Key trends in asset management today

It’s always a pleasure to join my colleagues and friends at the FoAM conference, hosted by the Financial Times. This year, Hannah Glover, Group Managing Editor at Money-Media, framed our discussion around four themes: Culture, Consolidation, Clients, and China. Here are my thoughts.

Culture. Good culture ensures a good company that creates good outcomes for clients and shareholders.

I’m pleased at how Invesco made it through Covid—even hiring 1,800 people in the midst of the pandemic. We’ve always had a strong culture, so we were able to shift quickly to a fully remote model with the help of technology during the lockdown period, and we’ve been able to successfully transition again to a hybrid model. This helped us stay focused on our clients throughout the challenges.

As we’ve emerged from Covid, we’ve spent a lot of time figuring out how to provide the flexibility that today’s workforce expects while also creating opportunities for employees who are at the beginning of their careers to learn from others. By asking employees, “Who do you need next to you?” we’ve created “neighborhoods” of small work groups. We don’t have all the answers, but as we evolve we’ve been purposeful about expanding horizontal conversations, instead of relying on vertical discussions.

Consolidation. Good news: it’s a massive industry and it’s still growing.

Today, clients are working with fewer money managers and expecting a broader range of capabilities and services. While there continues to be a lot of opportunity, it’s increasingly a situation where the strong get stronger. Clients demand that their needs are handled in bespoke ways and technology facilitates it; the environment is very outcomes focused. Firms that with a narrow range of capabilities are at more risk.

Our commitment is that our first dollar goes into meeting client needs and organic growth. When there’s a client need we can’t meet, only then do we look externally. An acquisition needs to make a difference for our clients, and to be successful, it must be one that can strengthen our culture. We are very disciplined about combining talent, always with a goal of improving the client experience.

Clients. In-person client interactions are never going away, but through the technology we expanded during the pandemic, our meetings are now more active, more specific, and more meaningful than ever.

We’re digitizing everything we do to provide better knowledge and outcomes to our clients. We appreciate that due diligence can be done over mobile, and technology can take away repetitive tasks. That said, I think it’s going to be a very long time before you don’t have a financial advisor.

Money is very personal. You might be able to manage a small, simple portfolio online, but where the needs are more complicated, a financial advisor is important.

At Invesco, we’re focused on offering programs to empower financial advisors to be more successful, even providing thought leadership in forms other than the traditional white paper. With our “How Not to Suck at Money” web-based game, in partnership with the NCAA^®, we’re trying something different in an effort to connect with a younger generation and increase financial literacy. So far, it’s going great.

China. China is the single largest asset management opportunity in the industry.

With any opportunity, it’s critical to weigh the risks, and that’s especially true in a developing nation. It’s been estimated that within three to five years 30-40% of the net flows in industry will come from China. Even cutting that forecast in half still presents a huge opportunity.

With a population of 1.3 billion, the Chinese know they have to open the market in order to serve their economy. China is highly regulated and highly competitive, and to be successful, it’s important that financial advisors understand the local market. The differentiator for us is that we’ve had management control over our joint venture (Invesco Great Wall) there since 2003. It’s run by local Chinese and viewed as a local company.

The geopolitical tensions are real and we’re having open conversations about them in the US and in China. Personally, I think it’s in everyone’s best interests to figure out how to coexist. We all need each other.