Authors: Doug Fritz, CEO and Greg Negron, Wealth Technology Strategist

We are in the midst of a coronavirus pandemic that is having an unprecedented social and economic impact to individuals and businesses both domestically and globally. In addition to coping with personal and family issues associated with the crisis, wealth and asset managers are dealing with the daily challenges of running and growing their business, while ensuring that clients are receiving the appropriate level of service.

F2 Strategy’s recent propriety research, that surveyed 22 top wealth technology leaders, sheds light on how the pandemic is impacting their organizations in 4 main areas:

1. Impact to Operations and How Firms are Coping

2. Managing Remote Work

3. Impact to Planned Expenses

4. Client Engagement and Communication

The insight provided by the 22 member firms that participated in the survey is summarized below.

Impact to Operations and How Firms are Coping

Though each firm had a Business Continuity Plan (BCP) in place prior to the pandemic, the unique nature and broad scale of the crisis is requiring additional thought and consideration to address certain scenarios that may not have been previously contemplated. Under normal circumstances, firms have a percentage of their workforce that either works remotely on a full or part-time basis.  Generally, respondents indicated that their firms were well prepared for dealing with the technical challenges required to enable a partially remote workforce.  

However, the forced transition to a close to 100% remote workforce model has presented numerous additional technical and operational challenges:

How do you handle increased demand on your remote access infrastructure?

How do you handle incoming physical mail?

How do you enable investment advisors and relationship managers that are used to operating from your firm’s office and interacting with clients and prospects directly?

How do you complete operational processes that are not fully automated and completed digitally?

How do you handle increased demand for client onboarding, portfolio implementation and re-balancing?

The list goes on.  

Respondents indicated that their firms are adapting to meet the challenges – identifying opportunities to digitally enable operational capabilities; evaluating existing operational capacity and the ability to meet surges in activity; enhancing technology infrastructure to support employees (e.g., extra monitors, webcams, Bluetooth headsets). This is not an exhaustive list. In order for firms to succeed, they will need to continually assess and prioritize improvements to both operational processes and the technical capabilities that support them to enhance the client experience.

Managing Remote Work

How do you support your people as they adjust to a workforce that is 100% remote?  

How do you manage engagement, maintain your firm’s culture and provide the appropriate level of social connectivity for your employees?

Addressing these questions is critical to effectively transitioning to the new normal.  Overall, respondents replied that their teams have adjusted very well to remote work. Several have indicated that they either have experienced an increase in productivity or expect an uptick once people have settled into their new working environment. Firms are actively seeking to maintain virtual engagement and make accommodations – conducting daily huddles, hosting end of day happy hours, increasing communication, encouraging collaboration across business areas, providing additional flexibility to deal with family life during the workday, etc.

People are critical to the successful weathering of the crisis. When assessing operations and technology, firms must also evaluate the employee experience and identify optimization opportunities

Planned Expenses

Less than 20% of respondents indicated that they had been asked to explore reductions in fixed expenses. As expected, the same cannot be said for variable expenses. Approximately 75% expected some level of expense reduction or change to their expected technology and innovation plans.

Firms continue to evaluate and reprioritize initiatives, with a focus on efforts that are critical to business operations. 36% of respondents are already seeing a partial impact to variable project expenses and 45% are expecting an impact.

Firms are seeking opportunities to minimize cost and more effectively partner with existing vendors, which will reduce expenses related to onboarding and integrating new vendors. 9% of respondents have seen a significant impact to new vendor expenses,14% a partial impact and 55% are expecting an impact.

Variable projects and new vendor work efforts are typically dependent on contract/consultant resources to support planning and execution. 5% of respondents have seen a significant impact to contract/consultant expenses, 23% a partial impact and 45% are expecting an impact.

Business travel and conference expenses have experienced significant and immediate impact due to mandated travel restrictions. 55% of respondents have seen a significant impact, 36% a partial impact and 9% are expecting an impact.  

Client Engagement and Communication

Firms that participated in the survey indicated a wide range of experiences in client engagement.  Several showed near normal levels of client contact and activity, while several had significant spikes that in some cases tested response times and increased client frustration.  

When comparing client activity levels across traditional telephone, video conferencing and online client portals, 14% of respondents indicated that demand for video conferencing and online client portals “Extremely Increased” (5 on a scale of 0-5) versus5% for traditional telephone.

Interesting to note is that firms that invested in digital capabilities to support interactions with clients expressed that they felt better prepared for dealing with the need for increased engagement and that it confirmed the value of a digital strategy for their firm. In at least one instance, a firm was forced to fully implement a digital capability in support of streamlining a client facing process.  

What Next?

We are all trying our best to navigate uncharted waters as the crisis evolves.  Wealth and asset managers need to focus efforts on activities that will enable their workforce and enhance the client experience such as:

Assess and prioritize improvements to both operational processes and the technical capabilities that enhance client and employee experience.

Evaluate and prioritize spending on activities that support initiatives that are critical to business operations. 

Adjust your methods of communication as necessary to ensure effective engagement with your clients.

Review and update BCPs to reflect scenarios that were not previously contemplated.  

With the right technology strategy in place for your organization, we feel confident wealth firms will be positioned well to weather the storm. Thank you to our 22 participating members for sharing timely and relevant insights.