There has been a "notable dent" in confidence among asset managers during the last quarter, a poll suggests, citing difficult markets, political uncertainty and a drop in profitability at the beginning of 2016.

Auditor PwC’s latest study with the Confederation of British Industry (CBI) says the current global market turmoil has had an “inevitable knock-on effect” on confidence.

Across the wider financial services industry, the quarterly survey of 100 firms concludes that optimism has fallen at the fastest pace for over four years.

The analysis chimes with the Lloyds Bank Private Banking Investor Sentiment Index, which dropped last month to its lowest level since the benchmark began three years ago.

“Concerns over China and a volatile start to the year for markets, alongside uncertainty about a possible Brexit, have created a “perfect storm” to dampen optimism in financial services,” said Rain Newton-Smith, CBI director for economics.

“As we know from talking to CBI members, now that the UK's EU referendum date has been set some investment decisions have been put on hold by some firms, though this is not widespread,” said Newton-Smith.

In the asset management space alone, PwC says the dour sentiment is leading to a decline in prioritising new product launches and more focus on core activities such as customer retention and strategic partnerships.

“As companies begin to feel a real squeeze on margins, we are seeing a clear focus on both cost and competition,” said Mark Pugh, asset and wealth management leader at PwC.

“Investment intentions for IT remain resilient, but spending plans are being scaled back in other areas. Investments are increasingly motivated by the need to promote efficiency, while uncertainty about demand appears to be holding additional investment spending back.

Increasing competition in the sector was cited as a key threat to business expansion by over two thirds of firms over the next 12 months.

When it comes to anticipating and planning for cyber threats, asset and wealth managers are lagging behind the wider financial services industry.