One in six asset and wealth management companies globally is expected to disappear or be acquired by 2027, twice the normal turnover rate, according to a survey by PwC.
The ‘2023 Global Asset and Wealth Management Survey’ highlights the industry’s struggle with digital transformation, changing investor expectations, consolidation and “retailisation.”
In response, 73% of asset managers are considering strategic consolidation to gain access to new segments, increase market share and mitigate risks.
Over 90% of asset managers are already utilising disruptive technologies like AI, big data and blockchain to enhance investment performance. The top ten largest asset managers are projected to control half of all mutual fund assets globally by 2027, up from 42.5% in 2020.
Global assets under management (AUM) fell to $115.1 trillion in 2022, a decline of nearly 10% from the previous year’s high. However, AUM is expected to rebound and reach $147.3 trillion by 2027.
The report also highlights the increasing use of AI-driven robo-advisers, estimated to manage $5.9 trillion in assets by 2027.
Additionally, private markets are expected to drive growth, accounting for half of asset and wealth management revenues by 2027. The Asia-Pacific region and emerging markets are predicted to lead AUM growth, while purpose-driven strategies, diversity, equity and inclusion (DEI) and environmental, social and governance (ESG) considerations are becoming imperative for the industry.
Olwyn Alexander, global asset & wealth management leader at PwC Ireland, stated, “Existential challenges are sweeping the asset and wealth management industry against a backdrop of social, economic and geopolitical disruption.
“Firms that effectively leverage technology such as generative AI and robo-advisors, build meaningful inroads to new and existing customers, diversify their recruitment and deliver exceptional client experiences will be well-positioned to not only survive but thrive.”
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