THE BEST OF TIMES, THE WORST OF TIMES - NORTH AMERICAN ASSET MANAGEMENT - GLOBAL WEALTH & ASSET MANAGEMENT PRACTICE - MCKINSEY
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The Best of Times, The Worst of Times North American Asset Management Global Wealth & Asset Management Practice
Cover image: Untitled, 1963, by Alexander Calder © 2017 Calder Foundation, New York / Artists Rights Society (ARS), New York
Contents
Introduction 2
Introduction
State of the industry:
State of the industry:
A continuing phase shift
4
A continuing phase shift
Mind the gap: A widening performa
Mind the gap: A widening performance spread
and an impending shakeout
10
spread and an impending shakeou
An inconvenient truth: The great
An inconvenient truth:
The great redistribution of value
16
redistribution of value
A tale of two cities 30
A tale of two cities2 The Best of Times, The Worst of Times: North American Asset Management
Introduction
Introduction
Despite buoyant capital markets and an unexpected regu-
latory pause, a pall fell over the North American asset man-
agement industry in 2016 as flows turned negative, a
growing number of active managers underperformed their
benchmarks, margins compressed, and aggregate industry
profits retreated. Although 2017 has shown indications of
an uptick in industry performance, a mood of pessimism
continues to prevail. The inconvenient truth for asset man-
agers is that strong secular trends—a moderation in long-
term investment returns, an aging demographic shifting
from an accumulation to withdrawal phase, the runoff of
large pension funds, and pricing pressure driven by passive
investments—are now firmly in control and will weigh on
the industry for the next 20 years. Welcome to the new ab-
normal of asset management.The Best of Times, The Worst of Times: North American Asset Management 3
These secular trends are widening the gap ence of portfolio construction and the un-
between top and bottom performers. Today, derlying drivers of product demand.
the difference in profitability between the
This is not all bad news for asset managers.
top- and bottom-quartile managers stands
A rising bar for the industry is causing under-
at a remarkable 42 percentage points. For
performing rivals to fall by the wayside. A
the first time since the depths of the finan-
shift in investment paradigms is opening
cial crisis in 2009, more funds closed or
clients’ minds to new innovations that cut
merged than were launched last year. Inter-
across asset classes. This in turn is leading
estingly, and counter to some conventional
to a radical shift in how clients invest—for
wisdom that predicts an inexorable shift to-
example, private equity now increasingly
wards scale, our research finds winners and
competes directly with public equities and
losers across institutions of all sizes. The
credit with fixed income. Moreover, technol-
greatest predictor of success has not been
ogy creates an unprecedented opportunity
size, but focused execution to capture
to improve both client experience and man-
share in the most important pools of value
ager efficiency, which stands to create new
in the industry. Many in the industry now
sources of competitive advantage for firms
predict, and we believe correctly, that these
that embrace technology in the right ways.
factors will drive a wave of consolidation.
But consolidation will take a different form In short, asset managers with the right op-
than many assume—instead of mega deals erating models and value propositions
aimed at creating scale efficiencies, large have a once-in-a-generation opportunity to
and medium-sized firms alike will make tar- drastically improve their competitive posi-
geted acquisitions to add capabilities, and tion, capturing additional clients, assets,
struggling managers of all sizes will shutter and market share. For North American
due to their inability to meet the industry’s asset managers, it is truly the best of
rising bar. times and the worst of times.
These secular trends are not only affecting This report draws on McKinsey’s ongoing re-
the industry’s economics, they are con- search into the asset management industry,
tributing to a fundamental change to how including insights from McKinsey’s 17th
value is distributed both across and within Global Asset Management Survey, which
major asset classes. This redistribution has gathers benchmarking data from more than
been steadily under way for a decade but 300 asset managers—more than 100 from
is near a tipping point as two investing North America, representing $30 trillion (80
trends take root with clients: risk-based percent) of assets under management
asset allocation that cuts across asset (AUM)—as well as McKinsey’s annual Global
classes and factor investing that identifies Growth Cube data, which provides a granu-
additional drivers of value beyond the mar- lar breakdown of historical and forward-
ket capitalization-weighted indices of looking AUM, revenue, and net flow data for
“standard” passive investing. These innova- 42 regions and countries, 9 client segments,
tions are reinventing the very art and sci- 15 asset classes, and 5 product vehicles.4 The Best of Times, The Worst of Times: North American Asset Management
State of the i
State of the industry:
A continuing phase
shift
A continuing
After a rough stretch in 2015, the macroeconomic and mar-
ket environment picked up steam in 2016 and into 2017. An
extended period of political and regulatory uncertainty came
to somewhat of a pause after the US presidential election,
corporate profits continued on an upward trajectory, volatility
declined, and the equity markets powered ahead, with the
S&P 500 delivering 10-percent returns for 2016 and over 16
percent by the end of October 2017. But while global AUM
hit a record high of $75.8 trillion by the end of 2016, the in-
dustry’s organic growth decelerated to 1.5 percent (from a
postcrisis high of 3.6 percent in 2015). This deceleration was
most pronounced in North America, the only major region
where flows turned slightly negative (-0.4 percent), with out-
flows of $161 billion despite rising markets (Exhibit 1). The
mood among professional ranks was distinctly gloomy.The Best of Times, The Worst of Times: North American Asset Management 5
n
This was a big change from the first 2016 was the first time in 20 years that
decade of the century, particularly the re- industry revenues and markets were out
covery from the global financial crisis, of sync; ominously, profit margins de-
when the North American asset manage- clined for the second consecutive year
ment industry enjoyed a rosy period of even as markets powered ahead, char-
AUM growth driven by rising markets and acterized by a level of volatility that
organic inflows. It was a rising tide that caused investors to stay on the sidelines
lifted all boats. (Exhibit 2, page 6).
