Global assets under management at asset and wealth managers fell to $115.1 trillion in 2022 – nearly 10% below the 2021 high of $127.5 trillion – representing the greatest decline in a decade.

That’s according to PwC’s 2023 Global Asset and Wealth Management Survey.

The survey said the 10 largest asset managers are expected to control around half of mutual fund assets globally by 2027, up from 42.5% in 2020, with private markets to account for up to half of asset revenues by 2027, up from 37.6% in 2020.

The report said 73% of asset managers are considering a strategic consolidation with another asset manager.

About one in six (16%) asset and wealth managers globally are expected to be “swallowed up or fall by the wayside” by 2027, twice the historical rate of turnover.

The report, based on PwC’s latest industry projections and a survey of 250 asset managers and 250 institutional investors, paints the picture of an industry grappling with a set of challenges – digital transformation, shifting investor expectations, consolidation and “retailisation.”

As a result, 73% of asset managers “are considering a strategic consolidation with another asset manager in the coming months in order to gain access to new segments, build market share and mitigate risks.”

Firms are also turning to technology to transform, with more than 90% of asset managers already using disruptive technological tools — including big data, AI and blockchain — to enhance investment performance.

“Asset managers faced a tough year in 2022, with global assets under management (AUM) falling to US$115.1 trillion, nearly 10% below the 2021 high (US$127.5 trillion),” said the report.

“This represented the greatest decline in a decade. The survey finds that inflation, market volatility and interest rate movements are by far the biggest concerns for both investors and asset managers over the next 12 to 24 months.

“However, AUM are expected to rebound by 2027, reaching US$147.3 trillion (representing a compound annual growth rate (CAGR) of 5%).”

Olwyn Alexander, Global Asset & Wealth Management Leader, PwC Ireland, said: “Existential challenges are sweeping the asset and wealth management industry against a backdrop of social, economic and geopolitical disruption.

“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.”