The ever increasing threat from technology, consolidation in the industry and contracting margins, just a few of the potential threats facing the investment industry.
The latest CFA Institute, the global association of investment professionals, study says leaders must transform if their industry is to survive and stay relevant.
The Future State of the Investment Profession study released by CFA Institute describes an industry at an existential crossroads. It warns that investment industry leaders who fail to transform their business models may jeopardize the future of their firms.
«Our industry is at an inflection point, where success or failure hangs in the balance,» said Paul Smith, President and CEO of CFA Institute.
Significant Change
The report provides a guide to investment industry leaders looking to adapt, however, and it is timed to coincide with the Putting Investors First campaign, a recurring CFA Institute annual initiative to focus the attention of the industry on the needs of investors around the world.
The study provides a series of planning scenarios derived by combining megatrends impacting all industries with other forces specific to the investment industry. These can be used as tools for leaders in investment management to steer the future of their businesses and ultimately improve outcomes for end investors.
Among the megatrends identified are technological advances, redefined client preferences, new macroeconomic conditions, different regulatory regimes reflecting geopolitical changes, and demographic shifts. The scenarios are not forecasts but include possibilities for the future state of the investment industry.
Leadership Skills Critical
The study also analyzed the most important skills needed for effective leadership in the future. While there are common global themes, certain regions differed in their assessment of the skills that are most important for leadership success.
Respondents based in Asia Pacific see ethical decision-making (38 percent), and relationship building skills (40 percent) as especially important.
Key Survey Findings
The views of 205 investment management professionals in Asia Pacific, out of more than 1,000 professionals surveyed globally, including CFA charterholders, indicate that significant change on all fronts lies ahead over the next 5-10 years:
Changing Investment Trends
81 percent expect environmental, social, and governance factors will become more influential
79 percent expect financial centers in the Asia Pacific region will become more influential
Business Models Facing Pressure
86 percent expect industry consolidation
65 percent expect to see more assets going into passive investment vehicles
57 percent expect profit margins at asset management firms to remain flat or to contract
70 percent expect institutional investors will look to reduce costs by in-sourcing more investment management activities
Opportunities on the Horizon
65 percent expect globalization will offer new opportunities for the investment professionals, while 14 percent perceive globalization as a threat
51 percent expect technologies will present new opportunities for investment professionals, while 20 percent see new technologies as a threat
