Quilter CEO Steven Levin has issued a stark warning to asset managers: cut fees or risk being swallowed up in a wave of industry consolidation. In an interview, Levin argued that the traditional active management model is under severe pressure from cheaper passive alternatives and demanding clients.
Fee Pressure Intensifies
Levin noted that the asset management industry is facing a "fee compression" that will only accelerate. He pointed out that many firms still charge high fees for mediocre performance, which is unsustainable. According to Levin, Quilter has already reduced fees on its own funds and expects others to follow suit.
Passive Funds Gaining Ground
The shift toward passive investing is a key driver. Levin highlighted that exchange-traded funds (ETFs) and index trackers now account for a growing share of assets under management. He said, "Clients are increasingly questioning the value of active management. If you can't deliver alpha, you shouldn't charge for it."
Consolidation Inevitable
Levin predicted that the industry will see more mergers and acquisitions as smaller firms struggle to compete. "There are too many asset managers chasing too few assets," he said. "Consolidation is inevitable. The firms that survive will be those with scale, low costs, and strong performance."
Quilter's Strategy
Quilter, which manages around £100 billion, has been adapting by expanding its multi-asset and passive offerings. Levin emphasized that the company is focused on keeping costs low for clients. He added, "We are not immune to these trends. We have to evolve or face the same fate."
Impact on Advisers
The changes also affect financial advisers, who are increasingly using low-cost funds. Levin said that advisers are becoming more fee-conscious and expect better value from asset managers. "The days of high fees and low transparency are over," he concluded.
