One in Four Fund Managers Believe it’s “Highly Likely” they will Face Competition from New Entrants Within the Next Fiv...
July 29 2015 - 9:00AM
Business Wire
State One in four (25 percent) senior asset management
executives believe it’s “highly likely” they will face direct
competition from a non-traditional new entrant such as a technology
or non-financial services company within the next five years,
according to a report from State Street Corporation (NYSE: STT). A
further 54 percent believe this threat is “somewhat likely.”
The findings are from a global survey* conducted by the FT
Remark commissioned by State Street among 400 senior asset
management executives for a new report entitled, “Opportunities for
Optimism? A New Vision for Value in Asset Management.”
Despite the emergence of new entrants, State Street’s findings
reveal asset managers are in a positive mood. As the assets under
management continue to increase, many asset managers are making big
plans to catch the next wave of growth. Over the next three years,
some 42 percent of survey respondents are preparing to enter a new
product category for the first time, 52 percent plan to expand
distribution networks and 48 percent will tap new distribution
channels. In addition, the research also shows that acquisitions
are set to reshape the fund management industry – 46 percent of
those surveyed said they are evaluating acquisition opportunities
today.
Jane Mancini, senior vice president and head of asset manager
sector solutions at State Street said, “Our findings show that a
number of asset managers are overhauling their approach to respond
to changing investor needs and new competition– from offering new
investment solutions to making strategic acquisitions to become
more competitive and grow their businesses.”
“As new entrants eye the sector, success will increasingly
depend on technology and data analytics to address the growing
demands of clients for more personalized and sophisticated
information and investment solutions,” continued Mancini.
Overall, State Street’s report looked at what fund managers see
as the biggest risks and opportunities facing them today. The
report shows that they must adapt to new client needs, which means
they need to focus more on multi-asset strategies, providing
greater transparency and delivering a more personalized approach.
They also feel under further pressure to reduce costs.
Investor needs are changing with a bigger focus on
risk
- 70% of asset managers interviewed said
they are having to rethink their business strategy around demand
for multi-asset strategies
- 64% say that heightened risk and
compliance demands threaten to divert resources from the critical
business areas
- 96% of asset managers say they are
under pressure to reduce costs
- 77% say they now offer clients more
transparency on risk and return compared to a year ago
- 61% say clients are demanding a more
personalized approach to help them understand their risks compared
to a year ago
- 72% of asset managers say their
conversations with clients has evolved to focus more heavily on
risk compared to a year ago
Mancini continued, “Asset managers are focusing on improving
their client and competitive proposition; forging closer
partnerships with investors; providing clients with the integrated
yet highly granular view of portfolio risk they need and developing
innovative models that will see off the threat from new market
entrants. They also need to invest in their operating
infrastructure to allow them to be more transparent, insightful and
cost efficient for investors.”
The report is based on a State Street survey of 400 senior
executives in the asset management industry. The State Street 2015
Asset Manager Survey was conducted by FT Remark in April and May
2015. Respondents from 23 countries participated, with the majority
from Australia, Canada, China, Germany, Japan, Switzerland, the UK
and US. Respondents manage assets for both institutional and retail
clients, spanning traditional and alternative strategies.
The full report can be viewed here.
About State Street
State Street Corporation (NYSE: STT) is one of the world's
leading provider of financial services to institutional investors
including investment servicing, investment management and
investment research and trading. With $28.7 trillion in assets
under custody and administration and $2.4 trillion* in assets under
management as of June 30, 2015, State Street operates in more than
100 geographic markets worldwide, including the US, Canada, Europe,
the Middle East and Asia. For more information, visit State
Street’s web site at www.statestreet.com.
* Assets under management include approximately $26.7 billion as
of June 30, 2015, for which State Street Global Markets, LLC, an
affiliate of SSGA, serves as the distribution agent.
CORP-1534
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State Street CorporationAnne McNally, +1 617 664
8576aemcnally@statestreet.com@StateStreet
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