Political, regulatory, and social change loomed large over year’s ICI conference.
The importance of asset managers future-proofing their business and being nimble to change was the overarching theme at this year’s ICI General Membership Meeting in Washington, DC. Whether it is responding to political unrest or being prepared for the next wave of data laws, the event highlighted that agile firms will be best-placed to drive growth. Two key topics stood out:
Keeping on Top of Politics
One of the biggest challenges highlighted at the conference was the widespread political change occurring in traditionally stable jurisdictions such as the UK, US, Germany, and Italy. Firms across the financial sector are operating in a disparate and uncertain landscape, leading to significant market change. The evolving nature of politics requires asset managers to be more jurisdictionally nimble than ever before in terms of investment strategy, operational infrastructure and location of legal entities required to execute global activities.
To stay ahead of the game, asset managers need to redraw the lines around how they categorize jurisdictions, investment classes, and investor types, as well as potentially revisiting the set-up of their own management companies, fund structures, and oversight. Closeness with compliance and regulatory firms is no longer a just a control function, but an essential component of the commercial decision-making process. Asset managers who succeed in responding to change will have the greatest chance of driving growth, whereas firms who remain wedded to traditional, inflexible approaches could struggle in the future.
GDPR is Only the Beginning
A year ago, a key talking point at the conference was putting to bed the final data regulatory regime that is General Data Protection Regulation (GDPR). But with the repercussions of the Cambridge Analytica scandal still a hot topic, more firms are now accepting that GDPR is merely the opening gambit. The debacle demonstrated that regulation can only guard against problems that arise at the time. In the fast-moving world of technology, it is prudent to assume data protection laws will get tighter. Asset managers should think about adopting a data strategy that is malleable enough to adapt to new legislation.
Global firms with multi-entity structures and legacy disparate systems need to ensure they have robust overarching data policies sufficiently adaptable for fast developing regulatory requirements. Future-proofing in this way will give asset managers the greatest chance of seamlessly evolving with changing regulatory requirements.
There has never been a more important time to be nimble.