The Five Keys to the Future of Asset Management

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The Five Keys to the Future of Asset Management
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The Five Keys to the Future of Asset Management by Peter Hans, President and Co-Founder, Harvest

In order to sustain, one must evolve. In order to grow, one must evolve faster.

I started my Wall Street career in 2000 trading short duration bonds, primarily interest rate derivatives. Products like these are what “Wall St.” has historically deemed as innovation. The synthetic creation of products such as CDOs, and CDOs of CDOs, and CDOs of CDOs of CDOs, is a form of innovation; however, lasting innovation serves to improve the value proposition for the end consumer. Most Wall Street investment product innovation simply serves to increase fee revenue further perpetuating mistrust.

Despite the differences between the asset management industry and the investment banks which create and sell “innovative products,” they are broadly viewed as synonymous. Plus, their major pain points are the same: high customer acquisition costs, and the subsequent difficulties in achieving economies of scale. Managing money for a fee, and selling financial products to a diverse client base, are inherently scalable businesses; however, acquiring and maintaining clients is exceedingly expensive and currently reliant on intermediaries.

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As we know, banks sought to achieve operating leverage through the cross-selling of new “innovations,” as opposed to targeting a more efficient work flow.   One might assume that the asset management industry would learn from the mistakes of the banks, but instead of treating t