Systemic risk in the superannuation system likely doesn’t stem from funds themselves, but from their service provider relationships. Regulators need to be thinking harder about where and how it arises – something they’re not necessarily well set up to do.
Big asset owners and managers are embracing the private markets as one avenue for growth, but the complexity that brings to portfolios means they also need to get a better view of what might be decades of siloed information.
How the world for managers and their custodians has changed
Fund managers have had a tough time for the last five years, observes Joe Antonellis, and it’s not going to get better anytime soon. What they need to do is adapt. And asset servicing companies will have to do the same.
Antonellis, vice chairman of State Street, in Boston, and leader of the firm’s European and Asia Pacific Global Services and Global Markets businesses, said in a wide-ranging speech in Sydney this month that: “The centre of gravity for the industry has changed.”
Asset managers were looking at a landscape where growth was difficult to come by and where developing markets were the main engines for growth. Distributors were flexing their muscles and gaining an increased share of the margin pool, he said. And there was a shift towards passive and alternative products, which were increasingly being sold as part of an overall investment “solution”.
This meant that the prizes would be shared by a smaller group of managers and the bar to entry for this group would be set ever higher.
Antonellis said: “Increasingly, conversations revolve around investors’ specific challenges or outcomes and the key for asset managers will be to find innovative ways of delivering on these needs.
“This trend is mirrored in the asset servicing space. It is critical for us to understand our clients’ challenges and opportunities in greater dimensions than ever before.”
State Street was currently piloting in Europe an iPad app called “ClientView”, which it hoped would allow the firm to have a “more strategic conversation” with its clients. The app would guide the clients through a diagnostic process which would help them identify the “pain points” in their organizations.
Antonellis also revealed that State Street had embarked on a “major piece of research” on the Australian superannuation industry, which looked at its particular challenges and outlook. The final report from this research is expected to be published in May.
