Sixteen percent of asset and wealth managers globally are likely to be absorbed or cease to exist by 2027, according to the 2023 Global Asset & Wealth Management Survey, released Monday by PwC.
The report depicts an industry grappling with digital transformation, shifting investor expectations, consolidation and "retailization."
As a result, according to the survey, 73% of asset managers are considering a strategic consolidation with another asset manager in the coming months to gain access to new segments, build market share and mitigate risks.
They are also turning to technology in this transformation effort. Nine in 10 asset managers reported that they already use disruptive technological tools, including big data, artificial intelligence and blockchain, to enhance investment performance.
As a direct consequence of these pressures — along with the drive to deliver at scale amid cost and competitive pressures — PwC expects the 10 largest asset managers to control around half of all mutual fund assets globally by 2027, up from 42.5% in 2020.
Last year was rough for asset managers, with global assets under management falling to $115.1 trillion, nearly 10% below the 2021 high of $127.5 trillion, the greatest decline in a decade.
The survey found that inflation, market volatility and interest rate movements are by far the biggest concerns for both investors and asset managers over the next 12 to 24 months. However, assets under management are expected to rebound by 2027, reaching $147.3 trillion, representing a compound annual growth rate of 5%, according to PwC.
"The rebound in equity valuations over the first six months of 2023 is a testament to the resiliency of the markets and the benefits of diversification," John Garvey, global financial services leader at PwC U.S., said in a statement.
"We're in fact already seeing the emergence of a new breed of investment firm: AI tech-enabled, customer-focused and prepared to operate across a wide range of asset types, both within and outside traditional asset and wealth management."
