Global Asset Management 2013: Capitalizing on the Recovery

By Gary ShubBrent BeardsleyHélène DonnadieuMonish KumarAndy MaguireTjun TangKai Kramer, and Philippe Morel

Global Asset Management 2013: Capitalizing on the Recovery is The Boston Consulting Group’s eleventh annual worldwide study of the asset management industry. This year’s research shows that the global asset-management industry has finally returned to a growth path, winning a welcome respite after four years of stalled growth. Both total assets under management (AuM) and profits as a percentage of revenues nearly returned to precrisis levels.

Although these results reflect the beginning of a recovery, the increase in net new assets is relatively modest overall. In addition, managers face market volatility, weakening of some revenue margins, and wide variations in performance among managers, products, and regions.

The decade since BCG’s first annual Global Asset Management report has seen steady growth in the breadth of our market-sizing research and benchmarking studies. The goals of the research, however, have remained steadfast: to probe beneath the surface of the market landscape, identify trends, and provide insights aimed at helping managers build strong and prosperous paths to the future.

Key Market Trends and Recommendations

While traditional actively managed core assets grew in 2012, we believe that this asset class will remain vulnerable to the market’s evolution. Managers need a long-term strategy that anticipates those changes.

This report discusses in particular detail the following trends and strategic recommendations:

  • The continuing fast growth of solutions and specialties confirms a structural shift in the market. The advance of these asset classes will continue to outpace the growth—and squeeze the market share—of traditional actively managed core assets. Traditional managers hoping to surf these new flows successfully should be ready to face fundamental decisions about how to participate and what capabilities to develop.
  • The most successful managers in every region are either specialists or traditional providers who have become “ambidextrous”—that is, they have maintained their active core-asset businesses while also developing capabilities to capture new faster-growth assets. For traditional players, investment in specialties, multiasset skills, or specific services will be a key to participating in the new, faster-growth flows.
  • Cost discipline has become an increasingly important focus since the crisis. Although efficiency gains in basis points from 2007 through 2012 were largely driven by the growth of asset values, managers are now more actively managing their cost structure.
  • The operating model is a growing source of strategic advantage. For many managers, an aggressive operating-model review will be required to realize their growth ambitions. Operations and IT have been largely bypassed in asset managers’ efficiency campaigns, which usually focus on other corporate and front-office functions. That is a costly lapse, strategically as well as financially. Reviewing the operating model—beyond boosting efficiency—is the key to flexibility, scalability, and future growth. A review provides managers the blueprint they need to unlock cash and to free management attention for product innovation, entry into new asset classes, and development of client relationships.

Like its predecessors, this edition of our report reflects a comprehensive market-sizing effort. We covered 42 major country markets (representing more than 98 percent of the global asset-management market), focusing exclusively on assets that are professionally managed for a fee. We also conducted a detailed analysis of the forces that are shaping the fortunes of asset management institutions around the globe.

In addition, this report contains conclusions drawn from a detailed benchmarking study of more than 120 leading industry competitors—representing 53 percent of global AuM—that BCG conducted early in 2013. Our aim was to collect data on fees, products, distribution channels, and costs in order to gain insights into the current state of the industry and its underlying drivers of profitability.