There are many external challenges facing the asset management industry, including demands for sustainable finance, volatility in capital markets, technological innovation, and cyber threats. Firms must also navigate further rafts of new rules, increasing regulatory divergence and greater supervisory scrutiny. Firms need to adopt resilient and dynamic business models if they are to be successful.
Regulators around the world are focusing on common themes in a fast-changing world. However, a lack of global standards and national nuances mean that they are implementing detailed rules and guidance in different ways. Increasing regulatory divergence is causing complexity and challenges for cross-border asset managers in terms of how they manage and market their products.
Key actions for CEOs
Deliver sustainable finance: Review the firm's overall strategy, embed sustainability factors into the investment process, ensure names and disclosures correctly reflect product offerings, and prepare to meet expanding disclosure requirements.
Mitigate systemic risk: Review investment risk management arrangements, particularly relating to the liquidity management of open-ended funds, and stress testing. Control the use of leverage and adopt asset valuation best practices, especially for private, real and crypto-assets.
Double-down on resilience: Review the risk management framework and controls in the light of challenges and opportunities. Identify and manage operational and information security-related risks, including third-party oversight arrangements. Maintain adequate financial resources.
Embrace innovation: Explore potential uses of tokenisation and artificial intelligence to drive efficiencies and new business, within the guardrails of the evolving regulatory framework.
Protect investors: Align the firm's strategy, culture, and purpose with clients' best interests.
Project good governance: Evaluate the success of the firm's culture, leadership, and governance model, and make changes where needed. Encourage a “speak-up” culture, ensure the composition of boards provides sufficient knowledge, expertise, experience and challenge, adopt a flexible business model, and deter financial crime.
Seize opportunities: Factor opening markets and new and evolving fund vehicles into the business and product strategy.
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