The profitability paradox: Competing for relevance and returns

These paths to profitability demand clear choices about how you compete and where you create value. Each choice involves trade-offs that shape cost structures, distribution economics, and positioning within the investment ecosystem.

Below, we set out five strategic considerations for asset and wealth management leaders:

Where should you integrate, where should you unbundle, and where should you collaborate or acquire to compete? Do you want to retain or build an integrated model that keeps control of the full value chain, combining manufacturing, distribution, and data to create scale and differentiation? Or do you want to unbundle, focusing on your core sources of alpha and handing off non-essential, commoditised, or infrastructure-heavy activities to shared utilities, platforms, or partners?

This isn’t simply another approach to cost reduction. It’s a strategic choice about which capabilities define your competitive edge, which you should retain or discard, and which can be delivered more efficiently through collaboration and scale.

Which parts of the client interface should you own, and where are you a product supplier? Do you want to invest to own the client interface through digital platforms, advisory ecosystems, and data-driven personalisation controlling the economics of distribution? Or would you rather focus on being a product supplier for distribution by others, competing to be the preferred provider in a broader marketplace?

This choice defines whether you control distribution economics or compete for shelf space. Success depends on strategic clarity about where you create unique advantages.

How do you make tech investment count? If your tech investment is rising, it needs to deliver outcomes. How can you go further and faster in eliminating inefficiencies and boosting performance, while channelling savings into initiatives that drive business value? How can you use AI-led personalisation tools (e.g. direct indexing or digital engagement) and collaboration with hyperscalers and fintechs to scale tech infrastructure?

Tech optimisation is as much about talent as it is technology. How can you make sure that your workforce has the skills to make the most of new technology and use the tools and time freed up to drive real value? How do roles and responsibilities need to evolve? How do you successfully integrate humans and machines in areas such as prompting and overseeing generative and agentic AI?

Where should you sit in the investment value chain? Should you design integrated solutions that meet client outcomes, such as pension portfolios or multi-asset mandates, acting as an architect of capital flows? Or should you focus on providing the specialist strategies and products that others integrate into those solutions?

The distinction lies in whether you shape outcomes or supply the building blocks. Many leading firms are adopting hybrid models, designing complete solutions for some clients while remaining core providers to others. Emerging asset classes such as digital assets are expanding both roles, transforming the infrastructure of capital markets and how capital is formed, deployed, and managed globally.

How will you balance orchestrating ecosystems and participating in them? Do you position yourself to orchestrate ecosystems that bring together a range of partners including fintechs, banks, insurers, and data providers? Or do you choose to be a specialist participant within these ecosystems, focusing on incremental improvements within your existing model and optimising for efficiency and margin growth?

The decision comes down to scale, brand, and infrastructure where orchestration can allow a firm to create a multisided value platform. Participation enables focus on a specific strength within an ecosystem, with the advantages of broader reach and accelerated innovation. Both paths can be viable, reflecting different risk appetites, time horizons, and market conditions.