While the timing of COVID-19 outbreaks varied from region to region, few countries (if any) escaped the severity of the pandemic. These timing differences, combined with heightened regulatory activity in the UK/Europe, appear to have contributed to regional discrepancies in managers’ top-of-mind challenges.
“Increased regulation” is a significant concern among managers in the UK/Europe where more than three quarters of respondents (77%) rated this as a top challenge, with “increased client expectations” in a distant second place (40%) and “technological change” in third spot (25%)—the only challenge that is among the top three for both UK/Europe and Canada.
Less than a third of Canadian managers (30%) expressed concern about regulation, instead focusing on a broader range of key challenges, including “returning to the workplace” at the top (43%), followed by technological change (37%), “market volatility”(35%) and “cyber/privacy issues” (33%).
Managers in Asia, representing a relatively small proportion of respondents overall, also demonstrated a unique take on their challenges, ranking “increased client expectations” at the top (71%), followed by “talent management” (57%) and increased regulation (43%).
Top Three Challenges - UK/Europe
Top Three Challenges - Canada
Top Three Challenges - Asia
- 77% of UK/European managers
consider "increased regulation" a top challenge - 43% of Canadian managers
consider “returning to the workplace” a top challenge - 71% of Asian managers
consider “increased client expectations” a top challenge
An Abundance of Regulation
While COVID-19 initially slowed the introduction of new regulation across Europe, the European Union (EU) has subsequently adopted an ambitious plan of regulatory reviews and amendments covering the Alternative Investment Fund Managers Directive (AIFMD), the Markets in Financial Instruments Directive (MiFID) and solvency. In addition, a push on green financing as part of the EU’s Action Plan on Sustainable Finance has resulted in a significant volume of new sustainable regulation, including the Low Carbon Benchmark Regulation, the Sustainable Finance Disclosure Regulation, the Corporate Sustainability Reporting Directive and the impending Taxonomy Regulation (see Sustainability section).
In the UK, Brexit has necessitated the amendment or republication of most financial sector regulation, raising uncertainty about how this will impact the business environment. While regulatory changes have been introduced in Canada to protect privacy and personal information, the timing of implementation remains uncertain. In addition, new or enhanced regulation on sustainability, initial margin and derivatives has not been announced. Such limited regulatory activity is likely a factor in the relatively low priority of increased regulation within Canada.
Focusing on new EU regulation
No Room at the Office
In the midst of the third wave of COVID-19 and with the regulators at bay, Canadian managers chose “returning to the workplace” as their top challenge (43%), significantly higher than respondents in the UK/Europe (15%) and Asia (0%). In addition to the intensity and immediacy of the pandemic at the time of their responses, several Canadian managers indicated that, as a result of significant growth experienced by their firms during the COVID period, existing office footprints are not expected to meet their expanded space requirements upon return to the workplace.
Focusing on "the return"
Nascent Markets
“Increased client expectations” is a top concern among nearly three-quarters of Asian respondents (40% in the UK/Europe and 20% in Canada). Andrew Gordon, Head of Asia at RBC I&TS, points to the nascence of Asian markets and increased governance requirements as important drivers behind this challenge. “We’re seeing a greater focus on client demands for both education and client reporting. Education is especially important for clients in the emerging markets of Asia as they look to learn about the global investment markets. Client reporting is also evolving in Asia and globally as increased governance needs are resulting in greater demand for customized and more detailed reporting. Clearly, technology is the answer here,” says Gordon. Growing governance needs are also reflected in manager concerns about increased regulation (43% of Asian managers, compared to 77% of UK/ European and 30% of Canadian managers).
Unlike other regions, Asian managers view “talent management” to be particularly challenging, chosen by 57% of respondents as a key concern (13% for UK/Europe and 30% for Canada). According to Gordon: “Rapid growth of the Chinese market has increased staff turnover, making attracting and retaining talent both difficult and important. As the market continues to expand, having a trusted team on the ground to capture the opportunities is a high priority. China is one of the few asset management markets where the pool of active fees is actually growing, but it’s not easy to break into this market.”
Learning about global markets
Technological change is our number one challenge and thereby our number one opportunity. As a younger organization, we are not saddled with legacy technology and are able to be disruptors in this space.
- Jordy W. Chilcott, Executive Vice-President, Wealth Strategy and Enablement, Wellington-Altus Financial Inc., Canada
Regulation is really putting a strain on our business.
- Dick van Ommeren, Managing Director, Triodos Investment Management, The Netherlands
Our biggest challenge is figuring out our employees’ return to the office. Guardian has been expanding over the past 18 months and we no longer have sufficient office space for all our employees.
- Darryl Workman, Senior Vice-President, Operations and Administration, Guardian Capital LP, Canada