Over the past 18 months, a shift has oc- Several familiar themes drove these re-
curred, ushering in a “new abnormal” for sults. Demographic shifts definitely played
the industry where neither growth nor a role, as millions of baby boomers went
profitability can be taken for granted. from accumulating savings for retirement
North America remains the world’s to repositioning their portfolios for retire-
largest asset management market by far, ment spending. Institutional market out-
accounting for about half of total AUM, flows continued gradually, as unfunded
but from 2012 to 2016 it accounted for defined benefit liabilities continued to
only about 20 percent of flows. And grow (a $63 billion increase by public
Exhibit 1
In 2016, North America1 AUM, 2007-16 year-end
$ trillion
Market performance
Net flows
North America
37.8
experienced 0.5 2.3
0.3
net outflows for -0.2 -0.2
0.4 2.0
the first time
since 2011 0
3.7
-0.2 2.2
26.9 0
2.4 0.2
-4.9
3.2 -0.6
0
Year-end 2008 2009 2010 2011 2012 2013 2014 2015 2016 Year-end
2007 AUM 2016 AUM
Net flows as
percentage of 0.0 -0.1 -2.5 -0.8 0.1 1.2 0.9 1.5 -0.5
beginning-of-year
AUM
1
United States and Canada
Source: McKinsey Performance Lens Global Growth Cube6 The Best of Times, The Worst of Times: North American Asset Management
Exhibit 2
Profit margins in Net revenues/AUM
Basis points
North American
asset 39 38
35 36 37 38 39 38 37 37
management
Operating profit
declined for the Percent of revenues
second year 31 31
33
30
32 33
31 30
28 29
28
running 27
25 26
22
27
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Operating costs/AUM
Basis points
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
27 27 28 27
26 26 26 25 26 26
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Source: McKinsey Performance Lens Global Asset Management Survey
Exhibit 3
The pullback North America net flow growth and revenue margin by asset class1
from active was Passive Active Alternatives
Bubble size = 2016 AUM
equities focused
150
Public market
2016 revenue margin (basis points)
145
Active alternatives
60
55 specialty
equity Active specialty
50 Multi-asset fixed income
45
40
35 Active
30 core Active core
equity fixed income
25
Passive Passive
20
equity fixed
15 Passive
Passive income
10 Money other
multi-asset
5 market
0
-13 -12 -11 -10 -9 -8 -7 -6 -5 -4 -3 -2 -1 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14
2016 net flows (percent)
1
Active core equity includes US large cap and yield/income equity; active core fixed income includes core, core plus, and municipal bonds; active specialty equity includes foreign,
global, EM and US small/mid-cap; active specialty fixed income includes global, EM, high yield, TIPS, and unconstrained
Source: 2016 McKinsey Performance Lens Global Asset Management Survey and Global Growth CubeThe Best of Times, The Worst of Times: North American Asset Management 7
Exhibit 4
Pricing pressure Percentage change in revenue margin, US asset managers, 2010-16
continued, 2010-13
but was
concentrated -1
-5
-6
-10
in passive -11
-14
-12
-21
2013-16 15
3 1
0
-5 -6
-14
-27
Overall Passive Passive Core Specialty Core fixed Specialty Multi-asset
equity fixed equity equity income fixed
income income
Source: Strategic Insight Simfund MF
plans in 2016) and more plans were siderable; over the past decade, passive
frozen and sponsors (particularly corpo- equities have taken in $1.4 trillion of flows
rate ones) considered derisking measures, while active equities shed $1.1 trillion.
and in some cases wholesale pension risk
Although pricing pressure continued in
transfer arrangements. Political and
2016, it was slightly less intense than in
macroeconomic uncertainty caused in-
recent years (Exhibit 4). From 2013 to
vestors to stay on the sidelines.
2016, revenue margins for mutual funds
dropped a weighted average of 5 percent
Ongoing shifts in product and compared to a decline of 11 percent be-
pricing tween 2010 and 2013. This slight moder-
In 2016, the continued shift towards pas- ation in pressure was caused by the
sive investing was broad based, and concentration of pricing cuts in already
reached a new high-water mark, particu- low-priced passive categories as a num-
larly in equities (Exhibit 3). Specialty fixed ber of major providers made aggressive
income, multi-asset, and private markets moves to gain share. Also mitigating pric-
were the only active categories that ing pressure was a shift in favor of some
gained share in 2016. The cumulative im- higher-margin products (e.g., towards in-
pact of the product shifts has been con- ternational equities in the core equity cat-8 The Best of Times, The Worst of Times: North American Asset Management
Exhibit 5
Costs continued Estimated total North American industry costs by function,
traditional asset management industry only (excludes alternatives AUM) CAGR
to grow, with $ billion 2007-16
Percent
the highest 83 3
80
percentage 76
71 16 17 6
increases in 67
14
15
100 = 62
distribution, Sales and 10 14
marketing
O&T, and legal/ 30
30 30 2
Investment 29
compliance/risk management 26 27
Operations and
technology 15 17 6
13 14
Legal, compliance 9 1 12 3 3 3
2 3 8
and risk
Management, 14 16 16 1
15 12 13
administration
and other 2007 2012 2013 2014 2015 2016
Cost/AUM
26 27 26 25 26 26
Basis points
Source: McKinsey Performance Lens Global Growth Cube; McKinsey Performance Lens Global Benchmarking Survey
egory). Specialty fixed income, for exam- that had not found traction with clients.
ple, was the biggest winner, boosting The result was a proliferation of “orphan
revenue margins by a healthy 15 percent funds” that created both operational
from 2013 to 2016. complexity and a crowded field of funds
chasing the same flows. Last year
Product proliferation: Some early marked a turning point. For the first time
signs of a turning tide since 2009, asset managers focused on
rationalizing their product portfolios, re-
Also notable in 2016 was the reversal of
sulting in 166 more funds being closed or
the product proliferation that took root
merged than opened.
during the industry’s postcrisis recovery.
As we pointed out in our previous report,1 But we are in the early stages of this cull.
the industry embarked on a wave of In the US market alone, there are more
product growth over the past five years in than 11,000 funds—roughly 50 percent
response to client demands for new more than all the stock market listings for
types of exposures, particularly multi- individual securities. In an age when retail
asset strategies, smart beta, and income intermediaries and institutional clients
solutions. Where the industry has been alike are gravitating towards “fewer but
1
Thriving in the New Abnormal,
McKinsey & Company, 2016. less responsive is in culling smaller funds more strategic relationships” and productThe Best of Times, The Worst of Times: North American Asset Management 9
platforms are curated with more preci- flowing. Operations and technology grew
sion, we expect this rationalization of at a similar 6-percent rate as managers
products to continue. It may, in fact, ac- rushed to add new systems and
celerate as industry pressures drive man- processes to deal with an increasingly
agers to repackage their offerings into complex world of products (e.g., multi-
more efficient (and in some cases less asset strategies) and distribution (e.g.,
profitable) vehicles such as separately greater focus on CRM and digital market-
managed accounts (SMAs), institutional ing). Finally, legal and compliance spend-
share classes, and clean shares that ing ratcheted up at the fastest rate (about
place less of a tax on performance. 8 percent per year) as asset managers
dealt with the complexities of expanded
Costs remain stubbornly high product portfolios and diverse regulatory
challenges, ranging from new fiduciary
At the same time, costs have continued to
standards from the US Department of
increase at a steady pace (Exhibit 5). De-
Labor and new MiFID 2 rules that demand
spite the much-vaunted notion of leverage
transparency around research costs.
