Asset managers expect compliance expenditure and regulatory burden to increase over the next five years, research from BackBay Communications and Osney Media found.
The latest report from The Summit for Asset Management (TSAM) series explored the evolving role of compliance, regulation and its implications for the future of the asset management industry.
The report found that the majority of respondents believe that more regulation is on its way as 85 percent said they believe the regulatory burden will increase over the next five years.
The majority of respondents (68 percent) anticipated that a greater portion of their organisation’s financial resources would be dedicated to compliance in the coming years.
A further 36 percent of asset managers believed that their firm’s compliance budget would account for more than five percent of revenues within the next five years.
According to the report, this increase in compliance investment is likely to be driven by the increasing regulatory burden of new regulations, such as the second Markets in Financial Instruments Directive (MiFID II).
Further findings found that 80 percent of respondent organisations claim to have been impacted to some extent. One in four of those surveyed said that MiFID II presents a significant challenge for their business.
Meanwhile, 15 percent said it has negatively impacted their competitiveness, the report revealed.
James Hatwell, content producer at Osney Media, commented: “The regulatory landscape for asset management has been in constant flux since the financial crisis began a decade ago.”
He continued: “As such, it is no surprise that many of our survey respondents believe compliance costs will continue to rise in the coming years.”
“As new technologies begin to take centre stage, firms are presented with both opportunities for cost-savings and additional compliance challenges. It will be interesting to see which firms can make the most of these emerging platforms.”
Bill Haynes, CEO and founder of BackBay Communications, said: “With the advent of regulations like GDPR and MiFID II, it’s become clear that many firms are still unsure of how to best meet the ever-changing regulatory standard and what technology’s role should be.”
Haynes added: “These uncertainties also present great opportunities for asset managers to proactively put the processes in place to make the most of what these new technologies and platforms have to offer in terms of client service and engagement.”
“Although it poses a challenge for asset managers, this survey and others like it provide valuable insights to track the change.”
