Revenue and headcount are on the rise—at least that's the word from investment management execs. And these top dogs are looking to burn that dough in strategic ways.
The audit, tax and advisory firm KPMG conducted a web survey in February called "KPMG's 2013 Investment Management Business Outlook," which consulted 104 senior execs at a variety of funds including mutual funds, private equity funds, hedge funds, trusts,and managed funds. The research revealed that 81-percent have seen their revenues increase over the past year, up from 60 percent in last year's survey. And optimism is in the air: 84 percent of those surveyed say they anticipate continued increase, up from 69 percent last year.
And where are these head honchos placing their money to continue growth? Geographic expansion and information
technology were shown to be the top areas of interest.
Company Press Release
Investment Managers Bullish on Revenue & Hiring, Set to Ramp
Up Spending in Technology, M&A Activity and Geographic
Expansion: KPMG Survey
Legislative and Regulatory Pressures Remain the Most
Significant Growth Barriers
NEW YORK, July 9, 2013 (GLOBE NEWSWIRE) -- Despite lingering concerns
over regulatory and political uncertainty, investment management
executives indicate revenues and headcount are on the rise, and they
appear more confident about the near-term future. They are poised to
increase spending on information technology and many are eyeing merger
& acquisition activity or geographic expansion to drive growth,
according to KPMG's 2013 Investment Management Business Outlook Survey.
However, legislative and regulatory pressures continue to loom as
ongoing business concerns.
The KPMG survey of more than 100 U.S. senior executives representing
mutual funds, private equity funds, hedge funds, trusts, managed funds
and other type of funds, found that 81 percent have seen their revenues
increase over the past year, up from 60 percent in last year's survey,
and 84 percent believe revenues will continue to increase over the next
year -- up from 69 percent last year.
When asked to identify the most promising region for asset growth, 57
percent named the U.S., while 28 percent identified the Asia and the
Executives are equally bullish on hiring with nearly half (46 percent)
saying headcount has increased over the past year, and 48 percent
expecting more hiring over the next year.
"While economic, political and regulatory uncertainty remain issues for
asset managers, they appear more focused on investing in their
infrastructure, geographic expansion and growing their businesses,"
said Jim Suglia, national advisory leader, Investment Management.
Investing in Growth
The executives were asked to identify the top areas they expect to
increase spending the most over the next year. The number one choice
was geographic expansion at 45 percent, followed by information
technology at 39 percent of those polled.
The importance of data analytics continues to rise, especially in the
areas of risk management, regulatory, competitive and customer
intelligence. Nearly 40 percent said their company has "high analytics
literacy," up from 27 percent last year, and 23 percent say their
company is "rapidly" moving toward becoming an enterprise with high
"It's becoming clear that firms that master these new tools and use
them--not only to comply with regulations but strategically integrate
them into their businesses-- will be the market leaders of tomorrow,"
said Al Fichera, national partner in charge, Alternative
Continuing to identify new areas of growth for their businesses, KPMG's
survey showed that more than half (54 percent) expect they will be
involved in some M&A activity this year.
Political and Regulatory Challenges Persist
While a number of findings in this year's survey indicate a bullish
view by investment management executives, it's clear the sector still
faces challenges. In fact, political and regulatory uncertainty remains
the biggest threat to their business models, according to 57 percent of
the investment management executives polled. However, on the positive
side, the survey found that 38 percent of those polled are "very
prepared" to manage the changes brought on by new regulations, up from
just 28 percent in last year's KPMG survey.
The survey also revealed that 49 percent of the executives believe
regulatory and legislative pressures remain the most significant growth
barrier for their business over the next year, which is down from 57
percent of those polled last year. Regulatory changes proposed over the
past five years are still being enacted and has resulted in KPMG's
survey respondents spending less money and time this year on navigating
the changes in the regulatory environment. Nevertheless, appropriately
complying with new regulations is still the most costly expense they
will incur over the next 12 months, according to 55 percent of those
Constance Hunter, KPMG's Chief Economist - Alternative Investments,
believes the survey results are consistent with the regulatory and cost
pressures many survey respondents are seeing.
"Despite concerns about the ability of the economy to grow faster in
2013, asset managers are seeing opportunities for investment and 46
percent are increasing hiring," said Hunter. "Considering the recent
positive economic data and a better base for growth in the U.S. from
housing, technology and the North American energy boom, we believe that
2013 has the potential to provide an upside surprise in terms of
economic growth and investment opportunities."
KPMG's 2013 Investment Management Business Outlook reflects the
viewpoints of 104 senior executives in the United States. The web
survey was conducted in February 2013.