Almost three-quarters (73%) of asset managers are considering a strategic consolidation with another asset manager in the coming months as a way to "gain access to new segments, build market share and mitigate risks," the news release said.
In addition, firms are turning heavily to technology to transform and survive, with more than 90% of asset managers already using disruptive technologies such as artificial intelligence, big data and blockchain to enhance investment performance. PwC noted that assets managed by robo-advisers will reach $5.9 trillion by the end of 2027, more than double the $2.5 trillion at the end of 2022.
As a direct consequence of issues facing the industry — in tandem with the drive to deliver at scale amid cost and competitive pressures — by the end of 2027, the 10 largest asset managers will control about half of global mutual fund assets, up from 42.5% at the end of 2020.
Meanwhile, private markets will account for up to half of all asset and wealth management revenues by the end of 2027, up from 37.6% at the end of 2020, as "the global economy heads back into growth, and inflationary and interest rate pressures ease," the release said.
Overall, global asset and wealth management revenues are projected to hit $622.1 billion in 2027, surpassing the record high of $599.4 billion in 2021.
The survey also revealed what a tough year 2022 was — global assets under management fell by almost 10% to $115.1 trillion at the end of 2022 from $127.5 trillion at the end of 2021, representing the greatest such decline on a percentage basis in a decade.
However, global AUM is expected to rebound and reach $147.3 trillion by the end of 2027, representing a compound annual growth rate of 5%.
Among other items in the survey, inflation, market volatility and interest-rate movements are expected to be the greatest concerns for both investors and asset managers over the next 12 to 24 months.
The Asia-Pacific region will lead the growth in global assets under management. PwC's base-case scenario projects that growth rates in the Asia-Pacific region will be about 50% higher than growth in North America in 2027.
Finally, global asset and wealth management firms will continue to focus heavily on diversity, equity and inclusion, and ESG factors in their investment processes. More than half (57%) of firms reported that their employees are demanding disclosures about their company's impact on the economy, while 50% said their employees are demanding disclosures over ESG matters.
The PwC data are based on the firm's latest industry projections as well as a survey of 250 asset managers and 250 institutional investors around the world.