Press Release, 21 November 2017
Europe's asset managers face challenges ranging from a persistent regulatory burden to intense pressure on fees, but a significant reward is in sight: a share of assets under management that are forecast to grow by an average of 6.2% annually over the next eight years, from $84.9trn in 2016 to $145.4trn in 2025, according to speakers at PwC’s Asset and Wealth Management 2017 conference in Geneva.
The fastest growth is expected to come in the developing Latin American and Asia-Pacific markets, but the European market is seen growing at 8.4% annually up to 2020 and 3.4% thereafter, taking assets from $21.9trn in 2016 to $35.7trn in 2025.
Delegates to the conference were told by Andrew O'Callaghan, PwC's EMEA Asset and Wealth Management Leader, that both traditional and alternative managers are set to benefit from new capital flowing into the industry.
"Active management is not dying - it is more important than ever, despite the growth of passive investment strategies," he said.
Worldwide assets under management of mutual funds, including exchange-traded funds, are expected to grow from $36.3trn last year to $46.5trn by 2020 and $59.5trn by 2025. Europe’s share of the fund industry is set to rise from $9.2trn in 2016 to $12.6trn in 2020 and $14.8trn five years later. The continent’s pension fund assets are forecast to grow from $8.4trn in 2016 to $13.8trn in 2020 and $17.1trn in 2025, with global pension assets reaching $53.1trn in 2020 and $64.6trn in 2025.
As a global leader in asset management and wealth management, Switzerland accounts for more than $1trn in assets under management, as well as having the world’s third largest ETF market. PwC Switzerland's Asset and Wealth Management Leader Jean-Sébastien Lassonde says: "We are investing in new technology and ideas, from artificial intelligence to fintech innovation - including supporting banks to offer bitcoin to their clients."
Wealth management is a critical area for the industry, with assets held by high net worth individuals and families forecast to rise to $93.4trn in 2020 and $119.9trn in 2025. North America will account for more than half of all HNWI assets, with Europe the next largest market with a predicted $29.2trn.
But speakers cautioned that the challenges facing both asset and wealth managers remain imposing, including managing the implementation and impact of digital transformation - an area in which the sector is regarded, in some ways unfairly, as a laggard.
Regulation continues to add to firms' costs - although the transparency being imposed by legislation such as the EU's MiFID II may also prove a benefit by helping the sector rebuild client trust in the financial industry damaged during the financial crisis.
Note to the editor
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