Asset management industry to radically transform over next 15 years, says KPMG

The global asset management industry will radically transform over the next 15 years due to seismic shifts in client demographics, technology and changing social values and behaviours, according to a new report from KPMG International.

The report, Investing in the Future, predicts that by 2030 the client base of a typical asset manager will be completely different from today’s, as generation X approaches retirement, generation Y matures and the middle class expands in emerging markets. The report warns that current business models will not be fit for purpose.

Tom Brown, global head of investment management at KPMG International, said: ‘We are on the verge of the biggest shake-up the industry has experienced; and the message to asset managers is clear — adapt to change or your business won’t survive. The two biggest issues that need to be addressed are the changing client base and technology, and asset managers need to get to work on these areas now.

‘It is no longer just about attracting the clients who are armed with cash and ready to invest. The successful asset managers of tomorrow must focus on building cradle-to-grave relationships with a dramatically different and more diverse client base from today, which includes much younger investors. They must also be mindful that women are increasingly controlling a bigger share of family wealth.’

The report also highlights the importance of technological investment and warns that businesses are currently focusing on the wrong areas.

Ian Smith, financial services strategy partner with KPMG in the UK, commented: ‘Technology plays a critical role in the industry’s future. The clients of the future will be fundamentally different in terms of their needs and expectations. They will demand more personalised information, education and advice that will require asset managers to radically address their technology capabilities to really understand their clients and support this level of service.’

Furthermore, most people will buy investment products online rather than through a face-to-face adviser, according to the report. Customers are also expected to buy based on their own research supported by crowd-sourced opinions on ‘TripAdvisor-type’ websites.

Smith said: ‘The growing relevance of online communities and social networks is also changing attitudes and behaviours. Consumers are increasingly looking to “people like me” rather than professionals for advice, guidance and direction.’