What's next for asset management? Private markets, tokenisation, competition, and more!

The asset management industry is currently navigating a complex landscape characterised by economic and geopolitical challenges. However, these challenges also present unique opportunities for asset managers willing to adapt and evolve. Gemma Cowie, Head of Global Growth Solutions, Data and Analytics at Broadridge, shares how.

Current state of asset management

The average asset manager faces a shrinking profile, yet there remains potential for growth. Despite a forecasted global demand model indicating a modest 2.5% organic growth over the next three years, areas of selective expansion are emerging. Notably, demand is increasingly driven by individual investor segments, with a pronounced shift towards defined contribution models. This transition brings changes in asset class investments and fee structures.

Additionally, retail investors are being influenced by governmental strategies prompting them to shift savings from cash to market investments, aiming to bolster economic stability. As a result, unlocking the potential of private markets and wealth access becomes crucial, especially as fewer traditional stock exchange listings occur.

Emerging markets trends and opportunity

Among the growing segments, Asia stands out with a projected 10.7% growth over the next three years, highlighting a vital area for asset managers to target. Such geographical shifts necessitate a strategic focus on competitive opportunities, considering the evolving end investor.

Technological integration: AI and data

The integration of AI and technological innovations plays a pivotal role in modern asset management strategies. Data, likened to the new oil, is fundamental in driving business efficiencies and determining market resonation. The industry's complexity has increased even as fee attainability diminishes. Understanding competitive positioning and market resonance relies heavily on data analysis.

Technology facilitates execution, and AI usage has become widespread, with numerous pilot projects currently underway in the asset management sector. The ability to connect diverse data sets is creating new narratives and stories that help asset managers make informed strategic decisions.

Challenges and industry adjustments

Consolidation and increased competition are prevalent in the industry, particularly with private equity involvement in wealth management. This trend necessitates stronger client relationships and transparency in portfolio value communication. Personalisation and customisation, driven by AI, are becoming essential tools in meeting client expectations and managing business efficiencies.

Future innovations: Tokenisation and digital connectivity

Looking ahead, tokenisation presents potential opportunities for creating diversified and personalised investment portfolios. This approach can offer cost efficiencies and diversify exposures that traditional mutual funds cannot. The digital connectivity of investors is also critical for asset managers staying competitive in this evolving landscape.

Tokenization may transform future discussions in the industry, as recent data indicates its growing relevance. The digital connectivity of markets and investors is poised to become an integral focus for asset managers.