Profitable growth has become the primary driver of an asset manager’s franchise value but it remains elusive. Without dramatic changes to revenues, costs or both, one-quarter of asset managers still risk becoming unprofitable by 2028.
Annually between 2014 and 2017: • Only 30% of firms benefited from profitable growth, with the median peer enjoying 4.6% organic growth, 12% revenue accretion and 7% cost expansion • Roughly 35% of firms engaged in cost cutting to no avail: the median peer could only shrink costs 0.4%, while revenue plummeted 6% and assets shrank 3% through redemptions • The remaining 35% are slowly melting while searching for growth: the median peer saw no organic growth, only 7% annual revenue growth, and annual cost expansion of 8%
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