It is no secret that the traditional asset management industry is in the midst of disruption. Advances in technology and the rise of low-cost indexed products has turned the business of investment management on its head. Recently, there has been a distinct trend of consolidation in mid-size asset management, as large entities with more established distribution channels acquire smaller firms. This article from Institutional Investor explores a new report from Boston Consulting Group (BCG), which predicts that the current trend is unlikely to diminish anytime soon. This creates only two viable business models for asset managers: (1) boutique investment managers that can produce reliable alpha; or (2) “distribution powerhouses”, like BlackRock or Vanguard that manage upwards of $1 trillion in assets and can reap economies of scale. Though increasing assets under management (AUM) for large asset managers that provide low-cost index products can create a positive feedback loop, BCG opines that in order for the smaller managers to succeed and thrive, those managers need to be pioneers and use data driven analytics for investment purposes. Although it is debatable if the relentless squeeze on investment management fees will continue in a meaningful fashion from current levels, it doesn’t appear as if stabilization in investment management fees will be enough to save traditional investment management firms that aren’t pivoting to accommodate the industry’s quickly changing landscape.