Does the active investment management industry take $600 billion a year in fees? So say the New York Times, Josh Brown, and Gawker. They base it on this State Street study. State Street attributes it thus, in a footnote:
> Boston Consulting Group: Global Asset Management 2014:
> Steering the Course to Growth provides evidence on the
> size of global assets under management and percentage of
> active mandates. This number [i.e. the $600 billion one]
> is approximated by multiplying assets under management
> ($68 tn) by estimated average fee levels, including advisory
> and consulting fees (1%) by percentage of mandates which are
> active (85%).
But you can actually read the BCG report! Here it is! It measures not just AUM but also fees. So you don't have to guess the fees. BCG says that asset manager revenues averaged about 29.4 basis points, for profits of $93 billion on net revenues of $200-odd billion. State Street just decided to triple that number for fun. And then that got reported as fact.
(This may be partly to do with BCG's reporting of "net revenue," which is "management fees net of distribution costs." Still it seems like actual revenues to asset management are 1/3 of the reported number.)