UK asset and wealth managers are optimistic about growth in the face of increased regulatory spend, according to new research.
Analysis by the Confederation of British Industry (CBI) and PwC for their Financial Services Survey found asset and wealth managers in the UK have reported an increase in overall profitability and in the value of fee, commission and premium income alongside an uptick in business from financial institutions, private individuals and overseas customers.
This means they plan to continue to invest in their people, land, buildings, technology and marketing.
Elizabeth Stone, UK asset and wealth management leader at PwC, said: “Despite ongoing uncertainty, the investment industry continues to increase its reach across the financial services sector and the optimism shown in this survey reflects the industry’s ongoing growth and rise in assets under management.
“Many asset and wealth managers find themselves in a final push to prepare for the implementation of Mifid II in January and the scale of this new regulation means continued investment in technology is required to analyse and organise vast amounts of complex data.”
The survey, which was completed during the last fortnight in August, showed asset and wealth managers believe intense competition in the sector could limit levels of business in the next year and, as a result, they intend to significantly increase marketing expenditure.
The analysis also found total operating costs in the sector continued to rise and productivity, regulatory compliance and new products will be the primary drivers behind capital expenditure over the coming year.
Ms Stone said: “It’s interesting to see the industry concerned about a lack of adequate return on their investments and I would call on firms to view the time, energy and money they have invested in compliance and technology as a strategic opportunity.
"This isn’t just about getting over the line in time for Mifid II or the General Data Protection Regulation. Firms need to think outside the box and use the new systems, skills and data they have built during compliance to understand more about the market and their customers.
"Competition undoubtedly remains intense and is increasingly coming from a number of angles - life insurers and emerging start-ups continue to push into the traditional asset and wealth management space.
"This pressure is leading firms to invest heavily in their brand, as they focus on cross-selling to existing customers.”
