GLOBAL - The recent economic crisis has forced asset managers to rethink their priorities away from sales and product development in favour of risk transparency and client information delivery, suggests a study conducted by Investit.
A regular six-monthly meeting with investment management officials hosted by Investit found the key priorities for fund managers has evolved since just prior to the credit crunch in July 2007 away from investigating new investment strategies towards reassuring clients about the status of their investments and delivering information to support it.
The poll completed by 30 CEOs who have a global view of asset management suggests they may have learned lessons from the crises of the last two years as firms have found there is a need to distinguish between service and production, while data and asset management are now back on the agenda as priorities in that service delivery.
Firms are asked each six months to state what their priorities are from a long list of product-focused options to investor services, governance and corporate management issues.
Whereas in July 2007 the CEOs said their priorities were supporting alternatives, expanding into new regions, mergers and acquisitions and CRM systems, and risk systems were a low priority, that has shifted over time to prioritise data management, market and counterparty risk, client reporting, regulatory change and cost-cutting initiatives.
The change in priorities does follow a pattern of developments within the credit crunch cycle, as priorities slowly evolved by July 2008 to focus on OTC derivatives, expansion into new regions and supporting alternatives.
By January 2009 the full impact of the Lehman collapse had kicked in, and the CEOs' key priorities were focused less on new product development and more on the growing call from clients for information about their investment and their security.
That said, John Robertshaw, principal at Investit's operations practice, said although the order of priorities has changed over the past two years, actually developing a plan of
action could take some time.
"The concern about data management has been a perennial issue and one expressed by all stakeholders in the investment management value chain. However, we have not yet seen any material improvement and I will hold my judgement to see if we will be saying
the same things about data management in 12 months time," said Robertshaw.
Interestingly, another ‘confidence' survey of the same respondents suggests confidence in the future of these companies has improved over six months, despite current economic conditions.
When asked in January "how confident does your firm feel at the moment?" 11% said the business was "braking hard" while 30% claimed they were "easing off the power", 57% aid they were "cruising ahead" and 2% said they were accelerating fast.
By July, none of the respondents said they "braking hard" and 23% said they were "easing off the power", while 7% said they were accelerating and 70% felt business was "cruising along".
Despite this apparent improvement in confidence, however, Investit predicted the true picture is very much dependent on what might have happened in that week and whether that has altered business delivery, as the overall picture suggests fund firms are no longer conflicted about the direction of business, suggested Peter Ellis, managing director at Investit.
"There was definitely a more positive message at our conference this July in terms of confidence about the future. About 41% of the participants expected things to improve within the next 12 months compared to about 27% at our conference in January," said Ellis.
"I think this is because six months ago the industry was still in shock over what happened in the fourth quarter of 2008 with the collapse of Lehman. Now that the crisis is being dealt with and executives have had time to digest what has happened, they are adopting a more strategic view," he added.
Investit is a UK-based management consultancy firm with five specialist operations advising fund management firms, alongside the Investit Intelligence division which conducts research.
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