Is it an Oligopoly? 150 People Control UK Funds

Many asset managers are in danger of going out of business in the UK because of the extremely limited amount of space of the distribution channel. Currently, around 150 people control the bulk of funds that flow throughout the industry, and their mentality is that their game is a zero sum, winner take it all. Deloitte is the institution that conducted the study finding that the number of true gatekeepers of asset management funds in the UK is falling.

These gatekeepers are using their power in order to consolidate the industry. Over 90% of funds in the UK last year went to only ten funds. Not only that, but these managers are putting pressure on their competition to cut back on their fee structure, providing much less room for profit for the rest. Other firms have actually conducted studies that show over half of the current asset funds in place now are likely set for extinction unless they are able to adapt themselves to the current investment landscape. Cofunds, Fidelity, Skandia and Standard Life have been able to consolidate £400bn in assets under the noses of regulators as well as competition, and it may be too late for many of the companies that let it happen.There are many opportunities that smaller asset management companies have for advancement. The new customers are younger and have less expendable income; however, they are just as ready to invest and hold money in an asset company. There are also many opportunities that are there for overseas investors to get into the First World market. The older markets do not have to move because the money that is more than enough to sustain that market for many years, say the companies who conducted the studies that noted the consolidation of the industry. This will lead to a definite stratification of the market over the course of the next few years; however, there will not be less money coming through the industry as a whole. This is good news for all asset managers who are able to stay within the industry, because jobs are being consolidated as well.

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