Conference Presentation, Panel, Fireside Chat, Roundtable
Institutional Investing: The Model for the Future
- The pace of innovation is accelerating, with expectations that 50% of jobs will not exist within the next 20 years and that benefit administration will become automated with robot interactions within 20 to 30 years.
- AIA projects that extended client longevity will directly correlate with improved financial performance due to a current strategic focus on wellness.
- Industry operations are expected to undergo significant technological shifts, including the implementation of an investment book of records in less than a year, the future appearance of electronic trading in the regional bond market, and the full integration of AI into the investment process over the next five years.
- Regulatory and accounting changes are anticipated within the next three to four years, making capital efficiency a critical priority and requiring the industry to reorganize away from high-interest rate conditions.
- The market landscape is expected to shift from active management to passive, smart beta, and factor investing, with the number of active managers shrinking and the 450 large managers falling off substantially by 2037 to be replaced by newer, faster, and smarter entities.
- Homegrown Asian institutions are predicted to become dominant by aggregating retail savings, potentially causing global names to struggle, while uncommitted capital pools, particularly in China, are expected to spawn new players.
- Technological advancement is projected to reduce or eliminate market information asymmetry, while the balance between outsourcing and insourcing will be revisited to drive operational efficiencies.
- Future financial services in Asia are expected to be driven by retail investors, requiring organizations to hire diverse talent, including data analysts, communicators, and problem solvers, and to implement reverse mentoring programs.
- Active fundamental investors will face increased pressure to demonstrate value during investment cycles as passive strategies dominate, and the role of institutional investors is expected to become more difficult by some measures.
- Alternative risk-premium strategies such as Quant and Smart Beta are expected to persist in the market, though their assets under management will experience cyclical fluctuations.
- Long-term material number and range expectations include a prediction of even more change over the next 20 years and a substantial decline in the number of traditional managers due to technological disruption.