The late philosopher of Major League Baseball fame, Yogi Berra, offered many witty, yet generally true phrases. One got me thinking: “You can observe a lot by watching.”
When visiting clients, I am often asked: What are the big things to watch in the asset management industry? With that in mind ─ and Yogi too ─ I offer my short list.
1. Follow the yellow brick road to and from the operating model
After many years of serving the industry, my colleagues and I agree on this fact. That is: Most things emanate from the operating model. The operating model is the epicenter of business improvement.
Consider these firm-based Q&A’s: Is new core technology warranted? Look at the operating model. How can we attain more scale? Redesign the operating model. How do we support new products? Focus on the operating model. What’s the strategy to improve client relations? Adjust the operating model.
Is the operating model the panacea? Perhaps not the end-all, it is the go-to mechanism to solve issues… most of the time.
In light of the predominance of the operating model, asset managers would do well to review this platform periodically. Does it match the strategic objectives of the firm? Considering the rapid pace of change in our world, this central tool may require tweaking … or more.
There’s a lesson here. Developing and maintaining a highly efficient, flexible and scalable operating model could help asset managers generate operational success. That, in turn, will help complement the success of the front office. It’s a one-two punch … if not more.
2. Keep your eye on the gig economy and target accordingly
Accenture released a statistic recently, a jarring one. By the year 2020, an estimated 43% of the U.S. workforce will be freelance.
The gig economy refers to a labor market where short-term contracts or freelance work are the prevalent modes of employment. Many of us likely deem this development as jolting. We’re used to the preponderance of permanent jobs.
Is this prediction significant for the asset management industry? Yes. Much of asset managers’ business comes from the workplace setting. It’s the home of the ever-popular 401(k) investment vehicle. But if the workforce is changing, so too should firms’ product distribution and business development practices.
There’s more to this story. It entails redefining the ways firms market, sell and service clients. Accenture refers to this call-to-action as “rotating to the new.” It requires devising and implementing a digital mindset to reach investors, both existing and potential.
3. Recognize the tech-business juxtaposition
Another recent trend has taken hold in the asset management space. We see it in the client relationship sphere. For years, the people who picked up the phone to ask for help with a specific question were often business leaders, such as the Director of Operations.
That is not the case as often anymore. Another function has ascended and resides center stage. It’s technology, as in Chief Technology Officer.
The technology teams are increasingly at the forefront and leading initiatives, not just technology-oriented ones. This change aligns with the transcendence of technology in our lives, not only in business and not only in asset management. It’s a new paradigm.
What are the ramifications for the industry? Think budgeting and take into account allocating money as well as human resources. Leadership and management of firms factors into the picture too. The technology team should not only have a space at the table, but also a voice in strategic planning and decision-making.
I wonder what Yogi would say….