Asset managers can add rising regulatory and technology costs to their list of woes as they struggle to expand revenue amid pressure to lower fees and expenses.

Non-compensation costs, which also include back office processing and office space, make up nearly one-third of total expenses at such firms, up from 26% in 2014, according to an industry study released Tuesday by Deloitte Consulting’s Casey Quirk and Aon Plc’s McLagan.

Overall, expenses have outpaced or matched revenue growth during the past four to five years, while aggregate fees declined almost 20%, the study found. Industry revenue expanded only 8% from 2015 to 2018, reaching $289 billion. By contrast, assets jumped 20% during that period to $71.8 trillion.

McLagan Partner Adam Barnett predicts the disruption will only intensify. “Today’s environment serves as a warm-up to challenges we expect during the next market downturn,” he said. “Firms must more effectively manage their costs and clarify their value-sharing propositions with employees and shareholders.”

Implementing such initiatives may cut firm expenses by as much as 17% and also save the industry up to $13 billion, the consultants said.

“It’s now a necessity, not a luxury, for asset managers to reduce expenses by automating, streamlining data and technology, and shifting functions to lower cost locations,” said Amanda Walters, senior manager at Casey Quirk. “Performance alone isn’t going to win the day,” she said in a separate interview.

The study includes data from more than 70 investment management firms based in North America, Europe and Asia with more than $30 trillion combined. Data from Morningstar Inc. and eVestment were also used.

This story provided by Bloomberg.