Despite a predicted industry-wide rise in AUM, it’s survival of the fittest
While there’s an anticipated sharp rise in assets managed by North American wealth managers, upcoming industry changes will not leave many firms to reap the benefits.
According to a recent report from PwC, assets overseen by North American wealth managers will surge to US$71.2 trillion by 2025, compared to US$46.9 trillion in 2016. The predicted growth in assets was attributed to the “burgeoning wealth” from mass affluent and high-net-worth individuals, as well as a shift from defined-benefit to defined-contribution retirement plans.
Retail fund assets, including those in ETFs, are predicted to nearly double by 2025. Investments in alternative assets — such as real estate and land, private equity, and private debt — are also projected to grow.
Annual growth in North American assets was projected at 5.7% through 2020, and was predicted to slow down to 4% per year from 2020 to 2025. Global assets, on the other hand, were projected to grow 6.2% yearly and reach US$145.4 trillion in 2025.
While the industry might benefit from the growth, it won’t be distributed equally. “[T]here will be a ‘great divide’ between few haves and many have-nots,” Olwyn Alexander, PwC’s global asset and wealth management leader, said in a statement.
According to PwC, technology will be one of the most significant challenges for companies. Research and portfolio management functions will be impacted by artificial intelligence, while robotic processes are anticipated to impact the back and middle office.
Alexander added that wealth managers will have to reshape their businesses to become more differentiated, look for ways to cut costs, and be prepared to succeed in some areas while failing in others.
The human element will also become more critical. Employment models will also have to adapt to evolving and expanding skill-set requirements, while retaining their focus on recruiting and retaining the right workers.
For more of Wealth Professional's latest industry news, click here.
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According to a recent report from PwC, assets overseen by North American wealth managers will surge to US$71.2 trillion by 2025, compared to US$46.9 trillion in 2016. The predicted growth in assets was attributed to the “burgeoning wealth” from mass affluent and high-net-worth individuals, as well as a shift from defined-benefit to defined-contribution retirement plans.
Retail fund assets, including those in ETFs, are predicted to nearly double by 2025. Investments in alternative assets — such as real estate and land, private equity, and private debt — are also projected to grow.
Annual growth in North American assets was projected at 5.7% through 2020, and was predicted to slow down to 4% per year from 2020 to 2025. Global assets, on the other hand, were projected to grow 6.2% yearly and reach US$145.4 trillion in 2025.
While the industry might benefit from the growth, it won’t be distributed equally. “[T]here will be a ‘great divide’ between few haves and many have-nots,” Olwyn Alexander, PwC’s global asset and wealth management leader, said in a statement.
According to PwC, technology will be one of the most significant challenges for companies. Research and portfolio management functions will be impacted by artificial intelligence, while robotic processes are anticipated to impact the back and middle office.
Alexander added that wealth managers will have to reshape their businesses to become more differentiated, look for ways to cut costs, and be prepared to succeed in some areas while failing in others.
The human element will also become more critical. Employment models will also have to adapt to evolving and expanding skill-set requirements, while retaining their focus on recruiting and retaining the right workers.
For more of Wealth Professional's latest industry news, click here.
Related stories:
Smarter investors are pushing funds of hedge funds to consolidation
Most expensive advice firms called out in new report
