Expect further M&A in 2023: EY
M&A activity in the asset and wealth management space is expected to continue in 2023, according to EY, as firms see pressure on margins and profitability.
Drivers such as central bank intervention, geopolitical conflict and regulatory action would force asset and wealth managers to “accept and respond innovatively” to industry changes.
Rita Da Silva, EY Oceania wealth and asset management leader, said: “With pressure on returns, margins and profitability impacted by market conditions, and scale and consolidation seen as key answers, 2023 will continue to see mergers and acquisitions activity in the asset management industry, including in the superannuation sector, where further consolidation will push asset managers into fewer relationships.”
She also expected super funds would expand their presence in the private debt space as investors sought opportunities for high yield.
Last week, AustralianSuper announced it had entered into an agreement with US firm Churchill Asset Management to invest in traditional senior and unitranche loans to private equity-backed US middle market companies as it planned to triple its private credit exposure
In the advice space, Da Silva said the Quality of Advice Review would lead to regulatory overhaul for advisers. This was delivered to Treasury on 16 December and expected to be made public in due course.
“The delivery of advice will also be subject to regulatory overhaul during 2023, with the Quality of Advice Review expected to be delivered. Balancing these demands remains a challenging prospect for the sector.
“Regulators are focussed on operational resilience and risk management and true to label disclosures, including green washing. This will impact the whole wealth and asset management ecosystem.”
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