Examine key opportunities asset management leaders can develop for future growth in an increasingly competitive market.
NEW YORK, (January 28, 2008) – Most executives are thinking alike when it comes to facing industry challenges, according a new study by kasina, a leading asset management consultancy. “The Future of Distribution: Stay the Course or Innovate” examines key opportunities asset management leaders can develop for future growth in an increasingly competitive market.
To find out how firms are planning to compete in the future, kasina spoke with 23 senior executives from some of the largest asset managers in the U.S. Among the executives surveyed, over 90 percent cited margin pressure as a mounting concern.
Yet, in the face of challenges that demand innovation, most senior executives seem to be playing it safe. According to the survey, 45 percent of executives noted the importance of improved product development. Another 36 percent listed the importance of improved distribution through Sales and National Accounts, citing Merrill Lynch and other major wirehouses as important distributors.
The results showed that while most executives seem concerned about the same issues, few, if any, responded to these issues with ideas that weren’t already echoed widely by their peers.
With over 8,000 open-end mutual funds in the market, firms are facing more competition than ever. The Morningstar nine style boxes are overcrowded with copy-cat products, said Sean Carroll, a manager at kasina.
Firms are not only competing for product shelf space — they are also competing for the same distribution opportunities. As with the Morningstar boxes, the large distributors like Merrill Lynch are overcrowded, making it impossible for every firm to succeed in that system.
Finally, despite dramatic growth rates in Europe and Asia, only 36 percent of firms listed international markets as a very significant source of growth over the next 1 to 3 years. “Given the overall growth of foreign markets, U.S. firms that do not have a global presence or strategy must scramble to catch up,” said Steven Miyao, CEO at kasina.
According to kasina, addressing these issues will require that firms:
- Think Outside the Box(es): Given the overcrowded market, firms must develop innovative products with no existing competition to command higher fees.
- Use Segmentation to Improve Distribution: Firms should use segmentation to identify unique opportunities while capitalizing on new roles, such as hybrid wholesalers.
- Decide Now: Should We Go Global?: As foreign markets grow faster than those in the U.S., firms must make a commitment to going global.
In short, firms can respond to upcoming industry challenges in one of two ways: they can either stay the course or innovate. In kasina’s view, there is no choice: firms must innovate.
kasina is a management consulting firm that is focused on helping financial services companies create intelligent relationships with their investors and intermediaries. By combining knowledge of distribution trends, technological innovations, and marketing strategies, kasina aids leading asset management firms with front-office efforts and publishes a regular schedule of cutting-edge industry research. kasina�s client list includes 18 of the 20 largest asset managers in the United States and leading firms in Canada, France, Germany, and the United Kingdom.