Taylor Swift boosting local economies, the missing Titanic sub-crew, harnessing the transformative power of generative AI, and the Open AI saga are a few of the dominant headlines from 2023. As we head into 2024, these stories gave me pause to reflect on the past year and venture into what’s to come, particularly in the asset management space. I’ve identified five consistent themes that will continue to permeate the industry moving forward. These themes revolve around global asset managers maintaining or growing their fees, managing costs, and creating more efficiency through technology.
- Diversifying strategies to generate growth
Traditional asset managers that historically focused on growing assets through pooled funds like mutual funds and ETFs are diversifying into multiple lines of business as they explore new strategies to deliver personalization to investors. In fact, more than 75% of our clients operate multiple lines of business, including fund managers with growing separate account businesses. For these firms expanding to new lines of business without adding headcount, technology will play a critical role.
Given this, I anticipate in 2024 that more asset managers will challenge their vendors to enhance support beyond the traditional fund structures. These firms will increasingly look to centralize operations and implement solutions capable of supporting both the depth needed to run a fund business coupled with the scale and personalization required to run separate account businesses.
- Data management is a key focus
In a survey of 75 global asset managers, more than half indicated that managing data to enable more efficient and impactful decision-making is a key driver for new technologies that they adopt. Amidst an ever-growing set of data, firms are examining ways to create efficiencies for their investment teams; I foresee this staying the same in the new year. Further, this data expands more than transaction levels and investor details; it includes the rise of alternative data sets and infrastructure data lakes; firms are witnessing the magnitude of their data increase by the day.
In development, we often speak of “time to market” when delivering our products and services to our customers, but many of our clients think in terms of “time to analyze.” Solutions like the Advent Genesis™ data platform empower firms to reduce the time it takes to process and normalize data into actionable information to analyze, which is critical to the success of our clients.
- Transformative growth in AI solutions
Generative AI exploded on the scene at the end of 2022 with the immense potential to transform our lives tomorrow. Yet, many of our clients can leverage other technologies like RPA (Robotic Process Automation) across a broader set of use cases to solve the operational headaches they face today. RPA elevates a firm’s automation process and offers opportunities for service providers like SS&C to create efficiencies and cost-effective managed services solutions.
In 2024, it's not profound to say that AI will expand its presence within investment management technology – we know that – but I anticipate that RPA and other forms of intelligent automation through machine learning solutions will lead the way in delivering the most tangible efficiencies of the newer technologies that are available.
- Cloud costs will continue to increase
The benefits of the cloud are indisputable, including easier access to new technologies and shifting cost structures from fixed to variable. However, the cost of leveraging the public cloud continues to increase, as evidenced by IBM’s announcement of price increases for storage services by as much as 26 percent. This may not be an impediment for larger institutions with their own public deployments, but for small-to-mid-sized asset managers, it’s likely that their vendors are seeing these cost increases and those costs may be found in your next invoice.
In the coming year, I expect more vendors that leverage the public cloud to face increased pressure on margins and, in turn, will start to put pressure on their end customers. At SS&C, we leverage the scale of our global organization and our private cloud for many of our applications. This investment will yield long-term differentiating solutions in a cost-effective manner for our clients.
- Operating models continue to shift towards outsourcing
People and ample available skills in the marketplace help support the operations of many asset managers, which continue to be one of the biggest challenges for our customers to deal with.
Over the past several years, more than 90% of our new clients have leveraged our investment management solutions coupled with managed operational services. Whether it is to support reconciliation, processing data, or managing corporate actions, firms are centralizing and focusing costs on managing assets rather than on daily operations.
As a result, we are shifting our investments to enable our Managed Services business to hit their SLAs faster, provide additional transparency to our customers, and reduce the personnel burden on our customers. While the pandemic transformed many firms’ operating models, new regulations like T+1 settlement in the US and Canada will further accelerate their search for a viable extension of their back and middle offices.
What’s to come for asset managers in 2024
Within SS&C Advent, we serve more than 1,250 global asset management businesses with industry-standard technology and solutions. After partnering closely with these firms over the last year to support daily operations and workflows, it’s evident that access to actionable data and transformative AI technologies powered by a secure and cost-effective cloud infrastructure will shape and enable our clients to diversify strategies and provide great customization to end investors, at scale.
Institutional Investor & SS&C Advent. 2023. “The Search for Scalable Growth.” Retried from: https://www.advent.com/resources/all-resources/industry-report-the-search-for-scalable-growth/. (2023)
2. Ghoshal, A. September 6, 2023. “Price shock: IBM to increase cloud costs by up to 26% in 2024.” CIO.com Retrieved from: https://www.cio.com/article/651215/price-shock-ibm-to-increase-cloud-costs-by-up-to-26-from-2024.html. (2024, January 2)