2024 investment management outlook

Key takeaways

• Firms will likely have to invest in technology and associated controls even amid weak performance and margin pressures, failing which they will likely fall short of client expectations and internal efficiency goals.
• Theme-driven portfolio construction is emerging as a vector for product development even though the age-old classification of investment strategies into scales of growth versus value, large cap versus small cap, and by industry sector are not going away.
• Although investment performance is an important factor that can help drive customer satisfaction, customers’ expectations have generally grown in terms of personalization and timeliness of interactions.
• While generative AI can transform the timelines and clarity of customer interactions, its successful implementation will likely require close collaboration across the organization, including front, back and middle office, finance, information technology, and risk management.
• As quantum computing technologies are increasingly being considered to help generate revenue and delight customers, firm leaders may need to play defense first owing to the quantum-related cybersecurity threats that are currently developing.
• Navigating organizational model changes can become easier when the organization is aligned with a strong sense of purpose. When survey respondents agree or strongly agree that their institutions workforce is aligned to the firm’s sense of purpose, they are also more likely to report that their institution’s culture became much stronger, which often leads to efficiency, productivity, and collaboration improvements.

For the investment management industry, 2024 brings with it exciting opportunities, urgency to take action, and reasons for caution. With intense competition for AUM, investment management firms are working to differentiate themselves, particularly in the areas of emerging technologies, talent modernization, client experience, purpose and ESG, and workplace environments.