Four Thoughts from Optima Group for 2018

As we look to year end, Optima Group would like to wish everyone a very Happy New Year. We hope you have time to relax and celebrate with your family and friends.

As 2018 fast approaches, we turn our thoughts to key issues, themes and trends for the coming year that we believe will impact the wealth and asset management industry. While by no means a complete list, based on our observations and research, we see four key trends and concerns that will drive much of what firms do in 2018.

1. Increased fee transparency and corresponding fee pressure on the manufacturing side

2. Continued search for alpha

3. Continued concern regarding cybersecurity

4. Leveraging technology to drive lead generation and sales efforts

Out in the open

The call for clarity of fee disclosure continues. That, combined with the availability of low-cost ETFs and other vehicles for just about any asset class you can name continues to put pressure on investment management fees, particularly for active managers. We believe this is a permanent shift in the investment landscape and that fee pressure on the manufacturing side is here to stay, particularly if performance lags. This trend is applicable to alternatives, where strategies that have failed to meet performance expectations have been met with increasing fee resistance.

In search of returns

Related to fee compression above is the search for sources of alpha in this long-running bull market. This has fed the trend of using cheaper products, especially for more efficient, core asset classes combined with the search for more unusual, non-mainstream asset classes, including private investments, real asset classes, etc.

You’ve been hacked

Cybersecurity and protection against fraud is top of mind for both financial services firms and their clients. End clients want clear indications that there are guards in place to protect against potential breaches, as well as the reassurance that firms are ready to respond quickly on behalf of their clients in the case of a problem. This means that service partners to wealth and asset managers, particularly those that deal with client information, such as custodians, face close scrutiny in terms of their expertise in combatting fraud.

A time to sell

Integration of technology into the sales and retention process is the name of the game. Using CRM for everything from managing the pipeline to tracking campaign results can help firms cost-efficiently step up their sales and marketing. But it requires a consistent and dedicated effort that can be hard to enforce. The rewards for those firms that do so are substantial, however.