A new report from KPMG, Evolving Investment Management Regulation, finds that there is a multitude of opportunities for investment managers but the sector is under pressure on transparency, technology, communication and costs.
The industry risks losing out unless it fundamentally reviews the way it builds products.
Governments across the globe have an urgent need to encourage serious long-term consumer saving. Investment will form the bedrock for much of that reform, but while firms struggle to address legacy issues like fund charges and distribution processes, they risk falling behind on product innovation and choice. Meanwhile, fintech companies develop simple, transparent and innovative products with increasing rapidity.
Author of the report, Julie Patterson, Investment Management Director, KPMG in the UK, says:
“Investment services are in great demand but finding a way to capitalise on that, whilst navigating compounding regulatory, security and economic pressures, along with rapidly evolving consumer demands, means the next decade will be a transformative one.
“If the investment management sector is to gain from the opportunities at hand, it needs to make significant investments in technology and reform the way it builds and distributes products. Increased information sharing is deepening regulators’ knowledge and enabling authorities to fine tune and intensify product investigations and enforcement. Products need to demonstrate clearly that they are tailored to consumer needs, earn their fees and are distributed appropriately. So far the sector has been slow to adapt, that is changing, but it needs to happen faster.”
Tom Brown, Partner, Global Head of Investment Management, KPMG, says: “Over the past 12 months we have seen an up-tick in regulatory measures across the globe that are demonstrably positive. This is especially evident in Asia, which will clearly be one of the main growth drivers. As markets open up and the geo-political environment remains volatile, the investment industry’s role as a vanguard for channeling growth is being put to the test.
“Investment firms face a real challenge. They need to design products that meet the changing needs of consumers and regulators, supported by leading cutting-edge technology and strong cyber security. Successful firms will help their clients to navigate difficult times in financial markets in a fully transparent way.”
