2010
Chapter
Operational Control in Asset Management: Processes and Costs

Cost Structure Patterns in the Asset Management Industry

Format:Print

Abstract

This chapter examines patterns in the cost structure of asset management firms and establishes two important trends in cost behavior. First, when revenues are growing, "indirect" costs related to sales, distribution, marketing, personnel, technology, and occupancy are far from fixed in this industry. In some cases they are "supervariable" or rising at a faster rate than sales. Second, and in contrast, such indirect costs appear relatively fixed in the face of sales "declines" in this industry. We discuss potential sources of these cost-structure patterns and their implications for cost management efforts as asset management firms move forward from the financial crisis of 2008.

Keywords

Financial Crisis; Asset Management; Cost Management; Financial Services Industry

Citation

Campbell, Dennis, and Frances X. Frei. "Cost Structure Patterns in the Asset Management Industry." Chap. 8 in Operational Control in Asset Management: Processes and Costs, edited by Michael Pinedo, 154–168. Denmark: SimCorp StrategyLab, 2010.