Memories of losses during the bear market of the early 2000s, the fund scandal and heavy-hitting new legislation have made investors nervous. As a result, investment companies around the world are scrambling to restructure, a new report finds.
The report, a joint effort by the CREATE and KPMG, is called "Raising the Performance Bar: Challenges Facing Global Investment Management in the 2000s." It asked fund managers from 29 countries about profitability and ways to resuscitate it. The results: Companies are increasingly recognizing that they themselves must change. One of the key issues, of course, is regaining investors trust.
To do so, companies are beginning to abandon the "be everything to everybody" strategy of the past decade and returning to their core competencies. Often, that means outsourcing or partnering with another firm that already has strengths in a coveted area, the report found.
"The industry faces some tough challenges ahead in this new environment of intense scrutiny," KPMG financial services leader Harry Ort told Canada-based CMA Management. He added that the "validity of all the fundamentals of the business model, such as performance and charges and service, are now being questioned."
The biggest challenge, the report says, will be to change the industrys collective mindset without turning over all the companies key staff members.