DELOITTE DIGITAL – BLOG
While I can't hear "asset management" without wanting to make a joke about "putting your assets into it," I enjoyed a chance to interview stakeholders about their predictions for the changing landscape of the asset management industry.
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At a time when the asset management field is more competitive than ever, success requires building stronger relationships with clients. Now is the time for firms to rethink the role digital technology plays in improving the overall client experience.
To get at the root of why it’s time for asset managers to take the leap, Deloitte Digital sat down for a Q&A with Harry Datwani, Principal, Deloitte Digital, Deloitte Consulting LLP and Jeff Levi, Principal, Casey Quirk, Deloitte Consulting LLP authors of the recent white paper, Distribution 2.0: How technology will redefine relationships with asset management clients.
FIRST OFF, HELP US UNDERSTAND WHAT YOU MEAN WHEN YOU SAY “DISTRIBUTION 2.0.”
JL: Sure. Historically asset managers embraced a product-led mindset. But now, the industry has an oversupply of products with competitive performance and robust investment processes, making a product-led approach insufficient to differentiate. We’re seeing a shift in investor preferences towards a more client-centered, consultative model. In addition, buyers are becoming more powerful and choosing to work with fewer managers. These dynamics are driving us towards 2.0.
HD: The traditional approach to growing sales in asset management has been to hire more sales people—more feet on the street. It is an expensive model and is very hard to scale. Similar to other industries such as pharma, asset managers will have to embrace digital and analytic capabilities along with their human capital.
WHY HAS ASSET MANAGEMENT BEEN SO SLOW TO EMBRACE NEW TECHNOLOGIES, AND WHY CHANGE NOW?
HD: The issue is not really about embracing technology. From our client work and research, we find that many managers are investing in technology across the enterprise, including in distribution. The issue is execution. Technology has been isolated from distribution strategy and set up in silos across marketing, sales, and service. Tools are treated as stand-alone solutions to narrow problems rather than an ecosystem that drives enterprise value. Given the margins this industry has enjoyed, there hasn’t been a burning pressure to transform. In today’s environment, winning asset managers will want to approach distribution differently.
CAN YOU ELABORATE ON THE TYPES OF RELATIONSHIP INVESTORS ARE NOW SEEKING WITH THEIR ASSET MANAGEMENT FIRM?
JL: In the past, clients would hire you because you have a great product and you deliver great investment performance. Now, many investors want a much more collaborative relationship and experience. They want to benefit from the know-how across your entire organization. They want access to people, insight, and training. They are seeking real-time information exchanges. And importantly, they want simple, convenient interactions. Clients want fewer managers and want to work arm-in-arm, collaborating and driving solutions together.
HOW CAN A NEW APPROACH TO DISTRIBUTION TECHNOLOGY ACTUALLY HELP ENABLE THIS MORE HUMAN, MORE CUSTOMIZED RELATIONSHIP?
HD: The big thing here about technology is extending the reach. As the demographic of buyers and their preferences shift, you can think about cases like how to reflect the notes from your last meeting when they are on your app or your website.
JL: Technology allows organizations to become more learning organizations and take in information across all client touch points, and then identify and predict preferences and better tailor engagement.
HD: It’s not robots, it’s a bionic arm. Technology extends the reach of sales and marketing, and solves what should be obvious pain points, giving customers that personalized experience.
BUT IT'S ABOUT MORE THAN JUST TECH, RIGHT? WHAT DOES IT REALLY TAKE TO REALIZE THE FULL BENEFITS OF DISTRIBUTION 2.0?
HD: It is definitely more than just tech. Humans are going to continue to be at the heart of the experience. To scale that experience, managers need to think about distribution technology much more strategically. Business leaders cannot “outsource” technology strategy or execution to the technology function anymore. Distribution technology should be an integral part of setting strategic direction. This will have implications on client facing roles, talent profiles, and executive accountability. It will be core to the operating model.
PREDICTIONS FOR DISTRIBUTION 3.0 AND BEYOND?
JL: In my mind, the next big wave will be oriented around strategic alliances. The distribution landscape will pivot because of data. That is, you’ll see firms powered by data and information that are able to create new networks of potential clients and play a much larger role in the development and delivery of solutions. Some will form strategic alliances with asset managers; others may become asset managers.
Digital transformation can be scary, but it’s necessary. Want to learn more about building better relationships with your customers and capitalizing on the latest technology?
Deloitte Digital can help.