Leading figures in asset management, including Mercer's Andrew Kirton, have predicted that the effects of the financial crisis will be far worse than first feared, while one of the foremost equity analysts covering the sector has dropped his profit forecasts for next year by 20% to 50%. The warnings are featured in Financial News' indepth investigation into the future of the financial services sector, to be published on Monday.

Speaking to Financial News, as part of a wider piece on the future of asset management, Kirton said: "The asset management industry has become bloated by the good times and surely, if the world is rational at all, time ought to have been called on mandating for investment skill, but paying primarily for market performance.