After marking the anniversary of a ten-year bull market in March, few are celebrating. Rising international tensions, tariffs, market volatility, and an upcoming presidential election are feeding into investor uncertainty and leading many to wonder when this historic run will end.
Compounding these worries, small to mid-sized asset managers face unprecedented challenges. Advisors report working with fewer providers, benefiting the best-known firms with the highest market penetration and scale to compete on price. Armed with a full range of investment offerings, larger firms have the opportunity to focus less on product and more on advice that achieves desired outcomes. Furthermore, larger firms are more likely to have the resources available to make capital investments in data and technology to better serve advisors and their clients. Indeed, in this year’s Advisor Brandscape study, industry giants American Funds, Vanguard and BlackRock appear stronger than ever.
Despite these headwinds, opportunities remain for firms willing to take the initiative. Relatively smaller players have an opportunity to step up in delivering authoritative insights that offer a distinct point of view and build on areas of perceived expertise. Mid-sized managers able to find a complementary partner can scale up quickly through M&A activity. Notably, the size of the $5 billion-plus Invesco-Oppenheimer deal could be a harbinger of things to come.
Taking a longer view, one wonders where potential acquisition activity could lead and whether tech giants such as Amazon, Apple and Facebook could enter the market and bring a new era of disruption. Investment providers that take the time now to assess where they fit in this changing landscape and what gaps they need to fill to effectively compete will be best positioned to thrive.
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