Strategic and Tactical Cost Management in the Asset Management Industry

Abstract

The financial crisis that started in 2008 made the global asset management industry face challenges it has not seen in decades. The industry was accustomed to high margins and substantial profits (particularly in the years 2000–2007, due to the availability of excess liquidity). As the market climbed over the last 30 years, occasional dips notwithstanding, asset managers became used to the steady increases in their assets under management (AUM) and almost certain yearly profits in a relatively low risk environment. However, in the wake of the biggest downturn since the Great Depression, a slow recovery has left many firms struggling. Even in 2012/2013 the recovery seems stalled, as the crisis still lingers to a certain extent, the highly volatile environment and macroeconomic uncertainties (more particularly high unemployment rates in most of the world) still do not allow customers to build wealth which is crucial for the asset management industry to grow.