Compared to other industries, asset managers are far more concerned with their rivals when it comes to digital transformation, according to a Fortune Knowledge Group survey (see table below).
With competition for assets only getting stronger, asset managers are exploring ways to separate themselves through digital capabilities. However, when asset managers focus their budget on the infrastructure to build products, they miss out on a key competitive advantage.
For example, consider The Vanguard Group. Vanguard earned 54 percent of flows into mutual funds and exchange-traded funds (ETFs) in 2016, according to Morningstar data reported by the Wall Street Journal. That’s not because they are necessarily the best performing funds or the most innovative on the market. What they do have, is one of the most unique value propositions and brands out there as a recognized leader in low-cost investing.
Optimizing the infrastructure to build products is more of a means to an end to free up funds to compete. Understanding the customer’s needs at each stage of engagement, from initial outreach to investment selection and beyond, can help firms earn asset flows. That requires asset management marketing teams to become more accountable for creating a unique value proposition, driving client engagement and generating a measurable return on investment (ROI).
Marketing to Drive Value
For many asset managers, there is an interesting tension that has developed within the organization between investing in competitive capabilities versus investing in operational cost savings. This tension is felt acutely within asset management marketing teams.
Some asset management marketing teams don’t run campaigns but rather perform routine sales support or enablement (i.e., producing a fact sheet or performing quality assurance). Further, marketing teams often aren’t allocated enough budget to expand their output beyond ordinary, manual production efforts.
The challenge is twofold. For one, marketing isn’t being held accountable for ROI. For another, the opportunity to achieve ROI is limited if marketers remain in simply a sales support role.Without breaking this self-fulling cycle, marketers are unable to help drive the firm’s unique value proposition in the market, such as tailoring messaging to specific clients or leveraging digital technology to create more unique and relevant content.
In this first wave of digital transformation, many asset managers have undergone capability-oriented transformation where new services are IT driven. However, as firms are more aware of digital capabilities,cost implications and competitive challenges in the market, digital transformation is becoming business driven. Firms are placing attention on their strategic direction and looking at their businesses programmatically. They are creating change management initiatives with their chief data officer (CDO) or digital product managers.
As firms re-evaluate their transformation strategies, it’s important they ensure internal resources are aligned and create actionable metrics to see where their digital investments generate the most value and opportunities.
Another essential consideration is talent. Digital transformation is not simply about having the right skills for individual projects and capabilities. The skill sets that are especially important are those tied to transformation and change. The ability to look at the impact on business processes and outcomes and align technology, capabilities and policies around them.
There are newer technologies emerging in the market. With those come required expertise and new ways of thinking to integrate them within existing infrastructure and legacy systems. It is a shift in mindset from worrying about the infrastructure behind the scenes to a focus on how those pieces are maintained and integrated. Change management and transformation expertise are some of the primary challenges when it comes to activating digital transformation programs.However, these skills are essential to solidify a value proposition and to create cost efficiencies.
For instance, many asset managers don’t have the required in-house digital marketing or digital product experience. That’s led some banks to acquire this talent. Capital One acquired Monsoon, a design and development firm, in 2015 and Adaptive Path, a design agency, in 2014.
Increasingly, asset managers will consider opportunities to acquire and hire this talent (e.g., a design agency, data scientists or predictive analytics) or partner with digital agencies.
Winning Digital Transformation
Winning asset management firms embrace customer centricity. However, most firms start their digital transformation with infrastructure rather than customer experience.
To differentiate products and services, asset managers can focus on how their offering specifically addresses the needs of their customers and define a value proposition that is authentic to their organization.Automating sales collateral and outsourcing non-differentiated marketing tasks can enable asset managers to create cost savings through efficiency gains. That frees up budget for digital solutions, talent or acquisitions,giving marketing teams the ability to optimize the engagement sales cycle in ways that are extremely relevant to the customer.
Jarlath Forde is a Vice President at Sapient Global Markets. He is focused on fusing design principles with technology to optimize business processes and transform the client experience. He has spent the last 16+ years shaping interactive initiatives for companies around the world, designing high-performance complex user interfaces and creating compelling information designs and visualizations.
David Poole leads Sapient Razorfish’s Financial Services Center of Excellence, which supports a global network of asset managers, insurance and banking clients in thought leadership, innovation, and customer insight. A change agent with over twenty years’ experience,David shares his passion for making it fun to be financially healthy.
