Asset management company CEOs expect revenue growth in the near future, with 88 percent feeling confident about growth in 2015, and 95 percent saying they are confident about the next three years.
The results, reported in Pricewaterhouse Coopers’s (PwC’s) annual global CEO survey, echo those of PwC’s ‘Asset Management 2020’ white paper, which predicted assets under management would exceed $100 trillion by 2020, up from $63.9 trillion in 2012.
CEOs are, however, still concerned over cost-cutting, with 46 percent saying they plan to cut costs in 2015, and 28 percent planning to outsource operations. Meanwhile, 88 percent said that they mainly use technology in order to increase operational efficiency, thereby reducing costs.
Other concerns include the availability of key skills, with 68 percent citing this as an issue, and growing cyber threats such as data security, which 63 percent highlighted as a worry. In the wake of the financial crisis, 61 percent of respondents said that a lack of trust in business was a concern.
The survey also found that asset managers are diversifying, with 28 percent saying they had entered a new sector in the last three years, and a further 18 saying they had considered doing so.
According to the survey, some asset managers are acquiring portfolios of, for example, real estate loans and lending to corporates, while alternative managers have broadened their product ranges to include private lending arrangements, primary securitisations and off-balance sheet financing.
China and the US are viewed as the most important countries for growth prospects, with additional growth from emerging markets in Asia and Latin America. One fifth of asset managers said they plan to grow through cross-border mergers in 2015, and more than 25 percent plan to grow through domestic mergers, a statistic much higher than in other financial sectors.
Tax systems were also a hot topic, with 67 percent saying that an internationally competitive and efficient system should be a government priority, but about half saying that their government had failed to achieve this. More than half, however, conceded that improved regulatory coordination is increasing cross-border capital flows, with 53 percent agreeing with this.
Mark Pugh, UK asset management leader at PwC, said: “Asset managers face a volatile environment over the next three years. Future success in this sector will depend on attracting not only the most skilled investment professionals, but also talented people in areas such as technology and risk management, which 77 percent of asset management CEOs are planning to do.”
“By 2020, technology will have become mission-critical to drive customer engagement, data-mining for information on existing and potential clients, operational efficiency and regulatory and tax reporting. At the same time, cyber risk will rank in significance alongside operational, market and performance risk within the industry.”
PwC’s 18th annual global CEO survey saw responses from 155 asset management CEOs from 46 countries around the world.
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