Jupiter CEO says asset managers are on the cusp of a revolution
The chief executive of London-listed Jupiter Fund Management has said the asset management industry is on the "cusp of a significant change".
Speaking at an event this morning hosted by Byhiras, a fintech firm which provides accountability and transparency across the industry, Edward Bonham Carter said that financial technology and machine learning would play a big part in the "revolution" of asset management.
Former banker Lord Mervyn Davies said Andrew Bailey, the head of UK regulator the Financial Conduct Authority (FCA), is "clearly looking at this industry and saying it needs to change".
But Bonham Carter said that change would happen whether regulators intervened or not, adding that there would be a "substantial reduction" in headcount in asset management.
"Is it a slow, inert industry that has arguably been buoyed up by high profits? Yes. Is it an industry that's going to look very different in 10 years' time? Yes, with or without regulators," said Bonham Carter.
Lord Adair Turner, former head of the FCA's predecessor the Financial Services Authority, echoed the sentiments. "I'm an optimist about the asset management industry, in that in 10 years' time it will be performing a very important function but doing much better than it does at the moment," he said.
"I think it has been an industry that is slow to change for two reasons: the lack of transparency or the difficulty to understand it – the difficulty of empowering customers – and the fact that the industry is organised in multiple steps in the chain. There are lots of principal-agent relationships and no one in charge of the total business."
Asset managers positive, but worried about regulation
Meanwhile a survey released by accountants PwC today showed that global asset and wealth managers are confident about revenue growth in 2018, although slightly less so than last year.
A total of 87 per cent of respondents were bullish on the year ahead, down from 92 per cent in 2017.
Chief executives at the firms named over-regulation, geopolitical uncertainty and tax changes as their biggest concerns, as the second Markets in Financial Instruments Directive (Mifid II) has been squeezing margins in the UK and continental Europe.
Though 70 per cent echoed Bonham Carter's thoughts that changes in core technologies will prove "disruptive or very disruptive" over the next five years, only 38 per cent believed that robotics and alternative intelligence (AI) can improve the consumer experience.