Expect more global investment industry consolidation, predicts leading study
Investors will also shift to passive management funds while fund houses are expected to see thinner margins, CFA survey finds
More consolidation of the global financial services sector is needed, if the industry is to tackle its main challenges over the next few years, according to a new survey by the New York-based CFA Institute.
Its Future State of the Investment Profession report shows some 84 per cent of 1,145 respondents – senior executives from investment firms all over the world – said they believe there will be more mergers and acquisitions within the industry over the next five to 10 years, in every major market including US, Europe and Hong Kong.
The study concludes every strand of the financial industry faces inevitable consolidation, including fund houses, brokers, insurance and other investment firms, if they are to effectively compete.
They also face an ever-rising tide of new technological challenges, which will require considerable investment, with an emphasis on the development of so called “fintechs”, which will increasingly provide robot-based advisory services.
Those trends are already happening in Hong Kong, with rising numbers of mergers and acquisitions between mainland firms and brokerages and insurance companies in the city, for instance.
On the plus side, this helps bring in new money to the industry and provide more job opportunities but there are also hefty management challenges to handling these marriages successfully.
There have been 21 takeover deals within the Hong Kong insurance market alone since 2014, ten of them involving mainland buyers, according to the latest data from Thomson Reuters.