Assets under management in Ireland to reach $7 trillion by 2025

Assets under management in Ireland will grow to €7 trillion by 2025, up from €4 trillion last year, according to a new forecast by global accounting giant PwC.

Olwyn Alexander, the firm’s global asset and wealth management leader and PwC Ireland partner, said Ireland would benefit from the wider growth in global assets under management, which is expected to almost double in size by 2025 to $145.4 trillion (€125 trillion).

This “exponential” expansion is being driven by a growth in the middle classes in the Asia-Pacific region, a rise in pensions savings as a greater onus is placed on individuals to save for retirement and a “benign” interest rate environment that “looks set to continue”, Ms Alexander said.

PwC is also “confident” that Ireland’s rate of economic growth, which is above the average European Union expansion in gross domestic product (GDP), will help it maintain its place in the funds industry, in which it “punches well above its weight”.

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Artificial intelligence

Embracing technology will be a key part of the process, according to PwC. The rise of artificial intelligence and robotics provides opportunities to the industry to further manage its cost base and deliver better products to consumers, Ms Alexander said.

“Asset management has been ahead of the curve when it comes to AI,” she said, identifying “further potential” for improvements.

“But we don’t foresee a world where everything will be done by machines,” she added. While AI will help deliver better investment analysis, “it will take humans to make sense of this”.

Helping individuals save for old age, as governments retreat from defined-benefit pension schemes, is “a new opportunity” for profitable growth, PwC said.

Expansion in defined contribution pension savings as the world population builds wealth, and life expectancy rises, is one of the main forces driving the firm’s “optimistic” forecasts for growth in assets under management.

For individual asset management companies, it is a case of “do or die” when it comes to innovating for growth, PwC said.

“Asset and wealth managers must be prepared for success in some areas and failure in others,” said Ms Alexander. “Nurturing and retaining the right people will be absolutely vital as the industry reinvents itself.”