In Asia's asset management industry the good times will «keep rolling», but the opportunities in the market, especially for new entrants, are «by no means evenly distributed,» McKinsey reports.
Assets under management for Asia’s managers have ballooned in the last 10 years, with an increase on average of 9 percent annually. Performance has been such as to encourage inflow.
A study by McKinsey suggests that the good times will «keep rolling.» But it also cautions that the opportunities in the market, especially for the new entrants, are «by no means evenly distributed.»
Cost pressures
McKinsey’s survey begins with the 2017 numbers. Profit margins for Asia’s asset managers are much higher than the margins for Europe or North America, despite recent growth in operating costs. The firm believes that the industry suffers from those increased operating costs because it lacks efficiency of scale. It also expects that cost pressures will continue for the next three to five years, as the asset managers involved make expensive investments in digitization and compliance.
On the other side, though, demand for the services of asset managers continues to grow, both from high-net-worth individuals and from institutions, financial website «All About Alpha» reports. Institutionally, the best customers are pension funds and insurers, each of whom must respond to the aging of the region, and the difficulties created by that demographic fact.
Room for Growth
There remains a lot of room for growth. Nearly 90 percent of the financial assets in Asia last year were outside of the asset management industry; institutional internal assets and high-net-worth unmanaged assets.
