74% of wealth managers urge an increase in
product specialists from asset managers
Active ETFs and alternative investments drive
product lineups as interest in mutual funds declines
NEW
YORK, Oct. 15, 2024 /PRNewswire/ -- As asset
managers rapidly expand their lineup of more complex investment
products such as alternatives, wealth managers are calling on asset
managers to ramp up their product specialist talent to keep pace,
according to a new survey from the Money Management Institute
("MMI") and Broadridge Financial Solutions, Inc. (NYSE: BR). Nearly
three-quarters (74%) of wealth managers have called on asset
managers to invest more in product specialists, up significantly
from 38% in 2023. Six in 10 asset managers plan to make this
investment, with a primary focus on adding specialists for
alternative investments, private markets, and non-traditional
products.
"As part of our ongoing program of delivering comprehensive
thought leadership on important industry trends to MMI's member
firms, we are excited to share our latest annual survey results in
conjunction with Broadridge," said Craig
Pfeiffer, President & CEO of the Money Management
Institute. "The survey provides multiple insights into the state of
the investment management industry to help drive actionable
strategies and informed decision-making for investment solutions
providers. In particular, our survey found that product lineup is
one of the top three characteristics that sets best-in-class asset
managers apart from others, so being thoroughly prepared to meet
these demands is mission critical. As such, building and resourcing
the right product specialist teams will be instrumental in helping
asset management firms stay ahead of the curve."
In its second year, the survey explores how MMI members view
trends and challenges across four topics: distribution, products
and strategies, artificial intelligence, and business outlook. This
year's survey found that asset managers are making progress but not
keeping pace with advisors' evolving product offering
needs.
Asset managers leaving money on the table with undiversified
products and expertise
"The investment management landscape is rapidly evolving due to
an influx of younger investors and unsteady markets forcing wealth
managers to look at newer, non-traditional products for alpha
generation. As a result, asset managers now more than ever have an
opportunity to provide innovative products and onboard the right
talent to meet the demands of today's investor," said Tim Kresl, Principial, Distribution Insight at
Broadridge. "Our survey reveals that the future of investing is in
newer products in private markets and active ETFs, and asset
managers can strengthen relationships by providing the right
products and services."
The survey also finds that wealth managers are increasingly
leveraging direct/custom indexing, typically to address tax
efficiencies and clients' unique investment preferences, yet 49% of
asset managers are not actively involved with direct/custom
indexing. Among asset managers without a proprietary direct/custom
indexing solution, 60% do not plan to introduce them yet nearly all
(89%) wealth managers plan to expand, add, or launch direct/custom
indexing solutions.
Further, asset managers may also be missing the mark when it
comes to converting mutual funds into ETFs, as interest in mutual
funds wanes; 51% of wealth managers are looking to asset managers
to create look-alikes/clones of existing, active mutual funds or
convert those funds into active ETFs, compared to only 35% of asset
managers who plan to do so.
In addition to evolving product lineups to meet the demand for
new investment opportunities, a majority (85%) of asset and wealth
managers agree that younger generations will require different
products and/or service models, but only 34% are preparing to
re-orient their growth strategies to address this demand.
Alternative investments and active ETFs are the new
battleground among investment managers
Investing in the right talent is increasingly important as
overall industry allocations to products are expected to change. A
majority of wealth and asset managers expect to see the industry
increase allocations to active ETFs and alternative investments
(89% of wealth managers; 92% and 85% of asset managers,
respectively), signaling investors' interest in new and exciting
investment vehicles.
While asset and wealth managers are aligned on the opportunities
these products offer, when it comes to alternative investments
specifically, there is misalignment in managers' vision for the
go-to-market strategy. Eighty-three percent of wealth managers
agree that their vision is to offer these products as an integrated
component of an overall portfolio versus standalone investments,
compared to 65% of asset managers.
In addition, nearly 8 in 10 (78%) wealth managers include liquid
funds among the top three fund wrappers offering the most growth
potential yet only 49% of asset managers are offering or developing
alternative investments with liquid fund wrappers. This suggests an
opportunity for asset managers to increasingly prioritize liquid
fund wrappers, in addition to registered fund wrappers – the top
wrapper currently used – in alternative investments product
development.
AI to advance opportunities among asset and wealth
managers
Nearly all (93%) asset and wealth managers surveyed allow some
use of AI, with 79% of those managers currently leveraging AI in
some capacity. Top use cases for AI include business intelligence,
marketing/content development, and client service delivery.
Of those leveraging AI, nearly all (99%) have already or expect
to experience a positive impact on efficiency and/or productivity,
and 97% report that AI is a moderate or high priority moving
forward. Further, 80% agree that AI will play a major role in their
firm's business over the next two years and specifically benefit
back-office/operational functions, employee productivity, and sales
and marketing functions.
While enhanced efficiencies and opportunities abound within AI,
concerns remain around errors/inaccuracies, data security/privacy,
and regulatory compliance, and some managers report that the use of
AI as well as the cost of keeping up with continually advancing
technology is a threat to their business. However, despite these
challenges and threats, managers are taking steps such as
evaluating contracts with service providers, being deliberate about
the deployment of technologies, and reducing costs in order to keep
up with the pace of change.
Methodology
The survey was conducted by the Money Management Institute (MMI)
in conjunction with Broadridge and 8 Acre Perspective, an
independent marketing research firm. A total of 175 MMI members
completed the survey, which was fielded from May 23 – June 28,
2024.
For further details on survey methodology, please contact a
media representative.
About Broadridge
Broadridge Financial Solutions (NYSE: BR), is a global
technology leader with the trusted expertise and transformative
technology to help clients and the financial services industry
operate, innovate, and grow. We power investing, governance, and
communications for our clients – driving operational
resiliency, elevating business performance, and transforming
investor experiences.
Our technology and operations platforms process and generate
over 7 billion communications per year and underpin the daily
trading of more than $10 trillion of
securities globally. A certified Great Place to Work®, Broadridge
is part of the S&P 500® Index, employing over 14,000 associates
in 21 countries. For more information, please visit
www.broadridge.com.
About the Money Management Institute (MMI)
Established in 1997, the Money Management Institute (MMI) is the
industry association representing financial services firms that
provide financial advice and investment advisory solutions to
investors. Through conferences, educational resources, and thought
leadership, MMI facilitates peer-to-peer connections, fosters
industry knowledge and professionalism, and supports the
development of the next generation of industry leadership. MMI
member firms are dedicated to helping individual and institutional
investors, at every level of assets, plan for and fulfill their
financial goals. For more information,
visit www.MMInst.org.
Media Contact:
Matthew Luongo
Prosek Partners
+1 646-818-9279
mluongo@prosek.com
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SOURCE Broadridge Financial Solutions, Inc.