The asset management industry has experienced significant growth in recent years, with an influx of client funds and favorable market conditions.
A study by consulting firm ZEB highlights the need for action as profit margins stagnate, cost-to-income ratios rise, and competition intensifies.
The analysis focused on 40 large asset managers with a strong European presence, collectively managing assets worth €42 trillion.
The top 10 asset managers control 36 percent of total assets under management (AuM), with the United States and Europe dominating the market.
Despite average AuM growth of 8.8 percent per annum over the past five years, profit margins are declining.
This trend is particularly concerning for medium-sized firms that struggle with rising costs and lack economies of scale.
To address these challenges, asset managers are increasingly focusing on cost reduction, with digitalization, process optimization, and workforce reduction as key strategies.
However, many firms lack understanding of AI and its potential applications, which could hinder their ability to adapt to the evolving market landscape.
Asset managers are also exploring new avenues for growth, such as alternative investments and targeting diverse client groups.
The industry's future success will depend on its ability to innovate and adapt to changing client preferences and market dynamics.