Exploring the future of investment management
Last week I was in Amsterdam for the International User Community Meeting of SimCorp, a leading provider of software for the investment management industry. I gave the keynote on the Future of Investment Management and ran a half-day Executive Master Class on Creating the Successful Organisation of the Future.
Prior to founding Advanced Human Technologies most of my working career had been in financial markets with Merrill Lynch and capital markets with Thomson Financial, with my final role as Global Director – Capital Markets.
My initial client base when I established my company was largely in financial services, and I began to focus on the investment management industry, for a number of reasons.
In the later 1990s my work and research was split between the fields of knowledge management and intellectual capital on the one hand, and futures methodologies such as scenario planning on the other.
I felt that one of the most important applications of our increasing understanding of intellectual capital was in asset management. Clearly information on non-financial indicators was often more important than historical financial data in making investment decisions, and I worked with a number of institutional investors on their efforts to value intangible assets of companies in which they were investing.
As I developed my expertise and experience in scenario planning, I saw there was an opportunity to apply scenario approaches to financial portfolio and risk management. I worked on applying qualitative scenario methodologies across several kinds of financial institutions, including asset managers and fund trustees.
In my book Developing Knowledge-Based Client Relationships, one of the key themes was that of adding value to client decision-making. Many of the case studies in the book examined how to enhance the cognitive and process aspects of financial portfolio decision-making, and I worked in applying that with a number of organizations, including the research departments of investment banks.
Having spent most of the last decade on broader issues such as the theme of living networks and examining the future of work, organizations, media, and government, it was a bit of a homecoming for me to speak at the SimCorp event.
Because I had not been deeply exposed to the industry for some time, in my keynote I spoke about high-level themes such as how changing information flows and distribution mechanisms are creating a wide variety of new opportunities in investment management.
Especially after running a highly interactive Executive Master Class with the most senior attendees at the conference, I found myself rather surprised to find that in fact the industry has changed very little over the last decade. Virtually the same issues – including talent, pricing, fee transparency, active vs. passive management, and distribution structures – are being discussed today.
There is a reasonable case to make that the investment management industry will change less than many others in years to come. The weight of capital to invest will inevitably increase, and there will be strong demand for capable fund management.
However there are certainly disruptions in store in investment management, and the industry currently hardly shines in its structural innovation. One of the speakers at the event noted that two-thirds of investment management firms ban social media in the workplace, a staggering statistic for companies that live off information flows.
In coming back to the industry I certainly see opportunities to help firms consider the future of the investment management industry, including identifying forthcoming disruptions and emerging opportunities.
I also see that there can be great value in applying what I have learned over the last decade and more in futures studies to the investment management process. I will be developing and sharing more content and ideas around the future of investment management in coming months.