Dublin / London / New York, November 30, 2022
The last decade has seen asset managers being inundated with industry challenges and complications. This month, Centaur conducted a survey to assess clients’ opinions about industry trends and challenges. When asked to highlight the primary challenges the industry would likely face in 2023, 26% of respondents put the regulatory landscape as extremely important. This was followed closely by the inflationary environment at just over 22%, operational risk at 11% and cyber security at 9%.
1. Fund Managers Face Rising Regulatory Scrutiny
Regulatory and compliance pressures have increased over the past few years as the demand for transparency grows. It is a big concern for fund managers and GPs as they continuously grapple with the complexities of new and amended fiduciary and regulatory requirements. Internal controls, risk management and strong compliance are inherent qualities for successful fund managers, who in turn are looking for these attributes from their fund administrators. 26% of surveyed clients cited the regulatory landscape as an extremely important concern with 62% stating that it is somewhat important. Interestingly, a similar survey taken five years ago by Centaur also had regulatory concerns top the list of challenges for managers.
Centaur’s comprehensive range of fiduciary services enables our clients to enjoy independent, professional services that ensure they navigate successfully through regulatory and compliance requirements, whilst following best practices.
2. Inflationary Pressures Are Rising
Of the fund managers surveyed, 22% said that inflationary pressures are the biggest challenge for the industry, while 50% stated they were somewhat important. Soaring inflation and falling markets are having a significant impact on fund managers’ bottom line and have particularly exposed asset managers with higher costs.
We continue to see economists forecasting sustained high levels of inflation globally, with the continuing war in Ukraine, the lingering effects of Covid-led supply chain disruptions and the accommodative policies adopted by the major Central Banks throughout 2021-22. Increasingly we are seeing Fund Managers looking to outsource finance and administrative functions, benefiting from the economies of scale and operational efficiency within professional service providers.
3. Operational Risk Has Become A Real Concern For Fund Managers
Asset managers take managing risk very seriously – even minor operational oversights or mistakes can have significant repercussions and destroy value. Operational risk can stem from many sources, such as cyber security risks, risks from regulations, organisational changes and risks relating to technology and the increased amount of data collected and stored. 11% of respondents indicated that operational risk as an extremely important concern with 38% stating that its it somewhat important.
Centaur is pro-active in identifying and managing operational risk. By hiring the best staff, implementing best practices and continually investing in technology, Centaur helps clients manage their operational risks and keeps clients up to speed with industry and market developments in this regard.
4. Fund Managers Prioritize Their Cyber Security Strategies
Of the fund managers surveyed, 9% cited cyber security as the most important challenge for the industry, with 34% of respondents saying it is somewhat important. A security breach is often (and swiftly) followed by fines, lawsuits, reputational damage and loss of trust with investors. As a result, cyber security is becoming a key component of supplier risk reviews for fund managers.
At Centaur, we continually invest in innovative technology, review our procedures and partner with the best technology providers to ensure we offer a safe and secure environment for clients and employees.
According to the fund managers surveyed by Centaur, other challenges facing the industry for 2023 include increasing investor due diligence, technology, new working practices that have emerged as a result of COVID, ESG compliance and data access & management. For more information on the survey, please contact: