Asset Managers Need a Tech Overhaul

The majority of managers are pouring resources into efforts to go digital and sync up with remote and hybrid work trends, according to KPMG.

Nina Riggio/Bloomberg

Nina Riggio/Bloomberg

Asset managers used to depend on in-person conversations to strike deals, but that’s no longer the case as managers and clients across the globe shift to remote work.

That’s one reason 75 percent of asset managers showed a strong appetite for digital transformations, according to a recent survey from KPMG.

KPMG got 1,300 global respondents to its survey, including 112 asset management CEOs. Of the U.S. participants, 63 percent were from private equity, 22 percent were brokers or financial advisors, 9 percent were from wealth managers, 3 percent were from hedge funds, and another 3 percent were multi-strategy alternative investors.

Even though the environment is changing, it comes with challenges.

“It’s a very relationship business,” said Greg Williams, national sector leader for KPMG’s Asset Management / Building, Construction & Real Estate practices. “The trust is built eye-to-eye. It’s difficult sometimes in this environment.”

Among other things, managers need to address cybersecurity issues and moving data and other systems to cloud-based technology, according to Williams, who also is responsible for the overall strategic direction of KPMG’s Alternative Investment and Public Investment Management practices.

Only 11 percent of the respondents said they were prepared for a cyberattack, and 70 percent said they were looking for an industry-wide approach to address increasingly common ransomware demands.

Asset managers are keen to raise employees’ awareness of issues like phishing attacks and the seriousness of data breaches. That means managers need to be aggressively investing in digital training and back-office upgrades, according to Williams.

The pandemic has also increased clients’ demand on cloud-based services, Williams said. Many managers are trying to adapt to the communication habits of a younger generation, who are used to obtaining all kinds of services quickly and virtually, rather than through face-to-face conversations or phone calls.

Some newer asset managers started using cloud tools before the pandemic, which gave them an edge over the less tech-savvy ones in the beginning.

Will Rhind, CEO of the five-year-old exchange-traded fund firm GraniteShares, said his company was able to continue providing services because it had adopted cloud solutions from Microsoft, Google, and Amazon before Covid-19.

The surveyed CEOs also expressed concerns over employees’ mental health while they’ve been working remotely, many of them since March 2020. Seventy-nine percent of the respondents said they need to address workforce burnout as part of the digital transformation process; 59 percent said they would be looking for shared office spaces where employees can work more flexibly; and 53 percent said they would hire at least some people who work mostly from home. Fifty-six percent said they would work to get a big proportion senior leadership (e.g. board, investor, management) meetings are conducted remotely

“The legacy of Covid for us is that it created an environment where employees who want more flexibility can have the flexibility,” Rhind said. He has permanently adopted a policy that allows people to work completely from home or adopt a hybrid work model — part coming into the office, part remote.

“When you think about going through something intensive like digital transformation, you have to keep the workforce motivated and energized,” Williams said.

Despite the challenges, many employees expect to be able to work remotely on a long term basis. “It’s imperative from a retention perspective. The war for talent is as fierce today as I’ve ever seen, and there’s not enough talent out there,” he added.