Mass Mutual and Athene made a bid for American Equity Investment Life. Activist Trian took stakes in Invesco and Janus in an effort to build one of the largest Asset Managers. M&A is a quick way to scale AUM, but it does not change the paradigm for legacy Asset Managers.
Legacy Asset Managers (and depository institutions) need to figure out how to evolve their business model to defend against new competition. Robinhood (private), is growing at the expense of traditional Asset Managers. Square (tkr: SQ) is growing at the expense of traditional Depository Institutions, legacy Payment Providers as well as traditional Asset Managers.
With respect to legacy Asset Managers, we would like to see a greater investment in technology, specifically related to: 1.) online marketing & analytics (including podcasts); 2.) KYC/customer analytics; 3.) dynamic reporting with a focus on visualization; and 4.) cybersecurity (two-factor authentication should be the default for client account access).
M&A is great, however the bump in AUM delivered by M&A will quickly dissipate if Asset Managers don’t do a better job of leveraging Technology to acquire and retain assets.