executives fear asset management iTunes – Financial Times

Four-fifths of senior asset management staff expect the fund market to be disrupted by an outside participant in the same way Apple upended the music industry with the introduction of iTunes.

According to a poll of 400 senior executives by State Street, the custodian bank, 79 per cent fear they will face direct competition from a non-traditional entrant to asset management.

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The fund market has been criticised for being slow to adapt to technological change, leaving it vulnerable to the likes of Amazon and Google stepping in and wrestling market share from them.

This has already happened in China. Several large internet companies that have hundreds of millions of online users, including Alibaba and Tencent, have begun distributing asset management products.

Last year FTfm also revealed that Google had commissioned research on how it could enter the asset management industry.

Helena Morrissey, chief executive of Newton Investment Management, the UK fund company, said: “Google and Amazon entering the market is a real possibility. The trouble is, we as an industry always seem to be behind the curve on these things, but it is good that people are worried, as it will sharpen up our act.”

Martin Gilbert, chief executive and co-founder of Aberdeen Asset Management, said: “I am the CEO and am paid to be paranoid, and I am paranoid about this. The big danger for companies like ours is we become complacent and believe our business is safe forever. It’s not.

“Having said that, it costs us £500m a year to run our business — and that is a big commitment, even for Google. I do not see them manufacturing funds but I can see them coming in and distributing funds.”

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