Wealth managers face “existential challenges” as global AUM fell to $115 trillion in 2022

The greatest decline in global assets under management in a decade will force 16 per cent of asset and wealth managers to either be acquired or to fail over the next five years.

That’s according to PwC’s 2023 Global Asset and Wealth Management Survey, which identified a 10 per cent decline in global AUM last year to $115.1 trillion, down from the 2021 high of $127.5 trillion.

It’s a decline that has been triggered by inflation, market volatility and rising interest rates in the post-Covid period, which has led to rising concerns among investors.

As a result of the changes, 73 per cent of the 250 asset managers surveyed by PwC said they are considering strategic consolidation with another asset manager in the coming months in order to gain market share and mitigate risks.

Over 90 per cent of those surveyed are already looking to harness technology, including AI, big data and blockchain, to enhance their investment performance.

"Existential challenges are sweeping the asset and wealth management industry against a backdrop of social, economic and geopolitical disruption,” said Olwyn Alexander, global asset and wealth management leader at PwC Ireland.

“The choice is simple—adapt to the new context or fail. Firms that effectively leverage technology such as generative AI and robo-advisors, build meaningful inroads to new and existing customers, diversify their recruitment, and deliver exceptional client experiences will be well-positioned to not only survive, but thrive."

There is hope on the horizon, however, as PwC predicts that global AUM will rebound by 2027 when it will reach $147.3 trillion.