INTERNATIONAL: Asset Managers should brace for fundamental change

Tuesday June 23 2009

A recent survey conducted by CREATE-Research which aimed at determining what the investment landscape will look like, once the worst of the current crisis is over, has revealed that mainstream assets will outweigh alternatives in client choices.

The report which takes into accountthe views of some 225 asset managers and pension funds in 30 countries reveals that products offering capital protection and tax efficiency with periodic opportunistic forays into absolute returns or cash products will become the items of choice for retail clients.

Asset Managers are witnessing their business models shifting towards a variable cost model in which costs are linked directly to revenue via variable pay. Strategic outsourcing and as well as maintaining a slimmer product range is also becoming the norm amongst asset managers the survey has revealed.

Asset Managers are enhancing their business model by outsourcing their front, middle and back office activities to create a distinct craft focus at the investment end; customisation at the distribution end; and standardisation at the administration end are just some of the measures being taken.

Of those surveyed, 45% of the respondents think it will not be before the first half of 2010 that the worst will be over and many still expect further upheavals beyond 2010 owing to the long lasting effect this crisis will have on the economy.

When questioned on the industry `s growth prospects in the next three years, there was more pessimism than optism with the majority of the respondents expecting limited progress.

Professor Amin Rajan, Author of the Report and CEO of CREATE-Research says regulatory change is going to be inevitable and the report further reveals that regulators are and will continue to take this opportunity to overhaul the regulatory framework which lead to increased costs.

Click on the above link to download the report.