Standard Life and Aberdeen set out the terms of their proposed £11 billion merger today.
They said they expected the deal to save the combined companies up to £200m in costs.
The deal comes as asset managers which charge a higher fee to make active investment decisions face twin pressures of rising regulatory costs and lower fees, amid rising competition from low-cost index-tracking rivals.
Given the industry's long tail of small and mid-sized firms, news of a tie-up between Aberdeen and Standard Life is likely to put even more pressure on other firms to follow suit.
The groups said the new company, to be headquartered in Scotland, would take a one-off £320m cash charge to cover integration costs.
Aberdeen CEO Martin Gilbert said the deal would lead to job losses where the two firms had an overlap, although it was too early to say how many would go.
Aberdeen's two-biggest investors, Mitsubishi UFJ Trust and Banking and Lloyds Banking Group, have both given non-binding statements of support to vote in favour of the planned takeover, which the companies say they expect to complete in the third quarter of 2017.