Asset Managers Elevate Serving Clients to Top Priority, Up from Cost Controls, Survey Says

The strategic emphasis for asset managers used to be belt tightening, according to a 2022 survey, but that has shifted to serving clients better, a new survey found.

For asset managers responding to the 2024 survey, the top priority is “enhance quality and accuracy” of what they offer clients, at 72% versus 45% in the 2022 survey. This year, the second leading priority is “improve the investor experience,” at 70%, up from 37% in 2022.

The poll two years ago ranked “creating greater efficiencies” as No. 1 at 50% (this year: 41%) and “control costs” as No. 2 at 47% (now: 46%). In other words, serving clients nowadays attracts much stronger support from the surveyed asset managers than it or anything else did in the past.

Northern Trust this year surveyed 300 global asset management firms, in a process run by research firm WBR Insights.

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“Changing market structures, such as T+1 in North America, emphasize the challenges of providing exceptional investor experiences,” the study declared, referring to a new Securities and Exchange Commission rule requiring financial institutions to settle trades one business day after they occurred.

Asset managers have taken a bruising lately, given turbulent markets and high interest rates. In 2022, a lousy year for investment returns, their assets under management dropped 10% and profit margins dipped five percentage points from 2021, according to a McKinsey & Co. study. McKinsey found that the recovery in 2023’s first half was tepid.

Indefi, a British strategic consulting firm, warned in a commentary that despite “a decade of rising markets, easy future growth is far from certain.” For instance, low-cost exchange-traded funds, which require little outside expertise from allocators and other clients, are tough competition for asset managers, the analysis contended.

Perhaps to focus on core matters, 59% in the Northern Trust survey indicated they wanted to “outsource non-core activities,” such as liquidity management, trading and foreign exchange.