PwC survey finds 88% of Global Asset Management CEOs are confident of revenue growth in 2015, but almost half expect to cut costs
There is great growth potential for Ireland but we need to stay competitive
- A fifth of asset managers plan go grow through cross-border mergers
- Nearly half have entered or plan to enter a new industry
- Asset managers see their key future competitors as coming from technology
Asset management CEOs are confident about revenue growth, reveals a PwC report. The firm’s 18th Annual Global Survey of more than 1,300 CEOs, which includes responses from 155 asset management CEOs in 46 countries, found a high 88% to be either ‘very’ or ‘somewhat’ confident about their revenue growth as they look forward to 2015, rising to 95% over three years. China and the US are viewed as the most important countries for growth prospects.
The findings echo the conclusions of PwC’s ‘Asset Management 2020’ white paper. It predicts global assets under management will exceed $100 trillion by 2020, up from $63.9 trillion in 2012, with much of the growth from emerging markets in Asia and Latin America. It also predicts the emergence of new fee models and opportunities in products that could disrupt traditional banking, as well as the rise of passive fund and exchange traded funds (ETFs).
However, with fees under pressure from the rise of ETFs and passive funds, asset management CEOs remain vigilant on costs, with almost half (46%) aiming to cost cut in 2015 and 28% looking to outsource.
PwC’s survey shows a fifth of asset management CEOs plan to grow through cross-border merger in 2015 and more than a quarter through domestic mergers – a far higher percentage than for the rest of financial services.
More than a quarter reported entering a new industry over the past three years. A further 18% say they have looked into doing so. Indeed, PwC has seen asset managers disrupt banking by, for example, acquiring portfolios of real estate loans and lending to corporates. Alternative asset managers have broadened their product ranges to include private lending arrangements, primary securitisations and off-balance sheet financing.
Asset Management CEOs’ see their future competitors as coming from technology, financial services or business services. Already ‘robo adviser’ business models are appearing to threaten to disrupt wealth management through automating asset allocation.
From a business perspective, 68% of asset management CEOs are concerned about availability of key skills whilst 63% fear mounting cyber threats, such as data security, which have become an ongoing business risk. What is more, even seven years on from the financial crisis, lack of thrust in business remains a concern according to 61%.
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