The second half of 2012 is shaping up as a turning point for many asset management firms, forcing them to take "transformational steps" to boost their competitiveness, according to a report PricewaterhouseCoopers released last week.
True, the asset management sector is enjoying a mild resurgence, PwC said. But difficult markets, regulatory initiatives, competition for clients and talent, and new expectations from investors and other stakeholders are posing big challenges.
"Successful firms will adapt to industry changes and take advantage of the opportunities opening up in the global marketplace with products that meet investor needs, improve client service and enhance operations to address new regulations and stakeholder expectations," Barry Benjamin, PwC's U.S. and global leader of asset management, said in a statement.
The report, Top Issues Facing Asset Managers, lists nine major challenges PwC says the asset management industry currently faces, and describes how leading managers are responding: 
1. Addressing Governance
Regulatory and stakeholder pressures are compelling asset managers to rethink governance, with greater involvement by executives and directors, especially audit committees, according to the report. The SEC, in particular, is focused on how asset management fund boards are carrying out their duties, and the extent to which boards are responsible for problems that arise.
2. Navigating Risk Complexity
Asset managers are refining their risk management strategies and controls to place greater emphasis on emerging risks. Industry standards are developing, including steps to mitigate common risks and processes to identify, assess and report on enterprise risks. 
3. Tackling New Regulations
Rules issued under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and other regulatory efforts will change many aspects of the asset management business, liek the advice firms provide, the way they trade securities, how they market themselves, the disclosures they provide and their employees' personal trading.
The report says asset managers should take a hard look at the effectiveness of their compliance programs.
4. Delivering Cost-Effective Technology and Operations
Many asset managers are investing in technology—replacing aging systems, integrating legacy systems, moving some operations offshore and making use of evolving cloud computing technology. 
6. Maximizing Value from M&A
7. Pursuing Growth Through Technology
8. Meeting FATCA and Other Information Reporting Requirements
9. Growing and Leveraging Human Capital
