Free Site Registration

Asset Managers Expect Compliance Expenditure and Regulatory Burden to Increase Over Next Five Years

Traders Magazine Online News, June 22, 2018

John D'Antona Jr.

New research from BackBay Communications and Osney Media reveals a projected increase in compliance expenditure and regulatory burden for asset managers over the next five years. The latest report in the TSAM series released at The Summit for Asset Management (TSAM) in New York today, explores the evolving role of compliance, regulation and its implications for the future of the asset management industry.

The majority of respondents (68%) anticipate that a greater proportion of their organization’s financial resources will be dedicated to compliance in the coming years. Furthermore, more than one third of asset managers (36%) believe that their firm’s compliance budget will account for more than five percent of revenues within the next five years. This increase in compliance investment is likely to be driven by the increasing regulatory burden of new regulations, such as MiFID II. Although an EU regulation, four in five (80%) of respondent organizations - over half of which were North American headquartered - claim to have been impacted to some extent. Indeed, one in four (25%) of those surveyed said that MiFID II presents a significant challenge for their business, while 15% said it had negatively impacted their competitiveness. The vast majority of respondents believe that more regulation is on its way with 85% saying they believe the regulatory burden will increase over the next five years.

“The regulatory landscape for asset management has been in constant flux since the financial crisis began a decade ago,” said James Hatwell, Content Producer at Osney Media. “As such, it is no surprise that many of our survey respondents believe compliance costs will continue to rise in the coming years. As new technologies begin to take center stage, firms are presented with both opportunities for cost-savings and additional compliance challenges. It will be interesting to see which firms can make the most of these emerging platforms.”

Additional findings from the report include:

  • When it comes to MiFID II, one in four (25%) feel that it represents a significant challenge to their business. A slightly smaller pool (15%) believe that is has negatively impacted the competitiveness of their business.
  • 76% have automated or outsourced at least some compliance functions.
  • Over half of those polled (58%) intend to outsource or automate more compliance functions in the next five years.
  • Of the emerging technologies presented, 30% believe robotic process automation (RPA) and machine learning/AI will have the biggest impact on the compliance function of their organizations.
  • One in four (26%) do not believe technology will dramatically alter the compliance function.
  • Speaking of emerging platforms, firms that use social media to communicate with clients reported most often using LinkedIn (65%) and Twitter (52%) to do so. 

Bill Haynes, CEO and founder of BackBay Communications, the financial services marketing and communications consultancy that conducted the research, said: “With the advent of regulations like GDPR and MiFID II, it’s become clear that many firms are still unsure of how to best meet the ever-changing regulatory standard and what technology’s role should be. These uncertainties also present great opportunities for asset managers to proactively put the processes in place to make the most of what these new technologies and platforms have to offer in terms of client service and engagement. Although it poses a challenge for asset managers, this survey and others like it provide valuable insights to track the change.”

To access the full report, visit

Survey Methodology:

BackBay Communications and Osney Media conducted an online survey of senior decision-makers at asset management companies between 17th May and 5th June 2018. The survey was completed by 36 respondents from across all areas of operations with over half (61%) having responsibility for risk management, client reporting or compliance. Companies ranged in size from boutiques with less than $1 billion assets under management (AUM) to global firms with an AUM of over $1 trillion.

For more information on related topics, visit the following channels:

Comments (0)

Add Your Comments:

You must be registered to post a comment.

Not Registered? Click here to register.

Already registered? Log in here.

Please note you must now log in with your email address and password.