Asset Management Faces Man Over Machine Dilemma
Asset Management: Status Quo – No More.
Asset Management firms are facing a multitude of challenges. Artificial intelligence, cognitive computing, and machine learning are game changers that are challenging the predictive powers of man, in every industry vertical. These changes are being felt by even the most seasoned investment strategists. Financial modeling is being turned on its head, and being augmented by analytics and global business intelligence that no one could have imagined, just 5 years, ago. Relationship management and client reporting will continue to be needed, but its shape will be re-cast to greet the digital power of data visualization. Clients’ demands for data transparency and answers on demand will rise to new levels. Advisors will also be required to go even deeper in terms of scenario/stress testing and analytics to justify decisions at even deeper layers for varying audiences.
New Transformational Road Map Forward.
Few firms aside from BlackRock are recognizing and realizing the need to make transformational changes to their business models. Many are investing incrementally in new technology platforms and customer content/reporting changes, few are reengineering their business, or even thinking that they have to. BlackRock thinks so, and is. Larry Fink, Co-Founder and CEO of BlackRock is regarded as a visionary and as such invested heavily in growth of ETFs, in 2009, with the purchase of Barclays. With more and more FinTech dollars going to retail wealth management and robo-advisory solutions, it’s inevitable, that new FinTech companies will spawn and head upstream to disrupt institutional business models, as well.
A New Era in Investment Management
Starting this month, Fink has decided to drive BlackRock’s own next fate by laying out an ambitious plan to signficantly cut its human & technology cost base and gain a market analytic edge by consolidating a number of actively managed mutual funds with peers that rely more on algorithms and models to pick stocks. This change from a reknown leader should serve a wake up call for other members of the asset management community to take stock of how they intend to compete, and in fact survive over the next 3-5 years, forward.
For more coverage on this see:BlackRock transforms its business model.