The results were part of PwC’s 20th annual chief executives survey for the asset and wealth management industry released on Monday. The survey included responses from 185 asset and wealth management chief executives in 45 countries.
Barry Benjamin, PwC’s global asset and wealth management leader said: “Technology is a disruptive force and I am amazed by how low the sector’s survey responses are around digital and cyber security.
“This industry is not thinking as agilely around technology and disruption as it should…Some chief executives are looking into this but our survey shows too many of them are not. There’s a real risk of firms being swept aside.”
Positive growth outlook
The PwC report did show great confidence by the asset and wealth managers revenue growth outlook for the next 12 months and the next three years, with almost two thirds (64%) of industry leaders planning to expand recruitment.
“Confidence is high, but the sector is showing signs of being slow to innovate and adapt."
About 92% of the top executives said they were confident of growth over the next 12 months, higher than the average across other financial services sectors of 86%.
Nevertheless, most said that margins are under pressure.
Worries abound
Other concerns cited by the chief executives were uncertain economic growth (84%), over-regulation (79%) and the increasing tax burden (77%).
Reflecting global instability, the survey respondent were also focused on geopolitical uncertainty (69%), the future of the eurozone (64%), exchange rate volatility (63%) and social instability (69%).
London standing
There was good news for the UK asset and wealth management industry post-Brexit, with London still ranked as one of the three most important cities, alongside New York and, surprisingly Beijing.
While New York was ranked unsurprisingly as No. 1 of the three by 23% of chief executives, London and Beijing both received votes from 21%. Beijing’s vote compared with traditional centres like Hong Kong, which got 17% of the vote, and Shanghai with 15%. Singapore is only mentioned by 9% of asset management chief executives as an important centre for growth.
M&A activity
Looking ahead, 52% of chief executives were planning strategic alliances or joint ventures and 41% are planning a merger or acquisition to drive profitability.
Andrew Formica, chief executive of Henderson Asset Management, explaining the logic behind his firm’s merger with Janus said: “I would say, over the last few years, it has become harder to be able to invest in the business for future growth, as some of the more mandatory requirements, driven by regulatory change, have eaten into any budget you would have in that.”
Just 27% of groups are considering collaboration with start-ups, though 68% admit they have already changed their people strategy to recruit, develop and retain future skills.
