Outlook 2022 on the distribution of next-generation asset management
[For years asset managers have discussed the need to transition to a “next-generation” distribution model to offset industry-wide margin declines. Many have been slow to adopt more advanced data, analytics and technology capabilities, but the pandemic and the pursuant economic disruption greatly impacted and pushed asset management firms into modernizing their thinking and propelling them to take new strategic critical actions.
A recent asset management industry research study by Market-Bridge entitled “Next-Generation Distribution Enablement—An Outlook for 2022” was launched to understand where asset management companies are driving innovation, investing and developing new distribution priorities, as well as taking into account the needs and expectations of financial advisors. We reached out to Institute member Bill Sheldon, SVP of MarketBridge, to dig further into their recent research study.]
Bill Hortz: Can you explain to us why and how behind the development and conduct of your research on next-generation asset management distribution?
Bill Sheldon: First of all, in terms of why: We have seen a number of ‘classic’ go-to-market issues emerge in the industry which, based on our work in other industries like technology, suggests that the industry is ready for fundamental changes and generalized distribution model, which frankly was not the case. changed considerably over many years.
These issues include continued margin squeeze, dramatic changes in customer buying behavior, the emergence of disruptive new fintech entrants, and a continued reliance and attachment to a “feet in the street” hedging model. There are also broader market trends at work such as the ongoing generational transfer of wealth and continued concentration within the industry and then you start a global pandemic. Clearly, this has forced companies to adapt and quickly change their engagement model as the industry has been forced to go virtual overnight.
We looked at how businesses will react after the pandemic. Will they revert to their old ways or will they take advantage of the pandemic reset to truly transform into a “next generation” data-driven distribution model? A solution that better meets customer needs, generates greater scalability for their businesses, and takes full advantage of advances in data, analytics and technology to truly transform the customer experience in the industry. One industry executive we spoke with got it right: “Can we take this opportunity to go from ‘outage based’ coverage to ‘by invitation’ coverage?
As for the how: We first surveyed 100 financial advisors to find out how their needs and behaviors had changed during the pandemic. Most importantly, we probed how they or they wait those to change after the pandemic and asked them how they would like to interact with their asset management partners in the future.
We then surveyed over 35 asset managers across the spectrum of assets under management to find out their perception of their ability to enable their go-to-market resources to identify and support those needs, and what were their priorities and plans to make the transition to the next one. -gen distribution and authorization of distribution.
Hortz: What do asset managers report to know where they feel in their current state?
Sheldon: We actually started the survey with two key questions: “How would you rank your current distribution activation strategy in terms of overall efficiency and impact on sales productivity?” And “How would you rank your customer experience across middle, institutional and retail channels (as long as they participated in those channels)?”
We were a little surprised that almost two-thirds of asset managers self-rated their current strategy as very (45%) or extremely (19%) effective. Companies with less than $ 100 billion in assets under management were actually a little more optimistic, with 30% of respondents in this category saying they were extremely efficient, while companies with more than $ 250 billion in assets under management were less so, with just 8% suggesting they were extremely effective. There is clearly a problem of scale at work here.
Regarding the customer experience (CX), the Intermediate channel obtained the lowest score, with 46% claiming to have provided an “excellent” CX there against 63% in the institutional channel and 68% in the sales channel. by retail. Interestingly, companies under $ 100 billion ranked their mid-level CX much higher. Mid-sized companies ranked it lowest, and large companies ranked it higher, but not as high as small businesses.
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