Demographic trends will have a material impact on the investment management industry. Not only do these trends magnify the need for effective investment management, but over time, they will radically change the nature of the challenge and an investment manager's potential client base.
The demographic drivers are clear.
Population growth – Developing regions are expected to account for 99 percent of population growth until 2050.
Increasing urbanization – With 60% of the population to be living in cities, infrastructure investment could be some of the highest growth opportunities for investment management managers.1
Changing role of women – In the US, women control 60% of all household wealth and drive 80% of consumption.2
Growing economic influence of developing world – The economies in the East and South are growing in power, influence and potential.
Increasing life events – There is a shift toward more frequent employment breaks, changes of career and growth in international assignments. In the United States, the average employee tenure is 4.4 years, but for the youngest employees, it is about half of that.3
The global economy is facing unprecedented demographic changes. Perhaps most importantly for the investment industry, aging populations, low birth rates, low savings rates and high levels of fiscal dept are creating a retirement burden which is shifting increasingly to the individual.
1United Nations Population Division 2012, "World Urbanization Prospects – The 2011 revision"
2Goldman Sachs, "Equity Research – Fortnightly Thoughts" 25 April 2013
3Future Workplace "Multiple Generations @ Work" survey 14 Aug 2012
Technology drives of social, economic and environmental change and is enabling solutions to deal with many investment management industry challenges.
Social media presents considerable opportunities and challenges to the investment management business models when trust in financial services is low.
Resource insecurities are changing investment opportunities. Clients increasingly incorporating sustainability into investment purchasing decisions.
The investment industry is likely to look different in 15 years, as clients needs, requirements and behaviors are likely to change considerably.