Managing Director & Partner
London
The global asset management industry’s assets rose to nearly $120 trillion in 2023, reverting from a decline the year before. However, asset managers are facing a variety of challenges to their growth. Investors are gravitating to passively managed funds and other products that have lower fees even as asset managers’ costs increase. Their efforts to create new products that would differentiate them from competitors have largely fallen short, with investors sticking mostly to established products with reliable track records. Historically, the industry has been able to weather these pressures thanks to revenue growth that has been largely driven by market appreciation. In the years ahead, however, market appreciation is expected to slow, creating further challenges to the industry.
In the face of these pressures, asset managers will need to rethink the way they operate in order to maintain the growth and profitability of past years. The most viable way forward is by using an approach that we call the three Ps: productivity, personalization, and private markets. Asset managers should increase productivity, personalize customer engagement, and expand into private markets.
As the artificial intelligence (AI) technological revolution gathers momentum, asset managers have an opportunity to invest in AI and integrate it into their operations in ways that can enhance a three Ps strategy. AI can boost productivity by enabling improved decision making and operational efficiencies. (See the exhibit.) It can be leveraged to create and manage personalized portfolios at scale and to tailor the customer experience. And AI can enhance the efficiency of deal teams in private markets and boost their ability to drive value creation. In adopting AI to facilitate these key moves, asset managers should view the technological possibilities as transformational tools for their organization.
As part of this year’s report, we surveyed asset managers with collectively more than $15 trillion in assets under management to gather their views on the role of AI in their business. The vast majority of survey respondents expect to see significant or transformative changes in the short term, and two-thirds either have plans to roll out at least one generative AI (GenAI) use case this year or are already scaling one or more use cases.
Waiting is not an option when it comes to investing in AI. The technology is rapidly developing, and asset managers that do not start their journey now risk being left behind.
Authors
Alex Belyakov
Project Leader
New York
Johannes Burkhardt
Partner
Munich
Lorraine Felix
Consultant
New York
Maitreyee Malpekar
Associate
Brooklyn
Michele Millosevich
Partner
Milan
Ian Pancham
Managing Director & Partner
New York
George Rudolph
Managing Director & Partner
New York
Lior Valitsky
Principal
Toronto
Andrea Walbaum
Knowledge Expert, Team Manager
New York
ABOUT BOSTON CONSULTING GROUP
Boston Consulting Group partners with leaders in business and society to tackle their most important challenges and capture their greatest opportunities. BCG was the pioneer in business strategy when it was founded in 1963. Today, we work closely with clients to embrace a transformational approach aimed at benefiting all stakeholders—empowering organizations to grow, build sustainable competitive advantage, and drive positive societal impact.
Our diverse, global teams bring deep industry and functional expertise and a range of perspectives that question the status quo and spark change. BCG delivers solutions through leading-edge management consulting, technology and design, and corporate and digital ventures. We work in a uniquely collaborative model across the firm and throughout all levels of the client organization, fueled by the goal of helping our clients thrive and enabling them to make the world a better place.
© Boston Consulting Group 2024. All rights reserved.
For information or permission to reprint, please contact BCG at permissions@bcg.com. To find the latest BCG content and register to receive e-alerts on this topic or others, please visit bcg.com. Follow Boston Consulting Group on Facebook and X (formerly Twitter).