2023: A Year for Pragmatic Caution for Asset and Wealth Managers
06 January 2023 - 1:00AM
Alpha FMC, the leading global management consultancy serving the
asset management industry, working with 80% of the top 100 global
asset managers by AUM, today published its 2023 Asset and Wealth
Management Outlook. The 2023 iteration of the report focuses on a
selection of personas that Alpha works with daily and where these
industry leaders should focus their attention heading into the new
year, an especially timely focus as investment managers across the
globe prepare for tumultuous and varied global economic headwinds.
The Outlook was written by a selection of Alpha’s 900+ global
experts and provides clear guidance on identifying the right
priorities and challenges. The Outlook takes a deep dive into four
key industry trends that Alpha believes are set to have the biggest
impact on the investment management industry: addressing structural
drivers of cost, ESG commitments, growth of private assets and
data-driven decision making.
“2022 was another turbulent year. Though undoubtedly
challenging, the threat of recession and uncharted market
conditions in 2023 should be approached as an opportunity for asset
and wealth management leaders,” said Michael Burns, Head of North
America Asset and Wealth Management Consulting at Alpha FMC. “The
asset and wealth managers who have strategic focus and
prioritization will be well positioned well for success in the
near- and long-term.”
Alpha’s 2023 Outlook has identified key priorities to consider
for select personas. For example:
Asset Management:
- Chief Executive
Officer: Now is the time for active investment managers to
demonstrate and articulate the value of active strategies, and
invest in future-proofing their operating models. CEOs should focus
on forward-thinking positioning, executing on a clear data strategy
and shifting attitudes in ESG and managers’ role in reflecting
these. Additionally, CEOs should focus on scale – reducing
complexity and equipping their business to scale effectively and
efficiently. Internally, CEOs should focus on how to enhance the
workplace culture and harness the power of change & innovation
for long-term success.
- Chief Investment Officer: CIOs will be
challenged to analyze opportunities across shorter economic cycles;
assessing inflation, continued supply chain constraints and
maneuvering policymakers. CIOs should focus on new geopolitical
challenges to the integrated global economy, corporations’ journeys
to net zero carbon emissions and how this shapes investment
governance and moving to a quality-over-quantity data mindset.
- Head of
Distribution: With markets remaining volatile for the
foreseeable future, performance will be a challenge for many
Managers and beyond Distribution teams’ control. Heads of
Distribution should focus on enhancing their Client Experience, by
scaling and improving service propositions to drive efficiency and
minimize costs, harnessing the power of data to win, service and
retain clients and continuing to integrate private market offerings
within existing operating models to offer multi-asset, whole
portfolio solutions differentiated solutions.
Wealth Management:
- Chief Executive
Officer: As asset growth slows down after the exceptional
2021 year, CEOs will go back to revisiting and setting the right
strategic focus for their organizations, both in terms of
on/offshore markets as well as client segments as to enhance their
future growth potential. CEOs should focus on
re-focusing/de-risking offshore markets strategies and evolving the
‘offshore WM model’, enhancing and differentiating value
propositions by tailoring it to specific client
segments/sub-segments and increasing sales effectiveness by
augmenting the Relationship Manager through data and advanced
analytics including AI.
- Head of Compliance:
Heads of Compliance need to pursue efforts to achieve better
results. They should focus on identifying ways to adequality
support business growth while maintaining risk levels, getting
leaner organization without compromising Risk and Compliance
frameworks and understanding and exploring the benefits of new
technologies such as web3.
Alternatives:
- Overall: Demand for
alternatives will continue to increase, presenting challenges for
traditional managers looking to incorporate alternatives
capabilities alongside their existing strategies, and for
alternatives providers looking to scale their operations and meet
demand. Additionally, those that provide alternatives strategies to
institutional clients will look at new ways to distribute their
products to intermediaries and individual investors, requiring
increased scale & efficiency.
- Private Credit:
Demand for Private Credit is set to continue growing in 2023, with
traditional capital providers less willing to lend in the current
environment. Private Credit managers should focus on maintaining a
compelling investment pipeline to attract investors in an
increasingly competitive GP landscape, scaling the business without
impacting returns or adding proportionately higher operating costs
and adopting better data and technology practices to enhance the
investor experience.
- Private Equity: Private Equity faces fresh
challenges in 2023, as tightening global monetary policy increases
the cost of capital – the lifeblood of an industry that continues
to mature. Industry leaders should focus on understanding drivers
of excess return and product differentiators amidst turbulent
markets, implementing successful ESG and Responsible Investment
strategies and building firm and fund operating models at scale
across AUM and multiple investment strategies.
To read the full Asset and Wealth Management 2023 Outlook, click
here or visit www.alphafmc.com for more information.
About Alpha FMCAlpha FMC partners with today’s
leading asset and wealth managers to think smarter and shape their
businesses for the future. The Alpha team has worked with all of
the world's top 20 and 80% of the world's top 100 asset managers by
AUM, comprised of more than 900 global consultants operating from
16 client-facing offices spanning the UK, North America, Europe and
APAC. Alpha shapes the industry by delivering expert knowledge and
advice in critical business areas such as new generation operating
models, digital transformation and new regulation management.
Visit www.alphafmc.com for more information.
Media Contact: Madison Thomas
mthomas@wearecsg.com 303.868.1220
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