Just how saturated/mature is the Finance industry becoming? Any more room for growth?

Chimp scampi's picture
Rank: Orangutan | 289

A bit of an existential crisis question for the WSO community:

Sitting on the asset management side, it's becoming increasingly apparent that the Finance industry is very saturated. There are more hedge funds out there than you can imagine (and all of them sound the same with rocks, trees, and rivers as firm names). The standard 2/20 fee is starting to get squeezed as more and more investors are asking for fee breaks. So I'm curious as to how senior members of WSO are viewing this trend. Are you considering this to be a mature industry that's on its way to decline? Are the golden days long gone? What do you see in the next 30 years?

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Jun 6, 2018

I think this is a really good question. Someone probably has a better grasp than me on finance's history but my sense is that from the 80s to the financial crisis the financial service industry experienced tremendous growth (particularly IB, PE, asset mgmt, and S&T). Many trends supported this growth: the start of the PE industry, deregulation, market inefficiency, sercuritizations etc.

I think the PE industry is maturing, HFs performance has disappointed, automation has improved mkt/trading efficiency. There's no growth coming from securitizations. I am finding it hard to see what will drive growth going forward but I do think the industry has always come up with a new "hot thing" that could suddenly cause tremendous growth.

My guess is that as PE and HF returns continue to disappoint, those industries will become less favorable for employees on average. I think IB will be OK but PE deal volume does have an effect. I dont think S&T will turn around (except when a new hot product gets developed).

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