Asset management is the “direction of all, or part of a client’s investment portfolio that is handled by a financial services institution or an individual.”, as Investopedia puts it. It is the management of one’s investments on behalf of others and essentially involves a mandate of monitoring the appreciation of a client’s asset over time whilst mitigating any potential risks.
In short, asset management is basically high-value security for your client’s property.
The COVID-19 pandemic has indeed affected a lot of things, moreso the economy especially. With Professor 3P’s help, let’s take a look at how asset management is doing right now and what specific trends we should watch out for in 2021!
How Asset Management is Doing Today
The asset management industry has been pulled in many different directions as the pandemic rages on. On one hand, a PWC article reports that the industry is now rising stronger than before, while on the other, an Institutional Investor article reports that the pandemic is expected to shrink the industry by almost a whopping $2 trillion! Let’s take a look at both scenarios.
In the PWC article, certain points of focus were given particular concern during the pandemic, mainly along the aspects of the following:
In the aspect of managing a crisis, the asset management sector continues to ensure that all contingencies are in place, especially in the midst of trying times. Each plan in place has been carefully analyzed and revised accordingly in order to take in new factors, further mitigating any potential crises just in case. This in turn can help ensure that the workforce is equipped with all the tools they need to keep things running smoothly, thereby ensuring that operations are still going on and demands are constantly met.
In terms of financial and liquidity, as well as strategy and brand, these areas are still, according to the article, quite the areas of concern. For instance, auditing, accounting, and reporting standards haven’t changed much and have ongoing evaluation challenges that can have an impact on liquidity, tax, and investors. This means that asset and wealth management firms must still adhere to their principles and interpret them in light of the current state of the market, and at the same time, scenario plan for the future to lessen any risk of liquidity issues.
When discussing the challenges faced by the asset management industry, we need to look at how the COVID-19 pandemic has affected the entire workforce as a whole. In the Institutional Investor article, it is believed that while a lot of businesses from different industries have recovered fairly from the onslaught of the pandemic, the asset management industry will be able to do so too, albeit with some marks.
It’s not hard to see why. In that same article, Justina Deveikyte, who handles Cerulli Associate’s European institutional practice, said the decline in asset management will be primarily due to shrinking assets under management in Europe and the U.S, which has been due to the pandemic’s onslaught.
On the bright side of this, Deveikyte also believes that the industry will grow on a steady rate and regain any lost capital, with the estimated number of growth projected to hit $130 trillion by the year 2024.
3 Trends in Asset Management to Watch Out for
With these three trends, we can definitely see how the asset management industry has been able to keep things moving!
- Digital Evolutions
Technology has helped shape certain companies into titans of their industries, and the asset management industry is no exception. In an article by RSM, it is said that adopting new technologies in handling cost control has helped professionals in the industry keep things going.
With new technological advancements to use such as automation, analytics, and personalized customer service, asset and wealth management companies are able to handle cases better, and at the same time, evolve their business models to allow better cost control.
- Maximization in Outsourcing
While technology has indeed helped speed things along, there are just some tasks that are best handled by humans in lieu of a machine or an A.I. In an Oliver Wyman article, it was mentioned that smaller asset management firms tend to maximize on outsourcing various tasks to external agents, therefore extending their services in the process, whilst working on expanding their company as well.
- Cybersecurity Investment
Like with all other industries, asset management relies well on data security for their clients. In the same RSM article, it was mentioned that many would assume that just because their portfolios are being managed by asset management professionals, total safety is now guaranteed for their assets. However, in this day and age, it doesn’t hurt to add more layers of security.
Asset management is something that not a lot of people may understand right out of the bat, but it is an industry that yields a lot of opportunities nonetheless. Now that we know how the industry is doing nowadays, as well as the three trends that are now in place, we can definitely see some new horizons in the future!
Of course, we want to help you get your new horizon as well, so start leveling up your game in asset management with Third Pillar! With our services and products, Third Pillar can help implement great Salesforce solutions such as Service Cloud and Customer 360 to ensure smooth sailing for your business. We work to build meaningful relationships with our clients, and to provide nothing but the best tech solutions for your business as well!
Don’t hesitate to contact us through here and we look forward to guiding you along the way to success!