RESEARCH

PwC 2024 Asset & Wealth Management Report

80% of asset and wealth managers say AI will fuel revenue growth while ‘tech-as-a-service’ could see 12% boost to revenues by 2028

NYBE

November 24, 2024

PwC’s new Asset and Wealth Management Survey of asset managers and institutional investors—together with our 2028 market projections—shows how disruptive technologies are reshaping investor expectations, expanding the frontiers of innovation, and unlocking new, untapped markets.

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Almost three-fourths (73%) of asset and wealth management (AWM) organisations say AI is seen as the most transformational technology over the next 2-3 years
81% are contemplating strategic partnerships, consolidations, or mergers and acquisitions (M&A) to enhance technological capabilities and build an ‘extended tech ecosystem’
Global assets under management (AUM) projected by PwC to hit US$171 trillion by 2028 at a 5.9% compound annual growth rate (CAGR), with alternatives to grow quicker – at 6.7% CAGR, to reach $27.6 trillion by 2028
AWM organisations look to tokenisation to democratise finance: PwC expects tokenised investment funds to surge to over $317 billion in 2028, at a 51% CAGR
Skills in high demand: 73% of asset managers considering M&A see access to skilled expertise as the number one driver of deal-making over next 2-3 years, yet 30% say they lack relevant skills and talent

Four-fifths (80%) of asset and wealth management (AWM) organisations say disruptive technologies such as AI will fuel revenue growth, with those moving quickly to adopt ‘tech-as-a-service’ potentially seeing a 12% boost to revenues by 2028, according to PwC analysis.

PwC’s 2024 Asset & Wealth Management Report, released today, surveyed 264 asset managers and 257 institutional investors from across 28 countries and territories, and also finds that four-fifths (81%) are contemplating strategic partnerships, consolidations, or mergers and acquisitions in order to enhance technological capabilities and build an ‘extended tech ecosystem’ to innovate, expand into new markets, and democratise access to investment products ahead of a great wealth transfer.

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The report also finds that global AUM held by AWM organisations around the world is projected by PwC to hit US$171 trillion by 2028, with tokenised investment funds to surge at a CAGR of 51%.

Albertha Charles, Global Asset & Wealth Management Leader, PwC UK, said:

“Disruptive technologies such as AI are transforming the asset and wealth management industry and fuelling revenue growth, productivity and efficiency. Market players are subsequently looking to strategic consolidation and partnerships to build tech-driven ecosystems, break down silos in data management, and transform their service offerings ahead of a great wealth transfer that will see mass affluents and younger audiences play a greater role in shaping service demands. To emerge as leaders in this new digital-first market, AWM organisations must invest in their technological transformation while also ensuring they are re-skilling and upskilling their workforces with the necessary digital capabilities to remain competitive and innovative.” – Albertha Charles, Global Asset & Wealth Management Leader, PwC UK

Disruptive technologies will fuel AWM revenue growth

AWM organisations broadly see disruptive technologies such as AI as transformational, with almost three-fourths (73%) viewing it as the most transformative technology over the next two to three years. 80% say such technologies will fuel revenue growth, with 84% noting it will improve operational efficiency and 72% noting it will improve employee productivity. The provision of tech-as-a-service¹ by AMW organisations could deliver a 12% boost to revenues by 2028, according to PwC analysis.

While such technologies represent an opportunity to turbo-charge operations and access new markets, more than three-fifths (68%) say that they allocate less than one-sixth of their capital to innovative and potentially transformative technologies, with more than half (59%) of institutional investors noting such technologies could reduce their reliance on asset managers. This comes as only 20% of AWM organisations are currently using disruptive tech to enhance personalised investment advisory.

Global AUM to hit US$171 trillion by 2028, with alternatives leading the way

Under baseline projections, PwC research estimates global assets under management (AUM) held by asset and wealth managers (AWMs) is expected to hit US$171 trillion by 2028, reflecting a 5.9% CAGR, and up from 5% last year. Alternatives are projected to grow much faster – at a CAGR of 6.7%, to reach $27.6 trillion by 2028.

As AWM organisations look to new growth opportunities, tokenisation stands out, with tokenised products expected by PwC to increase from $40 billion to over $317 billion in 2028, representing a 51% CAGR. Tokenisation, or fractional ownership,² could expand market offerings by democratising finance and lowering premiums, with tokenisation planned to be offered notably by asset managers in private equity (53%), equity (46%), and hedge funds (44%). While alternatives represent a significant growth opportunity, less than one-fifth (18%) currently offer emerging asset classes such as digital assets as part of their offering – even as eight in ten that do offer such assets report a rise in inflows.

AWM looks to consolidation and tech ecosystems as talent remains top priority

Against this backdrop, 30% of asset managers say they are currently facing a lack of relevant skills and talent, while 73% of AWM organisations who are exploring M&A see access to skilled expertise as the number one driver for deal-making over the next 2-3 years. As AWM organisations contend with digital disruption and expanding their talent and product pools, more than four-fifths (81%) are contemplating strategic partnerships, consolidations, or mergers and acquisitions to build an extended tech ecosystem to drive growth.

Albertha Charles, Global Asset & Wealth Management Leader, PwC UK, concludes:

“The report highlights an urgent need for AWM organisations to rethink investment strategies. Long-term viability depends on a radical, fundamental and continuous reinvention of how organisations create and deliver value. Strategic partnerships and consolidation will play a vital role in building tech ecosystems that will facilitate a greater transfer of ideas and expertise. Smaller players will be able to bring their systems up to speed quickly and cost-effectively, while allowing larger players to access talent and insight pivotal to growth, particularly as new and emerging technologies such as AI transform the investment management landscape.” – Albertha Charles, Global Asset & Wealth Management Leader, PwC UK

Why act now?

Amid shifting investor demands and rapid technological progress, organisations need to pursue growth beyond their traditional business model for their long-term viability.

Accordingly, this report is structured around four broad action areas designed to harness the growth potential of disruptive technologies:

Innovate products, expand into private markets, engage mass-affluent clients, and break down silos in your data management.

Forge strategic partnerships within ecosystems, support smaller players, maximise ROI and manage third-party risks.

Accelerate upskilling in your workforce, harness tech-driven workforce value, and shape future roles and career paths.

Enhance visibility, bolster protection, and prioritise cybersecurity across your organisation.