Broadridge whitepaper finds organic growth
across the global asset management industry expected to slow into
2031, but identifies new standards of differentiation to help firms
win
NEW YORK and LONDON, Oct. 12,
2022 /PRNewswire/ -- Organic growth across the global asset
management industry, measured on a total net asset flows basis, is
expected to slow from a compound annual growth rate (CAGR) of 3.9%
over the last decade to 1.7% from 2021 to 2031 as competition heats
up between both challengers and incumbents alike, according to a
newly released whitepaper, The New Competitive Calculus: Winning
with Data-Driven Strategy by global Fintech and asset
management advisory leader Broadridge Financial Solutions,
Inc. (NYSE:BR).
Despite this, Broadridge forecasts that net asset inflows will
still expand by a healthy US$18T over the next decade, helping to
push total assets under management (AUM) to a record of more than
USD$170T– unlocking exciting new avenues for growth and challenges
to overcome for those that can adapt to change.
Stiffer competition
Competition, however, will be more fierce as growth slows.
Broadridge's research reveals three increasingly distinct classes
of industry competitors, two of which - expanding incumbents and
innovative challengers - dominate the industry's organic growth.
Already less than 100 asset management firms globally accounted for
nearly 64% of the industry's $14.4
trillion-plus in net new flows gathered since 2016,
according to Broadridge's research.
"Opportunities will be driven by different capabilities and
clients – from institutions to individuals, and from the US and
Europe towards Asia, especially China," said Ben
Phillips, head of Asset Management Global Advisory Services,
Broadridge. "While secular changes manifest in different ways,
there are still primary drivers that asset managers need to look
out for to maximize their growth. The reality is that these changes
are creating unmet needs, all of which are opportunities to
innovate and reposition themselves for growth."
Broadridge expects significant opportunities to be had aligning
business strategies to meet shifting secular trends, many of which,
if missed, will increasingly bifurcate the market between winners
and losers.
The study predicts that individual investors will drive 69% of
net flows in the coming decade significantly overtaking
institutional investors, while private markets will shift from
driving 16% of net flows between 2011 to 2021 to 32% of net flows
between 2021 to 2031. In terms of regions, The New Competitive
Calculus outlines net investment flows shifting from the US and
Europe toward Asia Pacific, especially China. APAC will drive 42% of net flows
between 2022 to 2031, from just 26% between 2012 to 2021.
As individual investors seek to use their portfolios to address
a wider array of financial and non-financial objectives, thematic
investing is expected to rise. One example is the momentum in ESG
and impact-oriented investing, which will account for 27% of net
flows during the next decade.
New standards of
differentiation
The above trends are dramatically changing the competitive
forces facing asset managers today. Strong investment performance
has long been regarded by the industry as the primary
differentiator to win market share. However, with the shifts in
opportunities identified in the whitepaper, performance is not
enough to stand out. Today, competitive differentiation is being
defined across four major dimensions:
Faster product innovation – Quick and effective
innovation is key. Successful asset managers have adopted an
innovation- and product-focused strategy where product development
is a central role supported by data and propelled by a flexible
distribution network.
Stronger distribution – Successful asset managers
are set apart by their ability to scale. This means multiplying
points of influence, strengthening relationships beyond value
intermediaries, and building exclusive distribution relationships
as a protected channel against rivals. A data-driven approach to
segmentation helps maximize resource efficiencies and create
leverage to better monetize distribution advantages.
More flexible delivery – Competitive asset managers
have recognised the need to customise access for end-investors,
becoming increasingly flexible with delivery models, especially for
priority products and markets where such changes contribute to
divisive market leadership. In determining which delivery models
are worth pursuing, successful asset managers are focused on
implementation cost, technologies that allow customization and
portfolio personalization, and delivery capabilities that allow
operational efficiency.
Better brand building – A competitive brand will set
asset managers apart against the noise of new product capabilities
and products, striking a balance between regional norms and global
positioning. Strategic decisions include linking brand attributes
to clear competitive advantages and embedding innovation and change
as brand attributes.
Learn more about these trends shaping the global asset
management industry from Broadridge's whitepaper. Click
here to access The New Competitive Calculus: Winning with
Data-Driven Strategy.
About Broadridge
Broadridge Financial Solutions (NYSE: BR), a global Fintech
leader with $5 billion in revenues,
provides the critical infrastructure that powers investing,
corporate governance, and communications to enable better financial
lives. We deliver technology-driven solutions that drive business
transformation for banks, broker-dealers, asset and wealth managers
and public companies. Broadridge's infrastructure serves as a
global communications hub enabling corporate governance by linking
thousands of public companies and mutual funds to tens of millions
of individual and institutional investors around the world. Our
technology and operations platforms underpin the daily trading of
more than U.S. $9 trillion in
equities, fixed income, and other securities globally. A certified
Great Place to Work®, Broadridge is part of the S&P
500® Index, employing over 14,000 associates in 21
countries.
For more information about Broadridge, please visit
www.broadridge.com.
Media Contacts:
North
America
Matthew
Luongo
Prosek Partners
+1 646-818-9279
mluongo@prosek.com
Europe
Ruby Yeomans
Cognito
+44 (0) 7463730043
BroadridgeEMEA@cognitomedia.com
Asia
Pacific
Kainoa
Blaisdell
Teneo
+65 6955 8874
ASIA-broadridge@teneostrategy.com
Photo -
https://mma.prnewswire.com/media/1917742/Asset_Management_Organic_Growth_Chart.jpg
Logo -
https://mma.prnewswire.com/media/326728/broadridge_financial_solutions.jpg
View original
content:https://www.prnewswire.co.uk/news-releases/fierce-competition-ahead-as-less-than-100-asset-managers-secure-two-thirds-of-industry-asset-flows-301645461.html