Asset managers’ profit per unit of assets under management (AuM) has fallen 19% since 2018, and PwC projects a further 9.1% decline by 2030, amid reported pressure on infrastructure investment.
The Oct. 22 report is based on responses from 150 asset managers and 50 infrastructure providers worldwide. In a press release about the findings, PwC said 67% of surveyed managers reported that fee compression was affecting their ability to fund infrastructure upgrades.
Technology budgets show the costs of maintaining existing systems: 29% of managers devoted more than 70% of their technology budgets to legacy upkeep, PwC found. Another 23% said most of their technology spending went to new capabilities.
Poor or fragmented data was named the main barrier to scaling AI by 24% of managers, while 17% pointed to legacy systems and processes. Even so, 67% listed AI and machine-learning infrastructure as an investment priority for the next three years.
Managers reported different ways of obtaining technology: 44% favored combining approaches by capability, compared with 21% who mainly bought capabilities, 18% who partnered with third parties and 13% who developed systems in-house. The blended approach was the most commonly selected option in the survey.
Infrastructure providers in PwC’s survey expect their share of the asset and wealth management revenue pool to grow over the next five years. The outlook is a forecast, rather than a reported gain already realized: 70% expect an increase, including 26% who anticipate significant growth. Sixty-eight percent identified hyperscale cloud providers as a credible emerging competitor.
PwC said AI adoption, private-market expansion, faster settlement, regulatory changes and geopolitical fragmentation are increasing demands on firms’ infrastructure. Managers also compared costs with value delivered: 58% placed market data among the infrastructure layers they considered most expensive relative to its value, compared with 47% for regulatory and reporting systems and 46% for core technology platforms.
Peter Pollini, Financial Services Industry Leader at PwC US, said, “Infrastructure has quietly become one of the most consequential strategic decisions an asset manager makes.”
