Asset and wealth management industry braces for growth amid profitability challenges and tech-driven disruption

The asset and wealth management sector is poised for substantial growth in assets under management (AUM) over the coming decade, but this expansion comes with mounting profit pressures and strategic challenges, according to the latest comprehensive review by PwC.

PwC’s 2025 ‘Asset and Wealth Management Revolution’ report projects that the global funds industry will grow from approximately US$140 trillion at the end of 2023 to over US$200 trillion by 2030. This surge is accompanied by an increase in total fund revenues from US$611 billion currently to nearly US$843 billion by 2030. While such figures traditionally suggest a prosperous environment for fund managers, PwC flags a structural decline in profitability. Margins, measured as profit per billion dollars of AUM, have already dropped by about 19% since 2018 and are expected to shrink by a further 9% by 2030, falling to just over US$1 million per US$1 billion invested, a notable decline from a 2021 peak of US$1.7 million.

This erosion of margins, evident across nearly 90% of asset managers surveyed globally, is described as “structural rather than cyclical,” with a majority of managers expressing low confidence in reversing this trend. Only one in four fund managers reported being very confident in their profitability strategies, underscoring the significant headwinds facing the industry.

Cost efficiencies traditionally used to buffer profit pressure may only temporarily delay decline, with PwC emphasising that lasting competitiveness will rely heavily on technological innovation and strategic market positioning. Artificial intelligence (AI), blockchain-driven asset tokenisation, and digital transformation are identified as critical tools for growth. In fact, PwC’s 2024 report highlights that 80% of asset and wealth management organisations view disruptive technologies like AI as vital drivers of future revenue, with 81% actively pursuing partnerships, consolidations, or mergers to build enhanced technological ecosystems.

The asset landscape itself is evolving, with private markets becoming an increasingly dominant force. PwC forecasts that revenues from private market funds, already delivering margins approximately four times higher than traditional funds, will constitute more than half of the global asset management revenue by 2030, overtaking actively managed traditional funds within the next few years. Tokenised fund assets are also expected to escalate dramatically, soaring from US$90 billion in 2024 to an estimated US$715 billion in 2030, reflecting a strong trend toward the retailisation of traditionally private asset classes.

Further segmentation within the sector reveals that large “private-to-public hypermarkets,” firms combining multi-asset manufacturing and distribution, are likely to command almost half of all fund revenues by 2030. Smaller niche providers, “solutions platforms,” and low-cost providers will share most of the remainder. Importantly, distribution is increasingly consolidated within a few dominant third-party platforms, whose privileged access to models and mandates is becoming critical for scaling and margin preservation.

While passive index funds continue to attract significant inflows, they represent only about 5% of sector revenues today, with minimal increase expected by 2030. In contrast, active management, including alternatives such as private equity, real assets, and private debt, continues to grow in both absolute and relative terms, supported by demographic trends and shifting retirement savings responsibilities. Regionally, developing markets, particularly in Latin America and Asia-Pacific, are expected to experience the fastest growth, further diversifying the global wealth base.

Despite the optimistic growth trajectories, with PwC modelling a range of global fund industry sizes from US$175 trillion to over US$215 trillion by 2030, the major challenge remains sustaining profit margins. Industry players widely acknowledge the urgent need to rewire their operational models to leverage innovation more effectively. According to Albertha Charles, PwC UK’s global head of asset and wealth management, success in the future will hinge on managers’ ability to build digital ecosystems that deliver personalised and efficient services to a broader and more diverse investor base.

The industry’s strategic responses include embracing digital tools, forming technology partnerships, and considerable focus on talent acquisition, although a significant skills gap persists. About 30% of firms report inadequate in-house expertise to fully capitalise on emerging technologies, intensifying the sector’s race to attract and develop specialised talent.

In summary, while the asset and wealth management industry faces an impending explosion of assets and revenues, the landscape is becoming more complex and competitive. Profit compression suggests that simply growing assets will not guarantee success. Instead, firms must innovate rapidly, operationalise advanced technologies like AI, and strategically tailor their offerings to secure resilience and growth in an evolving market.