Insights from Nicsa: Navigating transformation in the mutual fund industry

Nicsa’s 2023 conference offered the opportunity to learn more about the latest advancements in the mutual fund industry 

Through networking with other financial services professionals and gathering insights from the various speakers, GFT explored the areas in which firms want to focus on and improve in 2024 and beyond. Here is a summary of the main points we gathered from the event: 

• Connectivity and balance: Firms must prioritize a work-life balance and adopt innovation to attract top talent. 

• New investment products and tools: With the advent of advanced AI tools and push from investors to have access to more diversification options such as alternative investments, it's critical to re-evaluate current compliance processes and tech regulations and to identify partners who have the experience to navigate through these changes. 

• Change management: Effective change management leadership is vital to ensure organizations evolve with the advancements in the industry and to support all team members who navigate these adjustments in the workplace. 

We explore each of these takeaways in depth to provide more detail for those who may have missed the conference. 

The pandemic and priorities of younger generations entering the workforce have shifted how companies operate. Employees today are placing a higher priority on work-life balance. Since the initial shift to remote work during the pandemic, many professionals are hesitant to return to an office setting and desire the flexible schedule that remote work can offer. To accommodate this, firms will need to incorporate new approaches in order to maintain connectivity and collaboration while offering flexible working arrangements to retain and attract top talent. Firms can achieve this by investing in mentorship programs, career development and communication and collaboration tools for remote and hybrid teams. 

Another consideration for firms that seek to become more appealing to investors, are the products and tools they implement. Retail investors are looking to diversify further through alternative investments that have historically been available only to high-net-worth investors. These sophisticated investors are selecting investment firms that offer a diverse suite of products and have advanced web portals with feature- rich tools that incorporate real-time data and analytics. 

There’s also a greater need for modern data and reporting tools to remain in compliance with increased regulatory requirements across the asset management industry—especially for the alternatives investment space. 

From legacy system challenges to data-driven insights through AI, the industry is on the verge of a technological revolution. 

Over the next several years, distributed ledger technology (DLT) and tokenization will take center stage, followed by the potential impact of Quantum AI in the future. Alongside this revolution, compliance requirements will heighten. To match the growing concern for increased work-life balance and guidelines for AI and tech development, firms remain vigilant about employee sentiment while protecting the reputation of their organization. 

Effective governance is vital to addressing this concern. As the industry’s tech and need for more innovation increases, new regulatory standards should be adopted. Firms partner with organizations that have compliance expertise, such as GFT, in order to gain support while navigating industry regulations. GFT’s offerings ensure firms are always up-to-date with regulations, while providing cutting-edge solutions to keep up with the investment tools that organizations demand in order to stay competitive in the financial services sector.  

With these transformations in workplace culture, communication and tools, comes the need for managers who can navigate these new norms. Change management is the leadership practice of successfully guiding a team through an evolving workplace, regardless of whether the change takes place in culture, operations, tools or the work environment.  

There is a race to zero management fees with the advent of passive investment funds, which is the biggest challenge for operations as groups and firms will need to embrace the use of data and AI to compete. This circles back to the need for strong change management within firms. There’s an automation paradox in which process automation through AI and data lowers operating cost and increases efficiency, but also results in fewer professionals who know how the process works. Should these professionals ever need to complete the process manually, they might not be able. This is why it’s so important to employ leaders who can guide others through these changes in tech and processes without losing sight of their mechanics. 
 

This type of manager is referred to as a change leader. These leaders often have the following three traits to lead to their success: intellectual honesty, transparency and believability. Firms who want to cultivate such leaders should prioritize recruitment strategies that attract diverse talent. 

NICSA’s 2024 General Membership Meeting will be held from October 29-30, 2024 in Boston, MA at the Boston Marriott Long Wharf. See you there!