How bad is it going to get for the asset management industry? A new study from Casey Quirk says that asset-based fees will fall 25 percent between 2007 and 2009. That will have a seismic affect on operating profits, which will drop 30 to 35 percent between 2007 and 2008, and another additional 30 to 35 percent in 2009, if costs are not cut significantly. Margins would decline from 33 percent of revenues in 2007 to just 22 percent in 2009.

The way to defend against this is to cut costs--which means we'll see even more head count reductions and possibly some shifts in compensation. The report notes compensation and benefits account for up to 60 percent of revenues and have the biggest impact on profitability. 

For more:
- here's the report 

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