In 2021, the investment management industry fared well despite the pandemic-driven market volatility. While the overall outlook looks promising as we head into 2022, uncertainty around potential COVID-19 variants remains. This, along with a host of other factors, will likely continue to test investment management leaders as they strategize for the future and come up with credible tactical steps to deliver on their mission statements. Success in 2022 will likely be driven by investment management firms’ ability to create a virtuous cycle of their leadership’s vision, strong talent models, operational improvements, alignment with stakeholder expectations, employee resilience, and strengthening culture.
Here are some of the key findings from Deloitte’s 2022 investment management outlook:
Progress toward quantifiable and transparent business metrics can help firms achieve a higher bottom line, financially and socially
Respondents that made a lot of progress quantifying the impact of diversity, equity, and inclusion (DEI) initiatives were more likely to indicate that employee engagement and productivity have become much stronger since the start of 2021 than those who did not make a lot of progress quantifying the impact of DEI.
There’s a need to bring in agility into talent management
The return to the workplace strategy remains under development at many firms. As firms adapt to a reimagined work environment, several talent centric success initiatives may help such as: redefining the communication strategy; quantifiably addressing the firm’s vision and purpose; upskilling existing talent to meet changing requirements; building staff resilience; putting mergers and acquisitions, and outsourcing strategies to good effect.
Digital transformation investments are paying off
An overwhelming majority (85%) of our respondents that use artificial intelligence (AI)-based solutions in the pre-investment phase either strongly agreed or agreed that AI helped them generate alpha. Nearly three-fourths of our survey respondents said that they would increase their budget for alpha-generating technologies such as AI, including NLP/G, and alternative data over the next 12–18 months. That said, there’s a combination of factors that helps generate alpha; survey results indicate that there is a strong correlation between the ability to generate alpha and better employee engagement and productivity, employee well-being, and agility in execution.
Although firms are accelerating digital transformation efforts, there appears to be a significant regional difference in the implementation of adequate governance mechanisms
European firms lead on the responsible implementation front with 27% of the respondents indicating that their firms are accelerating digital transformation as well as updating governance, followed by respondents from Asia Pacific (20%) and North America (11%). Left unchecked, inadequate governance and reporting that trails digital transformation could lead to significant financial, legal, and reputational repercussions.
Firms using technology to better engage with clients and deliver on their expectations are likely to be more successful
Investment managers are engaging with clients in some ways not possible earlier. Firms are utilizing technology to interact with clients through digital channels, handle client queries through intelligent chatbots, leverage virtual meetings in their sales and relationship building processes, and provide customized reporting. Survey results indicate that 38% of respondents from digitally advanced firms expect significantly better revenue prospects in 2022 compared to just 13% for other, less digitally advanced firms.
Overall, findings indicate that there is a virtuous cycle connecting corporate vision, strategy execution, customer service, and employee resilience. Although determining where this virtuous cycle begins or ends is likely an impossible task. Leadership and employee drive to exceed customer expectations are key elements that will likely have a huge role to play in fueling progress.
So, where can one begin and what can leaders do to get things right?
Deloitte Investment Management Services
“As global leaders in providing services to the investment management industry, Deloitte’s investment management practice provides global resources and capabilities with a local presence, resulting in a clear understanding of each client’s specific market and way of doing business.”
Deloitte Investment Management services provide specialized knowledge and fresh insights into the wide range of operational, technological, and regulatory issues surrounding the industry today. Regardless of whether you are in private equity, hedge funds or mutual funds, Deloitte’s investment management services can help you take on challenges and capitalize on business opportunities. With the added strength of the Deloitte Touche Tohmatsu Limited (DTTL) member firm network, Deloitte has the ability to offer a global, integrated approach to business issues that combines insight and innovation from multiple disciplines to help organizations excel around the world.