“Our industry is at an inflection point, where success or failure hangs in the balance,” CFA Institute’s chief executive Paul Smith said Monday in a statement upon the release of the organization’s Future State of the Investment Profession study.
“Industry leaders will make decisions over the next five years that will have an impact not just on their firms, but also on the entire landscape of the investment profession as we know it.”
The report’s publication was timed to coincide with CFA Institute’s Putting Investors First campaign, an annual initiative to focus the industry’s attention on the needs of investors around the world.
The study identified several megatrends, including demographic shifts, technological advances, redefined client preferences, new macroeconomic conditions and different regulatory regimes reflecting geopolitical changes. These trends are not forecasts, the report said, but point to possibilities for the future state of the investment industry.
The report was based on 1,145 responses, including 644 from CFA Institute, collected in December. In addition, Institutional Investor conducted interviews with 19 investment management executives to obtain context and further details about the collected data.
Two investment trends stood out in the study. Seventy percent of investment professionals expected financial centers in the Asia/Pacific region to become more influential.
Seventy-three percent of respondents said they expected environmental, social and governance factors to become more influential in investing.
In fact, ESG’s influence is already being felt. A recent study found that retail investors want their financial advisor to communicate more about ESG investing so they can align their investments with their personal values.
The study also found that business models were facing pressure, as 84% of respondents anticipated industry consolidations.
Seventy percent said they expected more assets to go into passive investment vehicles. In addition, 63% said profit margins at asset management firms would remain flat or contract.
And 57% of investment leaders expected institutional investors to reduce costs by bringing more investment management activities in-house.
More than half of respondents looked to globalization for new opportunities, while about one in five perceived globalization as a threat.