Confidence in the 12 month and three year outlook for revenue growth in asset and wealth management has grown again, with almost two thirds (64 per cent) of industry leaders planning recruitment, a survey shows.
PwC polled the sector’s CEOs as part of the 20th annual CEO Survey, and found 92 per cent confident of growth over the next 12 months, higher than the average across financial services sector (86 per cent).
Some 185 asset and wealth management CEOs from 45 countries were surveyed, revealing an industry confident about its growth, yet showing signs of being slow to innovate and adapt to opportunities. Only 10 per cent of CEOs plan to strengthen their digital capabilities, compared with 23 per cent across financial services, despite two thirds of CEOs being concerned that the speed of technological change is a threat to growth.
Sixty eight per cent admit they have already changed their people strategy to recruit, develop and retain future skills, but just 27 per cent say they want to collaborate with start-ups, confirming the sector’s reluctance to innovate and tap into an area known for its agility and highly sought skillsets.
Fifty two per cent of CEOs are planning strategic alliances or joint ventures and 41 per cent are planning a merger or acquisition to drive profitability, while 62 per cent say it has become more difficult to gain and retain trust in the sector, reflecting a financial services wide concern about falling levels of trust in business.
OECD economies meanwhile, are viewed as the most important for the sector’s growth in 2017. This year’s responses showed a big shift towards the US as a key market, with over half (54 per cent) judging it to be the most important market outside their home market, vs 39 per cent last year. China (28 per cent), Germany (25 per cent) and the UK (18 per cent) also score highly in 2017.
Focusing on the financial centres that are most important for the sector’s growth, CEOs put New York top. London ties with Beijing for second, as China’s capital continues to emerge as a global wealth management centre.
Mark Pugh (pictured), UK asset and wealth management leader at PwC, says: “Confidence is high, but the sector is showing signs of being slow to innovate and adapt – particularly to technology and a changing customer base. The sector demonstrates a dramatic need to drive technology adoption, global expansion, and recruit new talent.
“Their muted responses to issues on technology show some firms are planning on continuing business as usual and it’s difficult to escape the conclusion that some are at real risk of being swept aside by those already taking action.”
CEOs’ five biggest concerns in the sector are the availability of key skills (71 per cent), the speed of technological change (66 per cent), changing customer behaviour (64 per cent), lack of trust (61 per cent) and cyber threats (59 per cent).
Despite concern about technology’s speed of change, CEOs believe that, over the past 20 years, it has had less of a transformative impact on the sector than other financial services areas.
Just 53 per cent believe technology has completely reshaped or significantly impacted competition in the sector, vs 74 per cent of banking and capital market leaders. By contrast 77 per cent of CEOs across financial services see technology doing the same again within five years, vs only 65 per cent of AWM leaders.
