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Our 2022 Asset Management study is based on an outside-in competitive profit benchmarking among a sample of 46 asset managers.
Our analysis reveals that assets under management (AuM) grew by 20% from 2019 to 2021, while profits increased by a staggering 22%. Smaller asset managers with active business models and invested largely in equities remained among the most profitable, despite significantly higher costs per AuM.
Larger asset managers with AuM of more than USD 1tn were also able to achieve a comparably high level of profitability with active AM business models. The average cost-income-ratio (CIR) improved significantly – from ~65% to ~61% – despite a further increase in operating expenses (OpEx).
Outside-in competitive cost benchmarking
Significant increases in revenue helped asset managers to achieve a further reduction in their CIR despite (on average) rising operating costs. Half of all asset managers analyzed kept up the cost discipline from the previous year and reduced OpEx per AuM (by 1.7bps), while the OpEx per AuM of the remaining half increased by 5.1bps.
The group of asset managers with the highest cost increases are smaller firms with active investment management models. Most of this group nevertheless generate a high income and operate profitably with high costs and low CIR. However, cost reductions may be necessary, as revenue growth might slow due to global uncertainty.
AuM and asset manager profitability have already been heavily affected in the first half of 2022
Reduced asset prices have put cost discipline back on the agenda, after it had ceased to be the focus of many asset managers during the period of persistent asset price increases in recent years.
Strategic considerations for asset managers
In order to counteract pressure on profitability, asset managers need to focus on realigning their cost structure. We recommend the following strategic considerations:
Improve OpEX/AuM and strengthen differentiating capabilities to optimize bottom-line
Capitalize on high-growth areas to counteract declining AuM growth to accelerate top-line growth
Marc Peiter und Sandro Kanzian also contributed to this report.
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