Rallying equity markets and increased demand for investment services due to fundamental shifts in the financial ecosystem have boosted asset manager confidence and, according to PwC's latest survey, asset management CEOs are planning for a prolonged upswing.
“[CEOs] are 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,” Paula Smith, a UK asset management leader at PwC, said.
According to Rodney Fitzgerald, CEO at Walker Crips, the company is aiming to achieve £4bn under management within the next two years, up from the 2.5bn currently under managemen.
“We are looking at organic growth, new clients and acquisitions,” he said, adding that there will be new office openings in 2014.
Costs and regulation
PwC’s annual CEO survey found the majority expect their operating costs to rise while half believe that their ability to innovate is hampered as a result of regulation. This is mostly due to continued uncertainty around regulatory changes and the response of governments to fiscal deficits and debt burdens.
But while costs remain an important issue, it is not necessarily a main concern.
“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,” Smith said.
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.
The data
Research by PwC revealed that 97% of asset management CEOs are confident that their revenues will increase over the next three years. As part of the survey, 123 asset management CEOs in 37 countries took part. The data also also found that 52% of asset management CEOs believe that the global economy will improve over the next 12 months, a significant increase to just 19% last year. Around 58% plan to take on more staff over the coming year.
