PETALING JAYA: The joint research report compiled by the Institute for Capital Market Research Malaysia and Japan’s Nomura Institute of Capital Market Research has identified four structural challenges faced by the local asset management industry.
1. Changing demographic trends and investors’ preferences.
Retail investors are demanding access to a wider range of products to match their varying profile, risk appetite and returns expectation. There is a growing demand for more international options from regional fund registration blocks to be allowed to be distributed locally.
2. Digitalisation.
Inspired by the digital experience they encounter in their daily lives where prompt or immediate gratification ensues, investors are beginning to demand a similar level of experience from their financial service provider. This takes shape in the form of innovative investment solutions which offer greater convenience, channel access, transparency and lower cost.
3. Talent.
It is essential to assess if there exist any barrier prohibiting talent building and inflow as well as if existing talent incentives for the industry are sufficient to develop and retain the required human resource for the advancement of this asset management industry.
4. Market regulation and structure.
As regulators increase their oversight on asset managers, asset management companies have to congruently strengthen compliance through staff and system upgrades to cope with the dynamic and evolving operating environment. In line with this there is also a need for greater coordination among regulators so as to achieve a harmonised approach for efficient reporting and to minimise displacements and repetitive procedures within the industry.
In response to the challenges faced by the asset management industry, the report has come up with the following recommendations:
1. Facilitating market diversity for revitalisation.
2. Going beyond mere capital with differentiated strategies.
3. Developing talent through internationalisation and reciprocal relationships.
4. Embracing digital distruption.
5. Making Private Retirement Schemes a more attractive option.
6. Widening product range.
7. Strengthening the value of distribution channels.
8. Embedding financial literacy.
9. Establishing a high-level task force to address regulatory and policy harmonisation.
Retail investors are demanding access to a wider range of products. BERNAMAPIX
