Asset manager margins face pressure from rising infrastructure costs
PwC research indicates that profit per assets under management has declined by 19 percent since 2018 as infrastructure costs and fee compression mount.
Asset management firms are seeing their profit margins squeezed as the cost of maintaining and upgrading infrastructure continues to rise. A report from PwC reveals that profit per assets under management has fallen by 19 percent since 2018, with a further 9.1 percent decline projected by 2030. Approximately 67 percent of surveyed managers report that fee compression is significantly limiting their ability to invest in new capabilities.
The industry faces a structural imbalance in technology spending, with 29 percent of managers dedicating the bulk of their budgets to maintaining legacy systems rather than developing new ones. Data fragmentation and aging technology are cited as primary obstacles to the effective implementation of AI at scale. Meanwhile, 58 percent of respondents identified market data as the most expensive layer of infrastructure relative to the value it provides.
Roland Kastoun, global leader of asset and wealth management advisory at PwC, noted that surviving the next five years will depend on addressing fundamental operational tasks rather than solely pursuing sophisticated AI. Firms are increasingly adopting hybrid sourcing models to manage these costs, seeking a balance between internal development, strategic partnerships, and external procurement.