FOCUS ON ASSET MANAGEMENT
The experience of the past two years has created both opportunity and vulnerability for Investment Management in Canada. Events of 2020 have put Canadian asset managers on alert, and though the industry has shown its trademark resilience, Canadian asset management firms continue to feel the pressure of mounting competition, consumer shifts, and rippling impacts of the global pandemic. To remain competitive, moving forward demands new strategies.
With this, we are pleased to provide IIAC members with the valuable insights of McKinsey and KPMG. The reports take us through the historical explanation of how we got to where we are; dissect the events of the past two-years; and give us an informed lens into the future.
In brief, the reports expound that events of 2022 have changed some of the foundational assumptions behind the past decade’s defining success: active managers are under more pressure than ever before; exchange-traded funds continue to rise in prominence; some investors are pivoting to private markets; and there is a new consistent focus on sustainability. The industry’s relationship with technology has also evolved. While organizations are becoming more confident and adept in adopting the likes of blockchain, bots, data analytics, artificial intelligence and machine learning, reservations persist as to how these resources will pay back their investments and how organizations can mitigate their potential risks.
Finally, the reports uniformly express that asset managers have the unique opportunity to create high quality, frictionless service experiences for customers, and to pursue technologically enabled avenues for internal and external investment and service delivery efficiency, but they must have continued investment in technology and seek greater scalability and efficiency in their operating models. And, if asset management firms want to thrive amid the anticipated period of extended uncertainty, they must position themselves as an “all-weather” asset management platform that combines the attributes of flexibility, stability, and scalability—qualities required to deepen client relevance, deliver distinctive investment value, and grow with a high degree of operating leverage.
Asset management has an enduring growth potential and a critical role to play in Canadian wealth-building – firms just need to be comfortable pivoting away from historical success criteria and instead focus on what market is defining as the new success criteria.