The Asset & Wealth Management Revolution: Embracing Exponential Change report said artificial intelligence and machines are set to change the way research and portfolio management is conducted.
PwC predicted that global assets under management (AUM) would almost double in size by 2025, from $84.9trn in 2016 to $111.2trn by 2020, and then again to $145.4trn by 2025.
But despite the rapid growth, it warned firms should act now if they’re going to survive the changes.
Olwyn Alexander, global asset and wealth management leader at PwC, 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 haves and many have-nots.
“As a result, things will look very different in five to 10 years’ time and we expect to see fewer firms managing far more assets significantly more cheaply.”
Alexander said firms should act in three areas. “First, asset and wealth managers must be prepared for success in some areas and failure in others. This means they should reorganise their business structure to support their differentiating capabilities and to cut costs elsewhere,” she said.
“Second, every firm must embrace technology, as it impacts all functions and will determine if they win or lose in this fast-changing landscape.
“And thirdly, different skills are needed, backed by new employment models. Finding, nurturing and retaining the right people will be absolutely vital as the industry reinvents itself.”
Passive boom continues
The report found although AUM will increase across active, passive and alternative investment, active will continue to lose market share to passive and alternatives with active’s share of overall global AUM set to fall from 71% to 60% by 2025.
PwC also anticipates that while active management will continue to grow, reaching $87.6trn assets by 2025, the number of assets in passive management is expected to hit $36.6trn.
Passives will continue to gain market share, rising from 17% of AUM in 2016 to 25% in 2025. Alternatives are also predicted to rise from $10.1trn to $21.1trn, up from 12% to 15%, the report said.
