Tom Lyons: «Asset Managers Face a Crisis in Slow Motion»
Asset managers may be enjoying their last years of comfort. Behind the headline numbers – rising assets under management, improved cost-income ratios, and a reputation for stability – a quiet but dangerous squeeze is building.
Tom Lyons, Head of Communications and Content at GenTwo, calls it «Shelf Syndrome» – the over-reliance of small and mid-sized managers on third-party funds and off-the-shelf strategies.
In a new White Paper, Lyons warns that this habit is quietly eroding margins, diluting brands, and putting client relationships at risk. «It’s a slow-motion crisis,» he says. «And that makes it more dangerous, because many firms don’t even recognize it’s happening.»
Hidden Squeeze
Lyons’ research paints a more sobering picture than the surface-level health of the sector suggests. Across Europe, operating profit margins in asset management have collapsed to 11.1 basis points of AuM – the lowest since 2008. Ninety-five percent of active equity funds underperformed their benchmarks over the past five years. Average fees are sliding, while more than half of investors now say underperformance is their primary reason for firing a manager.
Mid-tier firms, Lyons argues, are caught in a vice: fee compression from above, and client expectations for alpha from below. For those outsourcing investment decisions to large fund houses – whose products themselves may lag – the business model becomes almost indefensible.
«You’re charging advisory fees on top of products that clients know they could access directly for less,» Lyons says. «The pain may not be acute now, but the trajectory is clear. In five years, many firms will be trapped between falling revenues and rising costs – with no differentiation to justify their existence.»
Risk of Being Invisible
The heart of «Shelf Syndrome» isn’t just performance – it’s branding. When client statements list Blackrock, Pimco, or Vanguard, the manager’s own name fades into the background.
«In a commoditized market, brand identity isn’t vanity – it’s survival,» Lyons insists. «If clients don’t associate you with unique products or solutions, price becomes the only differentiator. That’s a race to the bottom.»
Why Building Products Is No Longer Prohibitive
Historically, creating proprietary investment products was expensive, risky, and slow. Launching a fund could take six months, cost over $200,000 a year to maintain, and require gathering $150–200 million in assets to survive.
Those barriers are falling fast. Off-balance-sheet SPVs can now issue products in weeks at far lower cost. White-label platforms let managers piggyback on existing infrastructure, while specialist providers handle regulatory complexity.
«The cost of inaction is rising faster than the cost of acting,» Lyons says. «Clients want customization, ESG overlays, thematic exposures – things shelf products can’t deliver.»
Assetization: A Product Factory at Your Fingertips
Lyons calls the solution «Assetization» – building a «product factory» that allows managers to turn investment ideas into bankable products quickly and efficiently.
He paints a scenario: a portfolio manager sees an opportunity in European small-cap value stocks with ESG screens. Rather than finding the «least bad» external fund, they can structure their own – as a certificate via an SPV, or as a sub-fund through a white-label platform.
«It’s like applying a minimum viable product mindset to asset management,» he says. «You move from ‘Here’s what’s on the shelf’ to ‘Here’s what we built for you.’»
What Compelling Looks Like
For small players, creating products that resonate requires two things: ideas worth packaging and a platform to execute quickly.
The best boutique products, Lyons says, come from identifying genuine gaps – a systematic emerging market credit strategy that consistently adds value, or an infrastructure exposure tailored for family offices with currency hedging.
«The compelling part isn’t just the performance,» he says. «It’s the story: ‘We listened to your needs and built something specifically for you.’»
Monday Morning Action Plan
Lyons urges managers to start with a Shelf vs. Self Audit. Break down client portfolios into third-party («Shelf») and proprietary («Self») products, then quantify the external fees being passed to other managers.
Next, identify a single «assetization sweet spot» – an area where the firm has expertise or recurring client demand – and explore turning it into a product through an SPV or white-label provider.
«Don’t overhaul your whole business at once,» he says. «Prove the concept with one product. Set a 90-day deadline. That urgency changes the mindset inside the firm.»
Tom Lyons is a 25-year corporate communications veteran specializing in strategy, messaging, and thought leadership for financial services, fintech, and emerging technologies. At GenTwo, a Swiss fintech dedicated to democratizing financial product creation, he leads communications, media, research, and thought leadership. The firm’s latest White Paper warns that asset managers must act now to avoid becoming the next casualties of a slow-motion crisis.