within the industry’s operating model (put
simply, a manager should be able to man- The industry snapshot at the end of 2016
age double the volume of assets without was one of positive economic perform-
getting anywhere close to doubling costs), ance (about 30-percent operating mar-
the average cost of managing a dollar of gins) but with mounting challenges as a
assets has remained remarkably constant shift to passive, broader pricing pressures,
at about 26 basis points despite a $10.9 and low levels of organic growth com-
trillion addition of AUM to the industry bined with stubbornly high operating
over the past ten years. costs to weigh down the industry’s prof-
itability. The second consecutive year of
Since 2007, the North American industry’s
deteriorating operating margins even in
cost base has increased by $21 billion.
the face of market growth (from 33 per-
Growth has been concentrated in three
cent in 2014 to 30 percent in 2016) was
areas. Sales and marketing grew at an an-
perhaps the most powerful sign that the
nual rate of 6 percent driven in a large part
North American industry has reached a
by a small-scale “arms race” in distribu-
turning point. The all-too-familiar secular
tion over the past five years as managers
trends that we have discussed at length
expanded their sales forces to capture
are coming to a head in a way that makes
flows in a market that was growing and
business as usual a losing approach.10 The Best of Times, The Worst of Times: North American Asset Management
Mind the gap
Mind the gap: A
widening performance
spread and an
widening perf
impending shakeout
The dominant narrative for the asset management industry
has been that we are entering the worst of times: low re-
turns, lower flows, pricing pressure, performance chal-
lenges, a massive shift to passive, stubbornly increasing
costs, and margin compression. A look at the aggregate
performance of the North American asset management in-
dustry confirms this downbeat view.
However, while industry averages can provide a sense of
broad direction, they can also mislead. In an intensely com-
petitive talent-driven industry such as asset management,
few firms are actually “average.” By digging deeper, be-
neath the headline numbers, we can explore asset man-
agement dynamics at the level of individual managers.The Best of Times, The Worst of Times: North American Asset Management 11
What the numbers really say Even in the severely challenged active
p:
Contrary to the conventional wisdom that equities space, top-performing managers
all is doom and gloom across the indus- are finding ways to thrive.
try, a deeper analysis identifies a massive What makes averages even more mis-
spread in performance across the indus- leading in this environment is that the
try and a group of asset managers that is performance gap between winners and
doing exceptionally well (Exhibit 6). Ac- losers is widening (Exhibit 7). Our propri-
cording to McKinsey’s proprietary bench- etary benchmarking data shows that the
marking data of 100 managers in North
f
gap has been creeping upwards for sev-
America (covering 80 percent of AUM), in eral years but is now accelerating as
2016, the top quartile of managers grew some asset managers adapt more nimbly
revenue at 5 percent, above the -2-per- to the new environment than others.
cent average of the industry and enjoyed Today the difference in operating margins
highly attractive operating margins at or between the top- and bottom-quartile
above their historical highs. managers stands at a remarkable 42 per-
centage points (51 percent versus 9 per-
cent), compared to three years ago (51
percent versus 15 percent).
The increasing gap between the top
The increasing gap between the top and
and bottom of the industry suggests bottom of the industry—set against the
that a shakeout is all but inevitable. challenging secular trends laid out in the
last section—suggests that a shakeout is
The question is how and at what
all but inevitable. The question is how
pace this reshuffling of league tables and at what pace this reshuffling of in-
dustry league tables will take place.
will take place.
Size is not destiny
In other words, for some managers, it is What exactly will the contours of the
actually the best of times. Clients are shakeout look like? This is another area
hungry for yield and open to innovation, where we depart from the conventional
shifts in asset allocation are setting an wisdom. There is an argument taking root
unprecedented amount of money into in the industry that the current environ-
motion, lower-performing players are ment is making it harder and harder to
being eliminated, technology is creating succeed as a smaller manager, and that
new sources of competitive advantage, we are moving to an era when the giants
and trillions of dollars of unmanaged as- will take all. A related argument states
sets are up for grabs. In short, there is a that being medium sized is particularly
massive opportunity to gain market share. perilous, the assumption being that many12 The Best of Times, The Worst of Times: North American Asset Management
Exhibit 6
Top performers
in North America Operating margin, 2016
Percent
sustained 65
Survey average = -2%
meaningful 60
55
revenue growth 50
45
at highly 40
35
Survey
attractive 30 average
25 = 30%
operating 20
10
margins 5
0
-15
-30 -25 -15 -10 -5 0 5 10 15 20 30 65
2016 revenue growth
Percent
Source: McKinsey Performance Lens Global Asset Management Survey
Exhibit 7
Growth Operating margin
Percent
Long-term net flows/
beginning-of-year AUM
Revenue growth
Percent
headwinds Percent
2016
affected the entire 52
North American 30
industry, but the 9
4 5
-9
bottom quartile 0 -11 -2
was hit Top Average Bottom Top Average Bottom Top Average Bottom
quartile quartile quartile quartile quartile quartile
particularly hard
2015
48
31
13 11 13
0 -9 2 -10
Top Average Bottom Top Average Bottom Top Average Bottom
quartile quartile quartile quartile quartile quartile
Source: McKinsey Performance Lens Global Benchmarking SurveyThe Best of Times, The Worst of Times: North American Asset Management 13
such firms are “stuck in the middle”—that while the “average” asset managers with
is, they lack the scale to operate effi- $50 million to $150 million in AUM had the
ciently and are too broad to claim special- lowest operating margins at 26 percent,
ized status. And, once again, when you the top quartile of managers in that group
look at the averages, this outlook seems had margins of 39 percent, beating out
to have some merit. Medium-sized firms most other managers of all sizes. Similarly,
with $50 to $300 billion AUM suffered, on while the “average” small manager ap-
average, a 5-percent margin gap relative peared to operate at a structural disadvan-
to large firms, and a 3-percent gap rela- tage to the biggest in the industry, the
tive to smaller focused boutiques. top-quartile performers in this size band
were the best performers across the board.
