2022: what does it demand from a successful investment management firm?

Investment management firms gained a wealth of experience during the pandemic. They emerged more robust in their strategy, heading into 2022 that challenges them to become even more client-centric, foster innovation, and leverage advances in analytics for decision making.

The agenda of investment management firms has changed radically after the crisis, and now the industry trends point to the client and their experience with the products, amid a scenario of constant change that forces these organizations to have an agile and adaptive strategy to maintain their results.

Investment management firms find themselves in a voracious competition in which they do not want to miss any space. They are digitizing their offer after the irruption of FinTech in the market, forcing them to be more efficient and simplify their processes.

BCG’s report “When Clients Take the Lead” notes that while for years the management industry has professed to be client-driven and client-driven, “most continue to see the world as they always have.”

They continue to “view customers primarily through the prism of products” and serve them as “a collection of wallets,” an approach that causes them to miss opportunities in underserved niches.

Among these clients is the so-called simple needs group, whose wealth is US$1 million or less. This type of client is in a dilemma because the value of their assets exceeds the retail offerings, but at the same time, they are well below the highest net worth individuals.

“The result is a low degree of personalization and a lackluster customer experience with no wow factor. That’s a missed opportunity. The simple needs segment has 331 million people, has US$59 trillion in investable wealth, and has the potential to contribute US$118 billion to the global wealth revenue pool,” notes Boston Consulting Group.

Next-Generation distribution

The so-called next-generation distribution that investment management firms refer to involves a highly client-centric component and the adoption of advanced analytics tools and other technology solutions that will allow them to leapfrog in productivity next year.

On this topic, MarketBridge surveyed more than 35 asset management firm leaders and more than 100 financial advisors to review driving innovation and investments to achieve better results.

The Next-Generation Distribution Enablement survey concludes that among the top priorities for asset management in 2022 are:

  • Adapt to ongoing changes in customer behavior.
  • Deepening insights into users with relevant and personalized content.
  • Generate digital experiences, which involves investments in solutions such as artificial intelligence and analytics.

Although 90% of the companies surveyed worldwide see technology, data, and measurement as critical to successful distribution enablement, most of them still need to take advantage of these investments and reach an adequate level of adoption, as they are below average.

Image source: MarketBridge

Among the companies surveyed, 55% considered that improving business agility and keeping up with market changes are their main challenges for 2022.

Other relevant challenges include aligning sales, marketing, and service units (45 %), a key point in the strategy of these businesses, as well as digitally improving their distribution (43 %), transforming their coverage model (29 %), and aligning product management with customer demands (26 %), among others.

The measures to be implemented in 2022

To advance agility and scalability, according to MarketBridge, companies should focus on “establishing shared goals in sales, marketing, and service with common metrics across all teams,” as well as making the most of investments in technology.

On the client-side, it urges leveraging data to “identify an opportunity for growth and risk of attrition,” while on the digital side, organizations are encouraged to leverage predictive modeling to generate efficiencies with a focus on metrics and more accurate delivery of information to financial advisors.

MarketBridge senior vice president Bill Sheldon commented in a recent interview that despite high investments in technologies, many of these firms are not leveraging them due to a disconnect from their strategy. “This impedes their 360-degree view of the customer, which detracts from their ability to understand changing customer needs and adapt content and messaging to address them.”

Amid transferring wealth to new generations, management needs may increase in 2022; however, the profiles of these clients have shifted toward a greater appetite for risk and a longer-term investment horizon that demands adaptation on the part of companies. Investment management firms will need to stop being dazzled solely by their products and start focusing on the needs of their clients and the opportunities that are opening in this market. The change is now.

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