Asset management industry

An evolution in distribution


Jim Fitzpatrick: “Fewer distributors and increased scrutiny are placing pressure on asset managers trying to establish themselves on fund lineups.” (Illustration: Maison Moderne)

Product, distribution and data analytics have become high-impact themes for the global asset management industry. As a result of NICSA’s forward-looking evolution as a trade organisation, we have made meaningful strides to broaden our focus within these topics.

NICSA (National Investment Company Service Association) recently announced the formation of two new committees – a product & distribution committee, and a data analytics committee – with the mission of addressing key trends and challenges resulting from evolving business environments. Deepening our association’s engagement among distribution and data analytics executives complements NICSA’s historical mission of advancing leading practices among technology, compliance and operations professionals within the asset management industry. Given NICSA’s growing commitment to supporting product and distribution teams within our community, I am particularly pleased to join ALFI this September in Luxembourg for an in-depth discussion around the global distribution landscape.

Fee compression, shrinking shelf space and technology advancement are top of mind for global asset managers facing an evolving competitive environment. The US asset management industry has seen exceptional asset managers excel in a challenging environment by focusing on several key areas: evaluating strategic intermediary partnerships; realigning portfolios and product structures; bringing data analytics to the front office; developing technology-inspired service models designed for the digital era. A vision for the future and a focus on execution have been essential to developing strategic advantages for these thought leaders.

Strategic Partnerships are Key

Fewer distributors and increased scrutiny are placing pressure on asset managers trying to establish themselves on fund lineups. As distribution partners reduce the number of products as part of rationalisation efforts, it is becoming more important to identify opportunities to collaborate on creating solutions that meet the needs of the client. Smaller-tier asset managers are particularly challenged by product rationalisation efforts. These asset managers are keenly focused on the uniqueness of their product offerings in order to meet those needs.

The intermediary assessment process is no longer a one-size-fits-all exercise. Asset managers are increasingly using metrics to evaluate strategic partnerships with firms that distribute their products. Some are developing segmentation strategies to align with certain firms and using metrics to look at the size of the opportunity and the depth of the relationship. Data is being weighted and scored to allow assessments of the relationship and drive strategy for allocation of resources. As shelf space shrinks, many firms are realigning their coverage to adjust to changes in sales, asset mix and product development. Data is progressively driving segmentation and relationship models. This metrics approach is helping asset managers to determine where to focus their partnerships efforts.

Data Analytics Come to the Front Office

Big data is making its way toward the front office. Many asset managers are investing in data systems to address misalignments between sales and marketing. By utilising analysis-driven insights, they can support synergies between business functions. Sharing data-driven insights can be a critical ingredient that fosters communication between teams. The ability to analyse data, via a business intelligence team, is an example of a business strategy representing a big step forward in our industry. Alignment via a BI team allows both sales and marketing a seat at the strategy table. Firms that have invested in centralised business intelligence and integrated marketing and sales technology platforms are finding success in measuring effectiveness, which goes a long way toward aligning front office goals.

The Client Experience

Technology is having a great impact on the asset management industry’s service offerings. Asset managers and financial services firms are encouraging more direct-end user engagement via the digitisation of the customer experience. Technology is helping to reduce delivery costs for both advice and asset management products by improving efficiencies in what can be overly complex transactions. 

As asset managers continue to look to differentiate themselves in the digital age by streamlining the delivery of services, traditional value propositions may struggle. Firms that have continued to increase their digital presence have emerged with distinction among their peers as having adopted more innovative strategies that appeal to the next-generation client. 

A Look to the Future

As distribution opportunities within the global financial industry continue to mature and change, firms will be challenged to shed legacy business models and develop new strategies that are aligned with evolving client needs and expectations.   

As an organisation in support of global asset management industry, NICSA is always searching for ways to explore best practices and share thought leadership among participants. We strive to meet the challenges of investment fund and financial services companies by advancing the exchange of information. To that end, we are looking forward to the ALFI Global Distribution Conference where the world’s leading fund distribution community will come together to discuss these important issues.