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Asset management CEOs optimistic about future revenues, says PwC

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The majority – 97 per cent – of asset management chief executives are confident that their revenues will increase over the next three years, a survey has found.

PwC’s 17th annual CEO Survey, which includes responses from 123 asset management CEOs in 37 countries, also found that 52 per cent of asset management CEOs believe that the global economy will improve over the next 12 months – a significant increase from 19 per cent last year.
 
This buoyant outlook is reflected in the fact that 58 per cent of asset management CEOs plan to take on more staff over the coming year.
 
But continued uncertainty around regulatory changes and the response of governments to fiscal deficits and debt burdens pose the greatest challenges to their prospects with eight in 10 asset management CEOs seeing their operating costs rising and half believing that their ability to innovate is hampered as a result of regulation.
 
Paula Smith, UK asset management leader at PwC, says: “Asset management CEOs are confident about their prospects and getting more so as equity markets have rallied and fundamental shifts in the financial ecosystem increase demands for their investment services. What’s more, their optimism is taking root as they actively invest to stimulate future growth. Their expansion plans include mergers and acquisitions, investment in technology and hiring more people. They’re voting with their pocket books.
 
“Cost reduction is still important but it’s becoming less of a priority as asset management CEOs make plans for growth. It’s interesting to note that they see the best opportunities for growth in the US and Western Europe. But regulation clearly remains a strong headwind.”
 
Outside the fast-developing BRIC economies, asset management CEOs believe the big developed economies of the US, Germany and the UK will be most important for their future growth in the next three to five years. They are also beginning to look to Japan, where reflationary economic policies appear to be stoking recovery. In developing countries, asset management CEOs anticipate that China will be most important for their growth. They are also optimistic about Indonesia, which has a large population and fast-growing middle class.
 
Paula Smith, UK asset management leader at PwC, says: “As they plan for the future, asset management CEOs are firmly in expansion mode. They’re investing for both organic and inorganic growth – pursuing the former through hiring more people and increasing their technology spend, and the latter through seeking out mergers, acquisitions and joint ventures. Clearly, asset management CEOs are planning for a prolonged upswing.”

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