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Distribution 2.0

How technology will redefine relationships with asset management clients

The role of technology in asset management is fundamentally transforming the worldwide distribution of goods and services. This white paper explores four key considerations for asset managers of tomorrow. By embracing distribution technology, you can deliver efficiency and a better client experience that will help you acquire and retain more business.

Reshaping asset management strategy: Understand the evolving role of technology in asset management

The rapid innovation and progress of technology, particularly in the last decade, has transformed the distribution of goods and services fundamentally. In many industries, data, analytics, and digital applications have removed intermediaries, compressed value chains, and reduced costs. Unlike previous industrial revolutions, this wave of technological change also has permitted more personalized interaction with individual consumers. It’s also emphasized the experience, and not just the outcome, of a purchase—transforming transactions into relationships.

This white paper explores how technology will reshape distribution throughout the asset management industry worldwide. Asset management has been slower than other financial services industries to embrace new technologies. Its high profit margins have precluded the need to innovate labor-intensive models; its focus on sales and growth has de-emphasized client service and retention; and its culture has reinforced the belief that strong investment performance would trump all distribution inefficiencies, despite increasingly prevalent contrary data.

Winning asset managers of tomorrow will embrace the role of technology in asset management distribution—partly to deliver efficiency, but mostly to deliver a better client experience at scale—helping them acquire and retain more clients. Our white paper has four primary conclusions:

  • Buyers in asset management have changed dramatically: Powerful social and operating environment trends are reshaping retail and institutional clients, who now seek more continuous, less transactional, relationships with investment firms.
  • Most asset management firms have failed to keep up, making only incremental changes to address new buyer needs: Although asset management firms have added an estimated 50 percent to sales-oriented and marketing headcount for the five years ending 2017, the average efficiency of a sales professional, measured in terms of profitability, of each new hire has plunged by more than half.
  • Providing the client experience that improves client acquisition and retention requires technology. Asset management firms that place technology—measured by above-average investments in data, analytics, and client experience applications—at the center of asset management distribution strategy can enjoy dramatic improvements in distribution efficiency across multiple metrics.
  • But deploying the necessary technology only works in concert with enterprise-wide initiatives designed to transform the entire distribution organization, including a new distribution talent model, processes that support more rapid innovation and deployment, and a change management program that builds confidence and attracts clients.

Key considerations for asset management distribution 2.0

Thinking ahead

Although “transformation” has become an overused word, it truly describes what needs to take place among distribution organizations across the asset management industry. To succeed in a more competitive future operating environment, asset managers must understand and serve their clients continuing to meet rising expectations for levels of personalized service.

Human capital will no longer be able to meet these demands without leveraging technology and a process to continuously innovate that technology. As a result, asset managers, and other advice businesses facing similar challenges, will look increasingly similar over time.

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Get in touch with Casey Quirk, a business of Deloitte Consulting LLP:

Jeffrey A. Levi
Principal | jalevi@deloitte.com

Harry H. Datwani
Principal | hdatwani@deloitte.com

Matthew J. Baker
Manager | matthbaker@deloitte.com

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Learn more about Casey Quirk and our asset management consulting services.

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