Attention asset management firms: Unless you change up your current business strategies, it's unlikely you will see much growth. That's according to a recent McKinsey & Company report on U.S.-based asset managers. McKinsey says it agrees with the asset managers' notion that growth will be concentrated in five areas: retirement, international investing, sovereign wealth funds, ETFs and passive investments, and alternatives. But the consultant found that the firms are not spending enough resources to tap those areas. The average firm in the survey was investing $5 to $10 million per year, or 2 to 3 percent of costs, to grow organically in those five areas.
The report surveyed 110 firms with over $9 trillion in AUM — more than 40 percent of the industry and over half of the actively managed universe. Over half of those firms say they will increase their share of AUM over the next two to three years while 30 percent say they will retain their current share. As McKinsey puts it, “While this confidence strains mathematical logic, it also suggests a disconnect between managers' beliefs about growth and what they are doing about it.”