Asset management

66%

of CEOs intend to make changes to their firms’ strategies over the coming 12 months.

Confident outlook

After plumbing the depths last year, CEO anxiety about the global economy is lifting. 19% expect the global economy to improve in the next 12 months, with 56% believing it will stay the same. This compares with 44% of CEOs who voiced ‘extreme concern’ last year. When viewing their own businesses, 85% of CEOs anticipate growth in the next 12 months and 94% predict growth over three years, reflecting the likely improvement in economic conditions. Volatile economic growth and government austerity policies remain the biggest economic and policy threats to growth, according to 88% and 83% of CEOs respectively.

CEOs are adapting their businesses to a radically new post-credit crisis environment

Industry in transformation
66% of CEOs intend to make changes to their firms’ strategies over the coming 12 months. The extent of change varies from one firm to another. While 10% of CEOs surveyed anticipate changing in ‘fundamental’ ways, 56% think they will only change ‘somewhat’. 39% of CEOs place mergers and alliances among their investment priorities for 2013, while 19% put innovation high on the agenda. In other words, CEOs know they need to reshape what they offer investors in a risk-averse, low-growth world where investors are asking for fresh ideas.

Uncertainty over regulation
77% of CEOs named over-regulation as a threat. Many alternative managers will be regulated for the first time under Dodd-Frank and AIFMD. And regulators are debating curbs on ‘shadow banking’ activities, while Basel III’s higher bank capital standards and OTC derivative controls are affecting investment strategies. Finally, large asset managers designated as systemically important financial institutions may have to hold more capital. CEOs are sceptical about the benefits of regulation. Just 44% agreed that government has returned the financial sector to stability after the crisis, and only 14% thought that government had reduced the regulatory burden.

Emerging market expansion
CEOs are looking to emerging markets to supplement growth in their home markets, whether through setting up local operations or attracting assets from local institutional investors such as sovereign wealth funds. They have highest hopes for the Middle East, India, Latin America and Southeast Asia. Reflecting its economic difficulties, they expect least growth from the developed region of Western Europe.

Competition for talent
CEOs see talent management as an increasingly important area for refining strategy; with 79% of those CEOs planning to change strategy anticipating doing so in this area. New models for remunerating investment professionals are emerging, just as the importance of culture and in-house talent development is increasing.

Preparing for change
CEOs need to understand the potential implications of the complex set of changes taking place in their markets, among their stakeholders as well as in their own organisations. They have to change and adapt accordingly. Depending on their individual circumstances, some will have to make significant changes, while others might only adjust in subtle ways.

 

CEO interview quotes

"If you don’t evolve and change you go backwards. It’s pure physics"


Larry Fink
Chairman and CEO of BlackRock Inc.

"In a growth environment like Turkey, building value in a company is synonymous with job creation. At any given time, you have to recruit an excess of employees in anticipation of next year’s growth. We are blessed with an economic environment in which our social contribution is in complete harmony with our business goals. So it’s a really, really nice phase we’re in. Our colleagues in the West are very jealous because ours is a nice environment to operate in."


Seymur Tari
CEO of Turkven

"There's no question that our clients are our number one stakeholder. If we don't do our job for our clients, we're hurting the schoolteachers of the world, the firemen of the world. We're hurting that insurance company that's providing annuity for that individual. And I try to make sure that every employee understands that the number of assets we manage is irrelevant. It's just a number. You have to bring it down to that individual client, whether it's a sovereign wealth fund or that schoolteacher. And we have enormous responsibility to meet the needs of those clients. To me that's the greatest stakeholder need."


Larry Fink
Chairman and CEO of BlackRock Inc.

"That sort of spirited approach to growing our businesses has a bit of a self-fulfilling prophecy because when you put your heart into it, you usually get the results you’re after."


Seymur Tari
CEO of Turkven

"In terms of efficiencies or new products, we're not interested in designing products that are the new product of the day. We're trying to design products in anticipation of, but more importantly in response to, our clients' needs."


Larry Fink
Chairman and CEO of BlackRock Inc.
These interviews contain the opinions and views of the CEOs interviewed, and do not necessarily represent the opinions and views of PwC.

 
 

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