Google to enter the Asset Management Industry

Google is considering getting into the asset management business. Two years ago, Google asked an unnamed firm working in financial services to evaluate what it would need to do to enter the asset management business.

Even though Google is well-known as a search engine behemoth, it is already a company involved in venture capital. To date, it has invested in over 189 companies, among them Uber and Kensho, a financial analytics firm. It also invests in government bonds. And to handle its own large flow of cash, in 2010 it started its own trading operation.Technology now plays a vital role in financial services. The latest software and hardware speeds trading along. As a company on the cutting edge of Internet technology, Google may have a leg up on many asset management firms because some managers have failed to keep up with the most recent trends of technology, according to a January report by PwC, an American firm that specializes in tax advisory, audit and assurance and consulting services.

Reportedly, a former executive at Barclays Wealth & Investment Management said that senior executives at the company were nervous about Google getting into asset management. And in Aprll, a senior executive at a large U.S. fund firm told FT that his firm was also concerned about competition from Google. Furthermore, Graham Kellen, head of technology at Schroders, a large fund house in Europe, was quoted earlier this month as saying: “Obviously this is something we as an institution are concerned about [and] continue to monitor.”

Even though Google is a successful company, entering the financial sector will not be easy. Campbell Fleming, chief executive at Threadneedle, a fund in the United Kingdom, and Catherine Tillotson, managing partner at the wealth management consultant firm Scorpio Partnership, agreed that all will not be smooth sailing for Google if it decides to to take the leap into asset management. She noted that the financial services sector is closely monitored. Furthermore, she wondered how many investors will turn to Google to manage their accounts when there are many firms with years of experience and a legacy of excellence in asset management.

But other people point to the strength of the Google brand as a strong selling point no matter what business it’s engaged in. Its brand is familiar, and some retail investors would be willing to buy a fund that was distributed by Google. In fact, some who investors have an overall distrust of the financial sector would be willing to try Google. Likewise, some established investment firms would be eager to have their funds distributed by the company, which is a proven leader in distribution.

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