Business Model Shifts

Firm success is contingent on a client-first culture, and the state of agility in particular.

Good culture involves putting clients first. Good agility reflects the ability to understand the landscape, read the changes ahead, and apply the Shifts needed.

The investment firm of the future will:

Achieve organizational coherence
These qualities will follow from strong leadership, the practice of socialization, and a thorough understanding of values and beliefs and their significance. This includes the communication challenge of making a compelling case to influence others, particularly when change is required.

Build fiduciary culture around client outcomes
Organizations must ensure maximum transparency with respect to exercising fiduciary responsibility, build a better framework for measuring client perceptions of value and outcomes, and communicate early and often.

Have adaptable and inclusive leadership
Organizations must be prepared to change course to deal with tougher and more stressful business conditions. Creativity and vision to increase top-line revenues through new opportunities will differentiate firms from those that focus predominantly on managing expenses in the here and now.

Understand and engage with stakeholders
All investment firms have to view their stakeholders on wider terms and reach out to them to manage their expectations. Stakeholder mapping is critical, with central positions on this map held by the workforce and clients, owners, the communities in which the firm operates, and wider society.

Governance and culture upgrades by asset owners enhance the value created by the entire industry. This is because the limitations in practice of asset owner boards and investment committees have impacts on wider industry practice, and investment firms can legitimately claim that their own practices are limited by these weaknesses further up the chain.

In the investment industry of the future:

Fit-for-purpose asset owner governance becomes the norm through successful development of resources and processes.

Asset owners increase their resources by developing internalized capabilities and improving their delegations—in some cases insourcing, in other cases outsourcing.

Governance is able to ensure better coordination across the value chain and exercise better control on outcomes.

A strong investment culture is developed that is purpose driven and takes full accountability for outcomes.