However, the outlook notes that most clients have higher levels of disposable income that will not be significantly impacted by the higher cost of living.
Additionally, it highlights the resilience of assets under management (AUM), scale, diversified business, and sound profit margins, which should maintain wealth managers’ credit profiles.
Fitch says that “financial market volatility is likely to continue in 2023 as high inflation, interest rate rises, and the economic slowdown continue to unsettle investors.”
European asset managers rated by the firm reported a 15-20% decline in AUM in the first half of 2022 and declining asset values, and pressure on net inflows and related management fees, have deteriorated the outlook for traditional asset managers.
However, for those in the alternative assets space, Fitch has a neutral outlook: “as they are likely to be more resilient given the stability of their fees, long-term closed-end fund structures and growing perpetual capital structures.”
