Growing regulatory complexity is leading to more outsourcing in the fund management industry

Over the next two years, 99 percent of fund managers believe it will become much harder to navigate regulatory complexities, and this will fuel greater levels of outsourcing and a stronger focus on innovation, according to Carne Group, which commissioned research with fund managers in 10 countries that collectively manage $1.6 trillion. The study found that over the next 12 months, 41 percent expect to dramatically increase their use of third-party service providers when it comes to their fund administration functions, and a further 50 percent expect their use of them to increase slightly. Those surveyed identified the top three reasons for this increase as the difficulty in recruiting appropriate staff, the growing burden of regulation, and operating in more jurisdictions.

Regarding the level of outsourcing of the management of fund management companies to third parties, 79 percent of fund managers surveyed expect this to increase over the next three years. The study identif