Huge rise in assets and shift in investor base
The rise in the volume of investable assets is set to increase from around $64 trillion today to $102 trillion by 2020, a compound growth rate of nearly 6%. Assets under management in the SAAAME (South America, Asia, Africa and the Middle East) economies are set to grow faster than in the developed world. Growth in assets will be driven by three key trends: the government-incentivised shift to individual retirement plans; the increase of high-net-worth-individuals (HNWIs) from emerging populations; the growth of sovereign wealth funds (SWFs).
Pressures on the asset management industry
Alongside rising assets, there will be rising costs. First, the costs of complying with regulation will remain high. Commercial cost pressures will rise as firms grow their distribution networks. Fees will be under continued pressure amid the ongoing push for greater transparency and comparability. Investment in technology and data management will need to be maintained or increased to maximise distribution opportunities and to cope with regulation and reporting.
Nothing to hide, nowhere to hide, and nothing at risk
Full transparency over investment activity and products will exist at all levels; there will be nowhere for non-compliant managers to hide as regulatory and tax reciprocal rights criss-cross the globe. By 2020, only the plain vanilla managed account will remain outside regulatory reporting. By 2020, regulators will have real-time access to portfolios, cross-referenced to market data.