Kicking-off the New Year, we thought it would be timely to invite some of our senior leaders at Boston Financial to reflect on the key trends and issues affecting the fund industry. Over the next several weeks, we will use this blog to dive deeper into these trends, and the questions they raise for our clients.
There was a high degree of consensus on what these trends are and what they mean for the operations of fund companies. Topping the list are (1) an intense regulatory and compliance environment; (2) shifts in product distribution channels; (3) increasing interest in fact-based, analytical decision-making; (4) changing shareholder and advisor behaviors; and (5) an increasingly competitive market environment.
We will explore each in greater detail in future posts, but for now we have briefly highlighted the drivers of these trends and some of the critical questions they raise for fund operations:
- Stepped-up Regulatory and Compliance Oversight – the regulatory environment has become increasingly complex at both the state and federal levels. The intensity and scope of government scrutiny on the industry is increasing; this is likely to gain further momentum in the years ahead. We’ll explore how fund companies are minimizing risk and ensuring compliance in today’s environment.
- Shifts in Product and Service Distribution Models – third-party financial intermediaries will continue to influence how fund products and services are distributed to investors. We will explore how this has impacted fund families from a fiscal, regulatory oversight and shareholder servicing perspective.
- Movement Toward Fact-based Decision-Making – the trend of using analytics and “big data” to drive core decision-making is making its way into the fund business. Our review will take a look at how the industry is looking to capitalize on the use of advanced analytics by leveraging data to evaluate and influence consumer and advisor behaviors and expectations through mature, informed insights.
- Changes in Consumer and Advisor Behaviors / Expectations – mobile and social technologies have effectively created a new buyer / seller environment involving highly customized services and functionality. We will dive into the new priorities exhibited by investors and advisors that emphasize access, delivery, and experience; we will also highlight the importance of continuity across all platforms.
- Increases in Market Competition – new product entries such as hedge funds, active/inactive ETF index funds, global markets, and regulatory and infrastructure costs have dramatically altered market opportunities and the cost of doing business. We will delve into the rise of these alternative products; and examine what fund companies look for in growth opportunities and long-term partnerships.
This series is intended to both share our perspective and create a dialogue around the drivers and impacts of these trends on our industry. We look forward to your feedback; stay tuned for the first entry of this series!