Asset Management
Description
Companies in this industry manage the financial assets of corporate, institutional, and individual clients. Major companies include BlackRock, Fidelity Investments, State Street Corporation, and Vanguard Group (all based in the US), as well as Allianz Group (Germany), Amundi (France), and UBS (Switzerland). In addition, most major banks have asset management divisions.
Worldwide, total assets under management (AUM) hit a record $145 trillion in total assets by 2024, according to PwC. The world's largest asset management regions with the strongest growth are dominated by North America and Europe, according to the Thinking Ahead Institute.
The US asset management industry includes about 75,000 establishments (single-location companies and units of multi-location companies) with combined annual revenue of about $340 billion. The industry includes hedge funds, financial advisers, mutual funds, and venture capital firms, all of which are covered in separate industry profiles. Investment banks and securities brokerages, which are not included in the industry, also are covered in separate profiles.
COMPETITIVE LANDSCAPE
Demand is driven by demographic and market trends such as the growing population of retirees and the accumulation of wealth and investable assets, as well as returns on investments. The profitability of individual companies depends on the volume and performance of the assets they manage. Large companies have advantages in providing expertise in a wide range of investment options. Small companies can compete by focusing on a single product or type of client. The US industry is fragmented: the 50 largest companies account for less than 50% of revenue.
The asset management industry has emerged from the aftermath of the late-2000s financial crisis and is in the midst of a major transformation brought about by economic, technological, and demographic changes. A structural shift in products is underway, to the detriment of traditional management firms. Increasingly, alternative managers (private funds and hedge funds) are expanding into products historically provided by traditional asset managers. Enhanced competition also puts pressure on fees, the primary source of revenue for most firms. In response, many asset management firms are re-evaluating their strategies and business models.
Another source of disruption for traditional asset managers is the growing number of financial technology (fintech) companies. These companies, which use technology to deliver financial services more efficiently and at lower cost, are luring millennial investors away from traditional asset managers.
PRODUCTS, OPERATIONS & TECHNOLOGY
Major services include personal financial planning and investment management services (about 60%) and financial management consulting and implementation services (about 35%). Firms use diverse business models and manage a variety of assets, including mutual funds, exchange traded funds (ETFs), pension funds, hedge funds and venture capital funds.
Asset managers earn most of their revenue from fees based on the balance of the assets under management or the performance of investments. In some cases, compensation is indirect, through commissions received from brokering investment transactions. Some investment advisers have authority to invest on their clients' behalf.
Researching and analyzing investment options are among the primary duties of asset managers. They must balance risk and reward in order to create investment strategies to accomplish clients' financial goals. Once an investment plan is in place, managers track performance through periodic reviews. In addition to investment managers, companies also employ teams of people to monitor compliance with various rules and regulations that govern the industry.
Worldwide, total assets under management (AUM) hit a record $145 trillion in total assets by 2024, according to PwC. The world's largest asset management regions with the strongest growth are dominated by North America and Europe, according to the Thinking Ahead Institute.
The US asset management industry includes about 75,000 establishments (single-location companies and units of multi-location companies) with combined annual revenue of about $340 billion. The industry includes hedge funds, financial advisers, mutual funds, and venture capital firms, all of which are covered in separate industry profiles. Investment banks and securities brokerages, which are not included in the industry, also are covered in separate profiles.
COMPETITIVE LANDSCAPE
Demand is driven by demographic and market trends such as the growing population of retirees and the accumulation of wealth and investable assets, as well as returns on investments. The profitability of individual companies depends on the volume and performance of the assets they manage. Large companies have advantages in providing expertise in a wide range of investment options. Small companies can compete by focusing on a single product or type of client. The US industry is fragmented: the 50 largest companies account for less than 50% of revenue.
The asset management industry has emerged from the aftermath of the late-2000s financial crisis and is in the midst of a major transformation brought about by economic, technological, and demographic changes. A structural shift in products is underway, to the detriment of traditional management firms. Increasingly, alternative managers (private funds and hedge funds) are expanding into products historically provided by traditional asset managers. Enhanced competition also puts pressure on fees, the primary source of revenue for most firms. In response, many asset management firms are re-evaluating their strategies and business models.
Another source of disruption for traditional asset managers is the growing number of financial technology (fintech) companies. These companies, which use technology to deliver financial services more efficiently and at lower cost, are luring millennial investors away from traditional asset managers.
PRODUCTS, OPERATIONS & TECHNOLOGY
Major services include personal financial planning and investment management services (about 60%) and financial management consulting and implementation services (about 35%). Firms use diverse business models and manage a variety of assets, including mutual funds, exchange traded funds (ETFs), pension funds, hedge funds and venture capital funds.
Asset managers earn most of their revenue from fees based on the balance of the assets under management or the performance of investments. In some cases, compensation is indirect, through commissions received from brokering investment transactions. Some investment advisers have authority to invest on their clients' behalf.
Researching and analyzing investment options are among the primary duties of asset managers. They must balance risk and reward in order to create investment strategies to accomplish clients' financial goals. Once an investment plan is in place, managers track performance through periodic reviews. In addition to investment managers, companies also employ teams of people to monitor compliance with various rules and regulations that govern the industry.
Table of Contents
- Industry Overview
- Quarterly Industry Update
- Business Challenges
- Business Trends
- Industry Opportunities
- Call Preparation Questions
- Financial Information
- Industry Forecast
- Web Links and Acronyms
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