2022 investment management outlook
Positioning for a greater impact
Investment management firms figured out how to make complicated and interconnected business processes work through chaos and volatility in 2020. In 2021, firms began to execute on plans to strengthen their processes in a pandemic-occupied or post-pandemic world. In 2022, differentiated results and expectations are emerging among investment management firms. This outlook for 2022 will explore the connections between actions taken, the self-perceived cultural health of investment management firms, and the expectations for growth in 2022. Investment management industry leaders indicated, through our proprietary outlook survey, that a strengthening firm culture is correlated to revenue growth expectations. Talent matters and culture matters, and the crucible of the pandemic continues to test leadership skills to present a vision for the future, and credible strategic and tactical steps to achieve it.
- Progress toward quantifiable and transparent business metrics can help firms achieve a higher bottom line, financially and socially. In the survey conducted in the summer of 2021, respondents that indicated that their firm either completed or made a lot of progress quantifying the impact of DEI initiatives in their financial statements were more likely to indicate that employee engagement and productivity have become much stronger since the start of 2021.
- The workplace talent model is likely to continue to shift in 2022 as employees and firms adapt to the ever-changing requirements of operating in today’s environment. Internal communication plans are often baked into bold talent actions to maximize benefits. Implementing good business decisions absent communication plans that are cognizant of cultural impact can lead to sub-optimal results. However, when firms pull additional levers with an eye on increasing overall employee well-being and communicate those plans effectively, they can create opportunities for a stronger culture over the long-term.
- An overwhelming majority (85%) of our respondents that use AI-based solutions in the pre-investment phase either strongly agreed or agreed that AI helped them generate alpha. Using natural language processing and generation (NLP/G), a type of AI technology, analysts can save time spent on data collection and instead focus on analyzing data with a higher potential for insights.
- Since investment management is a highly relationship-oriented business, firms that can better engage with clients and deliver on their expectations will likely be more successful. Our survey affirms this view as 38% of respondents from digitally advanced firms expect significantly better revenue prospects in 2022 compared to just 13% of other, less digitally advanced firms.
- There appears to be a significant regional difference in the implementation of digital transformation, and modernization of governance mechanisms. European firms lead on the responsible implementation front with 27% of the respondents indicating that their firms are accelerating digital transformation as well as updating governance, followed by Asia-Pacific (20%) and North America (11%). Left unchecked, inadequate governance and reporting that trails digital transformation could lead to significant financial, legal, and reputational repercussions.