UK wealth and asset managers show resilience despite Covid-19 and Brexit uncertainty

Coronavirus impact

Almost all (89 per cent) UK wealth and asset managers plan to maintain flexible working patterns for employees first introduced in response to the Covid-19 pandemic, according to a new report by Lloyds Bank.

Eight in ten (85 per cent) meanwhile, expect to use digital platforms like Microsoft Teams and Zoom to liaise with clients, while almost two-thirds (62 per cent) will use new technology to automate more work.
 
Nine in ten (89 per cent) senior leaders within the sector say they plan to maintain current staffing levels or create jobs over the next 12 months, up from three quarters (73 per cent) in 2019.
 
The figures indicate many wealth and asset management firms expect their business to show resilience despite disruption caused by Covid-19. More than nine in ten (96 per cent) say their firm’s Brexit preparations are on track and six in ten (63 per cent) expect to maintain or grow their revenues in the year ahead (91 per cent in 2019).
 
The findings are included in Lloyds Bank’s fifth annual Financial Institutions Sentiment Survey, which gathers views from major banks, asset and wealth management firms, insurers and intermediaries. The financial services sector accounts for 10 per cent of the UK’s economic output and contributes more tax revenue than any other industry.
 
However, the relative confidence relating to jobs, revenue and Brexit preparations comes as wealth and asset managers’ growth expectations for the financial services sector and the broader UK economy deteriorated year-on-year.  
 
Almost two thirds (59 per cent) of respondents expect UK economic growth to slow in the year ahead, compared to 41 per cent in 2019. Two fifths (41 per cent) expect growth in the UK financial services sector to slow over the same period (32 per cent in 2019).
 
Darren Flynn, head of wealth and asset managers at Lloyds Bank Commercial Banking, says: “A drop in confidence in the financial services industry’s growth prospects compared to last year reflects how wealth and asset managers are feeling in the midst of unprecedented disruption caused by Covid-19.
 
“While it’s encouraging to see that maintaining and growing headcount is on the agenda for more wealth and asset managers this year, economic uncertainty makes the year ahead incredibly hard to predict.
 
“Like the rest of the financial services sector, wealth and asset managers have spent the past decade de-risking and modifying their business models with the aim of increasing their resilience. The next 12 months will be critical as we see how effective those defences are.”
  
The coronavirus pandemic is seen as one of the top risks to wealth and asset managers, as cited by half (52 per cent) of business leaders. Financial market risk, such as sterling and interest rate movements and cyber-crime were cited by the same proportion of respondents (52 per cent).
 
Despite concerns over the economy and their prospects, wealth and asset managers remain committed to a focus on environmental sustainability and sustainable finance over the next three years, with 63 per cent saying Covid-19 will have no impact on their strategies. Only 17 per cent admit they will focus less on sustainability.
 
Flynn adds: “Our findings show that Covid-19 is accelerating the use of technology to help firms adapt to new working patterns. Wealth and asset managers are working hard to find ways to give their employees the flexibility and freedom to choose how they interact and adapt with each other and their clients adapt to these new ways of working.
 
“For the many challenges we have all faced throughout the pandemic, one of the most positive steps taken by wealth and asset managers has been the rapid roll out of technology for staff across the sector and the commitment to experiment with new ways of working.”

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