10 minutes
Hot topic of the month: "AWM Revolution: Pressure on Profitability"
In the AWM industry, price competition and innovation are fierce, and investors and regulators constantly demand lower fees.
Although the Global AuM is anticipated to grow (from $84.9T in 2016, $111.2T in 2020 to $145.4T by 2025), fee pressure is causing the Revenue/AuM ratio to drop. It was down 10.43% between 2012 to 2017. The prediction is that it will fall further, from 0.40% in 2017 to 0.31% in 2025.
By 2025, investors will know where every cent of management fees has been spent and what value it is providing them.
Panel Discussion - Beyond the core; Challenges and solutions for the increasing burden of Regulatory, Investor and Fund Reporting
Core asset management functions are to maximise portfolio performance, and to gather new clients. However, given increasing regulatory requirements and stringent deadlines, asset managers have to dedicate more time for non-core, fund investor and regulatory reporting tasks.
When asked about handling the reporting burden, nearly 80% of the attendees (primarily asset managers and some asset servicing professionals) preferred outsourcing to building the capability in-house.
Whereas it may be more efficient to outsource the reporting function, particularly for smaller companies lacking scale, one size does not fit all. Clients are fragmented, even geographically, and have different needs. Two thirds of those voting for the outsourcing preference, would outsource initially on a fragmented basis to the best of breed provider than entirely to a one-stop shop.
Selecting an outsource partner is a matter of judgement and trust. Even with outsourced work, AMs have legislated obligations around data protection and usage. Data requires careful custodianship. It has a multiplicity of formats, sources and providers. For reporting purposes, it has to be consolidated, checked for consistency, compliance and customised for dissemination; possibly across multiple channels, in multiple languages.
In terms of future business models, if the industry were to take a utility approach to reporting, the service would have to come from credible, scalable providers. Like the Big-4, the providers would need to understand the technology, the overall business, and be able to provide the necessary assurance that deliverables remain compliant and future-proofed.
There is an opportunity for the asset management industry to use its scale. By relying on consolidated and centralised solutions to common reporting obligations, the industry could take out swathes of non-core costs, and result in a more harmonised and consistent approach.
Workshops
Monthly Update
PwC Solution: PwC Managed Services
The AWM industry is under intense margin pressure and at the same time being compelled to deal with non-core regulatory reporting and compliance tasks. Clients express concern about their lack of a comprehensive oversight of growing compliance obligations, and their risk of defaulting under high levels of scrutiny. Client want to grow and focus on their core services, and want a technology solution.
The PwC Managed Services Platform was built to address these concerns. A key feature of PwC’s Managed Services Platform technology is that it enables PwC’s integrated services delivery teams, as external providers, to comprehensively meet company needs across its full lifecycle, including planning & reporting.
For the client there is assurance of access to a fully scalable team that can meet specific needs, with cost savings from one dedicated service provider. PwC’s Managed Services Platform is tailored to your needs, intuitive and gives you the ability to track activities, deadlines and deliverables.