But our granular analysis shows clearly
that size is not destiny (Exhibit 8). There If firm size was not a reliable predictor of
were vast differences in performance success, which variables better forecast
within each size category, at a scale that success? Our analysis of the over 2,000
dwarfed the differences across size cate- metrics that we track on individual man-
gories. There were high-performing agers uncovered multiple routes to suc-
medium-sized firms, as well as large and cess. But what each leading firm had in
small firms that struggled. For example, common, was above-average “product
Exhibit 8
Size does not Profit margin by firm size, AUM, 2016
Percent
dictate success On average, scale seems to offer a 5-point Averages lie Top quartile
in North margin advantage
Average
Bottom
American asset quartile
management 43 44
38 39 38 38
36 36
33
30 30 31
28 28 28
26 26
24 24
8
$1 $1
billion billion- billion- billion- trillion billion billion- billion- billion- trillion
$150 $300 $1 trillion $150 $300 $1
billion billion billion billion trillion
Firm size, AUM Firm size, AUM
Source: McKinsey Performance Lens Global Benchmarking Survey14 The Best of Times, The Worst of Times: North American Asset Management
scale”—that is, the degree to which the dominance. There was no shame in rid-
individual firm scaled one or more major ing the coattails of emerging industry
asset classes/strategy areas and then ex- trends; in fact, it was essential to outper-
ecuted with focus. Specifically, profitabil- formance in many cases.
ity leaders drove close to 40 percent of
Meanwhile, the firms that struggled were
their funds to a scale above $1 billion,
those that resisted these trends, or took
compared to an average of 17 percent
only token steps to build new capabilities.
for the rest of the industry. Highly suc-
In many cases, they tried to play in multi-
cessful firms built the conviction to mobi-
ple areas to hedge their bets, but lacked
lize enterprisewide resources towards a
the conviction to invest in these busi-
focused set of well-defined growth priori-
nesses adequately or cull underperform-
ties. This resource allocation was not just
ing areas that diverted management
a question of dollars and headcount, but
attention and dragged on profitability.
also included mindshare across every
functional area of the firm. This dynamic
was a predictable marker of success Not the traditional M&A wave
whether a firm was a focused, single- Our third conclusion on the likely trajec-
asset-class specialist or a broad-based tory of the North American asset man-
multiproduct platform. agement industry is that consolidation
will happen, but through a nontraditional
set of channels. Conventional wisdom
assumes that a new logic of scale is
Some opportunistic mega deals will emerging across the board, that industry
occur as larger financial institutions giants will take all, and that margin pres-
sures will drive a search of economies of
reshape their business portfolios. But scale. Some go so far as to predict that
the bulk of consolidation will result from the pursuit of pure scale will lead to mas-
sive consolidation through transformative
more targeted acquisitions and lift-outs
mega deals.
of individual teams.
We believe this logic of scale applies in
some but not all parts of the industry; it
is arguably well at work in the world of
Asset managers in the top right of the passive, but less clear in active and al-
performance matrix—that is, those that ternatives. To be sure, some mega deals
lead in terms of both margin and will occur opportunistically as larger fi-
growth—got there not just through fo- nancial institutions continually reshape
cused execution in their areas of existing their business portfolios. But the bulk of
strength, but also through meaningful in- consolidation will result from more tar-
vestments in new industry growth trends geted acquisitions and lift-outs of indi-
that sometimes threatened their areas of vidual teams, undertaken to turbochargeThe Best of Times, The Worst of Times: North American Asset Management 15
the buildup of specialized capabilities in that two underperforming managers
areas of industry growth (e.g., alterna- can merge to become stronger is a
tives, multi-asset, ETFs). This process myth based on the misguided pursuit of
will be complemented by a second con- scale for scale’s sake. In reality, the
solidating force—the shuttering of strug- sum of two negative numbers is a
gling managers unable to meet the larger negative number.
industry’s rising bar. ■ Transformative M&A is tough. To be
sure, the industry will see some large
An evolving industry structure acquisitions. But instead of being
In summary, we have reached four conclu- driven by scale, these will more likely
sions about how the industry structure will be opportunistic purchases made pos-
evolve in a world where performance gaps sible when forward-thinking institutions
are rising between the best and the rest: realign their own business portfolios.
■ The coming shakeout is real. In a highly
The reality is that transformative M&A at
this scale is challenging. Few institu-
fragmented industry, where the per- tions have the integration skills or the
formance bar is rising and performance wherewithal to radically restructure their
gap is widening, and where clients are operating model.
■ Capability-driven M&A will dominate. To
demanding “fewer but more strategic
relationships,” poor performers will fall
align with the industry’s growth
by the wayside. Many will simply close,
trends—to ride those coattails—com-
not be acquired. A clearing out of the
panies need the right capabilities.
bottom tier is virtually assured.
■ M&A is not always (or even usually) the
Sometimes these can be built in-house,
but many firms will opt to move faster
answer. A wave of transformational by purchasing smaller or medium-sized
M&A to save those firms that are “stuck firms with specialized capabilities.
in the middle” is unlikely. The notion16 The Best of Times, The Worst of Times: North American Asset Management
An inconveni
An inconvenient
truth: The great
redistribution of value
truth: The gre
The shifting of the product mix in North American asset
management is well recognized. What is less understood is
how this shift is changing the equation between assets and
revenues. Also less appreciated are the trends that could
accelerate the shift over the next few years. In this chapter,
we explore these evolving demand-side drivers and exam-
ine how they are redistributing value across and within a
number of “hot spots” in the industry.The Best of Times, The Worst of Times: North American Asset Management 17
Where’s the money going? has translated into a 9-percent revenue
Much attention has been focused on the share gain. The big losers in this dynamic
massive flows into passive. Market share have been the traditional actively man-
of passive has indeed grown materially, aged asset categories, which have ceded
from 12 percent in 2010 to 18 percent in 9-percent share of the overall industry
2016. Yet, interestingly, passive’s share of value pool (as measured by both assets
the industry revenues has remained con- and revenues).
stant at 3 percent as its growth has been
accompanied by (and arguably driven by) New orthodoxies will accelerate
e
aggressive price competition (Exhibit 9). change
All but the largest players have struggled To date, this transition has occurred in a
to convert this significant asset growth gradual and steady manner. However, we
into meaningful revenue and profit growth. believe this shift in value pools is about to
Meanwhile, multi-asset strategies and al- accelerate, as investors embrace two
ternatives have both grown in parallel, trends that have been steadily gaining
collectively grabbing an additional 7-per- credence and momentum (Exhibit 10,
cent share in AUM since 2010; due to page 18). This philosophical change will
their higher margins, this gain in assets alter the investing paradigm.
