Asset manager margins contract as infrastructure costs rise, PwC finds

Asset management firms are seeing their margins squeezed as the costs associated with maintaining digital infrastructure grow. PwC’s latest report highlights a 19 percent drop in profit per unit of assets under management (AuM) since 2018, with forecasts suggesting a further 9.1 percent decline by 2030.

The industry faces significant hurdles in scaling artificial intelligence, primarily due to fragmented data and outdated IT systems. Globally, 24 percent of surveyed managers identified these factors as the main barriers to technological advancement, with data fragmentation reaching 26 percent in North America.

Roland Kastoun, Global Asset and Wealth Management Advisory Leader at PwC, observed that the firms most likely to succeed in the coming years are those that prioritize stabilizing their foundational infrastructure rather than simply adopting high-profile software. Competition is also intensifying, as 68 percent of infrastructure providers view hyperscale cloud companies as a significant threat to their market share.

To mitigate these pressures, 44 percent of asset managers are shifting toward hybrid sourcing models that combine internal development with outsourced capabilities. PwC concludes that firms must move away from a one-size-fits-all approach and instead clearly define which capabilities are core assets and which should be entrusted to specialized third-party partners.