Three-quarters surveyed expect an increase in outsourcing over the next
three years, driven by need for operational efficiency and more
LONDON, Feb. 7 /CNW/ - A survey report released today by RBC Dexia and
Accenture (NYSE: ACN) revealed that a majority of fund managers expect
their company's return on equity to remain below pre-crisis levels, and
a significant number are increasing their focus on cost reduction and
product innovation initiatives.
More than half (59 per cent) of respondents forecast a return on equity
of 15 per cent or less this year; and 14 percent of those respondents
expect return on equity to be less than 10 percent. Prior to the 2008
financial crisis average returns for the funds managed by survey
participants was 20 percent.
"Turmoil in the global financial markets has deeply affected the
profitability of the investment management industry," said Rob Wright,
Global Head, Product and Client Segments, RBC Dexia. "Falling market
prices and a general move away from high margin products to highly
liquid, low-fee products have driven down revenues. Our research
suggests that fund managers are looking to solutions that allow them to
concentrate on their core competencies and provide access to the latest
technology necessary to securing front office performance."
The survey, which involved face-to-face and online interviews with
approximately 100 fund managers at 80 companies in the United Kingdom,
North America, Europe, Australia and the Middle East, also identified a
rising trend in outsourcing among asset managers which is seen to help
lower costs, improve service quality and support more advanced products
to achieve growth.
"The backdrop of low-equity returns and pressure on fees and revenues
have made efficient operations a priority for fund managers," according
to Pascal Denis, a senior executive in Accenture's Financial Services
group and managing director of the company's operations in Luxembourg.
"At the same time, their clients are demanding new financial products
which have greater clarity of risks, and they would also like to see
risks mitigated. This means that products are complex, but in a
different way than before the credit crisis.
"All of this is happening in combination with clients expecting to pay
lower fees for financial products. Having efficient, scalable
operations and access to the new technologies will be a key competitive
factor for any fund manager in the years ahead," added Denis.
Cost and operational effectiveness key reasons for fund management
At the same time, more than three-quarters (77 per cent) of respondents
said they believe over the next three years the industry will see an
increase in outsourcing - ranging from fund accounting and custody to
back-office technology and risk management. And while respondents said
cost was an important consideration, they also stressed outsourcing is
undertaken to deliver operational effectiveness reflected by the
primary drivers cited in the research: cost reduction (95 per cent);
operational flexibility (84 per cent); and service quality (78 per
RBC Dexia's Wright said: "Our research indicates that certain
outsourcing strategies could lead to cost savings of up to 20-25 per
cent for some managers. This trend will appeal to many funds, which are
looking to increase operational efficiency and are urgently looking to
grow their businesses by launching new and innovative products faster
or by expanding into new geographies."
A full copy of the report is available on RBC Dexia's website here.
About RBC Dexia Investor Services
RBC Dexia Investor Services offers a complete range of investor services
to institutions worldwide. Our unique offshore and onshore solutions,
combined with the expertise of our 5,400 professionals in 15 markets,
help clients grow their business and sustain enhanced performance
through efficiency improvements and robust risk management practices.
Equally owned by RBC and Dexia, the company ranks among the world's top
10 global custodians with USD 2.8 trillion in client assets under
Accenture is a global management consulting, technology services and
outsourcing company, with approximately 211,000 people serving clients
in more than 120 countries. Combining unparalleled experience,
comprehensive capabilities across all industries and business
functions, and extensive research on the world's most successful
companies, Accenture collaborates with clients to help them become
high-performance businesses and governments. The company generated net
revenues of US$21.6 billion for the fiscal year ended Aug. 31, 2010.
Its home page is www.accenture.com.
RBC Dexia Investor Services Limited is a holding company that provides
strategic direction and management oversight to its affiliates,
including RBC Dexia Investor Services Bank S.A., a credit institution
licensed in Luxembourg by the Commission de Surveillance du Secteur
Financier and the Ministry of Finance. All are licensed users of the
RBC trademark (a registered trademark of Royal Bank of Canada) and
Dexia trademark (a registered mark of Dexia Crédit Local) and conduct
their global custody and investment administration business under the
RBC Dexia Investor Services brand name
SOURCE RBC Dexia Investor Services
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