If you look back at the history of asset management, investors are better off today than ever before — at least according to Kunal Kapoor, Chief Executive Officer at Morningstar.
Kapoor explored the latest product development trends in the asset management industry during Nicsa’s 2019 General Membership Meeting in Boston. The presentation was followed by a panel discussion with the industry’s top product and distribution leaders from American Century, Fidelity Investments, and Merrill Lynch.
“By most measures, it’s difficult to disagree with the notion that investors are indeed better off today,” Kapoor said. He based his assessment on three critical trends:
1) The investor is empowered with new data, research, and analytics.
2) Investors are demanding more value from the advice they’re receiving.
3) Portfolios now feature a convergence of public and private market investing.
“These trends are important because they get to the heart of another opportunity, which is personalization,” he said. “We want to get to a place where we can start to show the value of that personalization more meaningfully.”
In terms of product/solution trends, Kapoor focused on three key points:
“Even in the active area, if you look at our data, low-cost active is winning,” he said. “The same thing is true, where high-class passive is not doing well. Fees are declining across the board in that regard.”
DRIVING LOYALTY
Sandy Bolton, Managing Director, Head of Managed Investments - Investment Solutions Group at Merrill Lynch, agreed with Kapoor that there’s a need for advisors to better articulate their advice.
“It can’t just be around the investments anymore; it has to be around a holistic approach to overall financial planning,” she said. “We’re trying to show advisors that the more touchpoints you have with your client — whether it’s helping them with lending, their banking relationship, or their mortgage, whatever that connection might be — that’s what drives loyalty.”
Vipul Gautam, SVP Director of Research, Workplace Investing at Fidelity Investments, shared his insight from a retirement perspective. “We’re trying to go into a multiproduct relationship,” he said. “So we have a 401K/retirement plan, but can we also provide you an HSA?”
Glen Casey, Global Head of Products, Senior Vice President, American Century, said that in the intermediary distributed business, concentration has made it more difficult for asset management firms to establish a brand.
“Many advisors only know a particular asset manager through the prism of a single product, and that’s a very different proposition from a decade ago when advisors would look to do business with a small number of firms and know them holistically,” he said.
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