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Assets under management rebound in 2023 after 2022 setback
Compared to 2022, assets under management (AuM) have increased by an average of 9% in 2023, thanks to strong market performance. However, revenues saw a slight 2% decrease in 2023 due to ongoing fee pressure, and operating expenses (OpEx) rose once again. With pre-tax profits also down by 2%, asset managers must address the persistent top-line fee pressure and continue to manage costs effectively​.
Key findings
- From 2018 to 2023, asset managers in our selected sample experienced a 56% growth in assets under management (AuM)​
- Compared to a weak performance in 2022, AuM increased by an average of 9%, driven by strong market performance in 2023
- Despite the rise in AuM, profits have seen a slight decline of 2%
- Shrinking revenues and rising expenses are placing asset managers in a tight financial position
- Effective cost management remains a crucial focus for C-level executives
Growth of largest and selected other asset managers
US asset managers continue to outperform European peers in terms of scale and growth​. European asset managers have achieved an average AuM growth rate of 54%, vs. 67% for their North American peers over the last five years.
Effective cost management remains a top priority for the asset management industry
The asset management industry has seen a noteworthy drop in average operating expenses per assets under management (OpEx/AuM), yet cost-income ratios (CIR) have climbed. This shift is driven by escalating costs and dwindling revenues, both influenced by intense fee pressure. With this fee pressure likely to persist, mastering cost management will be essential to lower CIR and OpEx/AuM in the future​.
Outside-in competitive cost benchmarking1)
Average OpEx/AuM (bps)
Average Cost-income ratio (CIR) (%)
1) Subset (26) of 35 asset managers in the sample for which OpEx and revenue from 2018-2023 are publicly available
Source: Annual reports 2023; Strategy& analysis
Source: Annual reports 2023; Strategy& analysis
Asset management archetypes
We categorize asset managers into four strategic archetypes, with scaling and specialization as the key themes:
Pure scale players and value chain integrators drive the largest increase in assets under management, capturing approximately 75% of the market. In contrast, captives grow significantly slower than independent asset managers, relying primarily on insurance premium growth as feeders. Overall, asset managers exhibit higher growth rates than banks and insurers, who serve as the primary feeders of the industry.
The growth rate for captives is only one-third of the asset management industry’s overall dynamics. Additionally, the contribution of asset management to group profits varies among captives, with their OpEx per AuM being higher than the industry average.
Surge in M&A activity expected from 2024 due to tightening business conditions
As M&A activity and market concentration rise, it is projected that 16% of current asset managers will no longer exist by 2027​.
How to reap GenAI in asset management
While GenAI has the potential to unlock significant efficiencies of up to 15% for asset managers’ cost base, successful implementation demands a comprehensive approach:
- Define a coherent GenAI strategy as a framework to ensure GenAI implementation is strategically driven across the company
- Set-up a dedicated GenAI Governance to control GenAI activities, the use cases portfolio and processes, as well as managing GenAI-related risks
- Establish a GenAI Center of Excellence (CoE) to steer and coordinate GenAI activities within the organization
Strategic implications for European asset managers
Our study this year highlights six key strategic implications for European asset managers:
- 1Challenge to compete with global peers for investments in new technology (e.g., AI)
- 2Lower scale requires implementation of AI in a cost-cautious, efficient way
- 3Increasing pressure to simplify own business model and operations
- 4Review composition of own value chain and leverage large providers for back-office services to benefit from scale efficiencies​
- 5Imperative to identify more powerful distribution channels to catch up on growth
- 6(Re-)consider mergers, particularly involving captives which have been observed and are expected to further gain in attractiveness​
Sandro Kanzian, Julia Burger, and Freia Lorenz have also contributed to this report.
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