Where Do Asset Managers Make the Least Money?

UK asset managers are trailing their global counterparts in money-making, as the median publically traded firm saw a 13% uplift in revenues last year, research has shown.

While firms in the US, Canada, and Australia saw double-digit revenue increases in 2014, their UK counterparts’ income grew by an average 3%, according to consultant Casey Quirk. Some 40% of publically-quoted, UK-based firms suffered revenue declines.

“Many UK firms remain aligned with slower-growth buyer segments and geographic regions,” said Jeffrey Levi, partner at Casey Quirk, and head of the firm’s Knowledge Center.

“Many UK firms remain aligned with slower growth buyer segments and geographic regions.” —Jeffrey LeviLevi accused firms of not being “sufficiently aggressive” at building new active and innovative beta capabilities or repositioning against higher-growth markets, creating headwinds in firm growth. UK groups have also been grappling with new rules regarding retail distribution, and a shake-up in the at-retirement market coming into effect from this month.

“That being said,” Levi added, “we are seeing some UK firms making significant investments to take advantage of key opportunities.”

Casey Quirk studied public documents submitted by 62 quoted managers from around the world, which look after a total of $14.3 trillion. While 76% reported increases in their assets under management, just under a quarter suffered net outflows in 2014.

The consultant found net new flows into alternatives outstripped those into traditional asset classes for the fifth consecutive year.

However, Levi said continued upwards movement was not a foregone conclusion.

“Managers are being challenged by both buyers and shareholders in a lower growth environment,” he said. “Buyers want highly tailored outcome-oriented solutions while shareholders want to see significant cash flow generation through more scalable offerings. Product development and delivering a distinctive client experience will be critical for success.”

This week, consultant LCP reported some fees charged by asset managers in the UK had risen by 60%, while the cost of some asset class mandates had fallen.