The Future of the U.S. Asset Management Industry

The U.S. asset management industry is undergoing revolutionary change as a result of the Internet revolution. Power is shifting from large institutions to private investors, who are becoming reticent to pay mutual fund managers to underperform the indices. Today's individual investor is demanding the same personalization that has been common to institutional investors, and they are paying less for that privilege. For example, like institutions, individual investors can now choose their manager from a group of highly successful managers. They have access to powerful new portfolio management tools and can purchase large volumes of shares at a minimal cost. Meanwhile, asset managers are coming under attack from less expensive alternatives. These competitive online mutual fund providers allow individuals to pay low fees for many of the services previously offered only to large institutional investors. As a result fund managers will need to improve their performance and reduce their fees if they are to compete in the long-term with the new online providers.