The global fund management industry is undergoing a transformative period as it faces increasing pressures to improve operational efficiency and deliver more transparent, accountable services.
Kidbrooke, which offers unified analytics for investment and wealth, recently delved into how fund managers can bolster transparency and boost AUM.
According to KPMG, fund managers have encountered challenges like fee compression, forcing them to streamline operations, while distribution partners, such as independent financial advisers (IFAs) and wealth managers, are compelled to provide higher service levels to meet clients’ needs. This shift is reshaping their roles, encouraging distribution partners to focus less on product sales and more on offering holistic financial advice to help clients meet their financial goals.
The industry is also experiencing demographic and generational changes. With many financial advisers approaching retirement and millennial investors showing a strong preference for environmental, social, and governance (ESG) and impact investing, fund managers are under increasing pressure to adapt. Millennials, as KPMG reports, are particularly drawn to sustainable investment options, prompting fund managers to offer ESG-aligned funds and improve communication around their investment strategies.
In Sweden, fund managers rely heavily on third-party distributors, such as brokers, insurance platforms, and banks, to increase assets under management (AUM), Kidbrooke explained. The Swedish Premium Pension system serves as a significant distribution channel, underscoring the importance of transparency in information disclosures. A transparent approach not only enhances credibility and trust with distribution partners but also facilitates due diligence and informed decision-making for investors. Regulatory frameworks, including the Retail Investment Strategy under the EU’s Capital Markets Union 2020 Action Plan and changes to Sweden’s Premium Pension system, further highlight the need for transparency. These new mandates require fund managers to engage in procurement processes with the Swedish Fund Selection Agency to secure distribution opportunities.
Maintaining robust relationships with distribution partners has become essential as regulatory shifts place increased importance on transparency. Comprehensive and accessible product information is vital for adapting to these changes, with transparency acting as a critical factor in growing AUM and staying competitive in a dynamic market.
A recent study from Kidbrooke found a significant transparency gap among Swedish fund managers.
For distribution partners, improved transparency can simplify due diligence and onboarding processes, enhancing the initial stages of relationship-building. Many Swedish fund managers, however, fall short in these areas. For instance, our findings show that approximately 70% of Swedish funds lack thorough product information disclosures on their websites, presenting an opportunity for differentiation through enhanced information clarity.
As financial planners increasingly adopt a consultative approach, aligning investments with clients’ ethical values and financial goals, providing accessible and detailed product information becomes a competitive advantage. Transparent information regarding financial performance, geographic and sectoral focus, and ESG criteria simplifies investment decisions for distribution partners. However, Kidbrooke’s research highlights that over 60% of Swedish fund managers fail to provide comprehensive details on diversification and governance. This lack of clarity signals a pressing need for improvement in data presentation and management practices.
Furthermore, the depth, quality, and timeliness of information disclosures impact the perceived credibility of fund managers. Transparent data presentation helps build trust with investors and distribution partners, increasing retention and attracting new investments. A well-designed and informative website also enhances the user experience, making it easier for investors and partners to navigate and access crucial information. The regulatory landscape is evolving, with requirements like those in Annex I of the European Accessibility Act demanding fund managers provide accessible digital information that meets EU standards, ensuring a user-friendly experience for all investors.
Kidbrooke believes the Swedish fund management sector’s transparency challenges stem largely from inadequate data management processes, which are often prone to errors, key person dependencies, and scalability issues. To future-proof their digital presence, fund managers should focus on robust data management and analytics solutions that support brand management in the digital realm.
Solutions like KidbrookeONE can significantly improve data management, enabling fund managers to offer clear, up-to-date product information, aiding distribution partners and investors in making well-informed financial decisions. Enhanced data management processes not only simplify compliance with stringent regulations but also bolster fund managers’ competitive edge, fostering growth in AUM and strengthening industry positioning.
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