Although firms now realize the competitive advantage that comes with embracing new technology, are they willing to make the investments needed to overhaul their platforms and increase office efficiency?

Eighty-one percent of managers surveyed in the recent Forbes Insights, a report conducted in association with EY and SEI, agree that an increased investment in improving technology and creating broad strategy offerings for clients is not only crucial, but necessary for doing business in the years ahead. But just 39% of firms say they are making the investment.

"Why that gap exists is because of two things," Samer Ojjeh, principal at EY, explains. "One is distraction from regulatory pressure from regulators across the globe; managers would have to react to regulatory demands, in many cases, in a tactical fashion."

Ojjeh adds "asset managers, broadly speaking, are being demanded by their investors and clients to have a broader strategy offering."

Many of these anxieties stem from the growing sophistication of wealth managers and advisors, many of whom are now segmenting their own client base to meet investors' demands, according to the report.

As a result, 42% of firms say they have been reluctant to embrace technology because this has made it difficult to meet their expectations.

"The one major factor in improving margin is in automation, and investing in technology and investing in data," Ojjeh says.


The benefits of integrating robo tools are undeniable, according to EY survey respondents, and that is something many managers have already considered.

More than half (56%) of executives say they are in pursuit of generating greater operating efficiency and cost reductions through the use of new tech tools. In the search for optimizing costs, EY survey respondents say they are interested in making infrastructure investments to reduce operating costs, negotiate with service providers, outsourcing and migration to the cloud.

"The focus on fund raising and distribution is definitely accelerating by opening a platform," Ojjeh notes. "That is one dimension how they are achieving that by increasing volume, improving scale to improve the margin."

Joel Hempel, the chief operating officer at Lockwood Advisors, an affiliate of Pershing, suggests the race to greater efficiency has created an entirely new playing field; one that cannot be considered without the integration of robo tools.

"The rise of robo and digital advice platforms has changed the landscape," Hempel says. "It has forced asset managers to look hard at what they are doing to enhance the client experience, while at the same time evolving their internal processes to achieve greater efficiency. Technology is a key component in that transition."


Roughly 67% of asset managers surveyed say client-facing technology is a priority. Nearly 81% believe technology can help improve the client experience and 80% say they are now using technology to reach new clients.

Meanwhile, more than a third (39%) of companies are actually making investments in new ways to improve the client experience, while 37% have made investments in expanded device accessibility, according to the report.

"Technology is changing rapidly, so it is critical for asset managers to be well-networked and well-informed about the latest technologies," Hempel explains. "They need to ask themselves what they want their engagement model to be." Hempel adds, "When evaluating new technologies they should think in reverse - how do I want to engage my clients, what is the outcome I want to achieve and how can this technology help me achieve that outcome?"

In terms of making investments in new technology, 46% of managers say digital transaction execution is their top priority, while 44% cited improvements to advice and research delivery, according to Fidelity Insights. Also, 44% have made investments in improving payments and settlements capabilities.


Another challenge facing firms includes finding better efficiency when it comes to regulatory and compliance reporting, an issue 73% of Fidelity Insights respondents cited at the forefront of their to-do list. Almost 70% of managers say they are interested in tools designed to drive product innovation while training wholesalers and accelerating time to market for new products were are also considered key challenges.

Mike Pytosh, the senior marketing director and head of equities at Voya Investment Management, says the transition into a more technologically savvy operating model is part of the challenge.

"I think we all feel the pressure to keep up," Pytosh says.

Nearly 47% of managers say the biggest challenge is finding an increased diversity of products and strategies while the same amount say changing investor demographics are key factors for an overhaul.

In the search for a competitive advantage, 42% of managers say they are finding ways to blur the line between traditional and alternative products to drive change.

"We have great performance, but it's still difficult because the people that we would normally sell to often times have gone passive for the core of their portfolio and then they were looking for very concentrated high-octane solutions for that little piece of alpha and performance they want to generate," Pytosh explains.


Around 66% of asset managers surveyed say they believe their segment is undergoing significant changes in embracing technology.

Technology, according to EY, has reached a strong level to support even the complex products; however the challenge is leveraging what is already available in a strategic way with a strong governance and data framework that has not yet caught up.

"That's what is preventing managers from really optimizing their operating model and full benefiting from the advancement in technology," Ojjeh says.He adds that service providers can also play a key role in fulfilling non-core functions that help build scale and automation to support a manager's growth and enhancement of margin. 

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