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September 14, 2012updated 04 Apr 2017 3:34pm

BCG: Wealth managers grow stake in AM market

Wealth managers have benefited from distributing and developing investment products allowing them to win business from asset managers, new research has found.

By Lizabeth Davis

Boston Consulting Group’s (BCG) 2012 Global Asset Management report, Capturing Growth in Adverse Times, identified five other key challenges in the asset management industry.

"U.S. wealth managers and advisors have established a very strong position in the managed program-market," according to the report. "In the U.S, they package and distribute the majority of these assets, enhancing their own power in the value chain and acting as gatekeepers to asset managers."

Information gathered from the report, showed that despite the industry’s recent recovery in growth and profitability from the economic crisis, consistent growth has come to a halt.

BCG found that asset managers had failed to attract substantial flows of net new assets since the start of the economic downturn in 2008.

It also found that asset managers in developing markets experienced annual growth of 7% since 2007, while developed markets declined by 1% showing that mangers are still confined to a two-speed world.

Despite the move from traditional offerings to investor preferences continuing, the report found that, the gap between those adapting to this shift and those that have been unresponsive, has widened. This has resulted in a loss of assets.

BCG warned that these trends could leave the industry at risk if they are to continue.

The consultancy suggest managers place a strong focus on understanding and addressing investors needs by constantly innovating, building capabilities, and bringing adapted solutions to the market.

It also puts forward the following keys to overcoming lack of growth and profitability:

Self-assessment – providers should look at how best to position themselves to utilize growth opportunities

Emerging winners – follow the lead of managers that have strong capabilities and offerings focused on segment-product-geography combinations

Strategic choices – it is critical for managers to understand the impact that strategic choices can have on a company’s business model and capabilities

Capturing unrealised growth potential – regardless of whether there is a need to change strategic direction, all managers should identify and pursue unrealised potential for growth

 

Source: Private Banker International

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