Investment industry leaders who fail to transform their business models could jeopardize the future of their firms, an industry report has warned.
The report, from the CFA Institute of investment professionals, said that change – in the form of technological advances, changing macroeconomic conditions and other factors – had put the industry at an “existential crossroads”.The “Future State of the Investment Profession” study released today addresses the key issues that it says the industry will have to confront in the coming years.
“Our industry is at an inflection point, where success or failure hangs in the balance,” said Paul Smith, the chief executive of the CFA Institute.
“Industry leaders will make decisions over the next five years that will have an impact not just on their firms, but also on the entire landscape of the investment profession as we know it.”
The study, which includes a survey of 1,000 industry professionals, analysed the most important skills needed for effective leadership in the future with some regions differing in their assessment of the skills that are most important for leadership success.
Respondents from North America (61%) and Europe (46%) said that the most important skill of an asset manager chief executive will be the ability to articulate a compelling vision for the institution.
In Latin America and in the Middle East and Africa, relationship-building skills (42% and 40% respectively) and crisis management (39% and 37%) will be the two most important skills for leadership success, respondents said.
Meanwhile, respondents in the Asia Pacific region see ethical decision-making (38%), and relationship-building skills (40%) as especially important.
Other key findings of the report are that:
- 73% of industry professionals expect environmental, social, and governance factors to become more influential
- 70% expect financial centres in the Asia Pacific region will become more influential
- 84% expect industry consolidation
- 70% expect to see more assets going into passive investment vehicles
- 63% expect profit margins at asset management firms to remain flat or to contract
- 57% expect institutional investors will look to reduce costs by in-sourcing more investment management activities
- 55% expect globalization will offer new opportunities for the investment professionals, while 18% perceive globalization as a threat
- 49% expect technologies will present new opportunities for investment professionals, while 23% see new technologies as a threat
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