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Controlling costs in European asset management

• Asset management in Europe continues to be an immensely profitable industry. But given its cyclical nature, asset managers may need to deal with setbacks by scrutinizing their cost structures.
• Since 1998, McKinsey has surveyed European asset managers about their profits and losses. The latest survey, based on interviews and data gathered through mid-2007, reveals an industry in a state of flux: total assets reached a record high, but cost margins were also up, and the intake of new money rose more slowly than it did in previous years.
• Asset managers should examine how best to protect their core business while making it flexible enough to respond to the ups and downs of the economy and the capital markets.