and AI can also be used to simplify advisor interactions and reduce the time spent on administration. Having data about investor patterns and preferences immediately accessible or even pre-populated means less time on searching and rekeying information. The role of the TA is unique, and those who support multi-channel capabilities across asset management/funds, life and pension/retirement, funds and personal wealth/brokerage are even better positioned to aggregate information and data and unlock its potential.
It’s never been clearer that growth―increasing AuM―requires a combination of knowledge, flexibility and a set of customizable portfolio options around the end investor. True, sustainable success lies in product innovation, distribution evolution and business transformation, which is amplified through a partner that can support these ambitions.
ÌìÃÀ´«Ã½ is setting the industry’s transfer agency standard for investment operations and administration, where leading technology, product and delivery innovation and exceptional service underpin all we deliver. Learn how we’re helping asset managers redefine their delivery models across any market, sector, fund structure, product and distribution channel by reading our "Confronting the Brave New World of Asset Management: How to Get Ahead of Sweeping Change" whitepaper.