Our annual asset management and wealth management benchmarking studies provide insights into how leading asset and wealth management companies operate. Our Global Wealth report tracks the performance of more than 150 wealth managers globally, and involves more than 1,500 performance indicators related to growth, financial performance, operating models, sales excellence, employee efficiency, client segments, products, and trends in different markets and client domiciles. Our Global Asset Management report, which follows more than 165 leading asset managers representing $48 trillion—or more than 65% of global assets under management (AuM)—covers more than 3,000 data points per player.
Our most recent wealth management benchmarking found that top performers—which we define as consisting of the quartile of institutions that have the highest pretax profit margins—achieved a significant advantage over average performers in overall revenue growth and return on assets (RoA) over the past three years, along with significantly better price realization in every client wealth segment. Top performers also enjoyed a cost advantage, although it was much less pronounced than the RoA gap. This implies that the prime driver of higher profit margins resides on the revenue side. We also found that wealth managers can achieve a revenue uplift of from 8% to 12% by adjusting price levels, correcting unnecessary discounts, and simplifying overall pricing structures.
Our most recent asset management benchmarking revealed that the improved performance of asset managers in recent years extends beyond business fundamentals such as AuM, margins, and profitability. Managers have also excelled at rewarding their owners with exceptional investment returns, as indicated by total shareholder returns (TSR), the standard measure of gains received by a company’s owners. Over the past five years, the TSR of publicly owned asset managers has averaged 12%, surpassing many global stock markets’ robust numbers. That is a considerable feat, even if it owes something to the industry’s rebound from the financial crisis of a decade ago and to the AuM boost from strong global equity markets. Even more impressive is the performance of the top quartile of asset managers, which have delivered annual TSRs of 20%, compared with 9.1% from the other three quartiles.