Supermodel part two

Operational Overhaul: How growth strategies are changing the demands on operations

Insights from 200 global leaders on succeeding in today’s rapidly transforming industry. The asset management industry has been going through a super silent evolution. In recent years, product innovation has transformed the industry and how it operates. This has brought benefits and growth – but also costs and complexity.

This is the subject of our four-part research series, Supermodel: The great evolution in asset management

Based on interviews with 200 industry leaders, part one takes a strategic look at cause and effect in investment operations and identifies paths to future success. Amid our research, four key themes to reach that success became clear.

Over the coming months, we will be bringing these findings to you as four separate parts; presenting our findings and sharing our insights.

Part two: Operational Overhaul

Our second area of focus explores the demands growth strategies are placing on operating models.

To address issues around tighter margins and relatively lower client flows into active, public markets – fund managers are increasingly turning to active ETFs, private markets and sustainable funds. For example, Carne analysis [ii] shows that investments in private assets are likely to rise 62% to $21 trillion by 2030. A growing proportion of such investments will come from wealth managers.

As asset managers seek growth from new asset classes, new products and client segments, they simultaneously create problems that hamper their operations.

This creates a growth paradox; the faster an asset manager wishes to grow – the more operational issues arise.

However, our latest research [ii] lays bare the material implications of such growth. Over half (52%) of the respondents to our latest research say their firm’s growth strategies are leading to increased operational inefficiencies.

Entering new asset classes (55%) and expanding sustainable investment products (46%) create the greatest internal issues for operations teams and processes.

In other words, new asset classes and product vehicles mean greater operational complexity, to be solved by limited resources, in a cost constrained environment.

This overhaul to operating models sees managers adjusting to different data and reporting demands, regulatory requirements and fund structures whilst accommodating different distribution arrangements across multiple jurisdictions all of which drive up complexity.

Success requires change. The supermodel era is here.

Download part two here to learn more.

If you want further insights into our research such as how you compare to your peers and the best solutions to set you up for success, we will be happy to arrange a meeting contact@carnegroup.com

ii Carne Atlas Report 2024.

ii Research of 200 asset management executives conducted by Core Data in Q3 2024.