Asset Management Trends 2024: Future-Proof Your Business and Commercial Model (Simon-Kucher)

Summary

• Global capital markets rose continuously over the last decade (CAGR 2010-2021: ~8 percent), helped by ultra-loose monetary policy.§1
• Following the COVID-19 pandemic, macroeconomic and geopolitical conditions deteriorated and the asset management industry is experiencing a decline in profitability.§1
• A 5 percent increase in price leads to a 10 percent increase in profits under the given assumptions, far more than a 5 percent improvement in volume or costs.§1
• A new generation of younger investors shows greater interest in self-directed investing and often uses neo-brokers.§2
• Asset managers should prepare for a comprehensive inducement ban and find ways to remain relevant to distribution partners.§2
• Institutional clients and distributors are reducing the number of external partners, which has led some asset managers to set up strategic account coverage (SAC) teams.§3

Key insights

1. Focusing on top-line growth is a more effective lever than cost cutting for asset managers.§1
2. Pricing is the most effective profit lever: a 5 percent price increase leads to a 10 percent profit increase.§1
3. Many asset managers initially responded to the multi-crisis with cost cutting.§1
4. Younger investors increasingly use neo-brokers as a cost-effective alternative to traditional banks or online brokers.§2
5. Asset managers should use more marketing channels that directly target end customers.§2
6. Asset managers should review whether their product offering is suitable for an inducement-free world.§2
7. Successful SAC teams rely on clear responsibilities, efficient processes, support tools, representation in relevant bodies and targeted compensation schemes.§3