Our goal in this report is to describe the sources of industry growth and forecast their structural implications. A multi-tiered industry organization is evolving, in which asset flows and growth dynamics sustain organizations with wholly different strategies. In the context of continued industry growth and, more important, market fragmentation, some firms undertake acquisitions to broaden their product capabilities and extend their market reach. Other firms achieve phenomenal growth with focused products and rented distribution. Firms that have been successful at winning significant market share seek to protect themselves from disruptions on the portfolio management side by creating brand images to insulate themselves from performance disruptions.
Competitive forces operate to maintain diversity.
Retail access to small mutual fund providers with strong records and compelling stories is increasing through supermarkets. Supermarkets support such funds by reducing their costs of client acquisition and administration and making new investors aware of them. Asset flow dynamics are crucial to our long-term understanding of the competitive conditions of the industry. Currently, financial service organizations battle to gain control over the savings flows of a generation newly cognizant of the need to prepare for retirement. This struggle is sharpened by the dissolution of corporations' responsibility to provide traditional defined benefit pensions.