Exhibit 9
Passive’s share North America assets and revenues, 2010-16
Percent
of North Total industry assets Total industry revenues Passive
American 3 3 3 3 3 3 3
Active core
Active
12 12 14 15 16 17
revenues has 18
21 20 20 19 18 18 17 specialists
Multi-asset
remained Alternatives
30 30 29 26 Money market
constant 26 26 25
27
31 30 28
32 31 30
28 27 27 28 26 25 24 13 14
10 10 11 12
9
8 9 9 11 12 12 13
34 35 36 36 36 37 38
10 11 11 11 12
12 12
11 11 10 9 8 8 8 1 1 1 1
0 0 0
2010 2011 2012 2013 2014 2015 2016 2010 2011 2012 2013 2014 2015 2016
Source: 2016 McKinsey Performance Lens Global Asset Management Survey and Global Growth Cube18 The Best of Times, The Worst of Times: North American Asset Management
■ Risk-based portfolio construction. In- ■ Factor investing. Factor investing
vestors are increasingly recognizing seeks to go beyond broad market-
the limitations of traditional asset al- capitalization-weighted indices like the
location strategies, which use rigidly S&P 500 or the Barclays Aggregate
defined asset-class buckets and can Bond Index to identify a more granular
mask underlying risk exposures. By set of performance drivers, whether it
reframing the portfolio construction be macroeconomic growth, currency
process in terms of different types of fluctuations, momentum, or something
risk exposures (e.g., corporate, inter- else. Factors are the cornerstone of a
est rates, inflation) instead of types of passive investment strategy—so-
asset classes, these new approaches called “smart beta”—that has been
are blurring the boundaries between rapidly gaining traction with investors
asset classes, creating competition in recent years by providing a more
across previously distinct categories finely calibrated set of portfolio build-
(e.g., private equity in the place of ing blocks.
some public equities; and the use of Interestingly, factor-based investing
multi-asset strategies instead of fixed challenges both active management
income for some income generation). (because a good portion of “alpha” is
Exhibit 10
Risk budgeting Risk factor-based asset allocation Factor investing
and factor Defensive Inflation protected
Active mandates
investing gain Special opportunity Company exposure
Tactical asset allocation
followers 100
2
Cash Security selection
US bonds Market timing
6 Foreign bonds Alpha
(currency hedged)
18 Factor tilts/overlays
Real estate Value
Infrastructure
US TIPS Size
Alternative
21 risk premia Yield
Absolute return
Quality volatility
Real return
Distressed debt Momentum
Mezzanine debt
Structured credit Market exposure
53 Other opportunities
Beta Strategic asset allocation
Global credit Cap-weighted indices
Global equity
Private equity
Asset classes become more fungible with explicit Sources of active returns are more easily replicable
discussions on cross-asset-class trade-offs with value add over passive indices
Source: APFC website; Pensions & Investments; McKinsey’s 2011 Institutional Investor Benchmarking InitiativeThe Best of Times, The Worst of Times: North American Asset Management 19
attributable to exposure to these fac- Three hot spots where the
tors rather security selection) as well redistribution of value will play out
as passive management (because with intensity
classic passive management ignores The redistribution of value is occurring
these factors). and accelerating broadly across the in-
Together, these two ideas represent a dustry and asset classes, but we have
revolutionary shift in investment ortho- identified three areas where shifts are oc-
doxy with real implications on product curring with particular intensity, and
demand. As they gain acceptance with a where competitive dynamics and industry
broad set of investors, asset classes will structure are likely to undergo important
become increasingly fungible; meanwhile changes over the next five years:
the bright line between active and pas-
Hot Spot 1: Traditional active strate-
sive investing will become increasingly
gies (particularly equities)
blurred as smart beta utilizes both active
and passive methods of investing. The To put it bluntly, 2016 was a challenging
net result will be an increased level of year for traditional active investing, much
competition not just within individual worse than 2015, which itself was no
asset classes, but also across them. banner year (Exhibit 11). The pain was
Exhibit 11
2016 was a Outperformance of US domestic active equities funds, 2015 versus 2016 2015 2016
Percent of funds outperforming passive
challenging year
Growth Value Blend
for equities
49 37 28 25
Large 30 20
41 54 42
31 25
Medium 20
29 67 50
22 37
Small 15
Source: Morningstar20 The Best of Times, The Worst of Times: North American Asset Management
felt across almost every major active eq- Our results pointed to a good news/bad
uity strategy. The number of large- new story.
growth funds outperforming passives fell
First, the good news. Our research iden-
from 49 percent in 2015 to 30 percent in
tified five enduring sources of value
2016, the number of medium-sized-
within active management over the 20-
value funds outperforming dropped from
year period that undercut the gloomy
54 percent to 20 percent, and the num-
prognoses commonly applied to the en-
ber of small-value funds outperforming
tire active management industry:
plummeted from 67 percent to 15 per-
cent. Small-cap equity funds somewhat ■ Institutional strategies. More than 70
bucked the trend, with several cate- percent of these strategies outper-
gories improving their performance. And formed passive equivalents by up to
fixed income were the major outlier, with 100 basis points on a through-cycle
76 percent of intermediate bond funds basis. Several structural factors likely
for example outperforming their passive contributed to this outperformance:
equivalents, up from 29 percent in 2015. fee efficiency of vehicles and robust
governance of institutional mandates.
■ Specialized active. Specialized sub-
asset classes (e.g., small cap, inter-
Our research identified five enduring
national, emerging markets) have
sources of value within active generated long-term positive returns
management over the 20-year up to 200 basis points over passive.
In this case, lower market efficiency
period that undercut the gloomy (e.g., imperfect information, illiquidity)
prognoses commonly applied to the enabled managers with superior skill
to generate sustained returns.
entire active management industry.
