The investment industry has seen major change in the last few years, not least with the recent and ongoing economic and market challenges. This comes on top of significant product developments and greater refinement of alpha and beta strategies. However, many investors are still un-provided for in terms of their key needs. This can be seen as a failure of both product and of distribution methods. The challenges placed at the door of both investment managers, advisors and wealth managers in the current market conditions are multiple.
Bluerock's services in the investment management space address many areas that are at the top of the CEO agenda:
- Revenue protection is a necessary counterpart to cost reduction in the current climate. Bluerock's approach to scenario based planning supports companies in developing the combination of product and distribution strategies that will allow them to weather the storm. This will drive developments designed to stand up to varying conditions while allowing for opportunistic or tactical participation in macro, geographical and sectoral developments
- The development of successful and well targeted product is essential in a world of greater scrutiny. Our experience of leading proposition development initiatives, from innovation through to launch, is extensive across the institutional, wealth and retail spheres, dovetailing with our capabilities in market and distributor positioning
- While product and proposition innovation is important, equally so, is the product range. Our product portfolio management services complement proposition development, helping you to diversifying risk and balance revenues.
- As product innovation continues, the recent increased use of derivatives is not going away. However, risk may need a new focus. Our work in building derivative ‘fluent' operating models for clients has provided for increased OTC trading capabilities and sophisticated cover and exposure management.
Our services are based on a backdrop of several factors that are driving the need for change.
Firstly, regulatory and consumer evolution have created a raft of developments, leading with LDI in the institution pensions arena through to UCITS III products in the retail space. These provide a wider capability for managers to address specific investment needs but as with any new ‘technology', good product design and strong consumer uptake do not always flow with the first wave of developments.
Additionally, recent events show that through 5 years of strengthening market conditions, insufficient attention has been paid by many manufacturers to diversifying revenue streams as a means of managing risk. Style specific manufacturers have been vulnerable and too many others have suffered through following the herd in product development. Added to this, structural and counter party failure in some parts of the derivatives markets has opened eyes to the insufficiency of some current risk management approaches. In particular, the assumptions and data fed into risk models has been found to be insufficiently robust, lacking scope and breadth in the risk factors addressed.
Meanwhile, individual investors in the retail and wealth space are predominantly still reliant on advisors or themselves to manage their investment portfolios to meet their life objectives. Essentially, asset allocation at the individual level is still king (although not always effective), and investment engineering has paid little attention to the lessons from behavioural finance and outcome oriented products.
We believe that the current market creates the conditions and impetus for a new wave of change that can advance the cause of delivering better outcomes for investors while increasing shareholder value. We at Bluerock, through our depth of experience and thinking in this area, are ideally positioned to help businesses take both new steps and new directions in this journey.