The global asset management industry is in the midst of a reset. The profit dynamic is worsening with the rise of passive funds. Defined Benefit pension plans are now derisking with ageing demographics. The investor base is shifting towards a new generation of digitally savvy investors with radically different needs from their predecessors. Technology is advancing in leaps and bounds.
In a new report, Rebooting the Global Asset Management Industry, Citi and CREATE-Research have released findings offering a comprehensive view of the structural shifts reshaping the global asset management industry.
The report draws insights from 269 asset managers across public and private markets from 26 countries, managing a total of US$37.7 trillion in Assets under Management and features 30 interviews with senior executives from a cross-section of the survey respondents.
Ongoing industry challenges are coinciding with new opportunities: More than half of respondents cited new inflows going to mega players, the rise of passive funds, accelerating fee compression, and rising costs as key challenges.
At the same time, new inter-linked growth drivers are emerging. 67% of respondents believe democratization of private markets will drive organic growth in their businesses over the next three years; 61% cited the advancement of AI and GenAI, and 59% said intergenerational wealth transfer from Baby Boomers will contribute to growth.
Winning business models will combine the best of old and new: Successful business models will blend traditional and new approaches with an emphasis on client-centricity, such as tech-assisted personalized portfolios, performance-based fees and outcome-oriented investing.
Our findings on platforms, in particular, signal a marked departure from how things are done currently. 67% of respondents selected democratized access to private markets as a key feature of a winning business model, and 56% cited diverse investment strategies at point of sale. Close to half or 49% called out Direct-to-Consumer access and channels.