A new industry study is pulling back the curtain on what large institutional investors truly pay for investment management; an eye-opener for those in the retail space.
Negotiated fees across thousands of institutional mandates reveal the true cost of pricing in asset management. Rather than relying on published fee schedules, the research focuses on actual contract terms, revealing how far fees have evolved and where further reductions may be limited.
For retail-focused advisors, the institutional data may provide a powerful benchmarking tool, helping frame conversations about cost, value, and product selection in an increasingly fee-conscious marketplace.
For years, asset managers have faced relentless pressure to reduce fees, particularly in traditional active equity strategies. Callan’s 2025 Investment Management Fee Study examines the latest data and finds that while negotiated fees have continued to trend lower, the rate of decline has moderated. In other words, institutional investors have already captured much of the easy savings.
This suggests that future fee compression in active strategies may be incremental rather than dramatic, which may surprise clients who assume fees will perpetually fall.
The study highlights just how wide the pricing gap has become between passive and active management. Institutional investors are paying extremely low basis-point fees for indexed US equity exposure, while specialized or alternative strategies still command significantly higher compensation.
A relatively small subset of investment managers captures a disproportionate share of total active management fees paid by institutions. This concentration highlights how brand strength, performance reputation, or specialized capabilities can sustain premium pricing even in a competitive environment.
The research also confirms that separate accounts remain a dominant structure in institutional portfolios, in part because they allow for customization and direct fee negotiation. While most retail investors do not have access to the same pricing leverage, the trend reinforces growing interest in customized managed accounts and model portfolios in the wealth channel.
High-net-worth and family office clients, in particular, may benefit from structures that provide greater transparency and pricing flexibility.
Institutional investors operate at a scale most retail clients cannot match, but their negotiated fee levels provide a valuable reference point. Advisors can use these benchmarks to:
"We're seeing continued pressure on actual fees paid for active management, but the pace of fee compression seems to be slowing and may be approaching a practical lower limits for quality institutional products in some asset classes," said Ivan "Butch" Cliff, study author and Callan's director of research.
Among the key findings:
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