‘Existential’ Challenges Impacting Asset Management

A PwC report predicts 16% of asset and wealth managers globally will be swallowed up or fall by the wayside in the next few years.

By Rethinking65

Faced with “existential” challenges, 73% of assets managers are considering a consolidation over the coming month, says a new PwC survey.

PwC’s 2023 Global Asset and Wealth Management Survey surveyed 250 asset managers and 250 institutional investors worldwide.

The report predicts that one in six (16%) asset and wealth managers globally will be swallowed up or fall by the wayside by 2027, twice the historical rate of turnover.

In an effort to transform, more than 90% of asset managers already using disruptive technological tools (including big data, AI and blockchain) to improve investment performance.

By 2027, PwC expects the top 10 largest asset managers to control around half of all mutual fund assets globally, up from 42.5% in 2020.

Last year was a tough one for asset managers, with global assets under management falling 10% — the greatest decline in a decade — to $115.1 trillion from the 2021 high of $127.5 trillion, the report said. But it added AUM is expected to rebound by 2027, reaching $147.3 trillion.

“Existential challenges are sweeping the asset and wealth management industry against a backdrop of social, economic and geopolitical disruption,” said Olwyn Alexander, Global Asset & Wealth Management Leader, PwC Ireland, in a statement. “The choice is simple – adapt to the new context or fail. 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.”

John Garvey, PwC Global Financial Services Leader, PwC United States, said the rebound in equity valuations in 2023 shows the resiliency of the markets and the benefits of diversification. “We’re in fact already seeing the emergence of a new breed of investment firm: AI tech-enabled, customer-focused and prepared to operate across a wide range of asset types, both within and outside traditional asset and wealth management.”

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