Prioritizing M&A, workforce and tech in a difficult economy

By Michael C. Patanella & Shona O’Hea, Grant Thornton

Asset management firms have demonstrated their resilience in a variety of ways over the past 12 months as a series of events has created severe challenges across the globe.

During the current economic downturn, asset management leaders are:

  • Doubling down on their people focus to keep key employees
  • Making strategic technology investments
  • Improving their cybersecurity protections
  • Debating whether to outsource or insource areas such as compliance, risk reporting, financial reporting, administration, valuation, etc.
  • Reducing less profitable business segments and reducing the corresponding workforce supporting those segments

These strategies have helped asset management firms succeed in these very difficult times. In the Grant Thornton International Business Report (GTI) survey of mid-market companies for the second half of 2022, the percentage of asset management respondents expecting to increase profitability fell by double digits; however, 56% of these respondents still predicted that their profits would rise in the next 12 months. Asset managers are at an inflection point now, leaving a long-extended bull market and realigning their business in the short and long term.

Even in a challenging environment, these mid-market firms were confident in their resilience.

“Operational resilience is a key priority right now for all organizations due to regulatory pressure and client expectations,” said Shona O’Hea, Global Head of Asset Management for Grant Thornton International based in Dublin, Ireland. “Organizations have to ensure they can identify and adapt to potential operational disruption, and this requires coordination between risk management; business continuity and disaster recovery; third-party risk management and cybersecurity. Some hot topics firms are grappling with right now are uncertainty in macroeconomic climate, disruption in the form of democratization of distribution networks and the rise of digital assets. Organizations need to be actively horizon scanning to predict how this change will affect their business and how to react.”