Money managers' profit margins are rising, particularly among independent firms, a survey to be published in October will show. Indeed, the median profit margins for investment management firms rose to 31% in 1995, from 25% in 1994, according to preliminary results of the annual Business, Financial and Compensation Analysis by Investment Counseling Inc.
Increased fee revenue and lower operating expense levels helped boost the profitability of firms. The median firm grew revenue by 11.6% in 1995, far ahead of the median increase of 4.7% in 1994. Operating expenses grew 7.5% in 1995, compared with 15.8% in 1994.
The median firm grew its assets by 21% during the last year, with a median compound annual rate of growth of 14% for the last three years. Independent money managers grew fastest -- 22.7% annually for the last three years. Next were affiliates of brokers and investment banks, 14.2% annually, followed by insurers, 11.3%, and affiliates of banks and trust companies, 9%.