Boston, MA, December 8, 2020 – Brown Brothers Harriman & Co. (BBH), today released the findings of its inaugural C-Suite Asset Manager Survey. More than 50 senior executives—collectively overseeing $18 trillion in assets under management (AUM) and more than 115,000 employees globally—were interviewed on the unprecedented challenges this year, and how they are preparing for the future. These executives represent a wide spectrum of global asset managers including large, multinational asset allocators, and smaller, boutique firms—and they are responding to the year’s challenges by exploring new strategies, outsourcing, and driving efficiency.
With a global pandemic, dramatic volatility, and a contentious U.S. election, 2020 was filled with obstacles. When asked what keeps them up at night, 61% of executives stated the economy was their top concern. But size has an impact: While 70% of managers with less than $50 billion AUM said the economy was their chief concern, larger institutions—those with more than $500 billion AUM—were more concerned with staff productivity and cybersecurity.
The survey also found that COVID-19 has dramatically influenced a variety of business considerations, with 75% of global asset managers stating that they are changing the way they allocate capital as a result of the crisis. 77% indicated that their firms shifted seamlessly to remote work, while 23% said there were early challenges, but operations are now running smoothly. For some, understandably, real estate presents an opportunity for expense reduction.
“2020 has disrupted our industry, and every industry,” said Chris Remondi, BBH Partner and Global Head of Relationship Management and Capital Markets. “With this survey, we embarked on a mission: interview asset management leaders — CEOs, COOs, and senior executives — to see how managers are coping and what is the future of our industry. The results of our conversations demonstrate both the challenges and the resilience of our industry.
Other key findings include:
- The fee war is escalating. 52% of asset managers are planning to reduce the expense ratios or fees in the next 12 months to respond to competitive pressures.
- To combat fee compression, economic pressure, and to boost performance, asset managers are pivoting to new strategies. 35% of respondents said they are evaluating new strategies such as ETFs and Alternatives to expand their product suite. Some will boost performance by optimizing securities lending, FX, and operational improvements.
- Managers are targeting data/IT and the middle office for efficiency improvements. 57% of asset managers are looking to improve their data abilities and 38% identified the middle office as an area to drive efficiency.
- Many are considering outsourcing operational functions. 30% of global asset managers are more likely to consider outsourcing functions than a year ago.
- Investor interactions are way up as a result of the crisis. 72% of global asset managers have increased the cadence of client engagement since the start of the crisis, albeit through new channels.
- Remote work has propelled the industry into modern era. While 48% believe half their employees will be able to return to the office in Q2 2021, flexible work arrangements are here to stay.
About Brown Brothers Harriman
BBH is a privately held financial institution that has been a thought leader and solutions provider for over 200 years. The firm serves individuals, families, businesses and institutions in its three business lines: Private Banking, Investment Management, and Investor Services. BBH’s culture of accountability fosters deep and lasting relationships built on commitment, adaptability and trust. The company is independent, selective, and specialized by design.
BBH’s Investor Services business provides cross-border custody, accounting, administration, execution and technology services to many of the world’s leading asset managers and financial institutions. With deep ETF product expertise, BBH works with both experienced ETF managers and new, innovative market entrants to introduce and grow their ETF products. BBH helps asset managers launch, list, and cross-list ETFs across the globe.
BBH operates its global business out of seventeen offices located in New York, Boston, Beijing, Charlotte, Chicago, Dublin, Grand Cayman, Hong Kong, Jersey City, Kraków, London, Luxembourg, Nashville, Philadelphia, Tokyo, Wilmington and Zürich. For more information, please visit www.bbh.com.