The latest CBI/PwC Financial Services Survey found asset and wealth managers have been in a cheerier mood in the first months of 2017, picking themselves up after a period of “intense pessimism” back in 2016.
The shift has been attributed, in part, to the anticipation of more consolidation which could help boost business expansion.
Those responding to the survey saw M&A playing a part in their growth strategies in the coming year alongside organic growth to retain existing customers.
Mark Pugh, UK asset and wealth management leader at PwC, said the push for scale and the ability to innovate quickly was driving the consolidation trend, and added he expected it would continue this year.
He said the anticpation of of consolidation in the industry itself, “seems to be a factor in the industry’s swing back towards optimism”.
Among the other optimistic signals is profitability which is expected to improve over the course of this year with spreads, average fee and commissions also expected to rise.
Business volumes grew in the first three months of the year, but this growth is expected to slow from April onwards.
Pugh said: “The industry has picked itself up and feels in a stronger position than it did six months ago.
“Nonetheless, the sector remains sensitive to uncertainty and potential market volatility.”
Regulation and legislation was cited as the biggest expected constraint on business expansion throughout this year, with a sharp rise in total operating costs and the potential impact of Mifid II and the FCA Market Study resulting in a slightly slower rate of spending on technology by managers.
