Despite the challenges facing the industry, growth prospects are high. Asset managers should consider catering to the aging baby-boomers, emphasizing product innovation and seeking expansion in new markets around the world. In this paper, we focus on the most important issues over the next three to five years as revealed through an industry survey, interviews with senior industry executives and practice leaders from the DTT member firms. The five top issues on the asset management watch list are:

• Globalize and consolidate. Asset management firms will grow by consolidating and by exploiting fast-growing overseas markets such as China and India.
• Promote compliance. The regulatory burden on asset management firms is increasing – as are the reputational consequences of infractions.
  Differentiate products. The appetite among institutional and individual investors for diversification and uncorrelated returns will continue to propel growth in alternative investments. Fast-growing product segments range from exchangetraded funds (ETFs) to portable alpha.
• Better manage risk. Like executives in other sectors of the financial services industry, asset management executives cite better management of operational and reputational risk as a key to profitability.
• Adapt to demographic shifts. As baby-boomers become retirees, demand will grow for products that turn savings into retirement income.