Securing Profitable Growth in Tomorrow’s Asset Management Industry

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%