Asset management industry is still confident about growth, leveraging ESG and Digital and acquiring platforms is key to drive growth

23 January 2024, Hong Kong (SAR), China ("Hong Kong") – Asset managers have to fight for talent and set strategies for growth, with KPMG’s research finding an increasing appetite for mergers and acquisitions. The Asia Pacific region is experiencing increased demand for asset management platforms and other emerging markets are relatively new to asset management, both driving appetite for acquisitions.

The KPMG Asset Management CEO Outlook surveyed 80 asset management leaders of  organizations with revenues of at least US$500 million based in Australia, Canada, China, France, Germany, India, Italy, Japan, Spain, the United Kingdom and the United States, to collect their perspectives on their business and the economic landscape over the next three years. Asset management CEOs are a little less confident about economic growth than they were a year ago, but most are optimistic about both the sector and the global economy. 

Asset managers are generally still optimistic about the sector prospects, with 76% confident of growth in the industry (80% in 2022) and 73% having confidence in their own company’s growth prospects. Most of the CEOs in the research, 89%, expect their organizations to report growth over the next three years, almost unchanged from 90% in 2022.

This year’s research found that political uncertainty has shot to the top of asset management CEOs’ list of perceived threats with 16% mentioning it, up from 4% in 2022. Concern over interest rate risks remains unchanged at 15%, with asset managers having to cope with higher costs of financing while designing products with returns that exceed the greatly increased rates of risk-free assets such as government debt.

One of the biggest shifts between 2022 and 2023’s research is seen in the increasing interest in mergers and acquisitions, with 58% saying they have a high appetite and those with low appetite declining from 17% last year to 6% in 2023.

Attracting and retaining talent has risen to the top of asset management leaders’ operational priorities, with 26% of respondents mentioning it in 2023 compared with 17% in 2022. The sector still struggles with gender balance with women making up just 11% of the 80 CEOs in this research.

Asset management CEOs put advancing digitization and connectivity at the top of their operational priorities list in 2022 but it has fallen to joint third in 2023. Cyber crime and cyber insecurity moved to the top of the list of concerns that could negatively impact organizational prosperity over the next three years, with 81% of respondents seeing this as a pressing issue and 28% adding that their organization is under prepared for an attack.

Technology has allowed many staff to work remotely, but the research shows that most CEOs in the sector believe that employees should come to the office and are likely to be rewarded if they do so, such as with promotions or salary increases. Only 10% expect the working environment for traditionally office based roles to become fully remote over the next three years, with 49% expecting work to be carried out in offices. 

Generative AI is seen as a top investment priority by 69% of asset management CEOs in the survey, following the high-profile launches of services that generate text and images based on user requests. However, lack of regulation was mentioned by 51% of respondents as being highly challenging for generative AI, with 75% agreeing with the idea that regulations should mirror those for climate change commitments. 

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