Estate planning for wealthy celebrities or UHNWIs
By Sean Sheridan, Client Director, ZEDRA Isle of Man
Estate planning often gets pushed aside…sometimes with disastrous knock-on effects for a family. With today’s evolving regulatory environment, future planning can be challenging and often daunting.
Despite inevitable obstacles, there are ways to minimise the burden to enable even celebrities to have future generations enjoying the benefits of their wealth. In this article we explore why estate planning gets overlooked, and why it’s so important to protect prosperity and interests.
It’s easier to put off estate planning than you’d think – even for people like celebrities or UHNWIs who have earned significant wealth. For example, it’s thought that the great Diego Maradona passed away without leaving a Will or other plans for his assets, despite recent years of ill health. There were already reports of a contested estate just weeks after his funeral. Michael Jackson, Prince, James Gandolfini and Philip Seymore Hoffmann all passed away with various issues with their estates, despite having amassed fortunes.
It’s not disorganisation or a lack of desire that stops people planning their estate. In fact, often the last thing people want is to leave family or loved ones having to deal with probate and complex legal affairs at an already difficult time. Many people simply put off estate planning, thinking they will have time later…whenever that is. Alternatively, they may not comprehend how challenging it can be to untangle an intricate estate, and what legal rules there are that surround how an estate will automatically be divided amongst heirs and spouses if forced heirship laws apply. Equally, many people may not know that some loved ones may not get any assets or be looked after if provisions aren’t made in advance.
For UHNWI a properly planned estate can also mean more privacy for family at a challenging time. Many HNWI will choose – along with advisors – a structure that will allow for maximum confidentiality and will keep the details of the estate and any beneficiaries private. Information about beneficiaries of an estate becoming public can also make them a target for press or other unwanted attention. As structures which allow for both discretion and succession planning, trusts can be very popular for this reason.
Trusts also allow for settlors to stipulate the conditions under which beneficiaries may have access to or be given money from a trust.
Trusts allow the settlor the ability to lay out one or more conditions. For example, a settlor could put aside assets in trust to support beneficiaries but not make all the assets available to them at once. This might be to support good governance or simply to protect beneficiaries from some of the hazards associated with wealth, as perceived by the settlor.
Practically, this means a settlor and their advisors might look at different conditions for a trust’s assets. For example, beneficiaries might only receive a lump sum every 10 years. Alternatively, they might get a monthly pay-out, similar to a salary. The settlor might wish that funds are paid out to beneficiaries for the sole purpose of paying for their college education or to purchase a property.
Corporate trustees like ZEDRA ensure that the settlor’s wishes are met, and the assets of the trusts are used in the way the settlor would like and as laid out in the trust deed.
Planning ahead with advisors is vital – especially for anyone with a complex assets and interests that span various geographies may be complex in terms of nature, like IP rights.
Expert advice that’s tailored around an individual’s personal situation is a must, so thinking ahead is crucial. It’s never too early to make sure you’re planning your estate and making sure loved ones or important causes will be looked after when you’re gone.
Dollar edges lower as investors favor higher-risk currencies
By Stephen Culp
NEW YORK (Reuters) – The dollar lost ground on Friday as market participants favored currencies associated with risk-on sentiment over the safe-haven greenback.
Risk appetite was stoked by better-than-expected economic data and expectations that U.S. President Joe Biden’s proposed $1.9 trillion coronavirus relief package will come to fruition.
“The dollar’s down against other currencies but not by a whole lot,” said Oliver Pursche, president of Bronson Meadows Capital Management in Fairfield, Connecticut. “I expect the dollar to be where it is now at the end of the year, and the main reason for that is while I see some signs of improvement in the economy, monetary policy is going to stay where it is.”
“I don’t think the dollar is underpriced or overpriced,” Pursche added.
For the week, the dollar slid about 0.2% against a basket of world currencies, the euro was essentially flat, and the yen lost more than 0.5%. But the British pound advanced more than 1.1% against the dollar, its best week since mid-December.
Bitcoin continues soar to record highs. The world’s largest cryptocurrency was last up 6.6% at $54,961.67, hitting $1 trillion in market capitalization.
Its smaller rival, ethereum, was last up 0.7% at $1,953.28.
The digital currencies have gained about 89% and 1,420%, respectively, year to date, leading some analysts to warn of a speculative bubble.
