After Demonstrating Resilience Amid Q1 Havoc, Asset Managers Focus on Post-Health Crisis Recovery: Casey Quirk

NEW YORK and STAMFORD, Conn., May 28, 2020 /PRNewswire/ -- As governments worldwide took increasingly severe actions to halt the pandemic crisis, traditional publicly traded asset managers displayed financial resilience amid a steep selloff in global stock and bond markets. These findings are from an analysis of first quarter 2020 financial results by asset management strategy consultant Casey Quirk, a Deloitte business.

Median revenue at traditional publicly traded asset managers fell 6.7% in the three months ended March 31, 2020, while operating expense slid 3.9%, according to the Casey Quirk analysis of 19 firms with approximately $16 trillion assets under management (AUM). While AUM slumped 16.7% from Dec. 31, 2019, average AUM dipped only 2% as the severe market decline occurred late in March. Fees were stable, net flows declined less than 1%, and operating margins slipped 1.9% in the first quarter of 2020 for the median firm.

Comparable metrics to the year-earlier quarter were favorable as asset managers reaped the benefits of buoyant capital markets for most of the 12 months between March 2019 and March 2020. Median revenue at the publicly traded managers in the Casey Quirk universe rose 3.9%; operating expense fell 5%; operating margin climbed 5.5%; and average AUM gained 4.1% in the first quarter of 2020 compared with the first quarter of 2019.

"Investors reacted to the steep March selloff by moving to safer havens from riskier assets and that was reflected in the first-quarter results," said Amanda Walters, a principal at Casey Quirk. "With stocks and bonds on the rebound since March, a key indicator for asset manager financial results this year will be the market levels and investor flows for the remainder of 2020."      

"Despite market turbulence and uncertainty about the length and severity of the health crisis, publicly traded asset managers overall have weathered the near-term storm in decent shape, meeting client needs effectively after transitioning their employees to working from home," Walters said. "Yet anemic organic growth, rising costs, fee and margin pressure continue as significant industry challenges. Now that near-term financial concerns seem to be less acute, asset managers will prioritize longer-term business strategies."

These include: changing how the workforce operates; navigating in a world with more restrictive borders; potentially participating as M&A activity ramps up; and rationalizing and distributing investment strategies in a post-pandemic environment, she added.   

Casey Quirk, a business of Deloitte Consulting LLP, is a leading management consultancy that focuses solely on advising asset management firms. Casey Quirk was established in 2002 and acquired by Deloitte in June 2016. The organization has advised a majority of the 50 largest asset management organizations worldwide, including eight of the top 10. Casey Quirk provides senior leadership teams with broad business strategy reviews; investment positioning and strategy consulting; market opportunity evaluations; organizational design; ownership and incentive structuring; and transaction due diligence. For more information, please see the Casey Quirk website here.

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SOURCE Casey Quirk