■ Top-performing managers. Top-tier
managers provided sustained added
value even in mainstream asset
With this continued underperformance classes, delivering more than 100
of traditionally managed active assets basis points over passive on average
and clients’ increasingly hardening atti- over the last ten years.
■ High-dispersion markets. Macroenvi-
tudes towards certain classes of actively
managed assets in mind, we conducted
ronments mattered, but success was
an in-depth study of value creation in
less tied to bull markets or bear mar-
active management using 20 years of
kets and more to periods of volatility
granular North American performance
during which the price trajectories of
data to better understand the facts on a
individual securities varied signifi-
through-the-cycle basis and gain a per-
cantly. In aggregate, active strategies
spective on what the future might hold.The Best of Times, The Worst of Times: North American Asset Management 21
outperformed passive by 100 to 300 investors over the past 20 years through
basis points in high-dispersion envi- chronic and consistent underperfor-
ronments; this held true across both mance (Exhibit 12). The size of this asset
bull and bear market environments. pool is not insignificant. Of the $17.1 tril-
■ Quality manager selection. Individual lion of actively managed equities and
managers themselves go through peri- fixed income in 2017, $5 trillion is man-
ods of overperformance and underper- aged by funds that have underperformed
formance, driven by a range of their benchmarks for four or more con-
idiosyncratic factors. Manager selec- secutive years. And another $3.8 trillion
tion matters; and our research sug- is managed by funds with such consis-
gests that the ability to make the right tently paltry levels of outperformance that
choices can create a 1.5-times multi- investors might reasonably ask: “Why
plier over and above the performance bother?”
of underlying funds. Based on these findings, we expect that
Now the bad news. There is some validity the closing and merging of laggards,
to the charges leveled by the harshest which picked up pace last year, will con-
critics of active management. Portions of tinue. This winnowing will result in a
the industry have destroyed value for end smaller, better-performing active industry.
Exhibit 12
A Darwinian Total traditionally managed active assets, equities and fixed income only, 2017
$ trillion
moment for
Retail
~17.1 ~5.0
some active Institutional
management ~3.7
segments? ~9.0 ~1.3 ~3.8
~2.8
~8.3
~1.0 ~2.5
~8.1
~5.8
Active equities “Chronic Lower value-add “High-quality
and fixed income underperformers”1 funds2 core”
Highly contestable assets
1
Funds which had22 The Best of Times, The Worst of Times: North American Asset Management
Exhibit 13
Leaders in 2016 net flows for US active equity by fund 2016 net flows for US active fixed income by fund
$ million (N = 2,621 funds) $ million (N = 2,087 funds)
active have
been winning 18,000 18,000
15,000 15,000
new flows 12,000 12,000
9,000
9,000
6,000
6,000
3,000
3,000
0
-3,000 0
-6,000 -3,000
-9,000 -6,000
-12,000 -9,000
-15,000 -12,000
-15,000
922 funds (35%) generated ~$139 billion of 1,157 funds (55%) generated ~$258 billion of
positive flows, with top 20 generating ~37% of that positive flows, with top 20 generating ~34% of that
Source: Simfund
Exhibit 14
A value Institutional investor perceptions of alternative asset classes, 2013-16
Percent
migration in Hedge funds Private equity Fallen short of
expectations
alternatives as 11 8 6 5 Met
investors shift 16 expectations
35 33 Exceeded
to the private expectations
markets 66
64
71
75
63 78
57 58
31
30 24
21
13 17
8 9 3
2013 2014 2015 2016 2013 2014 2015 2016
Source: Preqin Investor Interviews, December 2013-16The Best of Times, The Worst of Times: North American Asset Management 23
But rumors of the death of active are compasses. And the category’s coher-
greatly exaggerated. Indeed, this Darwin- ence is coming under further stress as a
ian moment for the active industry cre- wide performance gap emerges between
ates tremendous opportunity for the public alternative market (that is,
high-performing managers that can de- hedge funds) and private alternative mar-
liver, and for those that restore value to kets, which is whetting investors’ ap-
their offerings through repricing and more petite for the latter.
efficient vehicles.
And this “liquidity transformation” in favor
A granular look at industry averages for of private markets is a logical response to
2016 indicates that a move to quality, performance. Since the global financial
high-performing managers is already tak- crisis in 2008 and 2009, the hedge fund
ing place (Exhibit 13). Amidst an overall industry has suffered from structural chal-
picture of active outflows, the top active lenges in the form of low rates and seem-
funds are actually enjoying great success. ingly unidirectional markets. In every year
On the fixed-income side, for example, since 2009, a diversified portfolio of
55 percent of 1,157 funds generated hedge funds has underperformed a stan-
about $258 billion of positive flow in dard 65-percent equities/35-percent
2016. The top 20 funds generated 34 fixed-income portfolio—and in a number
percent of this total. of years by double-digit percentages. The
converse has been true of the private
Hot Spot 2: A liquidity transformation
markets, with private equity meaningfully
within alternatives
outperforming the 65/35 portfolio over
Over the past several years, we have that same period.
written extensively about the rise of alter-
Once the darling of the alternative in-
native investments, driven by client needs
vestment category, the hedge fund in-
(e.g., meeting pension liabilities) and a
dustry is now facing existential
challenging external environment (e.g.,
questions as it seeks to position itself for
low rates, low returns). By and large our
a new environment. A number of large
expectations have played out correctly,
institutional investors have openly ques-
with alternatives becoming a $7.5 trillion
tioned the role of these strategies in
industry, accounting for approximately
their portfolios, either cutting back on
$2.3 trillion of new money entering the in-
capital allocations or in some cases re-
dustry over the past five years.2
moving the entire category from their in-
But that aggregate growth masks a vestment programs. These factors,
meaningful shift within the alternatives along with the closing of several large
category (Exhibit 14). “Alternatives” has funds, led to a turning point in 2016. For
always been somewhat of a misleading the first time since the financial crisis,
name for the breadth of strategies, styles, the hedge fund industry shrank in ab-
2
Inclusive of private markets
fundraising.
