Over four-fifths (83 per cent) are “somewhat or extremely concerned” about over-regulation, according to a new report from  (PwC), with Europe’s MiFID II and the US Department of Labor’s Fiduciary Rule increasingly squeezing margins. Both sets of regulations are piling pressure on firms to slash fees while demanding heightened transparency. 

Geopolitical headwinds follow as the second-top concern, say 80 per cent of the 126 CEOs surveyed, with tax changes close behind (77 per cent). 

“Although optimism is a strong characteristic of asset and wealth management CEOs, they are definitely beginning to appreciate both the magnitude of potential disruption in its various guises and the challenge of  finding new ways to gain scale and differentiate their product offerings in order to maintain and grow market share,” Elizabeth Stone, UK asset and wealth management leader at PwC, said.

Despite these worries, 87 per cent of wealth and asset management CEOs are optimistic about revenue growth this year, albeit a slightly lower figure than in 2017 when 92 per cent cited high confidence levels. To facilitate growth, over half (57 per cent) of CEOs are planning recruitment drives.

Interestingly, while 70 per cent of CEOs think innovative core technologies will be “disruptive or very disruptive” over the next half decade, just 38 per cent believe robotics and artificial intelligence can improve client experience. 

As money managers bolster their technology capabilities, however, they become more vulnerable to hackers. As a result, almost three-quarters (73 per cent) of CEOs are “somewhat or extremely concerned” about cyber-security threats. 

It appears an uptick in deals is likely, as more than a third (43 per cent) of CEOs are planning mergers and acquisitions this year, while nearly half (48 per cent) intend to expand capabilities through joint ventures and alliances. These findings follow a record year for M&A in asset management in 2017, when the number of deals reached an eight-year high. 

Economies of scale, a desire to tap new markets and the need to diversify are the main drivers behind M&A, according to PwC. 

The survey’s findings show that CEOs consider the US the most important market outside their own (48 per cent) – unsurprising considering North America has the highest concentration of wealth globally. Some 40 per cent consider China most promising.