The investment management business is undergoing significant transformations, which have to get expedited by the coronavirus outbreak. Many of the industry’s trends were already in motion before the epidemic, but with social distancing, working from home, and on-demand communication thrown into the mix, asset management firms must adapt or risk falling behind. We’ve identified the following significant themes that will shape the fund management sector in the future:

• The Impact of Technology

Is current technology allowing asset managers to plan for the future? The pandemic has highlighted — and accelerated — the industry’s technology transformation potential, according to Joseph Stone Capital. Fund management firms may automate, harness data, gain insight through analytics, and create a personalized customer experience, among other things, in the race to a digital future.

• Cost-cutting and digital transformation

Controlling costs is a top concern for long-term profitability, according to Joseph Stone Capital. That goes hand in hand with new technologies that automate previously manual operations. We must also acknowledge outsourcing’s steady rise: the concept of doing what you do best and delegating the rest to others. A quickly evolving business model allows fund managers to minimize costs and pass the savings on to their investors.

• Liquidity and balance sheet strength

The relevance of balance sheet strength and liquidity difficulties has to get highlighted in the present market climate. Firms that were previously financially robust will be able to profit from market disruptions caused by the epidemic. On the bright side? Gain new clients and expand your revenue base. What’s the drawback? Without the funds to invest, opportunities are lost.

• Fees are under pressure.

It’s known as the “Race to Zero.” Since the 1970s, when regulators scrapped fixed trading commissions, fund managers and brokers have been on a never-ending quest to reduce expenses. Customers today have alternatives to the traditional asset management business model, which charges fees as a proportion of money. More businesses are now providing clients with the option of being billed by the hour or a flat charge for their services. That does not include the rise of so-called Robo-advisors, which offer services for minimal rates.

• Observance of regulations

Compliance is taking up more and more time for registered investment advisors, with many depending on a chief compliance officer or outsourcing these responsibilities to an outside firm. Traditional risks (such as marketing, investor eligibility, and fees), as well as more recent exam findings in portfolio management and trading, valuation, custody, use of leverage, funding capacity, voting and consent solicitations, recordkeeping, and technology issues, are all compliance considerations for the fund management industry.

• Putting money into digital assets

Fund managers are increasingly receiving requests from their clients to include digital assets in their investment mix as digital assets become more acceptable in the mainstream investing community. That is a significant shift from only a few years ago when digital monies were considered the domain of scammers and criminals lurking in the shadows of the internet. However, because they have kept their worth, more fund managers include them.