According to PwC's survey of 250 asset managers and 250 institutional investors around the world, 16% of the world's asset and wealth managers are expected to be consolidated or eliminated by 2027 – double the all-time high, highlighting that the global asset and wealth management industry is facing more challenges than ever before. Against the backdrop of increasingly complex social, economic and geopolitical situations, some of the key areas that have long attracted attention, such as digital transformation, changing investor expectations, industry consolidation and "retailing" trends, have made new progress, but at the same time brought new challenges. Today, managers need to focus on how to survive and thrive in a rapidly changing industry environment.
Five Imperatives for Survival and Success:
Steer your way through a rare change.
Investors and asset managers are most concerned about inflation, market volatility and interest rate movements over the next one to two years, which will be a challenge for the asset and wealth management industry to achieve returns that exceed market benchmarks, and even low-risk deposits and money markets**.
Re-understand customer needs.
With an estimated $68 trillion of global wealth from "baby boomers" to "millennials" by 2030, intergenerational succession, while further opening up of the non-public market and shifting investment allocations (including increased demand for ETFs) are changing the competitive landscape and development frontiers of the industry.
Embrace the frontiers of technology and change.
Nearly 90% of the institutional investors surveyed believe that the use of disruptive technologies, including big data, artificial intelligence and blockchain, will lead to better performance in their portfolios. Although asset management institutions have invested in and applied technology extensively, it is still difficult to meet investors' expectations.
Scale up under cost and competitive pressures.
With the acceleration of industry concentration, it is expected that by 2027, the world's top 10 asset managers will control nearly half of the world's common ** asset size. As the demand for fundraising from asset managers increases and their influence on the real economy increases, some asset managers are even considering a more holistic approach to maintaining financial health, such as through mergers and acquisitions with banks or insurance institutions, joint ventures or corporate alliances.
Strengthen social responsibility.
Sixty percent of the asset managers surveyed believe that environmental, social and governance (ESG) expertise is critical to portfolio management teams in the current market environment, where talent is becoming increasingly scarce. As the influence of the asset and wealth management industry on the economy continues to increase, the mission and social responsibility of asset management institutions are also being paid attention to.
Thankfully, the asset and wealth management industry has shown remarkable resilience in the face of rapidly changing market conditions and changing investor needs. In response to the short-term pressures that are accumulating, a new generation of asset managers is emerging, that is, tech-enabled, customer-centric, and able to manage multiple types of assets across traditional and emerging segments. PwC expects the global asset and wealth management industry to be largely transformed by 2027. Therefore, managers must follow the trend and keep up with the times.
*: PricewaterhouseCoopers.
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