Global assets under management are expected to hit about $102 trillion by 2020, with about half of those assets held in North America, according to PwC.
North American AUM are expected to grow by more than 5% between 2012 and 2020, from more than $33 trillion to $49 trillion.
Expected growth in pension fund assets is behind a lot of the estimated growth in assets overall, PwC found. In 2012, there was more than $19 trillion invested in pension funds. The report estimates that will increase by nearly 6% per year to $30 trillion by 2020, just in North America. Globally, PwC expects assets in pension funds will reach $56.5 trillion by 2020.
Although PwC estimates assets in North America will outnumber those in other regions, the report found the economies in South America, Asia, Africa and the Middle East will likely grow faster than those in the developed world.
Specifically, PwC expects to see an increase in the number of mass affluent, those with between $100,000 and $1 million, and high-net-worth-individuals in those regions. The Asia-Pacific region will show the most growth in assets from mass affluent investors, followed by Europe, North America, Latin America and Africa.
Also fueling growth is a rapidly increasing middle class with a greater need for financial products. PwC estimates the global middle class will grow by 180% between 2010 and 2040, with the bulk of middle-class investors living in Asia by 2015. “Although the growing middle class represents low individual wealth, there is significant opportunity to serve that demographic if done thoughtfully and efficiently,” according to the report.
PwC identified six dynamics the asset management industry has to control for this projected growth.
First is that banks and insurance companies will lose influence in the financial industry by 2020, and demographic and market changes will make asset management more in demand. Regulations will whittle away at banks and insurers influence, according to PwC, and retirement and health care needs will make it necessary for investors to focus on long-term accumulation.