Global asset manager marriages.  Plus ça change, plus c'est la même chose

The more things change, the more they stay the same. The Schroders-Nuveen potential tie-up has caught the UK stock market and industry by surprise. The turnaround plan was viewed by the City to be working and Schroders at $823 billion AUM was deemed to have sufficient size and scale (in global top 30). However, the structural industry issues and challenges continue and the focus on the need for ever-increasing scale and growth is seen as being linked to survival in our connected world. 

Size, diversification, global footprint are all perennial issues that the asset management industry has been grappling with since I worked at Janus Capital - then a NYSE-listed asset manager, now Janus Henderson and since taken private in 2025. Then, the gyrations in the stock market would pre-empt a round of rumours as to who we would be merging with or be taken over by; a more likely scenario to create scale and product diversification. Then, in an instant, the ‘rising tide floats all boats’ of the post-Global Financial Crisis stock market rise helped to dispel and dissuade any suitors from what would have been seen as a cheap acquisition. 

However, the ongoing debate would always be: do we need size and scale to compete, create new products year on year, satisfy client need, as well as growing the global footprint? We settled on the attributes of a large well-resourced company (size and scale) and those of a boutique with a specialist investment offering. Then, this approach worked with a split between a growing US retail and international institutional footprint. 

Has the speed of technological change, client need, and access significantly changed the debate in the last year? Pre-tax operating margins for North American asset managers dropped to 32% in 2023 from 39% two years earlier, which chimes with flat revenues, increasing technological costs and the need to grow products in the active ETF and alternatives space. All these are structural, not cyclical, themes and increased AUM figures can often flatter asset manager numbers due to rising markets and obscure the real issues and shifting client needs. 

According to Morgan Stanley, consolidation among asset and wealth managers is inevitable and could result in more than 1,500 deals in the industry by 2029 with those managing at least $1 billion and reduce the number of firms by 20%. 

This might seem an exaggerated figure and does appear at odds with growth in AUM, which is expected to rise from $140 trillion now to $200 trillion by 2030 - a growth rate of 6.2%, with private markets growth providing over 50% of revenues. 

At a more micro level, for a Schroders takeover, the first initiative will be to the speed of integration. Running a business with a twin-track operational plan – business as usual while also executing synergies and combining systems - can cause client confusion and often inertia, impeding growth and causing reputational issues that didn’t previously exist. 

Reputation and repositioning will be to the fore. The key elements of a successful acquisition will always be judged on these core elements. Will a takeover make the company stronger from an audience and client perspective? Has the communication of the takeover been understood, and has culture been aligned? Will the strategy and operational plans work? Who is to say, though the saying “culture eats strategy for breakfast” does spring to mind.