February 25, 2026-- After more than a decade of painful margin compression, asset managers around the world are making profitability their top strategic priority in 2026.
Asset management AUM is growing at a steady clip. However, that positive trend is little comfort to asset managers under pressure from the long-term reality of fee compression, which in turn is a function of fierce competition between managers, the rise of low-cost passive strategies and the general commoditization of investment “beta.”
Given these conditions, the quest for profitability has become the dominant trend in the industry this year. In a new report entitled Asset management 2026: A laser focus on profitability, Crisil Coalition Greenwich projects how the drive for profitability will play out in asset management marketing, sales, customer service and experience, product offerings, budgeting, cost control, and other key areas in the rest of 2026 and beyond.
Across the asset management industry, passive assets now represent nearly 30% of assets under management (AUM) but account for only 7% of revenues. Meanwhile, alternative assets, which make up just 18% of AUM, generate 57% of industry revenues. Given that reality, asset managers of all types will continue adding private markets to their offerings.
“This year, the growing emphasis on private market offerings will have a noticeable impact on the operations, sales, distribution, reporting, and client service functions of traditional multi-asset managers,” says Mark Buckley, Global Co-Head of Investment Management at Crisil Coalition Greenwich.
Balancing scale and differentiation
The ongoing drive for scale in the asset management industry can often conflict with another profit imperative: The need to communicate a differentiated value proposition that maintains pricing power and, in the best of cases, charges investors a premium.
“At a time when the most fundamental challenge facing asset managers is the commoditization of public markets, managers can derive real competitive benefits by communicating a value proposition that clearly differentiates them from rivals in ways that matter to institutional investors,” says Crisil Coalition Greenwich Global Co-Head of Investment Management, Parijat Banerjee.
Artificial intelligence (AI) and other innovations are giving managers the unprecedented ability to analyze the universe of prospects and clients to identify and target the best opportunities for sales. Asset managers are working to harness innovative technology and unique data analytics to increase the sophistication of their sales strategies and optimize results.
Enhancing the Client Experience
Until relatively recently, some institutional asset managers paid little attention to the concept of the client experience or the client journey. But facing steady fee and margin compression and fierce competition for assets, managers are now pulling every available lever to build and strengthen relationships with clients. That includes providing clients with the best possible experience at every stage of the relationship, starting with prospecting and sales.
Controlling Costs
Growth in higher-margin private markets won’t be enough to alleviate broader asset manager profitability pressures. Managers will also have to arrest, or at least slow, margin compression across their public-market product slates by improving their operating models and reducing costs.
“Asset managers’ success in managing costs while successfully investing and executing long-term growth strategies across all these areas will be a key determinant of the industry’s ability to slow and reverse margin compression in the years to come,” says Mark Buckley.