Asset Managers Expect Growth in 2011, But Struggle with Readiness

A survey conducted by SimCorp found that most asset managers expect to have an increase in revenue and assets under management (AUM) over the next 12 months. At the same time, many in the industry expressed concerns that IT operations and regulatory changes could impact their ability to innovate and conduct business.

“The findings of this survey echo what we’ve been hearing in the industry about high expectations for growth in the year ahead,” said David Kubersky, managing director of SimCorp North America. “The survey revealed that many asset managers are concerned about how the growth of complex new investment strategies and expansion into new asset classes and markets is putting stress on existing front-, middle-, and back-office systems. More than ever, we’re seeing a growing need in the industry for enterprise-wide solutions that enable asset managers to quickly adjust to changing strategies and scale up as revenues and AUM continue to grow.”

Results of the survey showed that asset managers have an optimistic view on the growth of their firms over the next 12 months, with 90% of asset managers expecting an increase in annual revenue this year. In addition to positive revenue growth projections, 100% of all respondents expected AUM to grow this year, with 45% expecting growth of over 10%.

The survey also found that:

• While growth is a priority, the majority of asset managers are still in a position where they are relying on manual processes. Over 51% of asset managers indicated a moderate (31%) or high (20%) degree of manual processes in daily operations.
• Respondents indicated that with the existing investment management systems they have in place, the majority of respondents would take over three months to offer a new product to the market, with 26% of asset managers saying it would take over six months.
• Nearly all asset managers felt that increases in regulatory and legislative requirements will affect their organisation’s ability to innovate and conduct business. Over 80% of respondents felt that regulatory requirements would have a moderate to significant impact on their business.
• Even against this backdrop, over 50% of asset managers still have systems that only allow for a moderate to no degree of automation for new reporting requirements such as increased transparency in complex fund structures, regulatory reporting and client reporting.
• Many asset managers indicated a lack of growth-readiness – 38% of asset managers felt that their current IT infrastructure was either moderately or very little capable of supporting the future growth ambitions of their organisation.

The benchmark survey is based on 49 interviews conducted from April to July 2010 with respondents from around the world.

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