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For asset managers these days, the biggest question is not how to boost fees but how to keep from cutting them. And that poses a huge problem for an industry that has struggled to cut costs during a period of booming markets and growth in assets under management.
According to a blue paper released Wednesday by Morgan Stanley and Oliver Wyman, industry costs have remained stagnant for the past five years. With fee pressure meaning less in revenue per dollar of assets under management, something’s going to have to give.
That’s especially true given the risk of what the authors call “disruption in the distribution layer.” Right now, fee pressures are mounting despite a distribution model for mutual funds that supports higher fee structures. But an “Amazon-type marketplace” could cut asset-management fees in half – and some of Wall Street’s biggest names could take a huge hit. Here’s our story.
Elsewhere in finance news:
- Billionaire investor John Paulson’s hedge fund is “rightsizing,” and a bunch of senior staff are leaving
- Here’s what investors say they want out of the next Goldman Sachs CEO – and where Lloyd Blankfein fell short
- JPMorgan “pulled a rug out from underneath” its competitors, and now they’re all feeling the pain
- A top fintech investor is partnering with a member of the World Bank to cash in on ‘a big opportunity’
- An Obama-era rule that could reshape the massive retirement savings industry may be heading to the Supreme Court
In retail news, Amazon just accidentally revealed its next plan for Whole Foods in a job posting. The US is at risk of becoming a “demographic time bomb” – and it may have contributed to Toys R Us’ demise. And Best Buy’s CEO says he uses five criteria to decide whether someone’s a leader.