Last year, global asset managers experienced their highest operating margins since 2007, according to a new survey by consultant Casey Quirk and research shop McLagan.
Specifically, the median pre-tax operating margins rose to 32%, the highest since 2007. The new high in profit margin was driven by market appreciation, which also lifted 2012 revenue in the global asset management industry past the previous 2007 peak.
However, net inflows of 1.2% last year – compared with 3.7% in 2007 – increasing fee pressure, and a widening economic divergence among firms post-financial crisis point to growing industry challenges, according to the Performance Intelligence: 2013 Survey Results.
“With annual net flows of under 1% anticipated through 2017 these findings, based on one of the largest industry surveys of asset management economics, indicate managers must adapt and innovate to keep up let alone to continue thriving,’’ stated Kevin Quirk, partner at Casey Quirk.
“In a slow growth environment, asset retention is crucial, and winning firms stand out with more robust staffing in sales and client service and operationally by aligning their economics for superior attraction and retention of talent,’’ added Adam Barnett, head of the asset management practice at McLagan.
