If you talk to any fund manager about his biggest takeaway from 2018, the first words will probably be “fee compression.” Investors want more for less. It’s not new, but fee compression has hit asset management in a big way in 2018.
At the end of a six-year rise in asset prices, what does the future hold for the industry?
The main trends affecting the asset management industry today are challenges to the business model and core investment theory. Rising asset prices since the financial crisis have helped asset managers to maintain margins despite the shift to low-cost investment strategies and product solutions.
But storm clouds are gathering … with increasing client demand for lower fees, new regulation, and closer scrutiny of the social value of the investment management industry itself.
Key Observations Of The Talent Pool
- Professionals are working more intensely and for much less return on effort. Burnout and pressure on morale are real concerns for team leaders.
- Ever-increasing investor demands are pressuring lean teams.
- Compensation models have become more team-oriented, with less emphasis on individual production.
- While demand for sales talent remains high, more professionals are considering their long-term career options.
- A debate is underway regarding the value of hiring and retaining senior, experienced industry veterans versus mid-level professionals.
- The demand for technically capable, client-facing professionals is high and intensifies every year.
- Compensation varies widely, with little standardization.
- There is demand for consultant relations professionals and a robust debate regarding best practices.
- Fundraising and sales maintain their lead in hiring activity, Product specialists (particularly at diversified firms) and investor relations (at alternatives firms) show particularly strong hiring.
- Top-notch persuasion and presentation skills are critical for investment managers seeking to build relationships with consultants, who are tightening their control of institutional assets.
What is The Talent Pool Profile?
For institutional sales and consultant relations roles, firms typically hire experienced buy-side client-facing professionals. Companies hesitate to hire someone without a demonstrated track record of success, given the cost of a bad hire.
Creative solutions are more common in filling client portfolio manager, product-specialist, and investor relations/client service roles. Companies are more open to talent from the sell side, investment roles, and consulting firms.
Hiring firms have a preference for candidates with MBAs and/or CFAs. 37% of respondents hold an MBA and 21% hold the CFA certification
Current Hiring Trends and Activity
- Fundraising, typically the most active function, is robust.
- There is strong hiring for product specialists, consultant relations, and investor relations/client service.
- Industry trends in capital flows reflect increased demand from private equity, real estate,
infrastructure, and private credit clients, and relatively more conservative hiring for hedge funds and traditional managers. - The challenging asset management landscape and why skills not traditionally associated with the industry are becoming more important.
As millennials grow in importance, winning firms will retool by focusing on three key areas: restructuring product portfolios, streamlining operations, and delivering technology-inspired customer experiences designed for the digital era.
While digital capabilities are becoming essential to compete in 21st-century asset management, for institutionally-driven managers the human touch will remain – and perhaps take on even more significance.
RESOURCES
2018 Investment Management Outlook
Top Ten Trends in Wealth Management in 2018
Top Concerns of Asset Management CEOs
