A new survey of CEOs, COOs and senior executives show the challenges of the sector and where firms are pivoting to counter escalating fee wars and expanding their investment products.

The state of the economy, new strategies for driving efficiency, and outsourcing more middle office operations, were among the top business priorities of 50 senior executives surveyed about the challenges that 2020 has unleashed.

In Brown Brothers Harriman's debut Asset Manager Survey, CEOs and other decision-makers, collectively overseeing $18 trillion and 115,000 staff globally, agreed that these transformative times were heavy on disruption but a good time to show resilience and flexibility, and grasp new opportunities.

Nearly two-thirds of executives were most concerned about the economy. This was felt most acutely among those with less than $50 billion on the books. For larger institutions managing $500 billion or more, it was staff productivity and cybersecurity that led concerns.

Just over half (52 per cent) said they are planning to reduce expense ratios or fees in the next 12 months in response to competitive pressures and escalating fee wars. 

To combat fee compression and boost performance, many asset managers said they are pivoting more quickly into new strategies. A third are evaluating areas such as ETFs and alternatives to expand their product line. Others are boosting performance by optimizing securities lending and FX; and three-quarters said they are changing the way they allocate capital as a result of the crisis.

Efficiency gains are first, targeting data and IT operations and improving middle office services. Outsourcing more operations is another growing practice to balance the bottom line. A third of global asset managers said that they are more likely to consider this option than they were a year ago.

Views were taken from a broad spectrum of global asset managers including large multinational asset allocators and smaller boutique firms. Almost universally, executives reported more investor interactions as a result of the crisis, with three-quarters saying they have increased client engagement through new channels.

The jury is out, as is the industry, on what the office-working dynamic will be as firms settle into a vaccine-led recovery. While 48 per cent of senior managers believe that half their employees will be able to return to the office as soon as Q2 2021, they agreed that flexible working is here to stay, and many see real estate as an opportunity to cut costs.