Asset managers are demanding more value for their money, expecting better services at competitive prices, finds a published on 10 December 2024. Heightened expectations, in turn, are putting pressure on asset servicers to constantly innovate.
"Our study reveals critical insights that asset servicers and managers must consider to navigate the evolving landscape effectively together,” commented Norman Finster, EY Luxembourg partner and alternatives consulting leader, in a press release. “By addressing these challenges head-on, asset servicers can better meet the needs of their clients and secure their position in the market.”
The Big Four firm polled 21 asset managers in the grand duchy: eight multi-asset managers, six managers with banking captive status and seven pure-play managers focusing only on alternative investment funds. Respondents answered a quantitative survey and participated in qualitative roundtables. Here are a few takeaways from the survey.
1 in 5 would recommend their service providers
Only 22% of multi-asset managers, 29% of managers with banking captives and 20% of pure-play managers would recommend their asset servicers, said the survey. Most of them were fairly ambivalent.
Negative net promoter score for legal & reporting services
The study calculated a net promoter score (NPS) for each asset manager, asking them how likely they would be to recommend (or promote) their asset servicers. A positive score means there is a larger percentage of promoters than detractors; a negative score means there is a larger percentage of detractors than promoters.
“Legal and reporting services, with a negative NPS of -20, face significant dissatisfaction and must address customer concerns urgently to enhance loyalty,” said the survey. Fund administrators and depositaries, on the other hand, saw positive NPS, but there is still room for improvement.
But half of service providers say they have a “high level” of customer-centricity
Asset managers were also asked about how often they think about changing their service providers. Although many responded that they consider doing so “most of the time” or “sometimes,” the majority have been with their current providers for five to 10 years, found the study. “Despite a possible desire to move, asset managers often endure dissatisfaction due to factors such as familiarity with the service, fear of change, high transition costs, lack of decision-making power in certain locations like Luxembourg or influence from other key stakeholders like investors.”
In addition, the survey also found a “significant disconnect” between how asset servicers perceive themselves and their clients’ experiences. “Despite the low recommendation rates and the frequent consideration of switching providers, asset servicers believe they are meeting client expectations.” Nearly half (48%) said they had a “high level of customer-centricity.”
Top obstacles that affect the “loyalty” of asset managers to their service providers are the quality of customer service, the quality of the customer experience and low digital capabilities, concluded the survey.