But industry revenue rose at a more modest rate of 6.3 per cent during this time to around $319 billion, while aggregate average fees tumbled two basis points to 48bps, according to the research by .

Investors are swaying more toward passive strategies and distributors are taking a bigger slice of the pie from managers, the firms said. US market share of passive investments has expanded from 15 per cent in 2007 to 26 per cent in 2014 – a year when passive strategies represented 93 per cent of total net new flows for US-registered products.

The findings are also symptomatic of investor migration to independent advice models: data from January shows that global exchange-traded fund assets rose by 17 per cent to $2.08 trillion in 2014, with RIAs emerging as the leading distribution channel and accounting for $413 billion in assets.

Daniel Goldstein of Manchester Capital Management told Family Wealth Report that investment advisors are increasingly working with sophisticated investors to use ETFs, index funds and passive management in some asset classes where most would agree that active management does not consistently deliver out-performance.

Meanwhile, PwC recently noted that the shift towards “no-frills,” low-cost ETF and passive products is causing active asset managers to lose market share, putting their fee models under pressure. With the aging population, there is escalating demand for fixed income and income-generating assets, according to the firm.

“Traditional active, benchmark-oriented investment managers are increasingly challenged,” said Jeffrey Levi, a partner at Casey Quirk, the management consultancy. “Winning firms will include those that can become product innovators, developing benchmark-agnostic, high-conviction new active strategies, outcome-oriented solutions providers and/or cost-effective beta providers, and are able to penetrate and grow share in the retail marketplace.”

Those firms that also focus on recruiting “talented specialists for distribution” will reap the benefits of organic growth and client retention, added Adam Barnett, head of the asset management practice at McLagan, the compensation consultancy.

"We are seeing accelerated shifts in product demand as clients and advisors move to a more outcome-oriented, objectives based model," Levi told this publication. "On one hand, some advisors are embracing beta-oriented investments such as passive index and ETFs and more recently ‘smart beta’. On the other hand, many HNW advisors are migrating their active portfolio towards what we call 'new active' – more benchmark agnostic active products that could include high conviction long-only product and increasingly alternatives. Demand for illiquids also appears to be rising quite significantly."

He added: "Asset management firms must also recognize the shifting requirements to effectively distribute to HNW advisors. We are seeing diverging practices in how HNW advisors approach investment advice. Some are leveraging a third-party solution for investments while others are building out their internal, proprietary capabilities. The sales process, engagement model and requirements to effectively interact with these advisors is rapidly changing."

The findings are based on responses from 110 investment management firms across North America, Europe and Asia-Pacific.