Due to today's wide array of investment options, the demand for asset management has sky rocketed, but the industry cannot expect similar growth in the future, according to a new report from Cerulli Associates, "Evaluating Asset Manager Addressable Marketplaces."

There are currently $21 trillion in total assets under management, nearly double the amount of professionally managed assets in 1995, according to the August Cerulli Report. However, as the industry matures, it must anticipate the game of asset gathering will change significantly.

"Asset managers did a remarkable job of gathering assets from both individuals and institutions alike, but they may have difficulty securing asset growth of this magnitude moving forward because there simply is a smaller pool of investable assets upon which to draw," according to the report. "Asset gathering increasingly will become a take-away game as this asset base swells."

Institutional managers have stretched their efforts beyond their standard business models into new areas in an effort to find maintainable profit growth. Cerulli believes that the industry has been using the wrong tools to quantify and analyze U.S. financial Service Markets, so it has developed a new way to judge market opportunities: the Asset Manager Addressable Marketplaces (AMAM). AMAM slices U.S. AUM by client type and by the means through which assets were accumulated, either direct, affiliated or third-party.

Among these, the nonproprietary distribution channels are gaining the most ground, and not one manager anticipates an increase in direct-sold business over the next five years. According to the report, "Nonproprietary delivery systems continue to gain ground on proprietary, captive distribution models; unaffiliated distribution erases any specter of impropriety and ensures unbiased advice."

Investment management is more and more necessary in order to help investors sieve through the wide range of open options. As the asset pool grows, the investment options stay the same, and pretty soon managers are going to be raiding into each other's turf.  

Subscribe Now

Access to premium content including in-depth coverage of mutual funds, hedge funds, 401(K)s, 529 plans, and more.

3-Week Free Trial

Insight and analysis into the management, marketing, operations and technology of the asset management industry.