Between investors and regulators, the pressure will be on mutual fund fees, driving them downward by nearly 20% by 2025.
In its report “Asset & Wealth Management Revolution: Pressure on Profitability,” PwC predicts that mutual fund asset-weighted fees will fall by 19.4%, from 0.44% in 2017 to 0.36% in 2025. Passive funds will experience the biggest decrease, of up to 20.6%, while active funds will see their fees fall by 19.3%.
The report says that asset managers need to consider four factors to make sure that they have a future-fit operating model as the industry changes: “value for money, finding a strategic positioning, understanding that technology is the key to future success and winning the battle for talent.”
“Based on our sample of 64 [asset and wealth managers] with over $40 trillion in assets under management they have been able to improve their margins by 15.91% since 2012, largely due to strong AUM growth and lower costs achieved through economies of scale,” Olwyn Alexander, Global Asset & Wealth Management leader for PwC, says in a statement.