Report warns performance alone no longer enough as scale, tech, and access drive winners
The global asset management industry is entering a more competitive and uneven phase, with firms under mounting pressure to find new sources of growth beyond rising markets.
Assets under management climbed to $147 trillion in 2025, up 11% year over year, but the bulk of that expansion came from market gains rather than new investor money, according to new research from Boston Consulting Group. More than 80% of industry revenue growth was driven by market performance, underscoring a growing reliance on external conditions that are no longer guaranteed.
The report says that for more than a decade, rising markets did most of the work; as assets grew, revenues followed. But this dynamic will no longer carry the industry. That shift is forcing firms to rethink how they compete, as growth becomes harder to capture and increasingly concentrated among a smaller group of players.
“Asset management is entering a new competitive era,” said Renaud Fages, managing director and partner at BCG and coauthor of the report. “Performance alone is no longer enough. Firms must compete on distribution, operating model, and their ability to scale technology, particularly AI, to capture growth.”
Growth narrows as flows concentrate
The report finds that while assets have expanded significantly over the past decade, the benefits are not evenly shared. Growth is increasingly flowing to firms with scale and strong distribution capabilities, particularly in passive strategies and private markets.
In US passive funds, the top ten providers have captured more than 90% of net inflows over the past decade, while private capital is also concentrating among fewer, larger managers.
At the same time, retail investors are playing a larger role, accounting for 61% of global asset growth between 2020 and 2025, while geographic expansion is shifting toward faster-growing regions such as Asia-Pacific.
Despite this growth, profitability has stalled. Industry margins have remained around 30% for years, as rising costs—particularly for technology—and ongoing fee pressure offset the benefits of scale.
Distribution overtakes performance as key advantage
As product differentiation erodes, the report highlights a decisive shift toward distribution as the primary driver of success.
Control over client access, whether through platforms, advisors, or institutional relationships, is becoming critical, especially as shelf space tightens and competition intensifies.
“Distribution now defines who wins,” said Johannes Burkhardt, managing director and partner at BCG and coauthor of the report. “Firms that secure access to capital through platforms and partnerships will have a structural advantage over those that do not.”
This shift is also accelerating convergence between asset and wealth management, as firms move closer to end investors in an effort to secure flows and deepen relationships.
AI and tokenization reshape the playing field
Technology, particularly AI, is emerging as a central force in redefining competition. BCG estimates that firms could reduce costs by 25% to 35% over the next three to five years while significantly expanding research and client coverage.
AI is also expected to compress traditional advantages such as scale and information access, allowing firms to grow without proportional increases in headcount.
However, most asset managers remain in early stages of adoption and risk falling behind more advanced competitors.
At the same time, tokenization and digital assets are opening new avenues for product design and distribution. The value of tokenized real-world assets could reach $14 trillion by 2030 and $55 trillion by 2035, according to BCG, signaling a potential shift in how investments are structured and accessed.
A more complex path to growth
With market-driven gains giving way to competition-driven growth, firms face a more challenging environment where capturing net inflows is critical.
“The industry’s growth model is changing fundamentally,” said Fages. “Firms that adapt to this new reality will capture a disproportionate share of future growth.”
The report concludes that success will depend on firms’ ability to align with shifting capital flows, build scalable distribution platforms, and fully integrate AI into their operating models—marking a significant departure from the industry’s past reliance on market momentum.
