The growth in profitability of publicly traded U.S.-based money management firms remained flat during 2011, according to an analysis by Casey, Quirk & Associates.
The median operating profit margin for the 33 firms analyzed was around 27% in both 2010 and 2011 among the 21 publicly traded firms, along with the money management subsidiaries of 12 quoted U.S. financial institutions. Median annual revenue growth increased only 8% in 2011 from 22% in 2010, according to the report.
Among the firms analyzed for 2011, the independent investment firms outperformed larger companies' subsidiaries. Independent managers posted a median profitability of 35% last year, compared to 25% for subsidiaries, and their revenues grew 15%, compared with 6% for subsidiaries.
The metrics from the analysis tend to reflect the entire industry, which mostly comprises privately held firms, according to a CQA news release about the analysis. Asset managers participating in Performance Intelligence, a financial benchmarking initiative that includes private companies, reported median operating profit margins of 28% in 2010, while the median annual revenue growth in 2010 was 18%, slightly trailing the publicly traded managers' growth.
“Independent asset managers, whether publicly traded or employee-owned, usually generate stronger cash flow than subsidiaries of larger financial firms,” said Jeb B. Doggett, a Casey Quirk partner who oversees the Performance Intelligence initiative, in the release. “Because independent firms often can offer to share the asset management economics more directly with their employees, they can compete more aggressively for key industry talent.”
CQA is a consultant to money managers.
