By Lorraine Lyons, Business Development
Last week the ALFI European Asset Management Conference took place in Luxembourg. The two-day event (5-6th March) was packed with keynote speakers, in-depth panel discussions and lunch time fintech presentations. It was attended by Chief Risk Officers and Chief Compliance Officers from Europe’s largest asset management firms.
The overall theme emerging from the event was the four P’s of asset management: Product, People, Progress, Prediction. Here are our top ten takeaways from the event.
- In the past year, there has been a significant growth in the funds industry with Luxembourg having 40% of all net sales of funds in Europe. Alternative funds had a robust growth period in 2018 and there was a 17% increase in private equity funds.
- Digitisation will aid emerging generations with investment in funds. This innovation is not structural, it is competitive. There is a push from investors towards Environmental, Social and Governance (ESG) investing. This will attract talent and bring millennials on-board who are committed to changing things.
- When we talk about innovation, we must remember that the basics need to be done correctly. Firms are still running multiple systems, which can include manual processes for risk management. The efficiency of the back office, for example, is often times neglected.
- Technology is needed to give clients greater transparency and a holistic view of portfolios.
- Only 1% of young people move into financial services roles straight out of college. In order to attract the top talent who choose this industry, asset managers and regulators are competing with each other. This is another challenge to firms to preserve their legacy with the best candidates and to question why are there not more students interested in financial services?
- A pragmatic regulator who is open to constructive dialog is needed rather than a regulator that goes into technical details. If regulatory files are well prepared then filing should be straight forward for firms.
- Achieving sustainability will not be done by trying to predict the future, but rather by proactively creating it. We do not have to choose between a thriving economy and a clean environment, we have to achieve both to appease investors and the planet.
- Climate change is here. The cost of inaction is $4.2 trillion for four degrees temperature warming. Our planet is safe and will adapt but when we reach six degrees warming, human life is in serious danger. Only 17% of pension funds factor in climate risk in their investment strategies. On March 15 there will be a global strike from schools, organised by 14-15 year-olds who are concerned about inaction on Climate Change.
- ESG investments should have a single approach across the funds industry and be applied to all product not just some products.
- AI and fintech will not be used to replace humans, rather it will take the robot out of the human and move those repetitive tasks to the digital worker. There is a high amount of repetition in what we do and fintech can build rules based engines to solve for this.
The event’s content showed we have an interesting few years ahead of us between the changing environment, Brexit, AI and changing investors. Success in these times will come down to catering to these risk factors with skillful innovation and a personal roadmap of compliance.