The growing challenges confronting asset management were confirmed by the industry’s global performance in 2016. For the first time since the 2008 financial crisis, the revenue pool of traditional managers fell worldwide, along with their profits. Margins contracted as fee pressures continued to increase. Assets under management (AuM) returned to growth, largely thanks to rising asset values on financial markets. Net new flows, the industry’s wellspring of growth, remains tepid and little changed from recent years.
In 2017, the environment remains challenging, with the specter of continued outflows from active products and even esoteric long-only asset classes. Meanwhile, the acceleration of new, disruptive technologies will create opportunities for some asset managers while posing threats to others. With that in mind, we argue in this report that tomorrow’s industry leaders will appear quite different from today’s. To be among them, asset managers will need to seize opportunities to act boldly and transform the very way they work, through innovation that fully embraces advanced technologies such as artificial intelligence, machine learning, big data, and analytics. This will be especially true in investment management and distribution.
Understanding and pursuing opportunities embedded in big market moves will also define success—whether through M&A, partnerships, or gaining entry to promising new markets, such as China. Finally, acting to address costs structurally will differentiate winning managers, whether they take advantage of automation technology or leverage third-party resources. Those that succeed in making these changes will consolidate their position. Others will increasingly struggle with disruption and turbulence. These conclusions are among the central themes of this report, The Boston Consulting Group’s 15th annual study of the global asset management industry. They are the result of market-sizing research, an extensive worldwide benchmarking survey, and insights from our client work and other industry activities.
By Brent Beardsley , Hélène Donnadieu , Renaud Fages , Craig Hapelt , Lubasha Heredia , Philippe Morel , Neil Pardasani , Ben Sheridan , Qin Xu , and Yasuhiro Yamai
More: BCG Report – Global Asset Management 2017: The Innovator’s Advantage