For the wealth management industry, there is a vast chasm that asset managers need to bridge as rapid change continues to take hold and legacy structures within the industry risk derailing the future success of participants.
As we all know, there are many factors driving the transformation of the industry and while a semblance of order remains in the market, there is increasing pressure to adjust business models to fit the new realities of competition.
The void that exists stems largely from the intermediated legacy structure of retail distribution through financial advisers and many managers are somewhat unknown to end clients and have very low brand awareness.
And while advisers remain integral to asset management businesses there is clear evidence of a pressing need for better understanding of end clients to underpin the innovation needed in the market to bridge the gap.
Even if ‘direct’ in the minds of many in the industry is simply distribution through investor-facing platforms, the idea of developing a better understanding of the needs, hopes and fears of the end investor still stands true.
Today’s market requires products that meet the needs of end clients, not products that meet the needs of asset managers — the way it was historically.
Compounding the challenge — at least for a number of active managers — is the poor job many have done in terms of concisely articulating any value they bring to proceedings… Be it alpha, downside protection, diversification or whatever their USP is. This has allowed others (low cost passives mostly) to dominate the narrative and war of words in the market.
Now back to the idea of chaos. Yes we still have order in the industry but this may feel somewhat precarious based on the degree of change impacting asset managers.
However chaos, well, its watered down cousin — change — is an opportunity and not necessarily a threat. After all, the planet we inhabit was borne out of chaos!
Order breeds complacency and one could argue that change will spur those already within the market to innovate and protect from an external disruptor redefining how the industry operates.
Ultimately the future is about providing products and services end clients want and need at a price they are willing to pay, with the expected level of supporting functionality tech and with access to information and data that is desired.