For the sixth consecutive quarter business confidence in the fund management industry has risen, acc...
For the sixth consecutive quarter business confidence in the fund management industry has risen, according to PricewaterhouseCoopers, and nearly 90% of fund managers are planning to up their marketing spend.
The quarterly survey from PricewaterhouseCoopers, conducted in conjunction with the Confederation of British Industry, found that fund managers are riding a wave of optimism and are building up capacity on the back of increased business.
It found that business confidence rose to a lesser extent in the general insurance industry and banking, and fell among building societies, life assurance and securities trading.
Fund managers' main concern, according to the survey, is the threat of losing market share to foreign competitors who will find it easier to reach UK investors due to the internet.
All of the fund managers questioned said the main driver for planned capital expenditure during the coming 12 months was to increase speed and efficiency. The survey found that this planned spend comes on the back of a significant reduction in operating costs which are expected to remain unchanged over the next three months.
The survey also found that 88% of those questioned expect to authorise greater marketing expenditure in the next 12 months than they did in the year up to 7 June. That represents a doubling of the number of fund managers who predicted the same change three months ago.
General insurance reported a rise in business confidence following increased volumes of business over the three months to 7 June.
General insurers believe interest rate rises are holding, and although the value of premium income rose at a slower rate than reported in March, an increase in growth is expected over the next quarter.
The survey revealed that the cyclical nature of general insurance business is benefiting from an upswing in the insurance cycle. It reported that 99% of general insurers said that capital expenditure over the next 12 months would be on increasing speed and efficiency. Of the insurers polled, 90% planned to increase resources for attracting new customers, a 55% rise in the number planning to raise marketing spend at the same time last year.
According to the survey, life insurers feel that they are still suffering from the bad publicity from the diminishing returns from endowments and fallout from the shift in the burden of pension provision from state to individuals. The approach of stakeholder is also increasing uncertainty.
Life assurers that responded to the survey said they were finding it increasingly difficult to increase volumes on competitive terms, although business volumes are still expected to rise over the next three months.
The survey also reported that the sector is determined to drive volumes up and in doing so, push costs down.
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