Citi Investor Services and CREATE-Research have released findings from a new report, offering a comprehensive view of the structural shifts reshaping the global asset management industry. Comprising Custody, Fund Services and Execution Services, Citi Investor Services supports the entire investment lifecycle for its clients, including asset managers. The report draws upon insights from 269 asset managers across public and private markets from 26 markets, managing a total of US$37.7 trillion in Assets under Management. Respondents were polled from March to June 2025. Featuring also 30 interviews with senior executives from a cross-section of survey respondents, the report highlights how the industry is in the midst of a reset, and what asset managers perceive as winning business models for the future. Primary findings include:
- Ongoing industry challenges are coinciding with new opportunities: More than half of respondents cited new inflows going to mega players, the rise of passive funds, accelerating fee compression, and rising costs as key challenges.
- At the same time, new inter-linked growth drivers are emerging. 67% of respondents believe that the democratization of private markets will drive organic growth in their businesses over the next three years; 61% cited the advancement of AI and GenAI, and 59% said intergenerational wealth transfer from Baby Boomers will contribute to their growth.
- Small step, not big leaps, mark the rise of AI and Gen AI: While AI and GenAI are expected to reshape operating models, the adoption rate is moderate, with 41% of respondents at the implementation phase of AI, and 26% at the same phase for GenAI. That said, a majority of respondents believe that AI and Gen AI will significantly impact investment processes, although legacy systems and concerns around data quality, security and transparency remain key barriers.
- Winning business models will combine the best of old and new: Successful business models will blend traditional and new approaches with an emphasis on client-centricity, such as tech-assisted personalized portfolios, performance-based fees and outcome-oriented investing.
- Distribution channels and platforms, in particular, are expected to see a marked departure from the status quo. 67% of respondents selected democratized access to private markets as a key feature of a winning business model, and 56% cited diverse investment strategies at point of sale. Close to half or 49% called out Direct-to-Consumer access and channels.
- Outsourcing is linked with organic growth at lower costs: What started as a cost-cutting tactic is morphing into a strategic imperative with outsourcing creating tangible benefits on both the bottom line and organic growth. 59% of respondents noted the reduction of unit costs from outsourcing, and 57% acknowledged that it allows top executives to focus on core competencies.
- The report further suggests industry service providers will need to advance and develop state-of-the art capabilities and innovate across front, middle, and back-office functions as asset managers continue to outsource in these areas and prioritize core competencies in-house.
- Investors’ goals will not change but their means will: To deliver competitive differentiation and remain relevant in the changing landscape, asset managers, particularly small and medium-sized ones will evolve their delivery. 66% are focused on becoming their clients’ trusted advisors, and 61% are investing in talent and expertise. On distribution, partnering with asset gatherers was a top priority.