In the past, the role of an asset manager was relatively straightforward: selecting stocks and focusing solely on investment decisions. On the other hand, wealth managers acted as intermediaries, bridging the gap between clients and asset managers while earning fees for managing client relationships. Their primary responsibilities included advising clients on investment vehicles such as mutual funds and ETFs, as well as shadowing custodians to safeguard client interests.
The Rise of the Hybrid Model
Today, the landscape is shifting dramatically. Fee compression continues to disrupt traditional revenue models, prompting asset managers to seek new avenues for adding value—notably through portfolio customization.
Clients now demand more than strong performance; they expect personalized experiences, bespoke portfolios, and innovative strategies tailored to their specific goals and circumstances.
In response to these evolving expectations, many asset managers are adopting a “hybrid” model by acquiring wealth management practices. This strategy enables firms to:
- Deepen client relationships
- Diversify revenue streams
- Deliver a more holistic suite of services
For instance, many institutional firms traditionally focused on pension or public funds are now broadening their product offerings with mutual funds and ETFs to appeal to a larger audience.
Similarly, firms that serve high-net-worth or private clients are expanding their capabilities to include comprehensive wealth management solutions such as retirement planning, estate planning, and tax optimization strategies.
These broader offerings provide greater value to investors and position firms to capture a larger share of wallet in an increasingly competitive marketplace.
The Technology Divide Between Asset and Wealth Managers
Despite the positive synergies created by working together, the workflows of these managers have historically remained distinct.
Wealth managers evaluate portfolios through the lens of specific client goals and needs, relying on tools designed to support their workflows. Conversely, institutional asset managers prioritize high-level portfolio management and trading strategies, utilizing robust institutional-grade systems. Forcing one group to adapt to tools designed for the other creates friction.
To accommodate these different operational workflows, many hybrid managers are adopting a “best-of-breed” approach by layering purpose-built technologies to meet the distinct needs of each user base. However, in some cases, this strategy has the potential to heighten the underlying issue and may require firms to develop custom workarounds to connect different technology stacks.
The solution lies in a unified data platform that seamlessly supports both roles. By providing tools tailored to the unique workflows of each group—while maintaining a shared data foundation—firms can foster effective collaboration and empower both sides to deliver greater value to their clients.
A Purpose-Built Solution that Supports the Hybrid Manager
Changing investor demands present significant challenges for asset and wealth managers. However, these changes also present an opportunity for firms to expand their offerings, enhance their value, protect margins, and reinforce client relationships.
To achieve greater efficiency and accuracy in the face of this mounting complexity, hybrid managers require a platform that supports firm-wide collaboration, uniting critical investment functions across the business.
Portfolio managers require the ability to accommodate highly personal preferences for a number of investors within a portfolio modeling framework. A purpose-built platform that can serve as an IBOR for the firm and provide a centralized and institutional-grade OMS with advanced portfolio management capabilities is key to the success of these firms.
To learn how SS&C Advent Genesis® is equipping hybrid investment management firms with the tools they need to increase efficiency, scalability, and connectivity across user bases, contact us or request a demo today.
