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Illustration: Aïda Amer/Axios

New technology is reshaping asset management for a new generation of workers, and most of the industry has not kept pace.

Why it matters: Asset managers are in danger of being left in the cold as individual investors are forced to take control of their retirement savings, and more money shifts to passive strategies.

  • "The change is accelerating with tech and data and analytics in the asset management space, and companies need to really hurry up and get their house in order before they start being disrupted," Boston Consulting Group partner and managing director Lubasha Heredia tells Axios.

By the numbers: The value of assets under management (AUM) fell by 4% globally in 2018, to $74.3 trillion from $77.3 trillion, the first significant year-over-year decline since 2008, according to BCG's 2019 global asset management report.

  • North America saw the biggest decline, with managers recording $2 trillion of outflows over the course of the year, accounting for two-thirds of the global loss in value.
  • Total assets under management declined in almost all regions, largely because of the global market selloff during the fourth quarter.

Active management fared particularly poorly, losing $1 trillion in AUM last year, continuing a long-term secular trend.

  • Over the past 15 years, actively managed assets have declined significantly in popularity, BCG's data shows.
  • They now account for just $1 out of every $3 of assets managed, versus more than $1 out of every $2 of AUM in 2003.

Between the lines: As people move their money out of actively managed funds, they are being drawn to products that offer high-tech options that provide many of the same services as traditional financial advisers but at a fraction of the cost.

  • Many small and mid-sized asset managers are simply unable to compete and are being "squeezed out" of business, Heredia says.
  • That's creating a space where only very small niche players and massive asset management conglomerates like Vanguard and BlackRock can survive.
  • Heredia is also expecting digital giants like Google and Amazon to move into the space, as Alibaba's Alipay has done in China.

What to watch: China is expected to become the second-largest region for asset management — ahead of continental Europe — and will attract more flows than the U.S. over the next decade, BCG's data shows.

  • The firm also expects that sustainable investing will rise as firms weave environmental, social, and governance factors into their investment decisions, aiming to create positive impact without undermining returns.

Go deeper: HSBC hops on the robo-advising bandwagon

Go deeper

Scoop: Gina Haspel threatened to resign over plan to install Kash Patel as CIA deputy

CIA Director Gina Haspel. Photo: Win McNamee/Getty Images

CIA Director Gina Haspel threatened to resign in early December after President Trump cooked up a hasty plan to install loyalist Kash Patel, a former aide to Rep. Devin Nunes (R-Calif.), as her deputy, according to three senior administration officials with direct knowledge of the matter.

Why it matters: The revelation stunned national security officials and almost blew up the leadership of the world's most powerful spy agency. Only a series of coincidences — and last minute interventions from Vice President Mike Pence and White House counsel Pat Cipollone — stopped it.

Updated 5 hours ago - Politics & Policy

Coronavirus dashboard

Illustration: Sarah Grillo/Axios

  1. Health: Coronavirus deaths reach 4,000 per day as hospitals remain in crisis mode — CDC warns highly transmissible coronavirus variant could become dominant in U.S. in March.
  2. Politics: Biden says, "We will manage the hell out of" vaccine distribution — Biden taps ex-FDA chief to lead Operation Warp Speed amid rollout of COVID plan — Widow of GOP congressman-elect who died of COVID-19 will run to fill his seat.
  3. Vaccine: Battling Black mistrust of the vaccines"Pharmacy deserts" could become vaccine deserts — Instacart to give $25 to shoppers who get vaccine.
  4. Economy: Unemployment filings explode againFed chair: No interest rate hike coming any time soon —  Inflation rose more than expected in December.
  5. World: WHO team arrives in China to investigate pandemic origins.

John Weaver, Lincoln Project co-founder, acknowledges “inappropriate” messages

John Weaver aboard John McCain's campaign plane in February 2000. Photo: Robert Schmidt/AFP via Getty Images)

John Weaver, a veteran Republican operative who co-founded the Lincoln Project, declared in a statement to Axios on Friday that he sent “inappropriate,” sexually charged messages to multiple men.

  • “To the men I made uncomfortable through my messages that I viewed as consensual mutual conversations at the time: I am truly sorry. They were inappropriate and it was because of my failings that this discomfort was brought on you,” Weaver said.
  • “The truth is that I'm gay,” he added. “And that I have a wife and two kids who I love. My inability to reconcile those two truths has led to this agonizing place.”