Our society is changing and evolving in ways that are having a major impact on the financial marketplace. The business environment is facing newer and greater challenges. As a result, asset management companies are becoming extremely competitive. There’s never been a greater need than now for asset management companies to track and control their assets, optimize their processes and keep costs in check. Recent market changes are affecting asset management companies of every size.
The Top 5 Challenges for Asset Management Companies
Asset management companies face a host of challenges — many of which these companies can meet more easily by using fully integrated electronic solutions.
- The Financial Industry Enters the Distribution Phase: For several decades, the financial industry has focused on strategies and trends in financial growth. The Baby Boomer generation, which was one of the most sizeable generations of all time, is leaving the workforce in record numbers and entering the retirement stage. As the Baby Boomers leave the workforce, they’re starting to take their long-time investments with them. Millennials are starting to replace Baby Boomers in the workplace; however, a Pew research study reports that about 56 million millennials remain out of work. Those statistics combine to help us understand why asset management companies are losing customers and not finding viable ways to replace them.
- Greater Focus on Transparency and Compliance: New regulations call for greater transparency and compliance. Asset management companies largely agree with the reason for the regulations. At the same time, they’re finding it difficult to cope with the needed budgetary increases to support transparency and compliance. Some companies need to hire additional staff to meet the necessary requirements. Other companies opt to hire third-party vendors to manage handling regulatory matters. Either way, the changes increase overhead with no practical way to recoup the extra costs.
- Smaller Firms Lose Their Competitive Edge: The changes in the financial industry, combined with increased regulatory matters, are making it difficult for small asset management companies to compete with the larger players. As a result, they’re seeking strategic partnerships to stay in the game. Many are also looking for merger and acquisition opportunities to provide the extra services needed so they can survive.
- Succession and Recruitment: According to a 2016 report — EY: The Next Generation of Financial Advisors — the average age for financial advisors is the early 50s. That is an indication that a lot of institutional knowledge will be walking out the door over the next decade or two.The financial crisis caused clients to watch their personal investments much more closely. The emerging investor clientele is better educated than ever before. Today’s clients arrive at their appointments armed with information and lots of intelligent questions. They make it known that they desire to have a hand in their financial planning.Today’s public is doing their due diligence in checking the credentials of investment firms and advisors and weighing in on the firms’ reputations. Asset management companies are finding that they need to find ways to create value for clients independent from the performance of their investment portfolios.
- Information Security Governance :Asset management companies handle large amounts of sensitive data. As a result, they need a process for continually identifying and mitigating security risks. For example, asset management firms must provide extra levels of security in the areas of:
- Research and development
- Proprietary information
Data breaches are occurring daily, and new laws, such as GDPR, are requiring special handling of data and extra doses of security. As frequently as data breaches occur, companies can’t let down their guards or become complacent. Asset management companies have to be aware of the latest expected security measures and find ways to limit user access to data.
In addition to having secure modes of managing transactions and client data, asset management companies must have secure messaging platforms. It does little for companies to have the best security on their main systems while allowing board directors, managers and other employees the ability to use other platforms like business or personal email accounts that are less secure and that could compromise the security of the larger system. Clients want to work with asset management companies that are devoted to implementing the highest security measures possible for protecting all data and communications.
Total Enterprise Governance Management Solutions
A board portal is a good beginning to solving the numerous challenges that asset management companies must overcome to survive and thrive in today’s financial markets. However, a portal by itself is not always enough to meet the evolving needs of asset management companies. That’s why Diligent Corporation invested heavily in research and development to create an entire suite of software solutions to meet the many needs of asset management companies and other businesses.
Enterprise Governance Management (EGM) is the discipline of applying technical tools and resources to the full range of governance needs to govern at the highest level and to deliver long-term success and sustainability. The board portal serves as a cornerstone for the following suite of products for a secure and fully integrated total EGM solution.
Diligent Boards meets the needs of virtual data rooms for efficient, secure online transactions for partnerships, mergers and acquisitions, and other sensitive transactions. Administrators can restrict user permissions as appropriate for security. The platform is also an electronic source for creating board books, voting and much more.
Director and Officer Questionnaires
Regulatory bodies and others are expressly interested in Director and Officer Questionnaires for meeting the needs of compliance and transparency. This product can be added on to the board portal.
Diligent offers an electronic board solution for board self-evaluations. The tool also integrates seamlessly with Diligent Boards. This tool aids boards in their efforts of recruitment and succession planning to replace the Baby Boomers who will soon retire from board service.
Resolutions and Voting
Diligent’s Resolutions and Voting tool streamlines the process for voting and making resolutions. Board directors can vote anonymously online and get results in real time. This tool meets the needs of asset management companies for transparency and efficiency.
The days where asset management companies could rely on business or personal email accounts to communicate client information are long past. These accounts simply lack the necessary security to protect sensitive date. Diligent Messenger is a highly secure digital messaging solution that interfaces with the rest of Diligent’s software solutions that comprise the Governance Cloud.
Diligent Minutes streamlines and customizes the process of taking and recording minutes. The program incorporates voting and electronic signatures and interfaces with the Diligent Boards portal to help solve problems of efficiency, compliance and transparency.
Diligent recognizes the strong competition that exists in the financial marketplace. Insights is an electronic solution that provides curated content and videos that are customized for each individual user to help them maintain the edge over their competitors.
Large corporations need control over multiple operations in multiple locations. Diligent solves this challenge with Entity Management software that assists asset management companies in monitoring and controlling assets.
Diligent’s Governance Cloud provides electronic solutions for the challenges that asset management companies routinely face. The needs of asset management companies will continue to evolve in the near future because of changes in the financial marketplace, societal changes and advancements in technology. That’s why Diligent continues to invest in research and development and to stay current with industry trends in order to provide the most innovative and valuable solutions possible.