The Continuing Quest for $100 Trillion AuM

How Vendors/Suppliers Can Work to Support the Growing Future of Investment Management Operations
by Jay Wolstenholme, July 28, 2014
Industry Trends
Global

Abstract

As of January 2014, there are more than $100 trillion of investable assets on a worldwide global level. One optimistic growth projection has investable assets reaching $334 trillion by 2018.

New investors are constantly entering the market, and many investors are transitioning from wealth accumulation to de-accumulation distribution, which demands alternative strategies.

This report outlines investment management firms’ “demand” side of investable assets and the operational and technical requirements of servicing the demand. The geographic demographics and growth of the both the buy and sell sides are in flux.  Traditional vendors, custodians, fund administrators, universal banking systems, and prime brokers are all in competition to supply operational services for this massive pool of global investable assets.

Investment management operations have been dormant for too long and require reengineering to handle new product, geographic, and regulatory demands. The supply market has broken wide open, with each player verticalizing their offerings to capture market share. Custodians are offering trade desk to settlement services, while vendors are offering managed services. Vendor suppliers are being disrupted by new vendors encroaching from the sell side and derivative markets.

“Even nontraditional competitors such as Google, Amazon, Yahoo, and Facebook now have exploratory ventures in finance. One might be processing all their securities through ‘Googlezon’ in the future. But, for sure, the investment service landscape is in transition, and all suppliers need to know where to expand and invest, and to be aware of looming disruptors,” says Jay Wolstenholme, Senior Analyst with Celent’s Securities & Investments group and author of the report.

This report discusses current market penetration and market participants. Vendor recommendations focusing on investment management operations are presented, as well as the best ways to meet current and future market demands and possible future disruptors.

Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is a wholly-owned subsidiary of Marsh & McLennan Companies [NYSE: MMC].

Media Contacts

North America
Michele Pace
mpace@celent.com
Tel: +1 212 345 1366

Europe (London)
Chris Williams
cwilliams@celent.com
Tel: +44 (0)782 448 3336

Asia (Tokyo)
Yumi Nagaoka
ynagaoka@celent.com
Tel.: +81 3 3500 3023

Table of Contents

Executive Summary

1

Introduction

3

 

Where Is the $100 Trillion Now? — The Demand Side

3

What Are the Supply Choices?

6

 

Vendors

6

 

Prime Brokers

7

 

Fund Administrators

8

 

Custodian Banks

9

 

Universal Banking Vendors

10

 

Correspondent Clearing Firms

10

 

BPO Providers

11

 

Edge of the Envelope

11

Vendor Recommendations

13

Conclusion

14

Leveraging Celent’s Expertise

15

 

Support for Financial Institutions

15

 

Support for Vendors

15

Related Celent Research

16

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