Asset managers are still taking too many strategic decisions on the basis of limited insights into the costs. Additionally, they base their decisions on the assumed cost levels instead of levels supported by facts. This can be done differently.
Asset managers should have a better insight into the costs of their services and products. Only the asset managers who make the right choices will survive given the decreasing margins, increasing competition, more demanding clients and the rise of low-cost passive investing. Activity Based Costing can provide useful insights for making the right strategic choices. But creating an ABC model does not come without challenges.