J.P. Morgan Asset Management chief executive Chris Willcox has outlined his vision for the $120 trillion asset management industry, identifying a true north for its future direction.
Speaking to a group of international media in London on Tuesday, Willcox said the true north for asset management is client outcomes. It is driven by a core of exceptional investment capabilities with other key compass points being global talent; insights driven; and long-term focus.
"When looking at pensions, it is not enough to simply take a pot of money and invest it with fiduciary compliant and benchmark aligned returns," Willcox said.
"Portfolio construction will become more dynamic and customised and asset managers of the future will need to provide these capabilities to clients. We are striking solutions for these partnerships."
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His point is that "society needs asset managers now more than ever" in terms of wealth solutions.
Willcox said J.P. Morgan Asset Management's multi-asset solutions business has grown at annual rate of more than 20% in the past seven years.
He said asset management winners "will be global, all-weather and diversified, disciplined, enabled by technology and data and solutions driven across asset classes."
Up to now, the asset management industry has been operating with strong margins (about 23%) but Willcox cautioned the industry that what was successful yesterday will not necessarily be successful in the future.
To this end, he spoke about the proliferation of underperforming products over capacity in global asset management. In Europe alone there are 4458 domestic equity mutual funds and ETFs, yet there is 3910 companies listed on European exchanges.
He also said asset managers have been reluctant to shut down underperforming products.
JPMAM reduced its product list by 23% in the first half of 2018, from 550 to 423. It has also halved its mobile apps in the past five years.
The asset manager is also aggressively pursuing artificial intelligence and digital strategies to augment the business and human talent through its intelligent digital solutions group.
It has also deployed natural language processing, creating its own JPMAM dictionary which assesses nuanced investment and economic language and provides "nearly instantaneous analysis of research reports notes, broker reports, filings and news to better anticipate things like company earnings revisions."
He said JPMAM's portfolios will continue to "enhance the welfare of the societies in which we live in for the present and the future."
"This is why asset managers of the future will continue to be pillars of the financial system," Willcox said.
The journalist is a guest of J.P. Morgan Asset Management in London.