Senior executives from the investment management industry are less confident of the business environment than they were in January, according to a survey taken at investment management consultancy Investit’s bi-annual industry conference.
The near universal business response is to expand into new regions, while trying to understand which of their products are profitable.
The conference, held on 30 June, was attended by 70 delegates from 21 investment management firms with £5.4 trillion (€6.1 trillion) of assets under management, and four third-party administrators with £32.8 trillion (€37.1 trillion) of assets under custody and management.
In January 2011, 97% of respondents to the survey conducted at each bi-annual Investit Intelligence Conference, expressed confidence about the year ahead.
At the June event, that figure had dropped to 77%, with 23% either “easing off the power” or “braking hard”. Looking further ahead, 53% expected confidence among investment management businesses to weaken rather than strengthen.
Firms said they are responding to a slowdown in their home markets by competing overseas. Delegates at the June conference were asked to vote for their top priorities in the year ahead. Regulatory change, data management and product profitability were the top three priorities respectively for the second conference in a row.
John Robertshaw, principal within Investit’s Operations Practice believes that investment management firms will need to do a lot more work to understand costs. “While revenue is fairly simple to allocate to products and clients, investment firms are not good at allocating cost. This is partly because tracing operational activity back to the client is difficult; it is also because frankly a lot of people in the firm do not really want to know. But as margins come down, owners will want to know where profits come from… and where revenue is going.”