The power shift within the financial services industry by 2020
If you want to know where to position yourself to ensure you’re in a growth sector by 2020, PwC has a suggestion – get into asset management. While the banking sector is likely to shrink over the next seven years, asset management firms will continue to expand on the back of a surge in assets from nearly $64 trillion now, to over $100 trillion in 2020, it says.
Banks will continue to deleverage, believes PwC, which says their influence over policy makers will diminish, creating a “vacuum into which asset management will step and place itself at the centre of efforts to reinvigorate the world economy.”
Not surprisingly, key to asset managers’ ambitions for world domination will be the ability to attract the right people. Fund managers will have to step up efforts to hire retain and train staff, while partnering with universities to ensure an adequate supply of skills and knowledge is churned out of the education system.
However, a lot of this will be outside of their current key markets. South America, Africa, Asia and the Middle East (or the new PwC acronym, SAAAME) will be the key areas of growth. While currently a lot of these areas are merely distribution satellite offices, in the future they’re likely to be “regional hubs” where international firms can deploy their best and brightest and can be “used to attract and nurture talent in Africa or China for training future risk and portfolio managers, as well as regional heads of distribution, compliance and policy.”
In what could be more bad news for bankers should fund management really start to become more dominant, PwC is predicting that pay will become much more transparent – and the way it pays its staff part of the of sales process – and any incentives will be measured on nebulous concepts like customer satisfaction, quality of service and “innovative thinking”. The result will be that any institutional fund managers will have a high base salary, small bonus and any uplifts will be tied to “sustained return and reduction for excessive risk”.