Tax Function of the Future: Asset & Wealth Management

How will asset and wealth managers redesign, redefine and redeploy their tax function into a strategic asset?

As the asset and wealth management industry undergoes considerable growth over the next decade and global assets under management expected to reach over $100 trillion by 2020 – your tax function will need to shift from a reporting and compliance focus to a key enabler of your firm’s strategic direction. Our predictions for the tax function of the future of the asset and wealth management industry cover five main areas:

  • the global legislative and regulatory landscape for asset and wealth managers
  • the tax function’s role in your operations and investment performance
  • data flow into the tax function, and how it will drive your technology
  • how tax will affect your firm’s processes
  • people and organizational design

PwC’s predictions explore how leading asset and wealth managers are using data analytics and artificial intelligence in their decision-making and everyday tax reporting.

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Legislative and regulatory

  • Global financial markets, regulators, and other stakeholders will demand tax transparency, resulting in expanded reporting requirements filings, increased controversy, and reputational risk.
  • Global transparency initiatives, such as the OECD's Base Erosion and Profit Shifting Action Plan (BEPS), will fundamentally change how tax risks and opportunities are evaluated, impacting how investments are structured and measured.
  • US state and local jurisdictions will focus more on economic nexus and market sourcing, forcing fund managers to significantly expand their filing footprint, enhance investor reporting, and augment risk management policies.

 

 

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Data and technology

  • Tax functions will receive information in a 'tax-ready format' from either their enterprise-wide financial systems or Administrators, and bridge this information into a dedicated Tax Data Hub.
  • Tax Data Hubs will be mainstream and used to automate many tax calculations. Tax functions will seek the opportunity to migrate to one overall tax platform to harness analytics​. 
  • The vast majority of Tax functions will rely on professional data analysis tools to assist in the decision-making process in areas such as portfolio monitoring, fund performance, investor relations, and projection and scenario planning.

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Operations

  • Fund manager performance will be judged predominantly on post-tax yields relative to risk. Prospective investors will require disclosure of tax policies and risks, the amount of taxes paid, and where taxes are paid.
  • Fund managers with significant US state and local passthrough structures will be pressured by investors to offer composite returns to alleviate administrative burdens.

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People and process

  • Tax functions will use real-time collaboration tools to automate their workflow, document management, calendaring, and third-party data collection.
  • Successful tax professionals of the future will be highly proficient in data analysis and technology, as well as process improvement and change management. Their focus will be more on risk assessment, transactions, and investor relations, and less on management of data and tax compliance.

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Contact us

Bernadette Geis

Bernadette Geis

Asset and Wealth Management Leader, PwC US

Michael Shehab

Michael Shehab

Technology and Process Leader, PwC US

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