In 2021, the investment management industry fared well despite the pandemic-driven market volatility. Success in 2022 will likely be driven by investment management firms’ ability to create a virtuous cycle of their leadership’s vision, strong talent models, operational improvements, alignment with stakeholder expectations, employee resilience, and strengthening culture.
Respondents that made a lot of progress quantifying the impact of diversity, equity, and inclusion (DEI) initiatives were more likely to indicate that employee engagement and productivity have become much stronger since the start of 2021 than those who did not make a lot of progress quantifying the impact of DEI.
There’s a need to bring in agility into talent management.
The return to the workplace strategy remains under development at many firms.
Digital transformation investments are paying off
An overwhelming majority (85%) of our respondents that use artificial intelligence (AI)-based solutions in the pre-investment phase either strongly agreed or agreed that AI helped them generate alpha. Nearly three-fourths of our survey respondents said that they would increase their budget for alpha-generating technologies such as AI, including NLP/G, and alternative data over the next 12–18 months.
Firms are accelerating digital transformation efforts, but appears to be a significant regional difference in the implementation of adequate governance mechanisms.
European firms lead on the responsible implementation front with 27% of the respondents indicating that their firms are accelerating digital transformation as well as updating governance, followed by respondents from Asia Pacific (20%) and North America (11%). Left unchecked, inadequate governance and reporting that trails digital transformation could lead to significant financial, legal, and reputational repercussions.
Investment managers are engaging with clients in some ways not possible earlier. Firms are utilizing technology to interact with clients through digital channels, handle client queries through intelligent chatbots, leverage virtual meetings in their sales and relationship building processes, and provide customized reporting. Survey results indicate that 38% of respondents from digitally advanced firms expect significantly better revenue prospects in 2022 compared to just 13% for other, less digitally advanced firms.
Leadership and employee drive to exceed customer expectations are key elements that will likely have a huge role to play in fueling progress.
https://www.iosco.org/library/pubdocs/pdf/IOSCOPD45.pdf
https://www.wellington.com/en/insights/investment-market-outlook-us
