While maintaining client confidence was the greatest challenge faced by investment managers in 2010, industry executives anticipate regulation to be the most pressing challenge in the coming year, finds a new survey conducted by Linedata, the global solutions provider dedicated to the investment management and credit industry.
The survey was conducted on October 19, 2010 at the inaugural Linedata Exchange, an asset management industry conference in New York City attended by more than 250 representatives from the buy side's front-, middle- and back-office.
Top Challenges of Today and Tomorrow
Those surveyed overwhelmingly cited regulation as the biggest challenge they anticipate facing in 2011. Whereas 20 percent cited regulation as the biggest challenge they have faced in 2010, 43 percent anticipate that regulation will be the issue that challenges them most in the coming year. Nearly three in ten (29 percent) respondents cited maintaining client confidence as the top challenge they faced in 2010, with 37 percent suggesting this will be the biggest challenge of 2011.
"Post-crisis, winning back, or maintaining, the trust and confidence of clients has been a major challenge for the asset management industry," said Annie Morris, Managing Director for Linedata North America. "Repairing client relationships has been a top priority for the buy side in 2010. The industry is facing a new challenge in the form of increased regulatory scrutiny that is certainly a top concern and priority for investment managers in 2011."
IT Priority for 2011: Improving Legacy Systems
Looking ahead to their IT investment in the coming year, nearly 6 in 10 (57 percent) respondents cited improving their legacy systems as the area where they will be dedicating most of their IT investment. Compliance was cited by 28 percent, risk management by 23 percent and trading performance by 20 percent, as the most important areas for IT investment in 2011.
"New financial regulations will alter the competitive landscape for investment managers, with those best able to adapt to a more regulated environment most likely to succeed over the long term," said Annie Morris. "Many buy-side firms recognize that their legacy systems are inadequate to support their business groowth in a more regulated environment. We are currently seeing, and expect to see even more in 2011, interest from the buy-side in upgrading their front-, middle- and back-office technology. No firm wants to be leapfrogged by competitors seeking a technological edge. Many of these firms call on compliance and reporting solutions providers, like Linedata, to support and help optimize their investment processes while proposing new services towards their clients."