Our 20th Annual Global CEO Survey reveals an industry that’s set for growth but also uneasy about its readiness to address the opportunities and challenges that the powerful forces of technology and globalisation will bring. While some larger firms have their eyes firmly on the future, many others are planning to continue business as usual. The sector appears slow to innovate and adapt. Our survey explores changes in talent, trust, globalisation and technology.
Is the asset and wealth management (AWM) sector preparing fast enough for the impact of new technology? Personally, and commercially, the sector’s CEOs appear less acquainted with new technologies than their peers in other sectors. So far, these technologies have disrupted AWM less than banking, for example. But will technology now start to disrupt AWM?
Looking forward five years, AWM CEOs anticipate technology will cause more disruption. Some 65% see it completely reshaping or significantly impacting competition. Yet still they appear to underestimate the threat; across financial services as a whole 77% of CEOs anticipate this happening.
While CEOs see the need to re-engineer their approach to the workforce, the sector doesn’t appear to be prioritising relevant areas such as digital skills to the same degree as other sectors. But the relatively small size of AWM firms may make them less likely to do so. There’s a drive to adapt the workforce to the broader set of skills, agility and creativity needed for the future. For instance, 79% of CEOs either ‘agree or agree strongly’ that they promote diversity and inclusiveness. Similarly, 68% either agree or agree strongly that they’ve changed their people strategy to reflect the skills and employment structures needed for the future.
Despite patchy growth across the sector in 2016, there’s irrepressible optimism about 2017. Over the past year, buoyancy in Asian wealth management contrasted with flat US asset management. Yet 92% of CEOs say they’re ‘very confident or somewhat confident’ about their firms’ revenue growth in 2017. This level of confidence is even greater than in 2016, when 90% expressed this high level of confidence. And, CEOs maintain 2017’s level of confidence for the next three years, indicating optimism about the medium term. CEOs are less sure of the global economy. Just 29% anticipate the economy will improve in 2017, while 50% expect 2016’s anaemic growth levels to persist.
Turning to the issue of low levels of trust in an increasingly digitised world, more than half (62%) of the sector’s CEOs ‘agree or agree strongly’ that it has become more difficult to gain and keep trust. With this in mind, 83% agree or agree strongly that it has become more important to run their businesses in a way that accounts for wider stakeholder expectations, while 90% think it’s important to have a strong corporate purpose that’s reflected in their values, cultures and behaviours. Our CEOs see the biggest threats to trust as cyber security breaches affecting business information or critical systems (53% worry about this to ‘a large extent’) and IT outages and disruptions (42%). Consequently, 38% are addressing cyber security to a large extent, with 41% doing the same for IT outages and disruptions.
The Chinese economy continues to undergo complex structural reforms to ensure balanced and steady development and growth. Business outlook for executives in China appears quite positive. To achieve this growth, numerous challenges combined with global economic uncertainty have to be overcome. Intense industry competition, the pace of technological development, changes in consumer spending and behaviour, difficulty with recruiting employees with advanced skills and lack of trust in business were cited as main threats to growth prospects.
Business leaders today have a great opportunity and responsibility to lead through the disruptions by demonstrating purpose and increasing trust. Find out more from our China report: Leading through disruption.