4 traits asset managers need for success

Here's what we believe is required for these companies to thrive over the next decade

Greggory Warren, CFA 15 January, 2020 | 1:59AM

Foggy forest

Although most of the traditional U.S. asset managers we cover continue to hit record levels of assets under management, driven by the bull market in U.S. equities, the past decade has been difficult for the industry. Between the 2008-09 financial crisis and the increased scrutiny of investment management conflicts of interest, the balance of power in the retail channel has shifted more heavily toward the distributors.

This has led to not only increased fee compression, with investors (put off by the poor relative performance of actively managed funds) increasingly seeking lower-cost index-based options, but also product rationalization on the major retail distribution platforms, with broker/dealer and advisory networks culling funds with poor performance records, high expense ratios and/or low inclusion rates. The recently announced merger of Charles Schwab (SCHW) and TD Ameritrade (AMTD), two of the largest U.S. discount brokers, will only add to the woes of the U.S.-based asset managers.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar Rating
Affiliated Managers Group Inc139.97 USD-1.78
BlackRock Inc694.50 USD-0.04
Charles Schwab Corp61.72 USD-2.19
Cohen & Steers Inc64.38 USD0.94
Invesco Ltd22.42 USD0.18
State Street Corporation72.77 USD-2.01
T. Rowe Price Group Inc162.14 USD0.80
Waddell & Reed Financial Inc A25.09 USD0.12

About Author

Greggory Warren, CFA

Greggory Warren, CFA  Greggory Warren, CFA, is a financial services sector strategist for Morningstar.

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