Despite managing US$139bn in global assets set to climb to US$200bn by 2030, asset managers are watching profits disappear.

According to PwC’s 2025 Global Asset and Wealth Management research, profit as a share of assets under management has already dropped roughly 19 percent since 2018, with projections showing another 9 percent decline by 2030.

The crisis is structural, not temporary.

According to PwC’s analysis of 300 asset managers, institutional investors, and distributors, 89 percent of asset managers report profitability pressure over the past five years.

Almost three-fifths of institutional investors say they’ll replace a manager purely for cost reasons, with 41 percent likely and 16 percent very likely to make the switch.

Only one in four managers express confidence in their profitability strategy—a stark warning for pension funds relying on these firms to deliver stable returns.

The bright spot remains private markets.

According to PwC, they generate roughly four times as much profit per dollar of assets as traditional managers, and are projected to reach US$26.6tn by 2030, delivering over half of total industry revenues.

Alternative assets overall are expected to reach US$34tn.

Yet rising competition is putting pressure on fees and margins.

At the same time, regulatory reforms are democratising access.

The UK’s long-term asset funds, European long-term investment funds (ELTIF 2.0), and US interval funds are opening private markets to wider investor bases.

Singapore’s proposed long-term investment fund and Hong Kong’s pathway to listing alternative assets closed-end funds follow the same trend.

Retail investors and pension plans now access these new opportunities.

Tokenisation could accelerate that shift dramatically.

As per PwC, tokenised fund assets under management are projected to grow at a 41 percent compound annual growth rate, reaching US$715bn by 2030 from roughly US$90bn in 2024.

More than 40 percent of managers view tokenisation as their most important product innovation.

The industry’s cost-to-income ratio sits at around 68 percent—higher than many banks—meaning expenses consume more than two-thirds of every dollar earned.

Traditional cost-cutting has barely made a dent.

According to PwC, costs are projected to reach US$2.81m per US$1bn of assets by 2030, even as managers invest heavily in automation and AI to redesign processes.

Fee compression is relentless.

Intensifying competition places even alternative investment managers’ standout margins under pressure, reported by PwC, creating urgency for pension sponsors to scrutinise manager fees and efficiency.

The rapid advance of artificial intelligence and tokenisation is reshaping the sector.

According to PwC, roughly two-thirds (69 percent) of institutional investors signalled their likelihood to allocate capital to asset managers developing tech capabilities to offer enhanced products and services.

Processes that once took weeks—from investment analysis to regulatory reporting—can now be completed in seconds.

Yet the transformation is running up against a critical shortage.

Demand for AI and data specialists far exceeds supply, with wage premiums for top talent exceeding 50 percent in 2024, more than double the 25 percent differential from the previous year.