The asset and wealth management industry excels at problem-solving. We are now facing one of the greatest challenges of our time. Within the asset management industry, it is no longer "business as usual". Asset managers and third-party service providers need to prepare.
While there are many challenges as a result of coronavirus COVID-19, the bottom line is that the industry will survive. In fact, it will learn from the experience and become stronger for it, even possibly increasing its importance in the financial markets.
Asset managers should focus on the following four key priorities.
Businesses need to put continuity plans in place. These plans need to be continually assessed, revised and enhanced to consider new factors resulting from COVID-19.
Businesses need to ensure that employees have the necessary equipment, tools, working practices, access rights and technology to work flexibly offsite. especially with the need to minimise contact and business and community disruptions. It is essential to minimise disruption and maintain continuity. Supervisors need to keep approvals and processes moving, as well as providing clear lines of communication and support.
Stress levels may rise due to demanding clients, volatile markets and other challenges with remote working. Remember your people like the supportive infrastructure and familiar working environment of the office.
With increased remote working comes greater risks of cybersecurity issues. Reinforcement of cybersecurity policies and reminders of threats such as phishing and data breaches will be key.
Investors are naturally anxious in volatile markets. Firms can stand out with a positive customer experience during periods of uncertainty. Technology will be key to enable the "human touch" in communications, when in person meetings aren’t advised. A robust communications plan is essential in case of increased redemption activity and consultations on liquidity. Providing views on the market can show clients their captain has a steady rudder in stormy seas.
In an industry where a lot of income is asset and performance based, any downturn in markets will have an immediate negative impact on revenue. Coupling revenue challenges with the significant costs of business disruption will mean a very challenging economic situation for many businesses. Businesses that have embraced outsourcing might benefit from a more flexible cost base. Keeping service providers informed and updated, as well as assessing in-house functions for continuity of service will be essential. Operations may be challenged or stressed, so constant assessment and monitoring will be essential. Some firms may start to consider mergers or deals as the environment becomes more challenging in the weeks ahead.
Whilst the near future may not be "business as usual", many day-to-day operations will not change. Financial statements will still need to be prepared, valuations run, and regulatory reports filed.
While some countries are further along their COVID-19 journey than others, it is unclear what the landscape in the industry will look like in the coming months. There is no doubt that those who have robust business continuity and response plans in place will chart these unknown waters better than others. Those who also have clear and open communication channels with their workforce and their customers will do the same.
We know that, as uncertain as these times may seem, people, markets and economies will survive and recover. They will all emerge stronger than before.