Australia’s wealth and asset managers have proved to be largely resilient throughout the COVID-19 pandemic, however it has certainly accelerated the relentless digitisation of all aspects of their business, said Rita Da Silva, EY Oceania wealth and asset management leader.
“In 2022, as front and back-office functions evolve toward more automated process models to help manage costs and drive efficiencies, the industry will also need to focus on digitally enhancing their customer engagement and life cycle models and distribution channels,” Ms Da Silva said.
According to her, the coming years will see all client groups increase their demand for tailored investment solutions, advice and education, real-time personalised service and the integration of non-financial goals.
“Balancing these demands remains a challenging prospect for the sector,” Ms Da Silva noted.
Also in 2022, she expects institutional clients to continue to reduce their number of asset manager relationships, putting smaller firms under pressure.
In this environment, she said, any manager failing to create value will lose mandates, with many investors demanding solutions that preserve capital while delivering high yields.
“Asset managers will need to tailor propositions, models and teams around client needs to retain their business.
“In the superannuation space, we are likely to see super funds selectively insourcing parts of their portfolio management, as well as seeking out exclusive high-yield opportunities in areas such as private debt,” Ms Da Silva said.
“We can also expect further consolidation in the superannuation sector, as funds face continued pressure to justify their performance and member returns. Fund consolidation will push asset managers to build fewer, but stronger, relationships,” she added.
The focus on corporate social responsibility and sustainable investing is also tipped to accelerate in 2022 and beyond.
“Institutions will be seeking to balance their ESG commitments with their fiduciary responsibilities. At the same time, demand for alternatives and digital asset products and strategies will also accelerate.
“Sustainable success for the wealth and asset management sector in 2022 and beyond will require the delivery of: client value and trust; social value by integrating ESG within the business model; an inclusive and equality-driven culture; and financial strength and resilience, driven by technology enabled-models that will deliver stronger growth at lower cost,” Ms Da Silva concluded.
