But the forces of transparency and speed will lead to a complete transformation of the industry over the next decade, destroying excess profits and requiring firms to deal more in risk - whether through more proprietary and hedge fund-style trading or through offering third parties ways to mitigate risk.
Hedge fund growth will also be fuelled by investors' refusal to pay management fees for market level performance.
They will shift away from 'active' investment management to hedge fund-style investing and low-cost index-tracking investments. Clients will seek to lower costs by trading and performing investment research themselves, and firms will need to focus more on profitable clients and cross-sell more effectively.
The trader is dead, long live the trader!
Suzanne Dence, Daniel Latimore and John White
IBM Institute for Business Value, 4 April 2006
Review by Steve Lodge.