Understanding business economics for investment managers

The complex dynamics of world financial markets yield inherent uncertainty and the prospect of periods of enhanced volatility. The turbulent global economic and regulatory environment of the past few years has certainly illustrated this reality. As investment managers interpret clients’ evolving risk tolerances and investment objectives, striving to unlock opportunity in a fast-paced and ever-changing world, they also need to navigate their own course toward sustainable growth and profitability. To stay strong and competitive, investment managers are looking for ways to differentiate by enhancing products and services, offering new investment solutions, accessing new channels to expand client relationships, and working to meet investor demands for more information, greater transparency, and increased involvement in the investment process. To maximize resources available to advance these initiatives, they are evaluating strategies to lower operating expenses by improving process efficiency, restructuring operations, and ensuring alignment of global resource deployment. This paper explores how one innovation - strategic cost management - can help investment managers measure profitability more accurately and in richer detail.