Joint report says global changes likely

LONDON — The ever-changing face of the global asset management industry will soon undergo another restructuring, perhaps within the year, driven by changing segmentation and customer demands, according to a new report. by Mercer Securities, Mercer Oliver Wyman and Lazard Freres LLC.

The report, "Global Asset Management: Who Wants Performance" — by Mercer Securities, Mercer Oliver Wyman and Lazard Freres LLC — slices the industry in half, one section consisting of "professional" clients, whether institutional or retail, and the other consisting of "non-professional" clients. Business models and customer needs are vastly different and therefore the usual institutional vs. retail split will shift to cater to these two groups' demands, according to the report.

For the professional segment, performance will be key, said London-based Imran Gulamhuseinwala, consultant at Mercer Oliver Wyman and author of report. Outperformers will most likely be small, self-owned players who are independent and can strike up partnership structures with larger organizations that have a platform for the middle- and back-office functions. Among larger firms, outperformance will come through creating what the report called alpha platform providers — combining the distribution and back-office platform with small investment teams, generating alpha.

The report also pinpoints four different business models that will meet success in the future. The first is specialist boutiques that can generate performance — and therefore concentrate efforts on the professional segment. The second concerns larger institutions mirroring boutique organization and performance. The third is scale managers who have a strong brand and focus solely on the non-professional segment. The fourth is streamlined management units within banks and insurers.