To get at the root of why it’s time for asset managers to take the leap, Deloitte Digital sat down for a Q&A with Harry Datwani, Principal, Deloitte Digital, Deloitte Consulting LLP and Jeff Levi, Principal, Casey Quirk, Deloitte Consulting LLP authors of the recent white paper, Distribution 2.0: How technology will redefine relationships with asset management clients.
JL: Sure. Historically asset managers embraced a product-led mindset. But now, the industry has an oversupply of products with competitive performance and robust investment processes, making a product-led approach insufficient to differentiate. We’re seeing a shift in investor preferences towards a more client-centered, consultative model. In addition, buyers are becoming more powerful and choosing to work with fewer managers. These dynamics are driving us towards 2.0.
HD: The traditional approach to growing sales in asset management has been to hire more sales people—more feet on the street. It is an expensive model and is very hard to scale. Similar to other industries such as pharma, asset managers will have to embrace digital and analytic capabilities along with their human capital.
HD: The issue is not really about embracing technology. From our client work and research, we find that many managers are investing in technology across the enterprise, including in distribution. The issue is execution. Technology has been isolated from distribution strategy and set up in silos across marketing, sales, and service. Tools are treated as stand-alone solutions to narrow problems rather than an ecosystem that drives enterprise value. Given the margins this industry has enjoyed, there hasn’t been a burning pressure to transform. In today’s environment, winning asset managers will want to approach distribution differently.
JL: In the past, clients would hire you because you have a great product and you deliver great investment performance. Now, many investors want a much more collaborative relationship and experience. They want to benefit from the know-how across your entire organization. They want access to people, insight, and training. They are seeking real-time information exchanges. And importantly, they want simple, convenient interactions. Clients want fewer managers and want to work arm-in-arm, collaborating and driving solutions together.
HD: The big thing here about technology is extending the reach. As the demographic of buyers and their preferences shift, you can think about cases like how to reflect the notes from your last meeting when they are on your app or your website.
JL: Technology allows organizations to become more learning organizations and take in information across all client touch points, and then identify and predict preferences and better tailor engagement.
HD: It’s not robots, it’s a bionic arm. Technology extends the reach of sales and marketing, and solves what should be obvious pain points, giving customers that personalized experience.
HD: It is definitely more than just tech. Humans are going to continue to be at the heart of the experience. To scale that experience, managers need to think about distribution technology much more strategically. Business leaders cannot “outsource” technology strategy or execution to the technology function anymore. Distribution technology should be an integral part of setting strategic direction. This will have implications on client facing roles, talent profiles, and executive accountability. It will be core to the operating model.
JL: In my mind, the next big wave will be oriented around strategic alliances. The distribution landscape will pivot because of data. That is, you’ll see firms powered by data and information that are able to create new networks of potential clients and play a much larger role in the development and delivery of solutions. Some will form strategic alliances with asset managers; others may become asset managers.