Asset management firms may be riding a rising tide of wealth in many countries, but the business is less stable than it appears. The easy money boom that began in 2012 masked deeper trends: Customers generally have become more cost-conscious and less trusting of actively managed products, while market regulations have called for greater transparency and stricter rules on inducements to push product sales. As a result, profits have been squeezed, and Bain & Company projects a sharp decline in profits per asset under management, at a negative 7% combined annual growth rate through 2022. Weaker firms will find it harder to realize their desired price point or to keep a lid on costs; stronger firms, meanwhile, will seize a growing share of the market and the profit pool.
Matthias Memminger and Mike Kuehnel are partners and Cyrosch Kalateh is a manager with Bain & Company’s Financial Services practice. Memminger and Kuehnel are based in Frankfurt, and Kalateh in Düsseldorf.
After the Easy Money Boom, Stark Choices for Asset Managers
Whether through scale or niche, asset management firms must avoid the collapse of the middle.