RESHAPING RETAIL FUND DISTRIBUTION

NEW TECHNOLOGIES AND MULTICHANNEL BRANDING ARE THE CATALYSTS FOR THE NEW BUSINESS MODELS OF ASSET MANAGERS AND DISTRIBUTORS Theway newgenerations of investors interactwith the industry and the way social media influences investment behaviour will be crucial elements of change in the industry’s balance of power. Millennials are supplanting Baby Boomers as the pri- mary investorship. In this new environment, technology is a catalyst for the creation of new disruptive business models. The increasing adoption of SMAC technologies to serve informed retail clients and create a constant flow of dialogue to promote products and services will be crucial. To increase brand recognition, ongoing multichannel dialogues with clients are likely to become a major differentiating factor in the industry. Also, to deliver proactive responses in a dynamic environment and to appease demanding clients, distribu- tors will have to build robust data architecture in the “cloud”, enhance their IT security standards (to avoid reputational issues associated with hacking) and strengthen their analytics capabilities (to capture clients’ feedback and influence their value proposition, among other things). Retail clients of the new generation will become “instividuals” in terms of their sophisticated information consumption which demands tailored service delivered through the latest technologies. Investments in technology are fundamental for assetmanagers and distributors who hope to succeed in the new investorship environment where cost pressure is mounting and the level of service sophistication is increasing.

As a matter of fact, these technologies have given people the opportunity to share information and opinions in peer-to-peer networks and to replicate the portfolios of peers who they think could “beat the market”. Companies such as eToro and Ditto Trade have built their approach to investing on the basis of investor communities. These changes have introduced a new arena to the asset management industry, in which the role of the distributor and the portfolio manager are commingled within web-based social networks and the financial skills of a community of investors.

LOOKING FORWARD

The next stage of disruption is already underway - Millennials are increasingly making investment decisions on their own without advice or intermediation. In the era of SMAC techno- logies, the emergence of investor communities and mirrored investingislikelytochallengetheprimaryroleofassetmanagers and distributors in the asset management space.

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