Asset managers say increasing regulation top near-term challenge

“Greater transparency requirements, enhanced protection for investors, as well as additional oversight for the asset management sector are potential reasons behind the focus on regulation,” RBC explains in a news release, and this is also increasing managers’ sensitivity to reputational risk.

At the same time, asset managers say they are highly confident in their ability to adapt to the evolving environment, with efforts to improve efficiency and enhance service, cited as their top priorities.

“Regulations requiring asset managers to disclose details of their costs to end investors may be a factor in the increased attention around improved efficiency, while a more efficient operation can also allow managers to invest in an enhanced service offering,” RBC says.

In terms of product plans, 45% of asset managers say that they are not planning to introduce new products in the next year. Of those who are launching new products, the emphasis will be on ETFs.

Firms aim to enhance their service because asset managers believe their investors value client service (37%) ahead of high returns (23%), according to the survey.

Additionally, firms are stepping up their focus on data management, the survey finds, with 32% saying that enhancing their use of data can enable them to make more informed investment decisions, and 27% expecting it to improve their ability to anticipate client needs.

In the short term, “enhancing service offerings through enhanced client relationship management systems and increasing efficiency through process automation” are the top priorities for firms’ technology budgets.

RBC Investor & Treasury Services conducted an online poll of 82 asset managers across Canada in the second quarter of 2018.