Optimistic CEOS and buoyant growth, yet disruption looms

PwC's 21st CEO Survey: Key findings from the asset and wealth management industry

Optimistic CEOs; looming disruption 

There’s great confidence in the asset and wealth management (AWM) industry, but also acknowledgement that times are changing. While CEOs are optimistic about growth, they’re aware that they face challenges, although perhaps not the full extent of them. Those are the inescapable conclusions of PwC’s 21st CEO Survey in which 126 of the sector’s CEOs were interviewed.

Great optimism on growth

Eternal optimism about revenues is a characteristic of the sector. Some 87% of CEOs express themselves to be ‘somewhat or very confident’ about the revenue prospects for 2018 – slightly lower than in 2017 when 92% were this sanguine or 2016 when 88% were.

Some 79% of CEOs are gearing up for organic growth, compared with 76% in 2017. To prepare for this eventuality, they’re staffing up, with 57% intending to increase headcount, with an emphasis on employees with digital skills.

Yet CEOs know this isn’t business as usual. More than a third (39%) say they intend to cut costs, up from 43% in 2017. What’s more, over a third (35%) are planning mergers and acquisitions in 2018, while 48% intend to expand capabilities through either strategic alliances or joint ventures.

Looming sources of disruption

When it comes to mega trends or factors poised to disrupt existing businesses, AWM CEOs are worried, but are they worried enough?

Technology and the speed that it may change the sector is perhaps what makes them lose most sleep. Some 70% of CEOs said that they believe that changes in core technologies will prove “disruptive or very disruptive” over the next five years. Arguably, the sector is ill-prepared for competition from technology companies should it emerge.

Almost three quarters (73%) say they are “somewhat or extremely concerned” about cyber security threats, apprehensive that customer data or their own IP will be hacked.

Many CEOs also worry about key skills. They’re also struggling with changing consumer behaviour. Simply speaking, customers want better products and services at a lower cost.

Attracting digital talent

The type of talent needed for success is changing hugely. Data scientists will likely soon be just as sought after as research analysts. Senior leadership must not only run the business but understand the next generation of technology.

With that in mind, 63% of CEOs say that they are “somewhat or extremely concerned” about the lack of digital skills in senior leadership. Similarly, 67% say they are “somewhat or extremely concerned” about a lack of digital skills throughout their businesses.

Even so, they seem to under estimate the potential of digital skills. Just 38% say that they “agree or strongly agree” that robotics and alternative intelligence can improve the consumer experience.

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Marie-Anne Kong

Marie-Anne Kong

Hong Kong Asset and Wealth Management Leader, PwC Hong Kong

Tel: +[852] 2289 2707

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