Over 40% of asset and wealth management CEOs have said they are planning increase scale and enter new markets via mergers and acquisitions (M&A) or strategic alliances with other groups, according to a survey conducted by PwC.
The report, entitled Optimistic CEOs, buoyant growth, disruption ahead, which interviewed 126 CEOs about the threats and opportunities facing their businesses, found 43% had M&A intentions, while 48% planned to expand capabilities through either joint ventures or strategic alliances.
The reasons for M&A motivations, the report said, was to enter new markets, increase scale and offer a more diverse product range.
M&A activity has increased dramatically in the asset management industry over recent years with the mega-mergers of Janus Capital and Henderson Global Investors, and Standard Life and Aberdeen Asset Management, which completed in August 2017, while in the ETF space Invesco announced the acquisition of Source ETF in April last year.
Furthermore, the survey also found chief executives were ambitious to access markets outside of their home base.
Some 48% of CEOs view the US, which remains the wealthiest region, as the most important market outside of their own while 40% are now looking to China.
However, 79% of respondents also said they were gearing up for organic growth in 2018, while 57% are also planning to increase headcounts.
Despite this, more than a third (39%) also intend to cut costs.
When asked about threats to their businesses, respondents said increasing regulation was the greatest worry with 83% stating they were "somewhat or extremely concerned".
In Europe and the US, the report said MiFID II and the Department of Labor Fiduciary Rule were both set to squeeze margins as they were demanding greater transparency and putting further pressure on asset management fees.
Elizabeth Stone, UK asset and wealth management leader at PwC, commented in the report: "[Chief executives] 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."
Elsewhere, it said the chief executives surveyed were losing "most sleep" over the impact and speed that technological change was having on the industry.
Seven in ten CEOs said changes in technology would be "disruptive or very disruptive" over the next five years, while 63% said they were concerned about the lack of digital skills in senior leadership.
It said: "Asset and wealth management CEOs are struggling to come to grips with how technology is changing consumer behaviour. Simply speaking, customers want better products and services, more quickly and at a lower cost."
Stone added: "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.
"It's also important not to forget the uniquely important role of human talent in this industry. Finding and retaining the best people remains a key differentiator in a competitive market."
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