Asset managers can add rising regulatory and technology costs to their list of woes as they struggle to expand revenue amid pressure to lower fees and expenses.
Non-compensation costs, which also include back office processing and office space, make up nearly one-third of total expenses at such firms, up from 26% in 2014, according to study from by Deloitte’s Casey Quirk and Aon’s McLagan.
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Brent McIntosh is Citi's chief legal officer and corporate secretary. Brent leads Citi's Global Legal Affairs & Compliance organization, which includes the Legal Department, Independent Compliance Risk Management, Citi Security and Investigative Services and Citi's Regulatory Strategy and Policy function. He is a member of Citi's Executive Management Team.
Brent served as under secretary of the Treasury for international affairs from 2019 to 2021. From 2017 to 2019, Brent served as Treasury's general counsel. Prior to that, he was a partner in the law firm of Sullivan & Cromwell.
Brent served in the White House from 2006 until 2009, first as associate counsel to the president and then as deputy assistant to the president and deputy staff secretary. Before that, he was a deputy assistant attorney general at the Justice Department.
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Susana Ortega Valle is the VP of Product, where she leads the strategic vision for how small business owners engage with insurance. Throughout her two-decade career, she has built a reputation for developing high-performance teams that thrive on innovation and challenge conventional thinking.
Prior to joining Simply Business, Susana held digital product leadership roles at State Street and Santander Bank. Her approach to data-informed, AI-forward product strategy is backed by a robust academic foundation, including two MS degrees in Telecommunications Engineering and an MBA from MIT.
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Advisors know that a transition plan is important, but many fall into the trap of procrastination.
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Overall, expenses have outpaced or matched revenue growth during the past four to five years, while aggregate fees declined almost 20%, the study found. Industry revenue expanded only 8% from 2015 to 2018, reaching $289 billion. By contrast, assets jumped 20% during that period to $71.8 trillion.
McLagan Partner Adam Barnett predicts the disruption will only intensify. “Today’s environment serves as a warm-up to challenges we expect during the next market downturn,” he said. “Firms must more effectively manage their costs and clarify their value-sharing propositions with employees and shareholders.”
Implementing such initiatives may cut firm expenses by as much as 17% and also save the industry up to $13 billion, the consultants said.
“It’s now a necessity, not a luxury, for asset managers to reduce expenses by automating, streamlining data and technology, and shifting functions to lower cost locations,” said Amanda Walters, senior manager at Casey Quirk. “Performance alone isn’t going to win the day."
The study includes data from more than 70 investment management firms based in North America, Europe and Asia with more than $30 trillion combined. Data from Morningstar and eVestment were also used. — Additional reporting by Annie Massa
