– The AM Tech Day organized by L’Agefi showed that the attraction of individuals for ESG or private assets forced managers to find technical solutions to industrialize the distribution process.
Technology is not everything, but it is everywhere. And the world of asset management intends to use it to support one of the major changes it has been experiencing for several years: the growing democratization of certain offers and products. During the opening conference of AM Tech Day, a local event organized by L’Agefi on October 4 at the Palais Brongniart, the speakers were unanimous. The large-scale dissemination of private assets or the development of ESG (strategies taking into account environmental, social or governance criteria) will not be possible without new technological solutions.
All share the observation that the enthusiasm of individuals for these themes is growing. Certain private assets can thus be offered in life insurance contracts, whereas for a long time they were intended for an almost exclusively institutional clientele, or very wealthy clients. If this new outlet is a chance for the managers, it generates hitherto unknown problems. “Technology has been forgotten. Private equity managers could manage the subscriptions of a few investors, but it’s very different from having hundreds of clients subscribe,” notes Joseph Pinto, director of international distribution at Natixis IM and CEO of Natixis IM international. “Today it is very complex to connect the fund manager and the individual investor”, abounds Marie Jacot Cardoen, president of the management board of Edmond de Rothschild Asset Management. Digital technology is therefore very useful in simplifying the operational underwriting process. “Today, we are at the beginning of the democratization of investment. The real jump in profitability for management companies will take place if they manage to attract new clients with technology,” says Yoan Chazal, investment management services partner at Deloitte.
These tools can also be useful for managing product monitoring, from reporting to calls for funds. Technology will not do everything, however. Intermediaries will remain on the front line to explain to their customers how sometimes complex products work. “We must not confuse democratization and liquidity”, explains Marie Jacot Cardoen. Individual investors will have to assimilate the fact that if private equity has presented good performances in recent years, it is in particular thanks to the illiquidity premium, i.e. the surplus return that the immobilization of funds allows over a long period.
Too much data
For ESG, the problem is different. The theme is also in the development phase for individuals, after conquering institutions. The need for technology is especially felt here in data management. “The upheaval caused by ESG is as strong today for the financial industry as the Basel 2 regulations were for banks ten years ago”, explains Guillaume Lesage, Deputy CEO of Amundi. The data, which numbers in the millions, often fragmented and very different in nature, must be processed and then, in some cases, returned to customers. “The end investor must not consider that this data has no value,” explains Emmanuelle Mourey, Chairman of the Management Board of La Banque Postale Asset Management. Because they have a cost.