Transformation of asset management industry in the pipeline

The global asset management industry will transform over the next 15 years, according to consultants KPMG, due to big changes in demographics, technology and changing social value.

In a new report, Investing in the Future, KPMG said that asset managers’ client bases will be completely differently by 2030 and that current business models will have to change. KPMG global head of investment management, Tom Brown, commented: “We are on the verge of the biggest shake-up the industry has experienced, and the message to asset managers is clear – adapt to change or your business won’t survive. The two biggest issues that need to be addressed are the changing client base, and technology.”

Brown added that in the future asset managers must focus on building cradle-to-grave relationships with a dramatically different and more diverse client base, which includes much younger investors. “We also expect to see a significant boost of new money from the growing middle classes in China, Mexico, India, Nigeria and other developing economies over the next 15 years.” He concluded: “There is a huge risk that the global economy can’t grow fast enough to absorb the volume of savings needed to fund the needs of an ageing population. The asset management industry undoubtedly has a huge role to play in this broader savings debate.”

On technology, KPMG said that in the future clients will want more personalised information, education and advice, and asset managers will need to learn to use big data. Rather than putting IT resources into legacy issues, asset managers need to focus on tomorrow’s needs, KPMG said. This creates an opportunity for new players, the report said, such as Apple, Google or large retailers, which have trusted brands, and the ability to implement better digital and data strategies. There will also be greater use of online buying and crowd-sourced opinions.