and risk-return profiles that the term en- solute terms, with outflows of $70 billion24 The Best of Times, The Worst of Times: North American Asset Management
and an uptick in fund closures (Exhibit of challenges: a tough macroenvironment
15). While aggregate flows have picked (e.g., low rates, regulatory uncertainty,
up again in 2017 and returns have buoyant markets, and crowded trades);
bounced back, the industry has contin- the rise of factor investing, which—be-
ued to face growth headwinds given cause it granularly assesses value and
skeptical investors with an ever broader risk factors—has spawned low-cost
range of alternatives. Industry leaders hedge fund replication strategies; and a
have been repositioning themselves in business model that is difficult to scale
this new environment with a range of in- because of an overreliance on a handful
novations ranging from significant in- of skilled managers. These constraints
vestments in data, analytics, and can frustrate institutions that need to put
technology to create new sources of in- massive amounts of capital to work.
vestment advantage to paradigm shifts
Nevertheless, it is getting harder and
in pricing, with moves beyond the tradi-
harder to be a small investor in this
tional 2/20 structure to 1/30 or even
space. Recently, the bulk of flows have
0/20 to better position their propositions
gone to the largest firms, and this trend
for low alpha environments.
has continued through 2017. Thus, we
To be fair, the hedge fund industry has believe industry consolidation—through
had to contend with a very diverse array acquisitions and closure—will pick up
Exhibit 15
2016 was a Net flows into the global hedge fund industry
$ billion
challenging year 195
for the global 127
hedge fund
71 76
industry 56 64
44
34
-70
-131
-154
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Flows
Percent 11.4 13.3 -8.3 -9.3 3.5 3.7 1.7 2.8 2.9 1.5 -2.4
Source: HFRThe Best of Times, The Worst of Times: North American Asset Management 25
pace. Survivors will pursue greater insti- scale take-privates of companies; long-
tutionalization to better deliver quality in- duration “core” funds that create patient
vestment products in a broader set of capital; a greater willingness to play
formats. The most successful hedge seamlessly across debt and equity; and
funds are already pursuing this strategy, innovations such as special-purpose ac-
enabling them to monetize their skills and quisition companies (SPACS), which raise
intellectual capital through a broader large pools of capital to pursue single in-
range of channels. vestment themes.
Meanwhile, the outperformance in the pri- The bottom line is that investors are
vate markets is hardly a secret and new growing increasingly comfortable with the
money is rushing in. Private equity firms category’s illiquidity as a way to diversify
hauled in $626 billion globally in 2016, re- risk exposure and add value. We expect
visiting the highs set before the financial that private-market alternatives will con-
crisis. And—in contrast to the belea- tinue to attract a larger share of invest-
guered hedge fund industry—a number of ments, and managers are likely to drive
notable large investors have signaled the towards greater growth and scalability.
importance of their private-market pro- We are also likely to see a growing num-
grams and significantly upped their allo- ber of firms that position themselves as
cations. The surge in private-market multistrategy platforms—effectively be-
demand is raising some red flags among coming portals to access different invest-
market observers, who worry about future ing alternatives and partners.
returns and if a bubble is forming. They
Hot Spot 3: The third act for ETFs
point to high valuations, intense competi-
tion from strategic investors, and high lev- ETFs have continued their explosive
els of undeployed capital. growth, far exceeding any other major
asset class/vehicle, even overtaking their
The world of private-market investing is
passive equivalents in mutual funds and
indeed highly cyclical. But the surge in
the active strategies that they began dis-
demand should be viewed in the context
placing over twenty years ago (Exhibit 16,
of the industry’s significantly increased
page 26). There are now around 2,000
“surface area.” Ten years ago, private
ETF products with increasingly precise
markets referred almost exclusively to
exposures and themes.
developed markets’ private equity, but
the category is now much more geo- The astounding growth—ETFs now control
graphically diverse, encompassing all about 7 percent of all managed investment
things illiquid, such as credit, real estate, products—has been driven by intense re-
and infrastructure. Also fueling growth in tail demand for these low-cost, flexible in-
private markets are a wave of innovations vestment instruments with intraday liquidity,
among industry leaders, including: fund- particularly from their uptake in home of-
less-sponsor models that enable large- fice portfolios, the rise of the rep-as-port-26 The Best of Times, The Worst of Times: North American Asset Management
Exhibit 16
ETFs have US market share of managed investment products1
CAGR
almost Percent
32% 1993- 2000- 2009-
overtaken their 30% 2000 09 16
28%
passive mutual 26%
24%
fund equivalents 22% ETFs 37 31 11
20%
18%
16%
14%
12%
10% Passive 27 7 11
8% mutual
6% funds
4%
2%
0%
1985 1990 1995 2000 2005 2010 2015 April
2017
1
Includes long-term open-end funds, money market funds, and ETFs
Source: Strategic Insight
Exhibit 17
ETFs are Individual stocks, long-term mutual funds, and ETFs – US household
financial asset mix
Share year-end,
2007-16
increasing the Percent
2007 2016 Change
size of the asset 100%
ETFs 4 10 +6 % pts
management 90%
80% Long-term 29 27 -2 % pts
market mutual
70% funds
60%
50%
40%
Corporate 67 63 -4 % pts
30% equity
20%
10%
0%
1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2016
Q4 Q4 Q4 Q4 Q4 Q4 Q4 Q4 Q4 Q4 Q4 Q4 Q4
Source: Strategic Insight; Federal Reserve Flow of Funds; McKinsey Performance LensThe Best of Times, The Worst of Times: North American Asset Management 27
folio-manager business model, and the is sometimes used to characterize the in-
fast-growing “robo-advice” platforms. terplay between active and passive. We
expect, for example, that fixed-income
The growth of ETFs is often conflated
ETFs will grow rapidly, filling an acute liq-
with the inroads that low-cost passive in-
uidity and trading need caused by the
vesting has been making over active
pullback of traditional market makers,
management. That’s part of the story, but
which are trimming their bond inventories
this angle obscures the true potential of
and cutting back on activity given regula-
ETFs. ETFs are not just grabbing share
tory and capital challenges.
