The landscape for asset managers is evolving, and so are their strategic priorities, according to a Northern Trust survey of 300 global asset managers conducted in early 2024. The findings reveal that managers are shifting their strategic focus inward, looking at ways to improve their investor experience. To do this, managers plan to sharpen quality and accuracy, deploy targeted distribution strategies, employ better data management and outsource functions that can help them do all of this more easily.
The survey showed that asset managers are focused on nurturing the client relationships they have already established to provide the best value to their investors. They want to offer a high-quality product, and a big part of that comes down to having accurate data, consistently. The majority of our respondents (72%) see enhancing quality and accuracy as a top strategic priority for the next two years. It’s a two-way street, because investors must be able to understand their managers’ decision-making, and having access to consistently accurate and consumable data enables this. As managers continue to focus on their clients, enhanced quality and accuracy can help them accomplish their goals.
Another finding of the survey was that managers are employing a ‘right product, right fit’ strategy, leaning in to known successes. To do this, they are honing their distribution strategies and deploying technology to aid in decision-making and analytics. 83% of the respondents plan to change their product strategy in the next two years. Another 76% plan to invest in technology to focus their distribution channels. Respondents have shifted their attention to supporting asset classes like infrastructure, digital assets, and real estate. However, moving into these new asset classes can increase complexity, and many are seeking a ‘holistic’ operating model they can utilize across asset classes to maximize their efficiency. When deployed well, efficiency can translate to a better investor experience.
The common thread woven into many of the challenges asset managers face today is data – data enables effective decision-making, and managers have to get it “right”. Data sourcing is one of the top challenges that managers face when launching new products. This can impact the investor experience, because managers must be able to provide transparent and digestible insights to their investors. Asked how they plan to address data challenges in the next two years, 57% of our respondents said they intend to engage a specialized data service provider, while 45% will seek a custodian’s outsourced data solutions. They are also looking to new technologies, such as AI, generative AI and cloud adoption, to help address their challenges.
And while, according to the survey, some managers may have de-emphasized cost control, those that are focused on reducing costs look to outsourcers to augment their expertise across capabilities such as data management, securities finance, liquidity management, and trading. As asset managers look to evolve their product strategy, launch new products and enter new markets, they may need to turn to outsourcers to address the escalating challenges associated with data management and capital market operations.
When looking to support their front office, the results indicate a strong desire for enhanced data analytics capabilities, with 60% of respondents planning to leverage data tools to improve decision support and analytics infrastructure. Additionally, there’s a clear shift towards outsourcing expertise. Forty-eight percent plan to utilize a component outsourcing strategy. Respondents acknowledge their own limitations in expertise and resources, and view partnerships with outsourced providers for non-core activities as a way to better support the front office.
Asset managers are navigating a difficult landscape, and their priorities are changing with it. Their approach to growth is evolving, with a recalibration towards their investors to enable a ‘right product, right fit’ strategy. To do this, managers need high-quality data and analytical tools. As their competition continues to heat up, managers are leveraging outsourced services, advanced technology, and improved data management to enhance their investors’ experience.
