Twelve months on, while some of the issues may have changed, challenges not only remain but have increased. A number of major industry-wide themes – identified in our Asset Management Agenda 2019 report – continue to drive and shape the sector, whilst others, most notably regulation and the effects of MiFID II requirements, have arguably not had the immediate impact that might have been expected.
Ultimately though, much of the direction of travel is now being driven by (geo)political influences which are shaping the wider landscape in a variety of ways.
In the US, the eccentricities of the Trump White House (now exhibited through a continuing government shutdown) continue to dominate, despite a rebalancing of legislative power following the Midterm elections. Much also rests on the US’ continuing trade negotiations with China at a time when further discord will sow even more seeds of uncertainty, and as the latter faces its own challenges in maintaining the pace of economic growth.
More broadly, populist sentiment continues to pervade the geopolitical arena, as evidenced by the election of the far-right Bolsonaro in Brazil, and it remains to be seen how more nationalist politics will affect the global status quo.
And then there is of course the mess that is Brexit, a situation so shambolic that we still have little sense as to the final outcome, despite being less than three months away from the UK formally leaving the European Union. That said, yesterday’s vote in Parliament has diminished somewhat the threat of the UK crashing out with no-deal.
The impact of all these considerations on public, and in particular investor, sentiment has been marked. Economic forecasts, most recently illustrated by Eurozone projections, have been decidedly downbeat; markets far more sensitive and increasingly volatile, with the US in particular experiencing wild swings in the last few weeks; and investors appear to becoming more and more risk adverse, flocking towards perceived “safer” assets.
The combination of all of these is a daunting prospect and one that should rightly give the asset management industry pause, if not outright concern.
But before too much depression sinks in, it is also important to recognise that such a challenging scenario can also create opportunities. And this is why 2019 could be a seminal year for an asset management industry under pressure on a variety of fronts – be this the market landscape, public sentiment towards investment and pension providers, cost and fee pressures, or the lingering effects of regulation.
Granted, the environment is now harsher than it has appeared for some time, but such a climate can offer a real basis for managers to demonstrate their worth, using their skills and abilities to meet the objectives of their clients. Those that are seen to do this can hope to enjoy substantial competitive advantages on a longer-term view.
Needless to say that the year ahead will likely be an interesting and eventful one.