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March 14, 2018

Asset and wealth management CEOs positive about growth

Asset and wealth management (AWM) CEOs are optimistic about the growth prospects of their companies but are bogged down by concerns of disruptive forces including regulation, technology and changing consumer preferences, according to a report by PwC.

The study found 87% of CEOs having a positive outlook about revenue growth in 2018, versus 92% in the previous year.

The CEOs expect assets under management across the globe to surge from £61.2 trillion in 2016 to £104.8 trillion in 2025, but are aware of changes to fees, products, distribution, regulation, technology and people skills.

The biggest concern for majority (83%) of the CEOs is over-regulation, who said they are ‘somewhat or extremely concerned’ by it.

Eighty percent of the CEOs were concerned about geopolitical uncertainty, while 77% had concerns regarding tax changes.

Changes in core technologies were a cause of worry for CEOs, with 70% expecting them to be ‘disruptive or very disruptive’ over the coming five years.

As a result, 63% of the CEOs were found to be concerned about the lack of digital skills in senior leadership, while 67% were found to be anxious about lack of digital skills in their businesses.

The CEOs were also found struggling to understand how technology is changing consumer behaviour, with only 38% of the CEOs expecting robotics and alternative intelligence (AI) to enhance consumer experience.

Despite these worries, 79% of the CEOs said that they were prepping up for organic growth this year, while 57% said that they intend to increase headcount.

However, with fees under intense pressure mainly in the US and Europe, 39% of the CEOs said they plan to reduce costs.

PwC UK asset and wealth management leader Elizabeth Stone said: “Although optimism is a strong characteristic of asset and wealth management CEOs, they are definitely beginning to appreciate both the magnitude of potential disruption in its various guises and the challenge of finding new ways to gain scale and differentiate their product offerings in order to maintain and grow market share.

“Artificial intelligence, robotics, big data and blockchain are all transforming the way asset and wealth managers work. Some firms are further ahead than others in exploring these, but all firms needs to ensure technology is front and centre of their business models, especially as barriers to global business are likely to continue to rise.”

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