Executives in asset and wealth management sector positive about growth

03 April 2018 Consultancy.uk

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.

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Despite industry disruption televised sport still draws audiences

24 April 2019 Consultancy.uk

Despite the disruption wrought on most areas of traditional broadcasting by streaming challengers, sports remains a major draw for audiences of television networks. This is particularly true of viewers who bet money on sporting events, with those that have skin in the game considerably more likely to follow the event on a television screen.

Arguably the true opiate of the masses, for centuries organised sports have been a major draw for hordes of fanatical spectators, from the grand coliseums of Ancient Rome to the more understated greens of local cricket grounds. The advent of television in the 20th century took this to a new level, allowing for widespread visual access to major sporting events, and sowing the seeds of a multi-billion industry in the process. Yet while watching sport remains a key pastime for many, changing consumer preferences and new technologies are affecting the traditional sport distribution channel of TV.

To better understand trends in the sporting broadcast market, Deloitte recently released an article titled ‘Does TV Sports have a Future?’ as part of its wider ‘Technology, Media, and Telecommunications Predictions 2019’ report into telecommunications trends. The conclusions in the piece are based on the firm’s own survey of 1,062 US-based respondents.

More men than women watch sport

Traditional television has in recent years begun to lose out to streaming and on demand services, resulting in a generation that is watching considerably less television. The shift in consumer sentiment has caused traditional TV companies consternation as well as shifts in business models. The average Millennial now watches 42% fewer minutes per week of TV in 2018 than they did in 2010. Yet not all areas of the traditional television market have been as hard hit by the shift, and sport is one of them. This contradicts previous studies which may have suggested that Millennials were abandoning ‘old’ media for their sport viewing.

One reason for this could well be sports betting, which means that many of the people watching the event are keen to see how their punt is faring, in play. According to Deloitte, 78% of male sport viewers, and 64% of their female counterparts would be more likely to tune in to a live event if they had bet on it.

The study found that sport gambling remains a key fixture in the gambling industry as a whole in the UK. In the United Kingdom in 2017, sports betting had £14 billion in turnover. In the four Nordic countries, meanwhile legal gambling of all kinds was an approximate €6 billion industry in 2015. In the US, meanwhile, the industry as a whole is worth around a quarter of a trillion dollars – with sports betting figuring at around 40% of that total. The industry is projected to see growth of 9% over the coming three years.

Betting on sports is associated with watching sports on TV for more than five hours on a typical weekday

However, while the gambling industry does indeed seem to have some impact on television engagement, it would be dangerous to overstate this as a positive, and such a conclusion might also put the cart before the horse. Deloitte’s study found that ‘super-superfans’ – those who watched more than five hours on a typical weekday – were more likely to gamble than average viewers.

Of those who watch more than five hours of sport per day, only 4% do not bet. Of those, 2% do not currently bet, or have never bet, respectively. Again, it could be asserted that these people are engaging with televised sport, and thus keeping the advertising-based industry afloat, due to the betting they participate in. However, it could equally be argued that they are exhibiting compulsive behaviour in spending such a large amount of time viewing sport in the first place – behaviour which would leave them as easy prey for gambling firms, who can now milk them for profit.

But where is all this set to lead? According author Duncan Stewart, the potential profitability of this model means it is likely to be exported from the UK in the coming years.

Steward concluded, “As a thought experiment, one can imagine a 30-year-old American man in the year 2025… watching a football game on the TV set, smartphone in hand. He can bet on the match at any point, modify his wager, buy back a losing wager, bet on the outcome of individual plays or individual stats such as the number of passing yards by the quarterback—all in real time, and all tailored to him. Ads could be served that are customised for him, informed by his betting and attention, and watching would have to be 100% live. The broadcaster or betting site could not only charge more for ads seen by such an involved viewer, but even have a share in (or own outright) the profits from the betting/video stream … at margins much higher than the usual for TV broadcasting. To an American, this sounds like science fiction, but in the United Kingdom, these solutions (or variations of them) are available today.”