Asset and wealth managers in the UK “returned to optimism” in the first quarter of 2017, following a period of “intense pessimism”.
Fund flows grew in the three months to March – though growth is expected to slow over the coming quarter, a survey by the Confederation of British Industry and PwC found.
Despite expected lower fund flows, spreads and average fees and commissions were expected to rise, with profitability continuing to improve strongly.
Mark Pugh, UK asset and wealth management leader at PwC, said: “The industry has picked itself up and feels in a stronger position than it did six months ago. Nonetheless, the sector remains sensitive to uncertainty and potential market volatility.”
Total operating costs rose sharply in the first quarter and were expected to continue at the same pace in the coming three months. Despite this, firms continue to invest in technology, if at a lower pace in the next quarter.
Regulation and legislation were cited as the main constraint on business expansion for asset and wealth managers in the year ahead, particularly due to uncertainty over MiFID II and similar regulation.
The survey also found that respondents saw M&A playing a part in their growth strategies in the coming year, alongside organic growth strategies aimed at retaining existing customers.
©2017 funds europe
