Bull Market: Asset manager €46.9bn profits overtake pre-crisis peak

Since the global financial crisis of 2008, the asset management industry has made a marked rebound. In the wake of uncertainty, global asset management has recovered. With operating profits exceeding 24% at €46.9bn in the past cycle, asset management firm earnings have been outperforming their 2007 record of €40.8bn. With market performance returning to pre-crisis levels, the outlook is far more positive than it has been. The fact that profit levels are 18% higher than pre-crisis levels at €26.9bn, rising 30% in the past year, signals that emerging markets are continuing to drive industrial and technological economies of scale. Those economies now resting at about 55% at €7.9bn reflect gains in spite of some slowdown in the past few quarters.

The European markets have had some steady gains, yet show operating profits still near 6% lower than 2007 levels. Operating profits in 2013 stood at about €12.1bn reflecting an overall increase of 24% for the year. Financial analysts suggest that it is highly probable that those gains will exceed 2007 levels in the last half of 2014. Global asset management firms are reporting similar performance, regaining ground lost in market share of financial assets. Rising from 2012 which stood at 23.6% to 25.1% in the past year, amounts to an approximate €46.4tn increase; some of which has been at the expense of life insurance, pension accounts, and depository funds.

Retail investors also saw gains in Western Europe as a result of a net €130bn in mutual fund investments in 2013. This is up from the reported €45bn in 2012, and mean levels prior to the global financial crisis. Total costs for global asset management rose by 6% industry-wide in 2013. Personnel costs which have increased from €9bn to €12bn in the past two years are said to be partly the reason. Intense competition in hiring has promoted the upswing in wages in the sector. The fact that asset managers typically hire via known networks, has added value to compensation packages. The result is that firms have been forced to outspend competitors in order to secure talent. European Commission regulatory reforms proposing limits to compensation and bonuses in the sector is under consideration.

Regulatory scrutiny, it has been argued, is a substantial threat to the financial industry’s future. Perception of professional worth precede hiring. The United Kingdom’s Financial Conduct Authority (FCA) has responded with warning, levying £408m in fines on asset managers in in 2013. This is more than half of the total £752m levied in over a decade.


2 responses to “Bull Market: Asset manager €46.9bn profits overtake pre-crisis peak

  1. Pingback: UK Asset Management Salaries down 20%, really? | Alpha Banker·

  2. Pingback: Record Highs in the World Market | Alpha Banker·

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