2022 Investment Management Outlook

Published on

Positioning for a greater impact

The pandemic continues to test investment management leaders to present a vision for the future and credible tactical steps to achieve that vision. To help prepare for the challenges and opportunities ahead, Deloitte’s “2022 investment management outlook: Positioning for a greater impact” features insights from a global survey of 400 senior investment management executives on topics such as talent, technology, sustainability, and more. It also explores how customer demand is changing investment operations and product offerings for the better.

Get The Full Warren Buffett Series in PDF

Get the entire 10-part series on Warren Buffett in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues

Q3 2021 hedge fund letters, conferences and more

Investment Management Firms Are Turning To Digitization

Investment management firms across the globe are investing in their businesses and are increasingly turning to digitization to enhance customer experience and develop new products. Look at the number of firms planning to increase spending in these key technologies.

Investment Management

However, spending alone is insufficient. Leadership vision and collaboration are vital ingredients in the recipe for success.

Key Messages In The Deloitte 2022 Outlook

  • Progress toward quantifiable and transparent business metrics helps firms achieve a higher bottom line, financially and socially. Respondents who quantified the impact of their DEI initiatives were more likely to indicate that employee engagement and productivity have strengthened.
  • The workplace talent model is likely to continue to shift in 2022 as employees and firms adapt. Both internal communication plans and bold talent actions to maximize benefits are essential steps to take, as they create opportunities for a stronger culture over the long term.
  • An overwhelming majority (85%) of our respondents that use AI-based solutions in the pre-investment phase either strongly agreed or agreed that AI helped them generate alpha. Using natural language processing and generation (NLP/G), a type of AI technology, analysts can improve efficiency so employees can focus on analyzing data with a higher potential for insights.
  • Firms that can better leverage technology to engage with clients and deliver on their expectations will likely be more successful: 38% of respondents from digitally advanced firms expect significantly better revenue prospects in 2022 compared to just 13% for other, less digitally advanced firms.
  • Significant regional differences appear in the implementation of digital transformation and modernization/governance mechanisms: European firms lead with 27% of the respondents indicating that their firms are accelerating digital transformation as well as updating governance, followed by Asia Pacific (20%) and North America (11%). Left unchecked, inadequate governance and reporting that trails digital transformation could lead to significant financial, legal, and reputational repercussions.

Firms' Cultures

Although the past two years have tested the mettle of investment management firms, their people and leadership have made a difference. Many firms’ cultures have strengthened over the course of the pandemic, and there is a connection between strengthening cultures, revenue outlook, and the ability to implement important new technologies to meet evolving investor preferences.

Survey results indicate that there is a virtuous cycle connecting corporate vision, strategy execution, customer service, and employee resilience. This cycle can lead to financial improvements and operational achievements. Determining where this virtuous cycle begins or ends is likely an impossible task. However, the elements that fuel the cycle are likely leadership and employee drive to exceed customer expectations. Leadership establishes and communicates the vision for the organization. When executed well, there is alignment cross functional areas for strategic priorities including capital allocations, staffing, development, and implementation.

In 2022, firms with strong leadership are expected to achieve differentiated results to a greater degree than in years past, because of the magnitude and the pace of change expected throughout 2022. The biggest development in stakeholder expectations for investment management firms is related to ESG and data processing. Investment management firms are processing new data sets with AI to meet customer ESG priorities and investment return expectations. It is likely that these efforts and the accompanying sense of achievement can also fuel the virtuous cycle.

It appears that customer demand is changing investment operations and products offerings for the better, and this change will likely continue or perhaps accelerate throughout 2022. Investment management firms with high levels of success are likely to be simultaneously strengthening their cultures and achieving a higher bottom line.

The full report can be viewed and shared here.”

About the Author

Krissy Davis is a Deloitte vice chair and the leader of Deloitte’s US investment management industry practice.