Some 83% of asset managers plan to change product strategy in the next two years, a new survey from Northern Trust has found, emphasising the need to cater to diverse investor needs. 
Technology appears to be at the heart of that change, with 77% planning to leverage new tech within the same timeframe. Managers have shifted their attention to supporting asset classes like infrastructure, digital assets, and real estate, the report noted, which in turn can increase the complexity for managers.
In addition, the report reveals a pivot away from a focus on cost control more to enhancing quality and accuracy, with 72% of respondents citing that as a top strategic priority for the next two years. Additionally, seven in 10 respondents view improving the investor experience as a key objective, further emphasising a client-centric approach.
Data continues to be a key consideration for asset managers when business planning. When asked how they plan to address data challenges in the next two years, 57% of respondents said they intend to engage a specialised data service provider, while 45% will seek a custodian’s outsourced data solutions.
Clive Bellows, incoming EMEA president at Northern Trust, said: “We are seeing more focused strategies, with increasing focus on the use of data to inform distribution and identify where their particular areas of expertise will likely be most attractive to end-investors. In Europe, this includes focusing on new fund products such as the ELTIF and LTAF, which are of growing interest to both managers and investors.
“Additionally, asset managers’ plans to invest further in analytics to support their investment processes are a growing theme. We see this evidenced, for example, in their use of our data science solutions that allow them to digitize their investment processes, or combine trade data with behavioural science to identify decision patterns over time. Managers need to be able to digest their portfolio information, analyse the data on hand and decipher what it is telling them more quickly so they can double down on successful distribution strategies.”
The survey also took stock on the current appetite for outsourcing, finding that 27% of asset managers plan to control costs through outsourcing non-core activities in the next two years, notably trading. Other areas include: securities finance, liquidity management, foreign exchange and other capital market activities where outside providers can potentially add efficiency to a manager’s operating model.
Bellows added: “The use of outsourcing providers in the back-office space continues to grow and evolve, but as we have seen in prior surveys, outsourcing front office capabilities is also something that more and more firms are prepared to consider. This would include outsourced trade execution, cash and currency management.”
The study was conducted in collaboration with WBR Insights, which surveyed 300 CEOs, CIOs, directors of operations and senior executives from across APAC, EMEA and North America regions, from asset management firms with assets under management (AUM) of $500 billion and below.