Even as equity values continue to fall and economic woes mount, certain financial services firms will emerge as leaders, and the ones that do will be those that focus on long-term success, according to a report released Monday by management consulting firm Casey, Quirk & Associates and asset management compensation consulting firm McLagan, titled “Crisis in Asset Management: Industry Profitability Under Siege.”

Based upon interviews with executives at 50 firms, the two consultancies estimate that asset management firms’ operating profits could fall 35% from 2007 levels by the end of this year. And those profits could fall another 35% in 2009, without significant reductions in headcount, incentive compensation, or both.

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