The asset management industry is in the midst of a significant transformation. Fee pressure, regulatory demands, and technological shifts are reshaping the landscape, while changing investor preferences are challenging many traditional business models.
In response, consolidation within the investment industry could accelerate through 2025, as groups pursue scale, efficiency, and fresh growth opportunities.
However, it is not just a story of scale for scale’s sake. The entities to emerge strongest from the current competitive landscape will likely be those able to differentiate offerings, whether through specialist investment expertise, superior client servicing, or technological innovation. Simply becoming bigger without a clear strategic purpose may not be enough to offset industry headwinds.
Therefore, we expect the period ahead for the industry to be defined by strategic realignments – such as the continued expansion into private markets, the intersection of asset management with insurance and wealth management, and the rise of specialist boutiques.
Private market challenges and opportunity
One of the most notable structural shifts in the asset management industry in recent years has been the rise of private markets. Institutional investors are increasingly looking for flexible capital deployment across both segments, while retail and high-net-worth (HNW) investors are demanding greater access to private market strategies. For asset managers, this is both a challenge and an opportunity.
Expanding into private markets through acquisitions offers a compelling growth avenue, but integrating private and public market capabilities is not straightforward. It requires a fundamental rethink of distribution models, client engagement strategies, and operational infrastructure.
But while investors are drawn to the prospect of higher returns from alternative managers, advisers are increasingly scrutinising net returns after fees, questioning whether these strategies truly deliver the promised value. This will be a factor to watch as we move through 2025.
Nevertheless, we expect to see further transactions in this space, particularly as larger asset managers seek to acquire private market specialists to complement their existing platforms. The ability to provide investors with a seamless, multi-asset-class investment proposition could become an increasingly important differentiator.
Expect industry convergence to continue
Another central theme shaping M&A activity is the deepening relationship between asset managers and insurers. Asset managers are recognising that insurance mandates provide a level of stability that is increasingly valuable in a volatile market environment. Insurers are also looking to scale their own in-house asset management capabilities.
The convergence between asset management and wealth management is another structural trend gaining momentum. Asset managers are increasingly looking to extend their reach into high-net-worth and ultra-high-net-worth investor segments, recognising the growing demand for sophisticated investment solutions beyond traditional public markets. Private market players, in particular, are keen to expand their wealth management distribution capabilities, given the increasing appetite among wealthy individuals for private equity, private credit, and alternative investment opportunities.
At the same time, technology is playing a key role in making asset and wealth managers more efficient, driving significant investment in the systems supporting middle and back-office functions. As groups increasingly adopt an outsourcing model, many are narrowing the focus to just performance and distribution, leaving operational infrastructure to third-party providers.
The firms able to succeed in the future could be those that can offer truly integrated wealth and asset management propositions, providing tailored investment solutions that span both liquid and illiquid markets. We expect to see continued deal activity as asset managers acquire wealth management platforms or form strategic partnerships to deepen their engagement with high-net-worth clients.
Both boutique spinouts and consolidation
Finally, we also expect a continuation of the long-term cycle of spinouts. The industry constantly experiences a steady stream of successful investment teams breaking away to establish independent boutiques. These firms are often highly specialised, focusing on high-conviction strategies where differentiation is key.
However, not all boutiques will thrive, particularly with rising operational costs and distribution complexities. This could lead to larger asset managers acquiring boutiques that have been unable to gain critical mass, especially those with specialist investment expertise in growth areas.
Together, these trends point to a rapidly evolving asset management M&A landscape. Scale remains essential, but it is no longer a standalone solution. The most successful firms could be those that can combine size with strategic focus, embracing diversification, alternative asset growth, and closer integration with insurance and wealth management. The next phase of M&A could be defined by firms that can navigate these shifts with clarity and purpose.
In an industry facing profound structural change, the ability to adapt will be the ultimate competitive advantage.
Hugh Elwes
Hugh Elwes is a Managing Director in Stephens’ London office and leads the Financial Services Group. Prior to joining Stephens in 2015, he was at Hawkpoint Partners for 12 years, where he was a managing director and head of the financial services practice. He started his career at Morgan Grenfell/Deutsche Bank where he was first an asset manager, then executive assistant to the chairman, Sir John Craven, and then worked in corporate finance for a total of 17 years, including four years in South Africa.
He has 30 years of investment banking experience, advising public and private companies on mergers, acquisitions, restructurings and fundraisings and has broad experience across the financial services sector. He particularly specialises in the sub-sectors of asset and wealth management, life assurance, general insurance, banking and fintech, and has international experience in Ireland, France, Germany, Holland, Scandinavia and South Africa.
