2024: A Year of Continued Volatility for Asset and Wealth Managers

January 03, 2024 at 09:30 AM EST

NEW YORK, Jan. 03, 2024 (GLOBE NEWSWIRE) -- Alpha FMC, the leading global consultancy to the top asset and wealth management, insurance, and private markets firms, today published its 2024 Asset and Wealth Management Outlook. The report focuses on a selection of key business roles that Alpha works with daily and highlights some of the priorities and opportunities these industry leaders can expect to see in 2024, as investment managers across the globe prepare for tumultuous economic headwinds.

Written by a selection of Alpha’s 1,000+ global experts, the 2024 Outlook challenges firms to identify the right priorities and provides guidance on how they can best execute on those opportunities in 2024 across the following key industry trends that we believe are set to impact the Investment Management industry: accentuated costs; the continued growth in Private Assets; a refined focus towards global sustainability commitments; and the exploration of innovative AI solutions.

“We expect 2024 will promise continued volatility, most notably with the resolution or escalation of existing conflicts and geopolitical uncertainties playing a crucial role in the direction of global markets,” said Joe Morant, Alpha’s Global Head of Asset & Wealth Management Consulting. “However, alongside this macroeconomic environment, the opportunities presented by accelerating digital transformation and integrating technologies like artificial intelligence, machine learning, and digital assets are becoming pivotal to optimizing operational efficiency and enhancing client experiences.”

Alpha’s 2024 Outlook identified key challenges to consider for select personas, while also providing clear guidance on how each can find success this year. For example:

Asset Management:

Chief Executive Officer: CEOs will be looking to maintain stability over the short term and position their businesses for long-term growth in response to the challenging economic conditions of the last 12 months. Now is the time for CEOs to explore regional and international expansion opportunities either through deploying existing capabilities or building new ones (organically or inorganically). Firms that pinpoint where enhancements are required across their existing capabilities and operating model will be well-positioned to enter new markets and cater to local demand once economic conditions improve.
Chief Financial Officer: In 2024, CFOs will be grappling with the impact of peak inflation and will need to prepare for long-term market conditions, characterized by fewer rate hikes and less severe inflation compared to 2023. The classic delayering approach to cost-cutting seen in banks overlook specialist investment management roles, and therefore cannot be deployed crudely across investment managers. Firms should identify long-term growth opportunities, instead of short-term remedies, starting with the largest cost items: People, Technology and Market Data.
Chief Investment Officer: CIOs are facing significant headwinds in a rapidly changing landscape. A pivotal aspect is the relentless pursuit of competitive advantage to differentiate, particularly in areas like Data Science and AI. The pace of change in these fields is accelerating exponentially, necessitating the acquisition and integration of new capabilities and skillsets.

Alternatives:

Credit: Alternative Credit will continue to experience enormous growth in 2024, with borrowers increasingly preferable to flexibility of a bi-lateral or club-like relationship in contract with a broadly syndicated arrangement. The influx of institutional capital chasing yield will continue to provide the requisite capital to reshape the landscape of private credit to be a material competitor to the traditional banks. Investment managers looking to expand their investors will need to have both the operational rigor and technical agility to capture and disseminate the requisite information that investors demand and require.
Real Estate: The evolving global economy and advancements in technology continue to drive Real Estate investors to seek greater operational agility and deeper insights in an unpredictable landscape. Firms are realizing the potential of leveraging Artificial Intelligence (AI) and Machine Learning (ML) across a multitude of use cases, but appreciate the importance of organized, standardized, and accessible data as a baseline, before the benefits of AI can be truly harnessed. Additionally, further advancements in blockchain technology have the potential to revolutionize the market, with the subsequent ‘retailization’ of Real Estate providing firms with increased liquidity, greater investor access and heightened transparency.

Wealth Management:

Chief Executive Officer: With market sentiment and environments expected to continue from 2023 into 2024, CEOs will continue to balance the search for organic (and inorganic) growth with the need for efficiency and focus to return cash to shareholders. The threat of new, digitally-enabled entrants has diminished as clients have demonstrated loyalty. However, keeping up with the pace of digital innovation has become both a client and Relationship Manager attrition risk and a cause of stubborn cost pressures in Front Office, Compliance and Operations.
Chief Operations Officer: With pressure on margins crystallizing and competition not easing, COOs’ agendas remain very challenging and under heavy scrutiny. They face a challenge between upgrading capabilities of their platform for modern requirements and regulatory regimes vs. removing costs quickly. Business Process Outsourcing, while still maturing in some regions, merits consideration due to the potential to control total cost of ownership and service levels, even if the case for cost reduction isn’t yet as clear.

About Alpha FMC
Headquartered in the UK and quoted on the AIM of the London Stock Exchange, Alpha is a leading global provider of specialist consultancy services to the asset management, wealth management and insurance industries. Alpha works with all of the world's top 20 and 80% of the world's top 50 asset managers by AUM, along with a wide range of other buy-side firms. It has the largest dedicated team in the industry, with approximately 1000 consultants globally, operating from 17 client-facing offices spanning the UK, North America, Europe and APAC.

Media Contact
Madison Thomas
CSG for Alpha FMC
AlphaFMC@wearecsg.com

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2024: A Year of Continued Volatility for Asset and Wealth Managers

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