Identifying the right partner for product strategy success

Investor demand is driving asset managers to explore new investment strategies and solutions with the support of service providers as an important success factor.

Pre-pandemic competitive pressures continue to persist, with asset managers challenged to control costs and introduce new products.  The Covid-19 pandemic further complicated this as investors changed how they invest and interact with financial services firms.  In addition, this change accelerated by a new generation of investors. 

There’s an evolving consumer base because of the shift in wealth between generations, and those investor behaviors are quite different. We are witnessing an increased shift towards mobile and digital purchasing habits, and that extends to investing.So, as the consumer evolves, asset managers are trying to figure out how to target them in the best possible way.

says Jeffrey Baccash, head of global ETF solutions at BNP Paribas Securities Services.

More specialized support

A survey of 267 asset management professionals conducted by Ignites on behalf of BNP Paribas confirmed a continued focus on new product launches, with model portfolios, active ETFs and Separately Managed Account (SMAs) ranking as the most common among survey respondents.

Not surprisingly, ETFs are still experiencing robust growth, with more asset managers looking to enter this market with either new fund creations or mutual fund conversions.

“Traditional fund managers who were nervous about ETFs understand that a good segment of the investing population is enamored with ETFs,” says George Martinez, global relationship manager for BNP Paribas Securities Services. “If you’re offering an existing fund product, an ETF is considered a less expensive investment option.”

The emergence of new asset classes and strategies is also spurring investor interest, in areas such as digital assets and ESG.

“Demand for digital assets and responsible investing is rising across the board.  Individual investor demand is particularly high, whether it’s in mutual funds or retail separately managed accounts,” says Jeffrey Zoller, Director, US Fund Services at BNP Paribas Securities Services. “As firms look at investor demand, they’re not only assessing which investment strategies and asset classes to offer, but also what vehicles and distribution strategies make the most sense.”

More Digital Engagement                                                                                  

Banks are continuing to ensure they are in a strong position to be digital with a focus on developing extensive functionalities and innovative technologies, including; application programming interfaces, artificial intelligence, chat tools, transparent dashboards, mobile applications, universal databases, multi-lingual desktops for global offerings and intuitive input.

“A comprehensive partnership with an experienced and innovative service provider is highly important and can determine whether an asset manager’s product strategy is a success,” says Martinez.

Growing with you

Given the key role that service providers have played in the asset management industry over the past two years, it’s little surprise that asset managers are looking for their support when launching new products to grow their assets. It is important, therefore, that they seek out a provider with a wider range of experience and expertise in different markets.

However, the asset management industry is constantly evolving, and new products and strategies are always emerging. A strong partnership between asset manager and service provider, one in which the service provider is aligned with their client’s business strategy, is an important success factors in support of an investment manager’s growth ambitions.  

What’s important is that the service provider has the infrastructure, the expertise and the scale to help asset managers grow their business. And if they don’t have the product expertise, then it’s important they build the capability with you as a partner.

says Martinez.

*Ignites, a Financial Times service, in partnership with BNP Paribas, conducted a survey in Dec 2021 of readers who are involved in operations, work with key service providers or oversee those who do to participate. 267 valid responses were received to show this snapshot of how the industry has changed.

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