JP Morgan has announced a dedicated $30 million investment in new product and technology solutions to help Australian super funds and other institutional investors better manage their business.
The new solutions are a response to the impact that impending regulatory change is having on investors and the changing shape of the market.
“Australian super funds are changing the way they do business, and in many respects this is being driven by the needs of their members,” JP Morgan Worldwide Securities Services (WSS) chief executive Mark Kelley said.
“We believe the industry is being driven by what we call ‘the three Rs: regulation, returns and risk.”
The local enhancement to its services, which has already begun, will continue through 2013.
“While they’re trying to achieve the regulatory requirement, risking their portfolios and getting better returns, they need to reduce their operating costs. That’s a clear trend in this industry and every other one,” Kelley said.
He also noted emerging themes for the market affecting investors and their businesses.
“There is more and more consolidation happening and it will not abate for at least the next few years. Part of what is happening in the consolidation though is making it very clear one size or one service does not fit all,” he said.
“There is also obviously a changing demographic. There is a shift from the accumulation stage to the income-generation stage.
“That will shift for many in this industry exactly how they go on thinking about their members, their life cycle and the differences between the accumulation activities and what you do to accumulate funds, and generate returns into the income generation and how you generate stability for people to live off what they have been saving.”
He also noted the accountability and responsibility of boards was gaining interest in Australia.
There would be more interest in making sure boards were properly constructed to benefit members, he said.
