Don't underestimate culture in asset management

I have been working in our industry for more than two decades now and leading teams for much of that time. Gone are the days when I was content to "manage the status quo". I am driven by "making a difference", which for me means working hard to deliver outstanding outcomes for clients, thereby helping drive growth. At First Sentier there are many examples of growth and very strong investment capabilities. Coupled with a supportive owner, I see the potential for me to be part of team that grows strongly.

First Sentier Investors is a large and global asset manager. Working in truly global firms can be challenging - there are time zones to contend with and dispersed teams to align behind a common purchase and within a unifying culture. This is challenging, but makes hard won success that much sweeter.

The importance of a culture in an asset management firm cannot be under-estimated. An asset management firm owns negligible assets, other than its people. Therefore, a strong culture that holds people together, enthused and focussed upon client outcomes is critical. Success is close to impossible without a strong culture.  

I have worked across many countries during my career and each country has its own characteristics. Regarding Australia, the Industry Fund structure ensures a very high level of scrutiny of asset managers by very informed clients (on behalf of their members). Secondly, relative to other markets, I see a higher focus upon costs of managing assets in Australia. Clearly costs are important in driving client outcomes, but so is alpha. I prefer a focus upon client outcomes after cost (ie: overall value delivered).

I would highlight three issues that the industry is contending with. Firstly, in aggregate a low level of trust by clients in the asset management industry - partly driven by mixed performance by the industry over time and exacerbated by the Royal Commission that reported in 2019.

Secondly the bifurcation of the industry, forcing asset managers to choose between large scale (low cost) management of client assets or smaller scale with targeted higher alpha -the middle ground is an area where few succeed.

The third and most rapidly growing issue (or opportunity) is the whole world of ESG or responsible investing - asset managers are having to rapidly decide how to respond to the dramatic increase in client (and more general societal expectations) in this area.

I won't get drawn into market predictions as it is not my strength and (in my experience) possibly the least reliable way to deliver outcomes for clients. However, what has been proven over time is that there are great opportunities to create value for clients in almost all market environments, if asset managers focus upon identifying and backing attractive companies.

I have been learning the guitar for the past couple of years and am hoping for some new "pedals" to use with my electric guitar that allow me to make a wider range of "sounds" (I hesitate to use the word "music" in my case!).