Canadian Investment Review

Are you overlooking culture as a competitive edge?

Written by Yaelle Gang on Monday, June 10th, 2019 at 11:07 am

irections Choice Change Change Decision Making Concept © rawpixel /123RF Stock PhotosAlthough culture is a differentiator in determining successful investment management firms of the future, only a few asset managers measure and actively manage their culture, according to the Thinking Ahead Institute.

In a newly-released report, The Asset Manager of Tomorrow, the institute noted six attributes that are important for asset manager success: strong culture, technology commitment, technology-savvy leaders, well-positioned business models, recognition of comparative advantage and the ability to deal with change.

It’s difficult to measure culture precisely and many asset managers aren’t doing it, the report said.

“Now, I think, if you speak to some of the most successful [chief executive officers] and some of the best leaders of asset management organizations and you ask them about culture, they’ll immediately say it’s hugely important and it’s something that they take very good care of, and for the best organizations that’s true,” says Bob Collie, head of research at the Thinking Ahead Group.

However, culture isn’t being formally tackled and measured, he adds. “And one of the things we’re arguing for is that this should become more deliberate and more formal.”
Some of the ways to formalize culture are surveys and looking at other quantitative metrics like measuring certain levels of diversity, he says.

The paper also highlighted the many disruptions facing the investment management industry. Right now, there are many changes coming together and compounding, putting pressure on organizations, Collie says.

“In responding to the potential disruption that is coming in from outside, if management and leadership of a firm takes its eye off the ball on culture, then you can find something that might have been strong beforehand, but it doesn’t survive the changes and the pressures that come from a changing environment.”

When it comes to trends with investment managers, it’s about a lot more than just investment approach, says Collie, noting it’s also about how firms run the business, the operating model and the type of people employed.

“The type of investment professional that this industry needs in five or 10 years from now is not the same type of person that [has been] needed for the last five, 10, 20 years,” he says. “We need different types of people, which is one of the reasons that the diversity conversation, I think, is rising up the agenda.”

Pension funds can get a sense of an investment manager’s culture by asking about it, Collie says. “The vetting asset managers can judge for themselves whether these are cultures that they think are likely to succeed and be aligned with their own cultures. I think . . . something that’s going to become important over time is asset owners will want to work with asset managers that they feel share their values and share their beliefs and to some extent at least share their cultures.”

Copyright 2019. Canadian Investment Review. All Rights Reserved.