Executives in asset and wealth management sector positive about growth

03 April 2018 Consultancy.uk 4 min. read
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The asset management sector is expecting steady growth over the coming three years, boosted by organic growth in the short-term. The segment faces pressure in terms of accessing key talent, with new ways of working, particularly digital, demanding new skills.

The asset management sector is facing a host of new challenges, as clients take a more proactive approach to managing their assets, legislation calls for more transparent fee structures, campaigns target a more diverse sector, and new technologies disrupt aspects of asset management. Meeting these challenges also offers opportunities, with cost cutting and improved investor relationships being available in some contexts.

According to a new report by PwC, titled ‘The Anxious Optimist in the Corner Office’, asset and wealth management CEOs are, for the most part, less concerned than their global counterparts about almost all of the categories of concern around company growth prospects. The largest segment remains concern around cybersecurity, with 32% of respondents citing concerns.

CEO concerns

The availability of key skills comes next, as cited by 30% of respondents. The pace of technological development, which appears to have accelerated in recent decades, and can give rise to disruption, was cited by 29% of respondents as a key concern. The area where asset and wealth managers were more concerned than their global counterparts is a lack of trust in businesses, cited by 23% vs. 22% of all CEOs. The area of least concern for the segment CEOs are: activist investors or other campaigns, readiness to respond to a crisis, and potential ethical scandals, at 13% of respondents.

In terms of key priorities going forward, the majority of CEOs said that they are looking at different ways to attract or develop digital talent. This includes 34% that say they are modernising the work environment (e.g. rolling out digital tools, creating collaborative physical environments, among others). Firms are also considering making work more flexible, including mobile working, as cited by 39% of respondents. 29% of respondents also said that they are keen on implementing continuous learning and development programmes, although this is somewhat below the global average of 42%.

Changing work conditions

Overall, the sector is relatively confident about its future revenues, with 41% saying that they are very confident and 46% saying that they are somewhat confident about their future revenues. Very few are concerned about revenue growth in the short-term (2%). A significant number of respondents (38%) also say that they are ‘very confident’ about the company’s prospect for revenue growth in the next three years, while the majority (52%) is somewhat confident. Around 1% say that they are not confident at all.

CEOs plan to fulfil growth in the short-term, via organic growth, with 79% of respondents noting it as a priority. The segment is currently less keen on relying on cost reduction, cited by 33% of respondents, although new strategic alliances and joint ventures did feature for 43% of respondents. Inorganic growth through new M&A activity came in at 43% of respondents, in line with global averages. Outsourcing is less often cited than by global peers as a route to drive growth at 14% of respondents to 21%.

Driving corporate growth

Olwyn Alexander, PwC’s Global Asset & Wealth Management Leader, said, “For the sector’s CEOs, this is a time of contrasts: optimism, growth and looming disruption which of course can bring opportunities. Although optimism among CEOs is a strong characteristic of the Asset and Wealth Management sector, CEOs do realise that fast-emerging disruptions mean the sector must urgently learn new ways to differentiate their offerings, reach the market and gain scale. With barriers to global businesses likely to rise, digital technology is an important part of the answer. While arguably, the sector may be disrupted by competition from technology companies should it emerge, as it’s beginning to in banking.”

Related: Private equity firms see assets under management approach $3 trillion mark.