Asset management profits to dive, consultants forecast

Average profit margins in asset management could drop by 11% in the next three years, according to a report, despite the industry having had its best year in 2017 since 2010.

The Boston Consulting Group report, ‘The hidden pressure on asset managers’, said that there were negative trends beneath the exceptional performance of 2017.

It said that if current trends hold and if markets correct, it expects profit margins to dive from 38% to 30% and could even fall as low as 27%.

Cost increases thanks to new regulation such as MiFID and the need to invest in new technology were among the causes of the predicted profit dive.

But the migration of assets under management (AuM) from active to passive products is not the main driver of reduced average fee income, the report insisted.

The effect of these trends on profit margins will depend on the rate at which they develop and on the growth of AuM, which is closely related to the performance of the underlying asset markets, it said.

Other industry disruptors were the rapid growth of asset management in China and increased M&A activity.

China has become the fourth-largest asset management market up from eighth position only five years earlier with strong growth in both retail and institutional segments.

©2018 funds europe

HAVE YOU READ?

THOUGHT LEADERSHIP

Innovative US companies are providing some of the solutions to the climate crisis and transition to a more sustainable economy. We see potential opportunities in areas including renewable energy and…
FIND OUT MORE
This white paper outlines key challenges impeding the growth of private markets and explores how technological innovation can provide solutions to unlock access to private market funds for a growing…
DOWNLOAD NOW

IRELAND SPOTLIGHT

Visit our dedicated Ireland channel for all the latest news and analysis on the country's investment industry.
READ MORE

PRIVATE MARKETS FUND ADMIN REPORT

Private_Markets_Fund_Admin_Report

LATEST PODCAST