Investment management fees are coming under pressure as institutional investors gain more leverage in negotiations across both public and private markets, according to Bfinance’s research.
The consultancy said the industry is experiencing the “turbulent twenties”, with asset managers facing growing pricing pressure after a decade in which fee reductions were concentrated in traditional active strategies.
The trend is now extending into private markets. A recent bfinance poll of 84 institutional investors across 20+ countries found that many institutional investors reported securing lower fees for comparable private market mandates over the past three years.
More than two-thirds of respondents reported moderate or significant reductions in direct lending fees, while nearly half cited similar declines in infrastructure and real estate strategies. Private equity fees have also come under pressure, with 39% of investors reporting reductions.
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According to bfinance, a combination of weaker fundraising conditions, disappointing distributions and softer returns has shifted negotiating leverage towards investors. This marks a contrast with the 2010s, when demand for private market strategies allowed managers to maintain fee levels despite mounting competition.
While private assets continue to attract investor interest, bfinance said managers can no longer assume that higher fees will be accepted automatically. Instead, allocators are scrutinising fee structures more closely, negotiating bespoke terms and seeking greater transparency around the true cost of investing.
