While electronic platforms to inform investors and distribute products are quite common for many assets in the financial industry, wealth managers have been slow to adapt to new technologies. Many reasons force them to change this view with drastic consequences for their industry.
Investors increasingly demand online availability of financial information and services. This development is driven by the dissatisfaction with financial products after the financial crisis including the results achieved by some asset managers. Moreover, prices including fees have been experienced much less than transparent. This has let to skepticism in personal meetings and made investors more confident on making decisions on their own - especially where only little external intelligence is needed.
By now, investors are increasingly demanding automated systems instead of face-to-face interaction due to their on-demand availability, customized information, more choices and enhanced transparency and comparability. Asset managers need to develop an online reputation and distinguish themselves and their products from competitors to reach to existing and consumers in prospect.
Computational power increases exponentially, data storage costs decrease all the time and telecommunication bandwidth is becoming more available and cheaper. This advances the technological opportunities to develop automated, screen-based client services. Together with an increasing awareness and usage of technology, this explains the changes in investor demands. Financial information is easier accessible and investors are making very sophisticated decisions using it.
Regulation changes the way asset managers can compensate client-facing advisors. Practically, those advisors can no longer be directly incentivized but using only services, asset managers can skip these intermediary services and interact with the investors directly. That is a further opportunity to use online platforms and making information available to investors directly.
Investors, both in the retail and institutional segment, will increasingly make their own decisions based on their research instead of relying on informing provided in personal intermediation such as manager meetings. Due to technological changes, they are becoming increasingly more informed.
Asset managers need to adapt to this changing environment by becoming more transparent about their product and prices as well as by providing true differentiation in a world were similar product can easily be found. In conclusion, asset managers must excel regarding quality of products, brand name recognition, selection and, most of all, price.
altii provides such an electronic platform. Using altii’s product area, information about investment funds and asset managers can be made available to institutional investors in a transparent and independent manner. In combination with altii’s public area, investors can build a reputation and market their specific expertise to all investors.