The Year Ahead in Investment Management Outlook

In a sweeping review of the investment management landscape, Deloitte studied a wide-ranging number of issues likely to impact the industry in 2017 and beyond, including shifts in buyer behaviors, increased regulation and technological developments.  Outlined below is a summary of their study, “Closer Look: 2017 Investment Management Outlook.”^*

1. Changing Investor Behaviors

Deloitte expects that institutional and retail customers will continue to push change, driven by their concerns over fees and transparency.  Watch for firms to ramp up their customer experience and position their advice, insights and expertise to create competitive distinction.

2. Evolving Product Mix

While index funds and other passive investments will continue to be favored by investors, investment managers may be updating their product line to include socially-conscious investments and upgrading their digital and mobile platforms to better serve the increasingly important Millennial investor segment.

3. Increasing Regulation

Currently, the Trump administration may roll back many new regulations, perhaps even the new fiduciary rule.  However, if his priorities focus his administration’s efforts on other issues, investment managers will be adjusting to a number of new requirements, including rules designed to increase transparency, align incentives and improve risk controls.

4. Technology that Transforms

Technology is expected to have wide impacts on the investment management industry.  Among them are:

• Blockchain—As a technology for tracking transactions, blockchain usage is presently found in prototypes and in isolated instances. With more testing and regulatory approvals, expect blockchain to become more widespread in the years ahead.
• Becoming Smarter—Through the use of big data, artificial intelligence and machine learning, investment managers may gain new analytical tools and insight to drive alpha and improve cost effectiveness by leveraging human analyst resources with scalable technology.
• Robo-advisors—Increased adoption of robo-advisors and online investment management services will be propelled by fiduciary standards and regulations.
• Robotic Process Automation—New tools will be introduced to streamline tasks that involve manual intervention and consume considerable time, such as client on-boarding and compliance activities.

Deloitte’s conclusion characterizes this year as one of change, development and opportunity.  Advisors may want to see how the investment managers with whom they partner anticipate demographic shifts, take steps toward greater efficiency and employ new technology.

Source:

*“Closer Look 2017 Investment Management Outlook,” Deloitte Center for Financial Services, 2016.

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