This paper explores challenges and solutions for investment firms in what we call “The New Era.” Specifically, the main industry challenges are:
1. Fee pressure/margin compression
2. Alpha is scarce
3. Trust. Clients have lost trust in asset managers and in the integrity of the markets
The Solution: We summarize the solutions as being a firm’s ability to deliver “compelling value” to the clients. This is not what the investment manager thinks it is (i.e. beating a benchmark), it is what the client determines it to be. In the summary statements below, we contrast traditional investment industry practices vs. what we see as required in the New Era.