Fee pressure easing for asset managers in Europe’s insurance arena

Written by Adam Cadle

17/03/2023

Fee pressure for asset managers operating in the European general account insurance market is easing, according to Cerulli’s latest research, with just 10% of asset managers seeing decreasing fees as a significant obstacle to growing their business, compared to 42% in the previous year.

“In the UK, only 5% of asset managers reported high fee pressure, down from 25% the previous year,” Justina Deveikyte, director, institutional asset management research at Cerulli, said. “In Switzerland it was 7%, down from 21%.”

The research also indicated that fee pressure in the French insurance asset management industry has started to decline: in 2022, 41% reported facing either very high or high fee pressure from insurers in France, compared to 50% in 2021.

“Asset managers in Italy face slightly lower fee pressure than those in other insurance markets, mainly because Italian insurers typically outsource only niche asset classes where prices are already higher; in addition, they tend to choose fund vehicles instead of mandates,” Deveikyte noted.

In terms of asset classes, emerging market equity and direct lending/senior debt look set to enjoy most relief when it comes to fee pressure, with no manager respondents expecting a significant increase in fee pressure and fewer than half expecting a slight increase.

Fee pressure does remain a challenge in some areas however. Fee pressure is most intense in Denmark, Sweden and the Netherlands.

“Fees are linked to what asset managers are offering: in private markets, for example, the complexity and sophistication of the products provide space for higher fees,” Deveikyte said. “Asset managers should look to alleviate fee pressure by focusing on asset classes that offer higher-margin business. Alternatives, private assets, emerging market equity, and, to some extent, emerging market debt are still able to command higher fees due to the sophistication of the products involved.”

Related Articles