Industry Study Shows Asset Management Model Is In Transition

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2010-06-29 14:58

서울--(뉴스와이어)--An independent study from CREATE-Research, commissioned by Citi’s Global Transaction Services and Principal Global Investors (Principal), has found that asset management business models are in transition as the industry adapts to dominant investor concerns about liquidity and capital protection in a new, competitive landscape.

Based on a global sample of 237 asset managers from 29 countries, with combined AuM of US$29 trillion, the study entitled ‘Exploiting uncertainty in investment markets’ aims to provide an early indication of how asset managers worldwide are adapting to the post credit crisis environment, what the emergent business models will focus upon and where growth will be coming from over the next three years.

Respondents to the survey estimate that asset growth will be dominated by significant rebalancing of existing allocations; with the volume of new money in motion remaining small. Over the next three years, only a third of assets will mark fresh inflows from Sovereign Wealth Funds, national pension funds / central bank reserve funds and DC and DB plans. The rest will be switched assets from wholesale packagers, DC plans helped by the closure of DB plans and outsourced insurance assets. As a result, competition is expected to intensify further as money moves between geographic regions, asset classes and client segments.

With an increasingly professional, more diverse and more demanding client base, asset managers are already improving their product proposition by enhancing capabilities in asset allocation (54%), absolute return (21%) and product innovation (53%). Furthermore, they are improving service standards and raising technical collaboration with consultants and fund platforms, to broaden distribution.

Prof. Amin Rajan, CEO of CREATE-Research and the study’s author, said:

“The credit crisis is in the rear view mirror. But its after-shocks continue to rattle the markets and a thick fog of uncertainty is presiding over the competitive investment landscape. The small group of asset managers who suffered least had clear financial and non-financial alignment of interests with their respective clients, backed by operational excellence. As a result, asset managers are turning the spotlight on their own offering. They are attacking inefficiencies that have long tended to conspire against the interests of their clients.”

Currently, 50% of asset houses operate as integrated producers. According to the study, the number will decline and multi-boutiques will become the dominant operating model among medium and large asset managers over the course of the next ten years. Currently independent boutiques represent 7% and integrated boutiques represent 28% of the market. Creating a small company mindset in a large company environment helps to foster principles of meritocracy, personal accountability and leadership. Being more nimble and focussed, boutiques will be better placed to meet client needs.

Furthermore, over the next three years a fiduciary overlay will differentiate the winners from the losers. Success will require asset managers to exercise ‘duty of care’ by developing a fiduciary overlay that delivers five things: consistent returns, a deep talent pool, exceptional service, a value-for-money fee structure and a state of the art infrastructure. The overlay seeks a three-way financial and non-financial alignment between: asset managers and their clients; asset managers and their professionals; their professionals and clients.

Nick Lyster, CEO of Principal Global Investors Europe, said:

“It is apparent that the winning business model continues to be the one that puts clients first. In response, asset managers are targeting improvements which seek to position them as trusted advisers to their clients. A fiduciary overlay that overcomes behavioural biases, offers meritocratic incentives in which gains and pains are shared and develops common investment beliefs and time horizons will be critical. This model can already be seen in multi-boutique structures, which it is anticipated, will become the dominant organisational structure.”

The study further found that outsourcing of non-core activities will become a cornerstone of excellence. Stringent due diligence is the immediate outcome of the crisis with institutional clients and fund distributors no longer focusing on front office talent and track records when selecting managers but operational excellence and business resilience. As a result of the increased professionalization in the client base, there will be an increase in demand for accurate timely reports, regular adhoc communication, prompt response times and queries, frequent valuation and investment reviews, performance attribution analysis, product sustainability, checks and independent stress tests on new products.

Strong in back office, such practices will spread to a number of high value added activities in the middle office. 90% of respondents have or are planning to outsource custody and settlement, 50% have or will outsource valuation of illiquid investments and 28% have or will outsource risk management. New outsourcing will deliver higher operating leverage as well as a raft of checks and balances that rank high in clients’ due diligence.

Neeraj Sahai, Global Head of Citi Securities and Fund Services, said:

“The new alignment of interest will have to cover not only financials like fees, charges and returns but also involve non financials like service quality, product innovation, risk tools and operational excellence via outsourcing. For the second time in a decade asset managers are concentrating on their core capabilities and outsourcing the non-core areas.

“Third party administrators are now building a new generation of platforms, with enhanced line speeds, scalability and multi-product capabilities. Consequently, they are emerging as strategic partners, using their critical mass of clients to deliver operating leverage, delivering economies of scope enabling their clients to enter new markets in Asia, Europe and LATAM via UCITS funds. Post crisis, operational excellence is about doing new things to cope with the new reality, whilst also doing old things better. It is about ensuring that asset management remains a quintessential craft business - but with professional overlay of skills and infrastructure to exploit the opportunities created by the crisis.”

The full report is available at: www.create-research.co.uk.

한국씨티은행 개요
씨티은행은 1967년 최초로 한국에 진출한 이래 45년 동안 선진 금융 서비스를 국내 고객에게 제공해 왔으며, 2008년 글로벌 금융위기 때 8억불을 증자해 국내 외환시장 안정에 기여했고, 1970년대 석유 파동시 2억불 차관 제공으로 한국의 무역수지 개선에 기여한 공로로 수교훈장 ‘숭례장’을, 1997년 외환위기 당시 240억불 대외 부채 상환 연장에 기여한 공로로 수교훈장 ‘흥인장’을 받는 등 한국 경제가 어려움에 처할 때에 곁에서 힘이 돼 준 친구 같은 은행이다.

웹사이트: http://www.citibank.co.kr