What does an investment management business look like when it has been redesigned from the ground up and based on an investment manager’s genuine “jobs to be done”? “Even millennial-friendly platforms like Betterment, RobinHood, and Wealthfront take a one-dimensional approach to their companies,” said Suzanne Ley, previously of Westpac’s financial institutions division.
“We need to concentrate on how China is leading the way by completely transforming how we think about money and investment.” Alibaba’s Yu’e Bao fund, for example, has grown to be the world’s largest in just four years. The barriers between shopping, banking, investment, and social networking are rapidly dissolving.
SoFi, a full-service loan, money management, and social networking platform, is the only brand I can think of in the United States that comes close.” The five traits that will distinguish the winning investment management business of the future are outlined.
Money managers are investing in artificial intelligence and big data skills, as well as a seamless integration of front- and back-office procedures, on an internal level. Leaders are boosting their usage of social media and developing mobile and tablet apps. In the future, novel models will combine investment with elements of social media, interactive gaming, and education, particularly in the retail area. Technology will enable more proactive, completely configurable risk management and governance for institutional investors.
This quant model has been proven in the public markets by firms like D.E. Shaw, Two Sigma, and Renaissance Technologies. Firms like Versatile VC, Signalfire, and GV are increasingly employing technology to improve private market returns.
As the veil of opacity lifts, money holders will be able to discover who has been working in their best interests. The black box hedge fund approach is expected to lose favor. Investors are increasingly seeking clear, succinct, and consistent communication from their asset managers, according to Amanda Tepper, CEO of Chestnut Advisory Group.
Investor communication is essential to an asset manager’s objective, according to 92 percent of respondents in a recent Chestnut investor poll. Money managers must comply with an expanding number of regulatory regulations in addition to investor requests.