from active mutual funds, they are actu-
ally growing the total pie by winning new The ETF market has also been evolving in
flows into asset management as a whole terms of what it delivers to investors. To
(Exhibit 17). Between 2007 and 2017, a be sure, most ETF demand continues to
full two-thirds of ETF growth (as a share be in “bulk beta,” the cheapest, most
of household financial assets) came from basic portfolio building blocks that track
attracting assets once held as individual mainstream market-capitalization-
securities. In other words, ETFs are an weighted indices (Exhibit 18). The pricing
investment “technology” that is growing of these products is so low that only the
the total asset management market and largest, most efficient managers have
breaking free of the zero-sum game that been able to win, and often with the help
Exhibit 18
Bulk beta Breakdown of US ETF AUM by strategy, 2016 CAGR
Percent 2012-16
remains the Percent
AUM Revenue
mainstay of the Active
100% = $2.6 trillion
1
$6 billion
3
41 44
ETF industry Smart beta 11
20 30 27
Specialized 18
26 7 -1
Bulk beta 70
52 17 13
AUM Revenue
Source: Simfund28 The Best of Times, The Worst of Times: North American Asset Management
Exhibit 19
New ETF Hedge funds RIAs
Mutual funds Model portfolios
use cases Pension funds Portfolio Market Robo-advisors
management exposure
are emerging
Hedging Liquidity
management
Trading desks Corporate treasuries
Institutional investors Insurance companies
Price Mutual funds
discovery
Market makers
Asset managers
Source: McKinsey analysis
of business models that deliver a set of North American market. As more ETF
ancillary revenue-generating services managers move to leverage factor invest-
such as securities lending and product ing, competition will not just be about
wrap fees. But, concurrently, the industry price, but also about innovation and exe-
has been innovating, and investors are cution. Indeed, the recent entry of several
proving receptive to new products that traditionally active managers into the
come at slightly higher cost. Two cate- smart beta ETF space is a signal of the
gories in particular, active ETFs and nature of competition to come.
smart beta, have been growing faster
Given the robust demand across almost
than bulk beta (though off a low base).
every part of the ETF market, our overall
Active ETFs and smart beta experienced
outlook for growth is strong. We expect
compound annual AUM growth of 41 per-
the industry to continue its double-digit
cent and 30 percent respectively from
growth over the next several years, pos-
2012 to 2016. Bulk beta, in contrast,
sibly becoming a $6 trillion market by
grew at 17 percent over the same period.
2021 (from $2.9 trillion in 2016).
We expect that smart beta in particular
Attaining this milestone will depend as
will continue to be the focus of competi-
much on innovation as it will on head-to-
tion over the next few years as factor in-
head market share gains against other in-
vesting takes root in a greater way in theThe Best of Times, The Worst of Times: North American Asset Management 29
Exhibit 20
The industry Systematizing the Distribution scale and
investment edge institutionalization
game board
is dynamic Hedge Private
funds markets
Margin pressure
Fixed income
and Focus on solutions
multi-asset
Active Passive
equities and ETFs
Survival of Cost discipline
the fittest and innovation
Growth momentum
Source: McKinsey analysis
vestment vehicles. Leading ETF providers price pressures) with constant innovation
need to broaden the use cases of their (given the importance of first-mover ad-
products to grow the overall size of the vantage in new product areas as well as
market (Exhibit 19). Already, institutions the ever-present threat of “fast followers”).
are putting ETFs to use for a wider range
of needs: for example, to equitize cash New competitive dynamics
holdings (ironically, sometimes within ac-
The three major shifts outlined above il-
tively managed funds), to hedge expo-
lustrate how the redistribution of value is
sures in difficult-to-access markets, for
occurring broadly across the industry
price discovery in thinly traded asset
and asset classes, creating fundamen-
classes (e.g., corporate bonds), and even
tally different pools of value and new
in corporate cash management.
competitive dynamics. The result is a
Firms need to consider how to compete highly variegated industry “game board,”
in this market. The scale economics of where margin and growth dynamics are
ETFs differ from more traditional funds, exerting different pressures on different
particularly in bulk beta, which is consoli- segments of the industry (Exhibit 20).
dating and may come down to three to This creates a highly varied set of imper-
four firms. Success will depend on com- atives. There is no one-size-fits-all pre-
bining operational efficiency (to withstand scription for success.30 The Best of Times, The Worst of Times: North American Asset Management
A tale of two cities
A tale of two
The observation that the North American asset manage-
ment industry is at a pivotal moment is hardly novel. To say
that the industry faces an unprecedented set of challenges
is both so true and so accepted it has the ring of a cliché.
In this report, we take this received wisdom as a starting
point and cast an eye towards outcomes. And we argue
that these outcomes for the industry come in the shape of
a barbell. It is neither the best of times, nor the worst of
times. It is both.The Best of Times, The Worst of Times: North American Asset Management 31
Asset managers need to seize on the re- sticking one’s head in the sand), but it is
alities of this new environment, one of the also incomplete. When firms focus too
most fundamental of which is that the heavily on the downside, they risk miss-
majority of trends discussed here are ing some of the biggest, most exciting
deeply secular rather than cyclical. They opportunities in the industry today.
are not temporary fads that firms can ride
Disruption is setting an unprecedented
out or adjust to with incremental changes.
amount of money into motion, as clients
At the same time, asset managers need
shift assets in the hunt for yield. Industry
to approach the futurewith the dual mind-
consolidation will put large swathes of
set of both dealing decisively with new
market share in play. New technologies
challenges but also seizing on the oppor-
are opening avenues to innovation across
tunities that this new environment affords.
the asset management value chain and
could help forward-thinking firms capture
some of the trillions in unmanaged assets.
Two very different narratives are strug-
When firms focus too heavily on
gling for ascendance in today’s asset
the downside, they risk missing management industry. In the dominant
some of the biggest, most exciting (and pessimistic) narrative, asset man-
agement is moving inexorably towards
opportunities in the industry today. becoming a commodity industry, and
asset managers are transitioning towards
becoming cost managers. In the alterna-
Embracing both the best and the tive narrative, asset managers can find
worst of times new relevance by delivering solutions,
and have a unique opportunity to position
We believe the industry has been too
themselves as client-backed innovators.
one-sided in its embrace of the “the
Deciding how to embrace and balance
worst of times” narrative. To be sure,
these competing narratives is quite liter-
there is real work to be done in restruc-
ally a matter of choosing a firm’s destiny.
turing business models and product port-
folios to improve resilience to industry
pressures. But far too many managers Five priorities
have simply positioned themselves in a In an industry undergoing significant
defensive crouch, preparing for an ex- change, there are multiple paths to suc-
tended fight to hold onto their narrow cess. Nonetheless, we believe that asset
area of expertise and tightening their managers who are successful in reposi-
belts for a leaner future. tioning their businesses for continued
growth and profitability will embrace the
In many cases, this approach is certainly
following five priorities:
warranted (indeed it is far better thanYou can also read
