Assets & Wealth 2017: Outpacing, advancing, and surpassing industry change

by AM admin on December 6, 2017

Peter Finnerty, PwC US Mutual Funds Leader –

What will mutual fund/ETF assets be in 2025?

By how much will front-, middle- and back-office costs change between now and 2025?

What is the decline in active and passive expense ratios going to be per year through 2025?

Which areas do firms plan on outsourcing?

And, most importantly, what does the future of the mutual fund industry look like?

We discussed each of these topics at our recent conference, Assets & Wealth 2017, providing estimated figures on mutual fund AUM, expense ratios, and passive/active ratios. And more importantly, we polled about 75 industry participants for their thoughts as well.

Assets & Wealth 2017 centered thematically on “outpacing change,” an idea that’s a call to action for mutual funds and the larger AMW industry. In a landscape that’s defined by (almost daily) technology innovation, product changes, regulatory uncertainty, and strategic shifts, among other developments, firms are challenged not just to stay abreast—they need to stay ahead.

For the discussion, we brought together PwC and industry experts, who were able to share their viewpoints on the outlook for the mutual fund industry, including their perspectives with respect to fees, assets, and expenses/costs. To me, that’s just one side of the coin. Additionally, we discussed technology adoption, namely, how firms should invest to spend and spend to invest.

Other highlights inside:

  • Assets. In preparation for the conference, we worked with several of our industry and financial experts to project where we see active-passive assets, expense ratios, growth projections, and fees by 2025. More importantly, we stress tested our figures with audience members, polling them for insight. We’re pleased that they shared our sentiments: almost 50% believe passive assets will comprise 50% of total industry assets by 2025, and 42% believe the US mutual fund and ETF compound annual growth rate will be at 5% between now and 2025.
  • Fit for Growth. We believe that Fit for Growth means becoming Fit for Purpose, an approach that’s underpinned by value—whether it’s maximized through innovation or driving costs to zero. It’s about unlocking performance that helps firms manage cost in a more strategic way, allowing them to grow stronger at the same time. As mutual funds continue to face disruption and external pressure on a global scale, we discussed some of the strategies and solutions for emerging better, stronger, and more equipped for what’s increasingly becoming the new normal.
  • Solutions. Asset managers can manage and mitigate unrelenting fee, expense, and performance pressures by focusing on reducing costs while increasing scale. Reducing costs is more than an efficiency play. It’s about exploring ways of working internally (automation, rationalization, outsourcing, digital innovation) and externally (new products and new markets, creating new avenues for the sales force or deals and/or joint ventures etc.).

I’m excited to leverage their insight—and the audience’s as well—as we’re planning to launch a forward-looking publication on the mutual fund industry. Assets, fees, costs, talent, clients, and technology will be the main focus areas. Before that, please make sure that you check out our recent AWM publication, “Asset & Wealth Management Revolution: Embracing exponential change.”

We’re in uncertain and exciting times, and I’m looking forward to what’s on the horizon.

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