Cost and Growth in Asset Management 2021

Benchmarking analysis and implications for asset managers


The 2021 Asset Management Study is based on an outside-in competitive profit benchmarking with a special focus on insurance asset managers. Our analysis reveals key traits of insurance asset managers and suggests that for captives, currently only providing asset management services to their parent insurance company, accepting third-party assets offers a promising way to catch up with the market as the resulting revenue more than counterbalances higher cost. We provide suggestions for top-line growth through capabilities, i.e., growing business with existing capabilities in the current market first before expanding geographically and extending capabilities.

Key findings

  • Despite a 24% growth in assets under management (AuM) from 2018 to 2020 within our sample of 41 asset managers, profits have decreased by 24% in the same period
  • Smaller asset managers with active business models and a high share of equities remain among the most profitable, even at significantly higher costs per AuM
  • Overall, the average CIR has slightly improved, from ~66.1% to ~65.2%, and the continued focus on cost-saving measures has reduced operating expenditure to AuM from 31.3 bps to 25.6 bps, but the rate of this decrease is slowing
  • One relevant group of asset managers on average lagging behind on market profitability are insurance asset managers

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Growth of largest and selected Asset Managers

Due to ongoing mergers and acquisitions, as well as more dynamically growing markets among others, US asset managers grow significantly faster on average than their European counterparts. Smaller, active asset managers are able to maintain their pole position in profitability because of their business models that are similar to private equity companies.

Outside-in competitive cost benchmarking

Our results find that low costs do not necessarily translate into a low cost-income ratio (CIR), because successful asset managers with active investment management models are able to operate profitably with high cost and low CIR. In the past, their dedicated focus on controlling costs led to asset managers being able to slow down the rise in CIR due to falling income. However, further reducing cost is becoming less efficient. Therefore, a greater focus on increasing income is needed going forward.

With revenue significantly below market, average good cost management is not enough for insurance asset managers

Many insurers believe in close control of their asset management function and do not consider sourcing that capability. However, the insurance asset manager revenue is significantly lower than market average according to our analysis, and there is high potential for improvement. Additionally, the remaining low-yield environment combined with a low-risk profile places a considerable weight on low risk, fixed yield products in the asset allocation, which reduces the chances of a natural increase in income and profitability. Therefore, a strategic focus on increasing revenue is necessary. Increasing revenue by acquiring third-party asset management business, which also reduces the average cost base per unit of AuM, is therefore an interesting opportunity for captives.

Revenue per AuM in bps


Expenses per AuM in bps

Insurance AM

Market (excl. captive AM)

A strategic perspective on scaling up third-party business

By using a capability lens, revenue growth choices can be prioritized. The primary focus must be to analyze the busines close to the core capabilities.

Grow core
Extend capabilities system
Expand geographic footprint
Acquire new capabilities


Grow with a capabilities lens
  • Sell more of existing products to existing customers with existing capabilities system
  • Acquire new customers in same market segment
  • Enhance depth of current offering
Takeaway for insurance AM
  • Increase share of wallet
  • Seek to manage assets from third parties with similar risk profile and investment focus (e.g. fixed income for other insurers in the same market)
Grow with a capabilities lens
  • Leverage capabilities system to expand into new, complementary products and services
Takeaway for insurance AM
  • Offer existing investment products for non-insurance clients with similar investment focus
  • Leverage insurance cat risk expertise to assess alternative investments
Grow with a capabilities lens
  • Take offerings, capabilities system and way to play to new geographies where they can thrive
Takeaway for insurance AM
  • Expand existing offering into other European countries with similar pension / insurance structures and possibly similar regulation
Grow with a capabilities lens
  • Adjust capabilities system – if fundamentals of sales and profitability are changing
  • Prudently select new capabilities and fill capability gaps, if new opportunities require it
Takeaway for insurance AM
  • Offer third-party asset management for new assets classes / different risk profiles

Marc Peiter also contributed to this report.

Contact us

Dr. Philipp Wackerbeck

Dr. Philipp Wackerbeck

Partner, Strategy& Germany

Dr. Utz Helmuth

Dr. Utz Helmuth

Director, Strategy& Switzerland