blog

Predictions for 2011

By Steven Miyao

It is that time of the year again and I am making my predictions for the upcoming year.

Industry trends:
1. Emerging markets growth continues to outstrip U.S. growth, and U.S. firms start to focus more heavily on international products and clients. We will not only see assets predominantly flow into these categories, but also largely new fund or ETF products come to market in these categories.

2. Markets will soar next year as corporate profits and the economy improves. Flows will gravitate back to equities from fixed income products as confidence in the economy continues to improve. Late-year concerns over whether governmental fiscal discipline is achievable could hinder the enthusiasm. Interestingly, Year 3 of presidential terms is generally the best year for equity returns.

3. M&A activity will increase as firms start to have more confidence in the economy. Foreign as well as domestic powerhouses will make strategic acquisitions to broaden their product offerings. Small to mid-size firms with entrenched brand names or specialized product expertise are attractive targets.

Strategy & product:
4. ETFs continue to proliferate, grow and pick up one-third of all mutual fund and ETF flows; ETFs will finally start to gain traction on retirement platforms in a meaningful way. Another top 20 fund family will acquire or start rolling out ETF products.

5. We are going to see inflation protection and tax advantage products gain momentum as investors fear the nearing consequences of loose monetary policy and the long-term inflationary consequences of deficit spending.

6. By mid-year, positive flows into equities will exceed flows into bonds.

Distribution:
7. Assets will continue to consolidate among the top ten fund families. Distributors will increasingly push for the roll out of exclusive products (branded products only available through a specific distributor) with these preferred partners.

8. National Accounts teams continue to become more prominent, as fewer platforms exist and advisors use fewer providers, making getting on the shelf more vital. Firms will add to their National Accounts teams and will increase compensation for those teams.

9. Despite the fact that firms are trying to focus on profitability, most firms will not resist the temptation to staff back up with external wholesalers, and ratchet compensation up to pre-recession levels.

10. Several firms invest significantly in segmentation to better differentiate their advisors. These firms will then use this segmentation to direct their wholesalers, Web site and marketing efforts.

11. Asset managers will continue to expand their focus on RIAs. 50 percent of firms will segment coverage of RIAs by AUM.

e-Business:
12. Firms look to lower marketing & distribution costs by increased use of the Web as a wholesaler, particularly for lower-AUM clients. A number of firms will set specific Web site sales goals for advisors who are not covered by a wholesaler.

13. Social media will continue to become more relevant to engage with investors, advisors and institutional clients. Over 50 investment management firms will be on twitter next year.

14. Mobile efforts will expand greatly; apps start to attain dominance over site optimization for Web. Ultimately, there will be competition in the apps space and "app overload", but not short term. We will see enhanced mobile support beyond the mWholesaler platform. Over 35 percent of firms will roll out tablets to their wholesalers.

15. We will see many firms make the investment in more intelligent tracking/analytics to better understand their Web traffic.