All sectors of the securities and investments industry will be dominated in 2009 by the ramifications of 2008s cataclysmic events, according to a new series of research reports from TowerGroup identifying key trends for the coming year. Yet the electronic trading and wealth management sectors may be best positioned to leverage opportunities for growth as consumers need for financial advice increases in 2009 and as advisors and wealth managers take a more holistic approach to managing client assets.
Firms operating in the securities and capital markets arena (the sell side) will continue to grapple with myriad implications of the credit crisis in 2009, including the deleveraging of positions and mere survival. Investment managers (the buy side) will increase their emphasis on risk management and overall efficiency while responding to institutional investors demands for investment performance through use of alternative instruments and new portfolio strategies.
Though currently stalled and under pressure from client losses, the strongest participants in the wealth management space will begin to move beyond simply reacting to the daily fluctuations of the market and position themselves to take advantage of the new retail landscape.
In 2009, we are clearly looking at a time of retrenchment and regrouping across the entire securities and investments space, says Peter Delano, TowerGroup research area director overseeing the brokerage & wealth management, investment management, and securities & capital markets services. Yet even in the midst of continued uncertainty and instability, opportunities will begin to emerge particularly for retail brokerage and wealth management. TowerGroup expects the strongest and most confident firms in this sector to view this crisis as an opportunity to pluck advisor talent from the competition, gather client assets, and build for the future.
Highlights from the three reports include:
– Regulation and the retirement crisis are two of the biggest business drivers for retail brokerage and wealth management firms. TowerGroup believes a new age of regulation will result from the financial crisis of 2008, forcing firms to focus on increased advisor oversight and potentially react to a restructuring of industry regulators. Firms will look to technology to better differentiate client segments and enhance advice programs for an aging population that is largely unprepared for retirement.
– The sell side, sorting through the aftermath of the financial crisis, will leave no stone unturned to find cost savings in 2009. At the same time, public outcry, politics, and global perception will force some knee-jerk responses by global regulators. Capital markets firms will need to take responsible proactive measures to show regulators that they have learned their lesson. At the same time, the efficiencies and speed achieved with electronic trading have become required elements for every sell-side firm as manual trading vanishes.
– The subprime credit meltdown and the general economic crisis do not change the thrust behind the search for alpha and low-cost beta for asset management firms in 2009. In addition, the buy side has to improve portfolio and operational risk methods in an environment in which declining assets under management limit project budgets.
The three TowerGroup research reports are available to qualified members of the press for review:
– 2009 Top 10 Business Drivers, Strategic Responses, and IT Initiatives in Brokerage & Wealth Management authored by Matthew Bienfang (Senior Research Director) and Sean Cunniff (Research Director)
– 2009 Top 10 Business Drivers, Strategic Responses, and IT Initiatives in Securities & Capital Markets authored by Tom Price (Research Director) and Stephen Bruel (Analyst) in the Securities & Capital Markets practice
– 2009 Top 10 Business Drivers, Strategic Responses, and IT Initiatives in Investment Management authored by Dushyant Shahrawat (Senior Research Director) and Dayle Scher (Research Director) in the Investment Management practice
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