One in six asset and wealth managers will vanish in the next five years, PwC has said in a report.
Pressures including digital transformation, shifting investor expectations and consolidation have led 73 per cent of asset managers to consider consolidation with another asset manager in the coming months.
The report, PwC’s 2023 Global Asset and Wealth Management Survey, published today (July 10), is based on surveys of 250 asset managers and 250 institutional investors.
PwC expects the top 10 largest asset managers to control around half of all mutual fund assets globally by 2027, compared with 42.5 per cent in 2020.
So far this year Rathbones and Investec's private client arms have announced their merger, creating a £100bn UK-based discretionary wealth manager, targeting £60mn in pre-tax cost savings per year.
A few weeks later, Liontrust acquired Gam Holdings in a £96mn deal, which Liontrust's chief executive John Ions said will accelerate the company's growth through enhancing distribution, product capability, and investment talent.
Some 90 per cent of asset managers are already using “disruptive” technological tools, including artificial intelligence and blockchain, to enhance investment performance.
Global assets under management fell to $115tn (£90tn) in 2022, a 10 per cent drop from their 2021 high, which represents the “greatest decline in a decade” according to PwC.
Olwyn Alexander, global asset & wealth management leader, PwC Ireland, said “existential challenges” are sweeping the asset and wealth management industry against a backdrop of social, economic and geopolitical disruption.
“The choice is simple – adapt to the new context or fail,” he said.
“Firms that effectively leverage technology such as generative AI and robo-advisers, build meaningful inroads to new and existing customers, diversify their recruitment, and deliver exceptional client experiences will be well-positioned to not only survive, but thrive.”
The report predicted that assets managed by robo-advisers will reach $5.9tn by 2027, more than double the current figure, with 40 per cent of institutional investors planning to invest in custom indexing within the next two years.
sally.hickey@ft.com
