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Global assets under management 'set to soar'

Oct 31
Tags: PwC, Risk Management
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Global assets under management 'set to soar'

The asset management industry around the world is set to expand rapidly in the next few years, according to a report by PwC.

It has forecasted that the global assets under management (AuM) are set to increase from the 2016 aggregate value of $84.9 trillion to $112.2 trillion by 2020 and $145.4 trillion by 2025. This equates to an expansion rate of 6.2 per cent a year. 

Such an expansion will pose considerable challenges even for big four accountancy firms, and the demand for more management consultants to help existing managers to deal with the growth of the sector may lead to an increase in recruitment.

Super-wealthy drive growth

The rapid growth of AuM is believed to be linked to the changing patterns of investment by the super-rich, not least as a separate report by PwC this week revealed the combined wealth of the world's billionaires has jumped by 17 per cent since last year.  

Indeed, the AuM report said the fast expansion of the market will be driven chiefly by "the burgeoning wealth of high-net-worth individuals and the mass affluent."

Getting it right will not be easy, however, and competition will be strong. PwC’s global asset & wealth management leader Olwyn Alexander said: "Asset managers can take advantage of this massive global growth opportunity if they’re innovative. But it’s do or die, and there will be a ‘great divide’ between few have’s and many have not’s. 

"As a result, things will look very different in five to ten years’ time and we expect to see fewer firms managing far more assets significantly more cheaply."

How to adapt to a changing market

Such a scenario may be alarming to some managers, but others might react by ensuring they get the right management consultants in to provide the necessary advice to ensure that when it comes to winners and losers, they are on the right side of the line a few years hence.

Mr Alexander noted that alternative asset classes are a key area of investment for the super rich and for the main accounting and auditing firms, this is a pie they are already taking greater slices of.

Earlier this week, the latest alternative investment market (AIM) Advisers Rankings guide indicated this was so, with PwC themselves second in terms of client numbers, market aggregation and the number of FTSE 100 AIM clients, Economia reported.

Making sure firms are ready for the growth of AuM means meeting three challenges, Mr Alexander argued. One is the willingness to embrace technology, but two others are about attitude and approach. The need to learn new skills and introduce different employment models is one aspect, and managers must be ready for the reality of varied performance mixing successes in some fields with failures elsewhere. "This means they should reorganise their business structure to support their differentiating capabilities and to cut costs elsewhere," he remarked.

With the emphasis on finding and nurturing the right people to deal with change, there is no doubt now is a time when management needs to know exactly how it should proceed, since the status quo is evidently not an option.

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