Investment managers are prioritizing the quality and accuracy of their products to enhance the investor experience and grow their distribution in the next two years, according to a recent survey.

Less than half (46%) of respondents identify controlling costs as their top strategic priority in the next two years, while 72% choose enhancing quality and accuracy, improving the investor experience (70%) and expanding product sets (60%) as their top concerns, finds Northern Trust’s The Next Chapter in Driving Growth in Asset Management 2024 report, which conducted a survey of 300 global asset management firms. 

The results marked a shift from manager priorities in the firm’s prior survey in 2022, when just 45% of managers identified enhancing quality and accuracy as the top priority, behind efficiency and cost controls. In the 2024 survey, 83% of respondents say they plan to change their product strategy in the next two years, with a focus on meeting diverse investor needs.

While managers continue to face cost pressures, the impact of T+1 settlement and a challenging economic environment, the report notes, are influencing the ways that managers approach outsourcing non-core activities. Namely, 59% of respondents are looking to outsource securities finance and a similar trend emerges when it comes to liquidity management, trading and foreign exchange. 

Data management is overwhelmingly identified as the area where asset managers are considering outsourcing (83%), and almost half (42%) of respondents identify their biggest challenge with data management as ensuring that the data is easily understandable/consumable and insightful.

“Managers who over the last few years have focused on removing cost from their operating models have recalibrated their focus towards their investors,” says Caroline Higgins, Northern Trust’s head of global fund services for Asia-Pacific. “In the Australian market especially, managers are tweaking their strategies to service an aging demographic. As the demographics of investors change, they must be flexible with product offerings to meet the demand.”