Let’s take a look.   

Time to Report 

While reporting on its own is not a trend, in 2021, there was a growing emphasis placed on some areas that interjected a new set of criteria into the industry discussion.   

• Doubling Down on Due Diligence Questionnaires (DDQs)  While all asset management firms are familiar with due diligence questionnaires (DDQs), businesses placed a greater emphasis on these over the last year than ever before. This was primarily driven by a desire to align with firms sharing a similar set of philosophies, financial and otherwise. In step with growing DDQ demands, firms began looking for new automated capabilities that could streamline the manual and highly cumbersome aspects of these questionnaires. 

• Weighing Environmental, Social and Governance (ESG) While there is no mandate that businesses report on their ESG initiatives, many companies began sharing this information voluntarily. There’s a good reason for this–asset managers are expected to consider ESG more heavily than ever before when weighing their investment decisions. Just consider this statistic from the U.S. Forum for Sustainable & Responsible Investment (USSIF). According to its Report on U.S. Sustainable and Impact Investing Trends 2020, “$16.6 trillion in the U.S. professionally managed assets employed some form of ESG screening” in early 2020. That’s up 40 percent from 2019.

•    Diversity & Inclusion (D&I)  There was a significant uptick in asset management firms adding new layers of data to their traditional sales and client communications. This information extends beyond investment performance and the accomplishments of your team. To further differentiate themselves from competing firms, businesses began reporting on their D&I efforts. By including D&I in these materials, firms are allowing clients/prospects to dig deeper into what makes them unique.  

A Technology Pause 

While firms and clients dialed up new and expanded reporting, the story on the technology was distinctively different. Jolted by the pandemic, asset management firms had a long-overdue realization—a technology overhaul might be in order. But 2021 didn’t bring with it a massive spike in new technology spending. Not yet at least. Over the last year, many firms hit the pause button and took the year to reevaluate their current technology stacks and understand them holistically. What they discovered is their systems are broken and clinging to these outdated technologies will ultimately spell doom for their business. From there, firms shifted focus to modernizing their operations and planning their technology strategy for 2022.  

These developments are encouraging for the industry. On the one hand, we witnessed a growing emphasis on diversity and inclusion and the importance of the more significant world issues that encompass ESG. At the same time, firms took a moment to re-examine their business from a technology perspective and in the months ahead will be making critical new investments that will eliminate time-consuming process and allow them to better meet the needs of clients.  

Happy holidays to everyone and let’s get ready for a successful and safe 2022.