After the financial crisis (Lehman 2008), there were substantial growth and profitability in the industry. This post will discuss the challenges & issues in the asset management industry. Below are some past performance data on AuM (Sourced from Financial Institutions and Insurance Practice Areas & BCG Global Asset Management Database)
INTERRELATED RISKS
The financial crisis and its aftermath revealed the
true extent of asset managers’ risks (lehmann) demonstrating a high
correlations between credit, market, liquidity and valuation risks underscored
the need for more adaptive approaches to investment risk management.
We will explore the extent of operational risk by looking at a number of fraud cases in the financial industry in subsequent posts.
We will explore the extent of operational risk by looking at a number of fraud cases in the financial industry in subsequent posts.
FOREIGN REGULATORY REQUIREMENTS
With the introduction of US Dodd-Frank Act, EU Alternative Investment Fund Managers Directive (Annex IV report) and US Foreign Account Tax Compliance Act (FATCA).
Firms will want to review the operation, resources and effectiveness of compliance programmes, especially in key risk areas. We will cover the impacts of the various regulatory initiatives and reporting requirements in subsequent posts.
Firms will want to review the operation, resources and effectiveness of compliance programmes, especially in key risk areas. We will cover the impacts of the various regulatory initiatives and reporting requirements in subsequent posts.
AMCs OPERATIONS
AND TECHNOLOGY COSTS
Existing information systems are required to meet the
growing information requests from investors and, increasingly, regulators on compliance and transparency issues.
AMCs are improving reporting and operations’ efficiency by implementing a range of initiatives and integrating reporting systems for different asset classes that were previously separate.
Heres an article reporting the impacts asset owners and managers face when G20 countries agreed to be more transparent on their risk management practices. Some key areas and Link to article below:-
http://www.investordaily.com.au/analysis/37926-are-you-transparent-enough
"Budgeting: Analyst firm Aite has estimated compliance technology spent in capital markets will have increased by 35 per cent from 2012 to 2015 to build or buy the necessary tools to support all requirements and integrate them within existing infrastructure."
"Exit specific businesses/transactions: Some institutions are being restricted by the extra costs of transparency requirements impacting the economies of operations such as over-the-counter (OTC) derivatives or securities lending transactions. Consequently some are restricting their use of instruments and dealers are withdrawing from the business."
The significance from all the requirements is for a universal approach to the management of data with increased quality and granularity with the vast volumes of datas in different platforms.This poses new challenges to ensure data are captured and aggregated in a flexible manner for the future reporting.
GROWTHS AND OPPORTUNITIES
Future growth may come from organic approaches
such as with go-to-market
strategies, branding, distribution
analytics and client-facing
services. Additionally , innovative and customised products, as well as global
and emerging market strategies may provide new opportunities.
No doubt the global
pool of assets under management will grow in the years to come, but only those
firms that adapt swiftly to the changing environment will benefit.
