Detailed information about commissions, the profits and losses of individual asset management firms, and country-by-country results have always been hard to find, for in Europe the business is an opaque one. The only sure thing is that the industry is quite profitable.

In an attempt to fill this gap in knowledge, McKinsey conducted a survey of 33 European asset management companies, which hold a total of $1.2 trillion worth of assets under management—about 30 percent of European third-party assets. The survey focused on the amount and nature of those assets as well as on staffs, revenues, and costs. All major countries of Western Europe were represented, with a sufficient number of observations to estimate averages for 1998 and to make comparisons across countries (Exhibit 1).

Our survey confirmed that Europe’s asset management market still offers opportunities for profitable growth despite increasing competitive pressures. The average operating profit is 21 basis points (hundredths of a percentage point) of the value of assets under management, though the level of profit in individual countries varies widely—from 9 basis points in Germany to more than 40 in Spain and Portugal (Exhibit 2).

This range of variation reflects differences in the net revenues of...