Asset managers continue to navigate challenging terrain characterized by market volatility, operating margin pressure and the increasing cost of doing business. As a result, many are evolving their operating models – particularly to improve the interactions and experiences they can offer investors.

This was among the key conclusions from our recent survey of global asset managers by Northern Trust and WBR Insights.

It found, for example, that 71% of Ireland respondents indicated that improving their investors’ experiences was their top strategic priority for their operations in the next two years – the highest priority for Ireland-based asset managers participating in the survey, and aligning with 70% of all respondents who also it as a strategic priority.

And 88% of Ireland-based managers indicated that they aimed to achieve their priorities in the next two years by refining and implementing their target operating model – including by leveraging new technology. This response was even higher than the global average of 75% of respondents who cited it as a means through which they planned to achieve their objectives.

The research was conducted in Spring of this year with senior leaders of 300 global asset managers. It sought to understand how their strategies will continue to evolve amidst the current market and industry landscape. In prior surveys conducted by Northern Trust, controlling costs was a top priority for asset managers – yet this year’s results illustrate a changing mindset: ‘right product, right fit’ has emerged as the primary approach.

While respondents acknowledge that cost containment continues to be important, managers are increasingly focused on the quality and accuracy of their products to improve their investor experience and honing their distribution strategies and data management capabilities to target the right audiences.

Maximizing through targeted distribution
The survey revealed that managers are focusing more acutely on distribution strategy and pursuing the right products, markets, assets and investors at the right time. For example, in Europe, this includes focusing on new fund products such as the European Long-Term Investment Fund (ELTIF) 2.0 and UK Long-Term Asset Fund (LTAF) fund structures, which are of growing interest to both managers and investors.

But entering new asset classes can come with the challenge of increased complexity. To meet this challenge, many European managers are looking at refining their operating models to achieve their priorities. Others are turning to improved technology to focus their distribution channels – the most popular response to the question of how managers will seek to achieve their distribution goals.

Data is the common thread
As managers seek the right products for their investors, they are looking to leverage data tools to inform their decision-making. These tools can help them understand where their expertise will have the greatest impact – or alternatively where they may need to pull back on products.

High-quality data can play a key role in refining fund products and targeting investors, and in turn support an enhanced investor experience – but many managers struggle to manage their data with outdated systems and limited resources.

This notion was supported in the survey, which found that data management continues to be one of the biggest hurdles that asset managers face in driving growth and launching new products. Further, the ability to comprehend their data more effectively was demonstrated in the survey, which found that more than half (54%) of respondents identified that ‘ensuring that data is easily understandable /consumable and insightful’ is their biggest data management challenge.

So, it is now crucial that managers are able to digest and analyze their portfolio information quickly to enable them to ‘double down’ on successful distribution strategies.

With the goal of improving their accuracy and – ultimately – the investor experience, asset managers are increasingly engaging with service providers for advanced data analytics and management tools. When asked which areas managers were considering outsourcing in the next two years, an overwhelming number of global respondents chose data management (83%), with some managers enhancing their data management strategies by engaging their custodians for outsourced solutions.

For example, managers are turning to data science solutions that allow them to digitise their investment processes or combine trade data with behavioral science to identify decision patterns over time. These capabilities are readily available through service providers and can be slotted into each firm’s existing operating model.

Looking inward for the best outlook
This year’s survey found with the ‘right product, right fit’ approach, managers are focusing ‘inward’ on ensuring they have the right operating model, technology and focus to support their distribution strategies. To thrive in today’s environment, managers are focused on improving the quality and accuracy of the products they offer, evolving their approaches to distribution and leveraging outsourced partners for improved data management and analytical capabilities.

As their asset servicing and data solutions provider, this is one of the areas in which organisations like Northern Trust are well-placed to support them in more efficiently managing their data analytics and technology needs.