21 Apr 2021 Ankit Chadha

Asset Management Industry: Upcoming Steps in The Direction of Further Consolidation

Asset Management | TRC Corporate Consulting

The pandemic undoubtedly defined the global scene of 2020. However, with the onset of the new year, it is now interesting to see how significant industries are thriving in the post-COVID world. The impact of the pandemic varied widely across trades, with asset management being one of the least impacted industries. The revenues gained by the asset management companies remained more or less intact throughout the pandemic, but the operations and the people associated with the industry were somewhat impacted. Additionally, the price movement and the market instability witnessed drastic acceleration throughout the different levels of the industry.

Now most investment management or fund management organization are tweaking their financial strategies on the basis of what 2020 taught them. Corporations have realized that planning and forecasting for long-tail events will prove valuable for them, even though it has been observed to be insufficient in times of rapid disruption, such as what was caused by the pandemic. This value, however, was derived from the knowledge of tackling significant problems that might arise in the future and the ability to make wise choices in the face of uncertainty. In other words, COVID revealed that the exercise of planning and forecasting proves to be helpful even though the planning steps weren’t necessarily sufficient for the issues presented by the pandemic.

Leadership at most asset management companies have stabilized finance management as one of the earliest action points, especially during the uncertain times we’re witnessing. But aside from this, asset managers are adopting four steps to refine their strategy for further consolidation. Let’s try to understand them.

  1. Enforce Sustainable Costs

Up until now, most firms used to look at cost reduction or fund management as a one-time program. This means that cost-cutting was adopted as a way to manage finances in times of a crunch. But asset managers are looking at cost management and reduction as a more sustainable practice. This is because studies have revealed that year on year, operational costs can drastically eclipse revenue and obstruct growth.

As a major step towards consolidation in 2021, asset managers suggest that firms should put a framework in place that enables them to tune their processes and establish a culture to augment their cost model and boost ROI. This has become a vital aspect of asset liability management today.

  1. Focus on Product Innovation

It’s a no brainer that, in the future, product innovation will be primarily influenced by the needs of the clients. The ability to forecast the requirements of the clients will allow organizations to develop a more relevant inventory. While, as of now, it might be too high-priced to develop such elaborate need analysis mechanisms, but it can be possible to do this in a scaled manner, and asset managers are laying the groundwork for the same. 

Investment management experts recommend analyzing and identifying the products that drive profitability for your business. This data can then be leveraged to establish your product road map and determine capital investments. This analysis can help businesses set up a forward-looking strategy by rationalizing their inventory, making it a significant step in asset liability management.

  1. Strive for an Agile Infrastructure 

Initially, it was acceptable if innovative practices and their value were delivered two or even three years apart. But now, corporations strive for value in real-time. This could be through an acquisition, in the form of new product launches, or some large scale transformations. In other words, delivering incremental value has now become the core of the business strategies.

This should also reflect on how you choose your vendors. Businesses should go for vendors or service providers that have an agile mindset. You need suppliers that recognize how instantly they’ll be required to pivot their approach to continue delivering relevant products and services—this a key driver of asset-liability management.

  1. Instil Transformation in Your Culture 

Change and transformation are what will drive your business in the years to come. But this is not simply limited to program delivery.  Transformation should be a part of your culture and should play a role in the way people are hired, rewarded, and trained.

Continuous learning should become a regular part of your business as usual, and it should be a part of the business culture to provide the workforce with a personalized and flexible working culture. This will empower your people to develop relevant skills that would enable them to perform in a changing professional world.

Investment management experts and professionals at asset management companies today are bent on instilling a culture that accepts change and empowers people as they grow and transition into newer roles. Asset managers recommend encouraging people to reinvent themselves periodically and providing them with the necessary support to bolster this reinvention.  

To sum up, 2020 posed a challenge for the asset management industry, and the industry responded. The transformation witnessed by the asset management industry is likely to lead to much stronger and capable asset management by the end of 2021. Investment managers have come up with change priorities on the basis of experiences that 2020 and the pandemic brought forward. Now the focus on everything from employee wellbeing to customer satisfaction in the form of product innovation is palpable all across the industry. This is supported by a persevering and competitive spirit. Through this, it is clear that asset management or fund management has become increasingly important in this day and age.

At TRC Corporate Consulting, we understand the need for asset management and fund management and offer state-of-the-art asset management services to solve your organization’s needs. Our expert professionals have extensive knowledge and practical experience in asset management with a record of proven results. Contact us to know more about our services.

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