“One concern I’ve always had (about cryptocurrencies) is how susceptible they are to manipulation,” Pursche said. “But they’re going to continue to gain legitimacy.”
“While it’s great that Tesla made an investment in bitcoin, I’m more intrigued by Blackrock and other major investment firms taking a hard look at cryptocurrencies as a viable investment.”
The Australian dollar, which is closely linked to commodity prices and the outlook for global growth, was last up 1.21% at $0.7863, touching its highest since March 2018.
The New Zealand dollar also gained, closing in on a more than two-year high, and the Canadian dollar advanced as well.
Sterling, which often benefits from increased risk appetite, rose to an almost three-year high amid Britain’s aggressive vaccination program. It had last gained 0.27% to $1.40.
The euro showed little reaction to a slowdown in factory activity indicated by purchasing manager index data, rising 0.21% to $1.2116.
The yen, gained ground against the dollar and was last at 105.495, creeping above its 200-day moving average for the first time in three days.
(Reporting by Stephen Culp, additonal reporting by Tommy Wilkes; editing by Jonathan Oatis)
Shares rise as cyclical stocks provide support; yields climb
By Saqib Iqbal Ahmed
NEW YORK (Reuters) – A gauge of global equity markets snapped a 3-day losing streak to edge higher on Friday, as the recent selling pressure on high-flying big technology-related stocks eased even as investors showed a preference for economically sensitive cyclical sectors.
Oil prices fell from recent highs as Texas energy companies began preparations to restart oil and gas fields shuttered by freezing weather, while the U.S. Treasury yields extended their recent rise.
The MSCI’s global stock index was up 0.47% at 681.88, after losing ground for three consecutive sessions.
On Wall Street, stocks steadied as cyclical sectors edged higher while tech names made modest advances after concerns about elevated valuations led to some selling in recent sessions.
“What we saw (this week) represents a market that is tired and may not do very much. So we are headed for some sort of a pullback, but I don’t think we’re there just yet,” said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.
“Investors are not really pulling out of the market, but they are becoming more cautious. It already has factored in another good positive earnings season.”
The Dow Jones Industrial Average rose 119.97 points, or 0.38%, to 31,613.31, the S&P 500 gained 12.93 points, or 0.33%, to 3,926.9 and the Nasdaq Composite added 92.58 points, or 0.67%, to 13,957.93.
The S&P 500 technology and communication services sectors, housing high-value growth stocks, were among the smallest gainers in early trading, while financials, industrials, energy and materials rose more than 1%.
European shares edged higher on Friday as an upbeat earnings report from Hermes boosted confidence in a broader economic recovery. The pan-European STOXX 600 index was 0.64% higher.
U.S. Treasury yields on the longer end of the curve rose to new one-year highs on Friday as improved risk appetite boosted Wall Street, while the yield on 30-year inflation-protected securities (TIPS) turned positive for the first time since June.
Core bond yields have pushed higher globally, led by the so-called reflation trade, where investors wager on a pick-up in growth and inflation. Growing momentum for coronavirus vaccine programs and hopes of massive fiscal spending under U.S. President Joe Biden have spurred reflation trades.
The benchmark 10-year yield was last up 5.1 basis points at 1.338%, its highest level since Feb. 26, 2020.
Oil prices retreated from recent highs for a second day on Friday as Texas energy companies began preparations to restart oil and gas fields shuttered by freezing weather.
Unusually cold weather in Texas and the Plains states curtailed up to 4 million barrels per day (bpd) of crude oil production and 21 billion cubic feet of natural gas, analysts estimated.
Brent crude futures were down 28 cents, or 0.44%, at $63.65 a barrel, while U.S. West Texas Intermediate (WTI) crude futures fell 66 cents, or 1.09%, to $59.86.
Copper jumped to its highest in more than nine years on Friday and towards a third straight weekly gain as tight supplies and bullish sentiment towards base metals continued after the Chinese New Year.
Spot gold XAU= was down 0.58% at $1,785.71 an ounce.
The dollar lost ground on Friday, extending Thursday’s decline as improved risk appetite sapped demand for the safe-haven currency and drew buyers to riskier, higher-yielding currencies. The dollar index was off 0.295%.
Bitcoin hit yet another record high on Friday, hitting a market capitalization of $1 trillion, blithely shrugging off analyst warnings that it is an “economic side show” and a poor hedge against a fall in stock prices.
(Reporting by Saqib Iqbal Ahmed; Editing by Nick Zieminski)
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