Sentiment within asset and wealth management improves as profits recover
AMs post rise in business volumes
Investment management firms have seen a rise in business volumes and profitability over the past three months, as sentiment within the sector continues to recover post Covid, a survey has revealed.
Sentiment among investment managers has increased over the past three months with confidence the sector's positive performance can be continued over the next quarter, findings from the latest CBI/PwC Financial Services survey show.
The survey, which was conducted between 1 and 19 September, found more companies had seen higher volumes over the past quarter, reversing a decline over the previous three months, with most also seeing rising profits.
As a result, optimism levels also jumped across the sector, despite a mixed picture across financial services as a whole.
Wealth managers 'to accelerate digital transformation'
Asset and wealth management leader at PwC UK Elizabeth Stone said the findings were "encouraging".
"We know that the asset and wealth management sector has not been as deeply affected by the economic fallout from Covid-19 as many other consumer-facing industries, however improved confidence - provides a degree of reassurance that the sector is weathering the economic storm wrought by the pandemic," Stone added.
The research suggested the increases have come as more savers switch from deposit accounts to investment plans, which have helped to boost firms' AUM growth.
While this trend is expected to continue, mounting economic stresses and changing stakeholder expectations point to further turbulence ahead.
Elsewhere, the survey highlighted a need for a further strengthening of companies' operational agility and resilience, most likely achieved through accelerating the deployment of digital technologies.
How much longer will value funds keep heads above water?
Meanwhile, credit risk is likely to rise as government support for businesses and jobs is gradually scaled back.
The firms added portfolios must be monitored closely, with some areas of the economy likely to bounce back once restrictions are eased but others such as real estate and retail likely to be negatively impacted by the pandemic accelerating structural challenges faced in those areas.
Asset managers also said they would be more focused on upskilling existing staff than recruiting new employees.
While almost two-thirds of investment managers said diversity and inclusion forms part of their business objectives, the sector lags the wider financial services complex on this metric, at one-fifth.
Almost three-quarters of firms said ESG issues were a strategic imperative, which should align with their business purpose, rather than simply a compliance requirement.
Stone added: "We are seeing an increased focus on ESG among investment managers with all participants either incorporating or planning to incorporate ESG into their business objectives.
"Given societal trends, ESG will only grow in prominence and importance over the longer term in relation to securing and sustaining mandates."
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