It’s not been an easy twelve months for the asset management sector. A much-changed world – characterised by rising inflation and interest rates, geopolitical tension and growing regulatory pressures – has made for a markedly different environment for investment businesses and their clients to operate in. The benign markets of the last decade feel a long time ago.

In such an environment, it is critical to understand the key concerns, priorities and thinking facing asset managers’ underlying clients. It is on this basis that JPES Partners has conducted its annual asset owner survey – Looking Beyond Investment Returns: Assessing Asset Owner Priorities in 2023 – a major research initiative surveying the views of 32 UK pension schemes, charities, investment consultants, fiduciary managers, wealth managers and wholesale platforms who are collectively responsible for more than £800 billion of assets

The results of the study – which were presented at the annual JPES Asset Management Seminar – are stark. Confidence among asset owners in the managers they employ has fallen by 36% in the last twelve months, with just one third of respondents now ‘confident’ or ‘very confident’ in their existing managers. Almost two-thirds of those surveyed indicated they would likely make changes to their manager roster in the next year.

Satisfaction levels of asset owners towards the asset managers they employ over 12 months compared to 2021

Source: JPES Partners

While some increased dissatisfaction among clients should be expected in these turbulent times, the scale of this fall in confidence should raise questions. Asset owners noted particular concern over the ability of investment strategies to respond to crisis, as well as the quality of information provided by managers to their clients. The latter certainly appears an area where additional work is needed, not least given the increased reporting and regulatory pressures under which asset owners find themselves.

Though this clearly represents a challenge in terms of client retention, does it also indicate opportunities from a new business perspective? In theory at least, one person’s loss can be another’s gain.

The reality is a little more complicated, with asset managers needing to understand the key priorities and criteria used by asset owners to select future service providers. More work also appears required here, with those areas that asset owners are prioritising – team quality and continuity, ability to explain investment strategy, and ability to demonstrate a positive corporate culture – being where decision-makers feel managers fall short. The importance attached to the cultural element of investment firms is especially notable, with just 8% indicating satisfaction towards managers in this area.

With this in mind, reviewing and improving client engagement and communications practices should now be a clear priority. Managers must be able to meet investor needs and demonstrate the unique characteristics and attributes of their own businesses. Investment performance and track record alone are no longer enough – success now also requires the ‘softer’ skills of communication.

For more information on JPES Partners’ proprietary research programme and our latest study – Looking Beyond Investment Returns: Assessing Asset Owner Priorities in 2023 – please contact matt.rogers@jpespartners.com