Separation from the pack: Successful financial management in the asset management industry

Successful financial management is a key component of separating from the pack and achieving long-term success in the asset management industry. In our research, we found that winning firms excelled in their financial management practices, which contributed to their ability to outperform their peers and capture a larger share of industry revenues.

So, what are the key elements of successful financial management that winning firms prioritised in the decade following the GFC?

1. Strategic Allocation of Resources: Winning firms were strategic in how they allocated their resources, focusing on investments that would drive growth and innovation. They prioritised investments in technology, talent, and client experience, recognising that these areas were critical to their long-term success. By allocating resources effectively, winning firms were able to stay ahead of the competition and adapt to changing market dynamics.

2. Robust Risk Management Practices: Successful financial management also involves robust risk management practices. Winning firms had a clear understanding of the risks they faced and implemented proactive measures to mitigate them. They conducted thorough risk assessments, stress tests, and scenario analyses to identify potential threats to their business and develop strategies to address them. By effectively managing risk, winning firms were able to protect their assets and maintain financial stability in times of uncertainty.

3. Data-Driven Decision Making: Winning firms prioritised data-driven decision making in their financial management practices. They leveraged data analytics and technology to gain insights into market trends, client preferences, and investment opportunities. By using data to inform their decisions, winning firms were able to make strategic choices that maximised returns and minimised risks. Data-driven decision making also enabled winning firms to adapt quickly to changing market conditions and stay ahead of the competition.

In conclusion, successful financial management is a critical component of separating from the pack in the asset management industry. By prioritising strategic resource allocation, robust risk management practices, and data-driven decision making, firms can position themselves for long-term success and outperform their peers. As we look towards the next decade, it is essential for asset management executives to learn from the strategies of winning firms and adapt their financial management practices to thrive in an evolving industry landscape.