The evolution of
Asset Management
and increasing
pressure on
the buy-side
trader
Taking a helicopter perspective of the changes in
the asset management industry, it is no wonder
that the buy-side heads of trading are under
tremendous pressure to perform and change
management is becoming business as usual.
Looking into the rationale for a number of the
take-overs in the last years, we can identify
common trends that are predicting the future of
the asset management industry:
1. Rising costs from increasing regulation is
putting pressure on the firms to achieve more
optimal economies of scale with automation and
managing mid and back office operations.
2. The buy-side firms need to extend its
distribution networks to cover rising costs and
demonstrate growth.
3. Asset management firms are acquiring to
gain local presence and global reputation as the
national authorities are pushing clients towards
more future looking critical savings in the capital
markets. The clients are looking at:
a. Lower risk diversification in safer and more
passive investment instruments.
b. Investing with Asset Managers who have
recognised credible brand names.
4. The demand, accessibility and cost differences
between commoditised and specialised financial
instruments such as small/mid cap, emerging
markets and high yield are widening. Only a few
buy-side firms will survive based on a high level of
specialisation.
5. With high entry requirements for public listings,
the private capital market is an increasingly
attractive alternative for investors.
Summer 2017
The heads of trading need to
adapt to the mergers and take
overs and demonstrate their value-
add in the investment process and
why the execution desk needs qualified
staff over and above automated low touch.
It will become increasingly important to be able
to articulate the benefits of retaining the execution
functions in-house vs. outsourcing. As if all of these
pressures are not enough, the sales trading desks
are also being more streamlined and regulatory
transparency are forcing the brokers to charge for
add-on services which ultimately transfer additional
workload and responsibilities to the buy-side trading
desk.
Kristian Karppi
Managing Director
K&K Global Consulting
We at K&KGC have recognised a dramatic shift in
cultural behaviour over the past 3 years where the
buy-side traders are increasingly pressed on time
and need to prioritise their activities to survive their
working day. While some buy side feel they can no
longer take time away from their trading desk, others
have realised the increasing value of interacting with
their peer network to remain on top of the game and
in worse case, know who to contact if one is made
redundant. In some cases, it becomes apparent that
the buy-side firms are streamlining their trading
desks to the extreme that there is no longer a
contingency plan for holiday or sickness cover.
K&KGC’s vision is to support the individuals in our
global buy-side community in this increasingly
pressured environment. We are also happy to
support buy-side traders who find themselves in the
unfortunate position of redundancy, to stay in touch
with the industry.
www.buysideintel.com
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