The rising market tide, which has been in force for more than a decade, did much of the work in expanding the industry's assets under management. That impact is unlikely to be repeated to such an extent. AI and other technologies, however, may enable dramatic cost savings. A report examines how the sector is changing.

Top-ranked asset managers are grabbing the lion’s share of inflows while costs have risen faster than revenues, putting margins under pressure and forcing firms to consider their competitiveness, a study says. At the same time, AI technology can slash costs and reshape the industry landscape.

The points come from Boston Consulting Group in its Global Asset Management Report 2026: An Imperative for Growth, report, issued today. 

Global assets under management reached $147 trillion in 2025, with more than 80 per cent of industry revenue growth being driven by market performance.

For more than a decade, rising markets supported industry expansion. That dynamic is weakening as growth becomes harder to capture, more unevenly distributed, and increasingly dependent on distribution strength and technological capabilities, BCG said. 

The report comes at a time of continued M&A and consolidation in parts of the wealth and asset management industry, with economies of scale being a driving force, reflecting some of the pressures the BCG report discusses. To take a single Anglo-US case, there has been the Nuveen acquisition of UK-listed Schroders, for example. 

Vibe shift 
Sources of growth are changing. Retail investors are now the primary driver of AuM growth, accounting for 61 per cent of global expansion between 2020 and 2025. Retirement systems are increasingly redirecting flows as defined contribution plans expand and defined benefit pools mature. Growth shows variety. In 2025, Asia-Pacific (excluding Australia and Japan) AuM rose 12 per cent from the previous year; in North America, it rose 13 per cent, it rose 7 per cent in Europe, 17 per cent in Latin America, and 11 per cent in the Middle East and Africa. Globally, AuM rose 11 per cent.

Rising assets don’t automatically mean greater profitability. 

Since 2010, industry profit margins have remained broadly flat at around 30 per cent. Revenues have grown more slowly than costs, resulting in negative operating leverage, challenging the traditional assumption that scale automatically improves profitability, the report said. 

Global AuM has more than tripled and revenue more than doubled over the past 15 years, the report said. Between 2010 and 2025, revenues grew at 5.1 per cent annually while costs rose slightly faster at 5.4 per cent. Institutional fees have fallen by 3 per cent annually; passive funds and exchange-traded funds now dominate net inflows, and active ETFs are gaining share at fee levels below the vehicles they are replacing. Each incremental dollar of AuM therefore carries a lower average fee.

“Asset management is entering a new competitive era,” Renaud Fages, a managing director and partner at BCG and a co-author of the report, said. “Performance alone is no longer enough. Firms must compete on distribution, operating model, and their ability to scale technology, particularly AI, to capture growth.”

Growth is also becoming more concentrated among a smaller set of players. In US passive funds, to give an example, the top 10 providers have captured more than 90 per cent of net inflows over the past decade, while private markets are also seeing capital flow to fewer, larger firms.

The report said that product manufacturing is becoming more commoditised, with control of distribution increasingly driving success. For example, access to platforms, advisors, and institutional channels increasingly dictates which firms capture flows.

“Distribution now defines who wins,” Johannes Burkhardt, a managing director and partner at BCG and a co-author of the report, said. “Firms that secure access to capital through platforms and partnerships will have a structural advantage over those that do not.”

The AI element
BCG reckons that with AI, asset managers could cut costs by 25 per cent to 35 per cent over the next three to five years. Additional expected benefits include a two to fivefold increase in research coverage; a three to fivefold increase in client coverage per relationship manager, and faster and more scalable personalisation of investment solutions. 

Forces such as tokenization and digital assets could change how the asset management market evolves. BCG said the value of tokenized real-world assets is projected to reach $14 trillion by 2030 and $55 trillion by 2035, creating new channels for distribution, ownership, and product design.

Generational change
BCG said it is estimated that nearly $124 trillion will move between generations in the US through 2048. “The recipients of that capital are increasingly digital-native investors whose relationship with financial services looks very different from their predecessors,” it said. 

“Control of the investor relationship is also shifting. In Europe, neobroker assets surpassed €150 billion in 2023. In the US, retail investors now account for roughly 20 per cent to 25 per cent of daily equity trading volume, much of it intermediated through digital platforms,” it said. “Across Asia-Pacific, retail investors are entering markets through digital channels, using mobile wallets and cash management products as primary entry points.” (“Neobrokers” are digital financial services that make trading and investing more accessible to a broader consumer base.)

“The rise of digital-native investors is concentrating flows in a smaller set of platforms that act as gatekeepers to capital. For asset managers, success will depend on being embedded in these ecosystems, with products and capabilities designed for how capital is allocated within them,” it added.