The Asset Management industry is in a period of transition. The days of black books and exclusive regattas are waning. Regulation, changing demographics and fee pressures are forcing the industry to relook at their interactions, their costs, and their clients. But the answer is not cutting costs – its innovating, embracing digital transformation and creating a new asset management industry.
Mifid II is forcing the Financial Services industry to have clear reportable transparency. Asset managers will have to report each client interaction to the regulators. Each time I meet with an Asset Manager I hear groans about Mifid II. But let's use this as an opportunity.
These projects are funded because they have to meet this regulation. So now’s the time to not just meet this regulation but use this opportunity to grow AUM at the same time. Suddenly, asset managers will have huge sums of data on their client interactions.
The mantra of “data is the new oil” has been the charge in many industries for year. It’s time asset managers join the fray. So a smart asset manager will ensure all this data ties back to financials to create a 360 degree view of their client; a view that enables them to be more targeted and understand their clients’ needs.
When speaking with my asset management partners, I regularly hear that the 80/20 rule applies: 80% of the AUM comes from about 20% of the clients. But do most firms have visibility into who these 20% of the client are? Let's create the transparency and give the white glove service to the clients that deserve it and save costs by offering electronic interactions to the less profitable clients. Mifid II is the catalyst that will enable you to know who they are.
With changing demographics, omni-channel interactions are more important now then ever. Millennials don’t need or want their hands held, like previous generations, and instead want to interact through mobile and social channels.
As Lynda Gratton discusses in her book, The 100-Year Life, there is a 50% percent chance that millennials will live to 100, and with advances in technology everyone will be living longer. This puts extra pressure on retirement income and creates a need for new flexible products that take longer lifespans into account.
Combine longer lives with Millennial priorities and you end up with clients who expect more personalisation, more transparency and more flexibility. Let's use this data to give them that. Although this means more smaller transactions on the whole (and probably smaller fees) it will be a growth in AUM if you are able to capture the market.
Asset Managers who will leverage this data, looking at the entire client lifecycle and creating an “effortless” experience, will ultimately capture AUM. Asset Managers should be looking from on-boarding to off-boarding and optimising the experience with one central client view. Not only do they have to do this for regulatory compliance (gone are the days of paper pushing), but this will allow them to provide the personalised service clients are expecting.
I want to work with an Asset Manager who “knows me,” “guides me,” and “wows me". That would win my business.
So while most companies are frustrated by Mifid II, I get excited about what kind of transformative effect it could have on the Asset Management industry. Let's move beyond regulatory compliance, and lead the way on this transformation, grow AUM and increase customer satisfaction with the customers that matter most. The world is transforming and the Asset Managers that lead this transformation will be the ones on top.
On June 7th we’re hosting a webinar in partnership with Deloitte to see:
Register your place here.