A lot of consolidations, which could not be interpreted as a good sign. Many midsize companies like Oppenheim/Eaton are purchased. Any idea on what those people go if they left this industry? Does it mean that AM in general is shrinking? Given that there are less companies in this industry, I guess there will be more competition. Hard to tell what AM will look like thirty years later.
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Institutional point of view here - i'm not as fluent on retail, I'll leave others to that area.
In general - yes, it's a good place to get into and while there's enough cynical finance folks out there, if you truly do enjoy investing, markets, etc. there's plenty of roles for you. There's also plenty of institutions who really need investment advice, good managers and firms that can help them. What there isn't is a free flowing money spigot like there used to be - it's extremely competitive, and you can't simply manage a mediocre fund for years expecting inflows or minimal outflows. Too many firms, too many similar strategies... I don't need to go on about this, we all get what's going on. Consolidation is frankly the best route possible for many mid market firms - unless you own a niche market in something, or are an incredible actively managed out performer - it's going to be very tough to survive.
The other thing you are seeing are firms getting away from the 'everything to everyone' model of business - or, at the very least, concentrating on their core franchises where they either have scale, expertise or both. Think PNC dumping their funds to focus on SMA's/customized portfolios, Federated buying them to continue to build their fund business and diversify, in a small way, from their liquidity franchise. Speaking of that - liquidity franchises are under a ton of pressure with interest rates. There's not many who can survive without bank backing or some other diversified stream - which, not shockingly, you see folks closing them down or punting them. There's a lot of examples of this, but I think you are moving back towards a more stratified industry with the middle, as always, being squeezed out. Smaller, more specialized players will survive - massive firms will get bigger, etc. You also probably see more firms considering their product mix - how much they rely on funds vs. SMA's vs. commingled products and how they distribute it.
I'd also say this about the whole active vs. passive discussion - it's not going away, it's not dead and active management still has a place and can add value. EV is a good example of that with all their tax advantaged stuff they manage, alongside calvert, parametric for SMA's, etc. Sure - there will be less of them than before, but there's always someone trying to beat the market, someone who will and people with lots of money chasing both. Sorry. I know we love to talk about academic studies, it's like throwing a dart, etc. That's all fine, and I would agree there are many areas - large cap US equities as an example - where you probably can save a few dollars and just by the SPY or Russell. But institutions have spending needs and stakeholders need returns.
AM is changing - it always has. Working for an endowment, pension, non-profit, higher ed - there's lots of roles and opportunities outside of simply working at Morgan Stanley or wherever. Is it less lucrative than in the past? Certainly. Probably will be less seats than in the past and, certainly, there are plenty of structural changes - but I wouldn't off the cuff dissuade someone from coming into the industry if they really were interested in it. What I wouldn't do is jump into AM 'just for the money' at this point - as it's probably not where the easiest money is made right now if that's all you care about.
Great comments. I would add that Fixed Income AM is an interesting place to be. Most folks outside the industry don't realize that FI dwarfs the equity markets in actual asset base and number of securities. Like it's not even close. Where a lot of EQ has moved to passive indexing (certainly there are still good active managers), there is a ton of alpha generated in FI. I think that's mostly because the market is so big and there are so many instruments in which to uncover alpha opportunities.
The cool thing about AM is you get to be quite knowledgeable about macro economics / world events and assess how they effect the financial markets. Pretty interesting way to spend the day.
I also think there's a lot of value in aligning with an actual AM firm, not the AM arm of a bank, as culture and resources will always follow the bank. That's there core business. Too easy for them to just move on from the AM group when they get a good offer.
FI assets e.g. bonds are highly correlated and indeed relative value is a strategy well known. The fundamental side is indeed very interesting. But still surprised to hear that after so many years, still lots of space to do.
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