Just 30 per cent of global asset management CEOs expect the global economy to improve over the next 12 months, according to PwC’s 19th Annual Global CEO Survey of 189 asset management CEOs in 39 countries.
Twenty five per cent of asset management CEOs expect the global economy to decline in 2016. This does not, however, seem to dent the confidence they have in the revenue growth they expect to see in their companies over the next one to three years.
Most asset management CEOs think ‘responsibility’ will play an important part in defining their success in five years’ time. Most significantly, 86 per cent say they will prioritise long-term over short-term profitability. Furthermore, 69 per cent say they will report on both financial and non-financial matters, while 68 per cent anticipate corporate responsibility being core to everything they do.
Barry Benjamin, global asset and wealth management leader at PwC, says: “Asset management is going through a time of fundamental change. This is a time of great opportunity for growth, yet asset managers need to become more innovative, leverage technology, manage a wider range of risks and use digital communication intelligently if they are to remain competitive. In ten years’ time the sector is likely to be far bigger, but asset management companies will look very different from today.”
In addition to the global economy, CEOs of asset managers see over-regulation, geopolitical uncertainty, volatile exchange rates and interest rate rises as threats to growth.
Some 61 per cent of asset management CEOs see shifting customer behaviours as a threat to growth, while 60 per cent view cyber security as a threat to growth, and 61 per cent see stock market volatility as threat to growth.
Mark Pugh (pictured), UK asset and wealth management leader at PwC, says: “Asset managers are on the right side of a number of powerful trends. Retirement patterns across the globe, especially in the UK with recent Pension Freedom reforms, are leading to opportunities as well as creating a wider set of stakeholders. However, there are grounds for wondering whether asset managers worry enough about some of these hazards. Are they anxious enough about cyber security, disruptive technology and changing consumer demands and expectations?”
Some 61 per cent of asset management CEOs see the speed of technological change as a threat, 85 per cent are examining how they use technology to improve stakeholder experience, and 64 per cent of CEOs believe that data and analytics are the most effective means for engaging customers.
Fifty eight per cent of asset management CEOs meanwhile, are prioritising strategic alliances and joint ventures.
Asset management CEOs are in line with the wider CEO community in their concern about the speed of technological change. The industry has an opportunity to learn from ecommerce firms who have harnessed “Big Data” successfully. By understanding how to use data, and the technology available to analyse it correctly, asset managers can address the changing expectations of both their stakeholders and their customers.
Mark Pugh, UK asset and wealth management leader at PwC, says: “As asset managers seek to fill product gaps and make the most of the opportunity to move centre stage in finance’s ecosystem, CEOs are aware they need to keep on top of the latest technological developments. For some, this means they are exploring the opportunity to keep track of, and potentially partner with, start-up and FinTech companies who have already built up strong expertise in this area. With over half of global asset management CEOs already prioritising strategic alliances, the other half of the industry can ill afford to get left behind. The ongoing possibilities being opened up utilising and analysing data will be transformational for the asset management industry.”