The main challenges affecting investment managers’ profitability are:
- Cautious clients: Investors have become more cautious preferring cash holdings and guaranteed income to more volatile assets
- Passive funds: Passive investments with very low fees are becoming more popular at the expense of active funds with higher fees
- Demographic change: Baby boomers entering retirement will see greater demand for asset protection and drawdown, and less asset accumulation
- Regulation: Compliance with increased regulation – AIFMD, FATCA, RDR, and UCITS – is adding cost to asset management firms
Eliza Dungworth, lead investment manager partner at Deloitte, said:
“The financial upheavals of the past years, increased regulation, an ageing population and increased consumer focus on costs are putting a huge amount of pressure on fund managers’ profitability.
"Many fund managers often struggle to obtain a clear picture of how profitable their products, clients, services and distribution channels are, but what they need to do is make fundamental changes to the way in which they conduct business and focus on profitability management to ensure survival in a difficult market."
