Asset Management: A Brave New WorldSep 7, 2016 Blog Asset Management
During economic disorder and regulatory change, most asset managers have not given themselves time to bring the future into focus. However, the industry is in the height of major shifts that will shape the future of the asset management industry. The way in which many asset managers operate in 2020 will be vastly different compared to the current model.
Assets under management in the economies of South America, Asia, Africa and the Middle East (SAAAME) are set to grow faster than in the developed world in the years leading to 2020. The global growth in assets will be driven by three key trends: The increase of mass affluent and high-net-worth-individuals from the countries stated above. The expansion and emergence of new Sovereign Wealth Funds with diverse agendas and investment goals. The increasing defined contribution schemes partly, driven by government-incentivised or government-mandated shift to individual retirement plans.
Asset Managers in developed countries looking to other countries for their long term future believe the most important geographical area of focus will be the SAAAME region. This regions markets will provide opportunities for existing global asset managers to tap new pools of wealth and majorly expand their franchises. Assets owned by mass affluent and high-net-worth-individuals are expected to rise and the single greatest contributor to this surge in assets is increasing SAAAME wealth. Many countries have set up government-owned Sovereign Wealth Funds for a variety of purposes, saving for future generations and investments in socio-economic projects. SWF’s based in the Middle East and Africa will grow the fastest.
Alternative asset managers will continue to broaden their product ranges. The move of alternative asset managers into the finance space vacated by banks will lead to a period of sustained product regulation. By 2020, technology used by regulators may enable real-time access to the investment portfolios of asset managers, either via asset managers or from their administrators.
Historically, banks have dominated the financial landscape and have traditionally been innovators. Their influence is expected to have diminished by 2020, changing demographics and markets will thrust the asset management industry to centre stage. This article is based on a PWC report, you can read the full report here.