The fund industry knows it faces major challenges. Fee compression, the growing demands for environmental, social and governance products, and the need to reform distribution methods are all set to undergo dramatic change, according to an audience survey at ALFI’s European Asset Management conference held on 5th and 6th March.
A further poll showed that a majority understand that technology will be a major driver of this change. There is exciting talk of big data and artificial intelligence tools enabling innovations such as mass-market personalised financial products. At the conference’s Industry (R)evolution panel, ideas such as made-to-measure “lifestyle funds” were floated. These would help clients achieve clear personal goals, such as saving for children’s university fees, second homes and more.
However for most players the fundamental technological challenge remains creating and maintaining comprehensive, standardised, robust databases. “There is a lot of talk about innovation, but the sector has to ensure the basics are in place before moving to embrace artificial intelligence,” commented Serge Weyland CEO of Edmond de Rothschild Asset Management (Luxembourg).
“I’m not sure that we will be creating bespoke products in the coming years, but technology can certainly help us work more closely with clients,” agreed Mara Shreck, Head of Regulatory Affairs - Asset & Wealth Management, JP Morgan Asset Management. Moreover, clients are increasingly “outcome conscious, and they are asking us to do more for less, so we have to be more responsive,” noted Martin Parkes, Managing Director, Global Public Policy of BlackRock.
These challenges are central to how our societies will develop in coming decades, as the responsibility for retirement savings is falling increasingly on individuals. The panel agreed that investor education is important, but that maybe the state could do more to nudge people towards making sufficient retirement provision. Automatic enrolment schemes could help, particularly if these included mechanisms to increase contributions as income rises.
This article is part of our ALFI EAM '19 Newsflash. To start receiving our mailings, subscribe here.
(Image source: ALFI Funds)