Day Two of ALFI’s Scandinavian road show wrapped up in Copenhagen today. I, again, had the privilege of participating on a panel on the future of asset management. Here are some of the highlights from the day.
The Association of the Luxembourg Fund Industry (ALFI) continued taking its Luxembourg Fund Centre message on the road – today in Copenhagen. Through several speakers and panel discussions, we dove deeper into the future of asset management and sustainable investing.
Direct-to-consumer: The future of asset management?
As I mentioned in my highlights from day one in Stockholm, the evolution of technology has vast implications for the asset management industry. I had the chance to discuss this topic again on a panel on digitization and the future of asset management. One idea stood out from the rest: Not only can technology streamline operational capacities, but it can also empower investors to do more with less.
For asset managers, digital platforms and tools can broaden their customer reach and open new channels for business. And as asset managers grow more comfortable developing these tools and platforms, it stands to reason that many more will eventually want to deliver their products or services directly to consumers. In fact, according to a survey presented today, 44% of asset managers want to move towards a direct-to-consumer model.
Faced with increased competition that is forcing asset management fees lower, many firms believe there are tangible cost advantages by reaching out directly to consumers. But in order to travel that path, asset managers need to produce a top notch digital experiences (via their platform) that can hold its own against the best technology company. Consumers are accustomed to smooth, slick user experience in almost every aspect of their lives and will expect the same from their asset manager.
Sustainable investing is an especially interesting topic to discuss while in Scandinavia – where environmental, social, and governance (ESG) issues are at the top of the region’s political agenda. Denmark, Sweden, Switzerland, Finland, and Norway are the top five countries according to a bi-annual sustainability ranking. While much of the score is based on things like air quality and climate protection, of which Scandinavia is a global leader, it’s also important to look at how ESG is changing the game of asset management. Panelists agree the 2015 Paris Climate Agreement was a turning point for the industry.
Both new and existing investors are seeking more funds with a purpose. They want to know their asset manager’s values align with their own and that they can invest in funds they believe in. They also take that notion one step further – ESG funds not only have an impact, but they are also a way to generate alpha. And when a fund can generate larger returns on top of doing good in the world, that’s a win for everyone. This also goes a long way in attracting and retaining top talent.
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