The £9.1 trillion reality check: Why asset managers are quietly abandoning the AUM growth model

The UK asset management industry manages £9.1 trillion in assets. But this impressive figure masks an uncomfortable truth. For the first time in decades, simply growing assets under management isn't delivering the results many firms expected. 

The maths should be straightforward: gather more assets, generate more revenue, achieve sustainable growth. But 2024 exposed the fatal flaw in this logic, and smart asset managers are quietly changing course. 

When more assets mean less profit 

Global AUM reached a record $128 trillion last year, yet the industry's revenue story tells a complex story. That $58 trillion in revenue growth was overwhelmingly driven by market performance (70%) rather than genuine net inflows (30%). More troubling still, half of the revenue increase was immediately offset by clients shifting to lower-cost products and ongoing fee pressure. 

It's growth, but not the kind that builds sustainable businesses. 

Our research with 100 senior UK asset managers confirms what many suspected: asset growth as a primary concern has dropped from 47% of firms in 2024 to just 33% this year. The industry has quietly acknowledged that chasing AUM without addressing fundamental operational realities is a losing game. 

The operational reality 

What's actually keeping asset managers awake at night? The unglamorous stuff that doesn't make headlines but determines whether firms survive the next five years. 

Manual processes that take three days when clients expect same-day responses. Data reconciliation that requires two people to spend half their week checking numbers that should flow automatically. Fund launches that take six months because information sits in five different systems that don't talk to each other. 

These aren't just technology problems, they're business problems that technology could solve, if firms approached them systematically.  

The asset managers performing best aren't necessarily the ones with the most sophisticated investment strategies. They're the ones who can onboard a new client in days rather than weeks, launch products while competitors are still navigating compliance requirements and respond to distributor requests without scrambling to pull data from multiple sources. 

The fee compression trap 

Fee compression likely isn't going away. Clients have become ruthless about costs, regulations demand transparent pricing and passive alternatives are eating market share. 

The traditional response of gathering more assets to compensate for lower margins just creates a vicious cycle. More assets mean more operational complexity, higher costs per pound managed and even greater pressure on already-thin margins.  

Some firms have quietly broken this cycle. They're not competing on price alone because they've made their operations efficient enough to maintain profitability even as fees decline. They're finding that operational improvements often matter more than investment performance in winning and retaining clients.  

Resilience is taking the place of raw scale. 

What actually drives growth  

The asset managers growing profitably aren't ignoring AUM but they are approaching it differently. Instead of asking "How do we gather more assets?" they're asking "How do we build operations that scale profitably?" 

Instead of viewing operations as a cost centre that supports asset gathering, they've made operational excellence the foundation of their growth strategy. This means solving practical problems that every asset manager faces: getting accurate data faster, reducing manual work that adds no value, and building processes that scale without requiring proportional increases in headcount. 

This shift is evident in their investment priorities. More than half (53%) now prioritise investment in data management and governance, up from 48% in 2024. Another 50% are strengthening data architecture and integration to eliminate the operational bottlenecks that constrain growth. 

The bottom line for efficiency-enabled growth 

There’s a reason why 61% of senior asset managers now look to streamline operations and cost structures as their primary strategy for addressing growth challenges. It’s not cost-cutting for its own sake. Rather, it's building the foundation for sustainable competitive advantage. 

While the industry talks about digital transformation, senior asset managers are making targeted investments in areas that directly impact their ability to serve clients and launch products efficiently.  

They're not trying to revolutionise everything simultaneously. They're focusing on the specific operational bottlenecks that prevent them from responding to market opportunities quickly and cost-effectively. 

Conclusion 

The £9.1 trillion UK asset management industry is quietly recalibrating around a simple realisation: operational efficiency isn't just a back-office concern. 

For firms willing to see efficiency as a growth-enabler, the prize is substantial: profitable growth that scales with operational efficiency.  

Our 2025 Asset Managers Report provides detailed analysis of how leading firms are addressing operational challenges and investment priorities. Access comprehensive benchmarking data and strategic insights from 100 senior UK asset managers, including the specific areas they're prioritising for investment, and the operational strategies that are proving most effective. Download the report below: