Top 5 concerns of asset managers in 2023 – from CASS to automation

Posted: 04/05/2023 | Read time: 3 minutes

 

The asset management industry has long been regarded as the central pillar of the financial services industry.

This attitude reflects the sector’s continued success. Global assets under management (AUM) reached an all-time high of $123 trillion at the end of 2021. And AUM is projected to reach $145 trillion by 2025.

However, the financial services landscape is shifting. Technology is driving change and increasing competition across the asset and wealth management industry. And disruption remains a looming threat.

To fully comprehend the challenges and opportunities the industry is facing, we asked 250 industry professionals in the UK for their thoughts on compliance, technology, financial controls and data management. They also told us their strategic priorities for 2023 and 2024.

Analysing the report’s findings, we’ve set out the following six key focus areas for asset management firms over the next two years.

 

1. 1. Firms still prioritising CASS compliance

The overwhelming majority (98%) of firms say that CASS compliance is a significant focus for their senior management teams. This is despite PS14/9 remaining largely unchanged since the FCA introduced it.

However, given that the regulator continues to stress the importance of CASS, this finding is to be expected. It’s welcome news that firms are heeding the FCA’s advice and still regarding CASS compliance as a priority.

 

1. 2. More regulations = increasing spend on compliance

The FCA has recently introduced a number of new and updated regulations. Notable examples include IFPR and Operational Resilience, which both came into force in early 2022. Asset management firms will also have to comply with Consumer Duty rules, set to come into force in July.

This is on top of firms’ ongoing need to meet CASS requirements. So it’s unsurprising that, over the next two years, 97% of firms say they will increase their spend on compliance.

 

1. 3. Firms are increasing their budget for automation

Most firms (over 90%) acknowledged they were too reliant on spreadsheets.

But it’s promising to see firms taking steps to become less dependent on manual processes. Almost all respondents said they are either maintaining or increasing their automation expenditure in the years ahead.

With 72% of start-ups increasing their budget for delivering automation in 2023 and 2024, start-ups are the group most looking to tap into the potential offered by technology and automation. This is reassuring because replacing manual methods early in a firm’s growth cycle is more efficient.

 

1. 4. Firms are reviewing their back-office operations regularly

Almost 80% of respondents told us their firm reviews their back-office at least once every six months. Responses further show that no firms conduct reviews less frequently than every two years.

It’s critical for organisations to review their back-office regularly to ensure maximum efficiency. Firms regularly evaluating their processes are better positioned to drive further improvements.

 

1. 5. Firms struggling to attract and retain talent

Firms identified their top strategic priorities for 2023 to be people-related. While CASS small firms are prioritising increasing headcount, CASS medium and large organisations are prioritising attracting and retaining talent.

Firms with objectives to attract and retain talent will be pleased to know that automating key back-office processes is a key and an often underused way to increase employee satisfaction. By eliminating repetitive manual data work, staff can focus on more value-add and stimulating tasks. Not only does this improve colleague satisfaction and retention, but it relieves pressures when firms struggle to find talent.

 

Summary

• Despite CASS rules remaining largely unchanged since PS14/9 was introduced, 98% of firms are still prioritising CASS compliance
• On top of meeting CASS regulations, investment management firms are upping their spend on compliance as new regulations come into force
• With over 90% acknowledging an overreliance on spreadsheets, firms are increasing their budget for automation
• Some 80% are reviewing back-office operations regularly
• Attracting and retaining talent are some of the key challenges facing firms

 

Read the full Investment management industry outlook here. Or head to our asset management page to learn more about how AutoRek can deliver regulatory compliance and control – while cutting costs and increasing efficiency.