100 days on from Covid-19 …. where are we now
Posted by Luuk Jacobs on 24 June 2020
We are around 100 days on from the domino effect of the world going into lockdown as a result of the Covid-19 pandemic. The global aim has been to save lives and health services. Undoubtedly the impact has been far reaching and enormous, affecting every aspect of our lives. As our freedoms have been reduced, and many of us find ourselves working from home, our respective worlds have become much smaller.
We’ve been pondering developments in the Wealth and Asset Management sector to build a picture of what the macro view is, and the questions this raises for our clients and their customers.
In particular, we have been exploring various areas such as returning to work what to expect in the office. Additionally, we’ve keenly examined leadership and management, target operating model as well as innovation, platforms, sales and marketing, ESG considerations and moving forward.
What the domino effect now equates to is a new timescale, as different countries are in different stages of flattening the curve and easing lockdown measures, but we are seeing some positive moves, even if there are some setbacks in places like Germany and Lisbon.
We are at the first hurdles of a new race to get back to some kind of normality. In our Coffee With… AlgoMe Consulting podcasts we have discussed at length the impact it has and will continue to have in general, on operations, leadership and innovation. Add to that sales and product development, changing ESG dynamics and social issues that have come to the forefront. A new world under construction will need to be address these far reaching and complex situations. Right now there are more questions than answers and this we see as an opportunity for healthy discussion and debate.
Returning to work
In some industries, staff have partially started to return to the office. A full return however in any industry is not even considered yet and dates are only indicative. Those who can continue to work from home are advised to do so with September being seen broadly as the return to the office.
Logistically the return to work is not just a headache for any company with regards the office set up. For staff to get to the office demands flexibility and being inventive; the number of bicycles and other alternative transport (for example electric scooters) has grown exponentially. Those with families will also struggle with childcare and those who are shielding will need extra support.
What will the office set up be like?
The big question is will everyone return back to the office. only staff linked to certain “key” activities or will it be on a rota? Equally alternative scenarios are being drawn up in which there could be a smaller central office with multiple satellite offices where staff will be working certain days of the week, other days from home and or the occasional day in the central office. The solutions will most likely be bespoke to any company and equally be driven by its specific operational set up, the culture of the company, its staff and the general willingness to embrace change.
So far, the return to the office seems to have been managed very much as a project to get the infrastructure in line with government guidance but there is a human side to be considered. Many colleagues will have gone through a challenging time, not just managing their job from home, equally managing their families and some might even have lost a family member or friend. With a future still potentially meaning working from home indefinitely how can we support staff mentally.
Last but not least to consider when it comes to returning to the office, it will be instrumental for continue to create culture, creativity, exploring new ideas and thus also innovation; Ideas might be created in a garage but execution will be by bringing people together in a room.
Leadership and management
How do we equip management with dealing with these experiences and how can we continue to motivate staff when they are working from home? How do we ensure their wellbeing at home when they are living in a 1-bedroom apartment? And not to forget the new hires that join at a time a company has become virtual, not just how will they be handling their role but how will they capture the culture of the company and create the connections with peers and management.
How do we keep abreast of what is going on in the company? How will cooperation, coordination and engagement fare and be managed while we work decentralised or from home? No doubt leadership and management styles and skills will have to be updated. (see also our article on “the six principles to lead through the Covis-19 crisis)
Target operating model
The operating models of most companies have, through the Covid-19 crisis, proven to be robust which is no surprise given that the industry is used to various levels of outsourcing as well within the same group of companies, country or city or to locations abroad; the associated management and governance structures have been in place. The question now is if they can be used as a template for staff working from home.
With the change to work from home, the focus has been on ensuring the availability of systems and initially less so on security. With the essentials in place the focus has now to shift to security to prevent cyber-attacks and data risks.
Likely the real tests will be when the current operating model is to be changed due to technological developments, innovation and regulations. Processes and procedures as well as staff’s responsibilities will as a consequence change, so how do we manage that when the company works in a virtual environment.
Covid-19 is often referred to as a great catalyst of innovation. Equally you could argue that all the technology we have been using to be able to continue to work from home has been out there for many years (Zoom was founded in 2011, Bluejeans in 2009 and Skype has been around since 2003). What has happened is a massive cultural shift in adoption of these technologies ie market penetration and created for example a much closer contact between the client and the company; webinars, podcasts and the likes are now abundantly available to all investors, institutional as well as retail.
To carry forward this cultural shift in accepting technology, we however need to realise that technology supports the solution to an identified and understood problem. If the problem is not well understood it is unlikely that the technology is going to resolve it and the company might stay behind with (another) failed project.
What it does highlight is the need for better understanding of data and the benefits it could create for a company. A first good step could be to ensure Boards and senior management have a good representation of tech savvy people.
There are only few Asset and Wealth Managers that have their own sizeable platforms through which they sell their offerings. The GAFA (Google, Apple, Facebook, Amazon) platforms have done very well in the Covid-19 environment and have been able to further increase their war chest. Will they take this moment to start thinking of entering the market for selling investment products? They not just own the clients, they have also all their personal data. With some smart AI they could design the products of the future, taking into account the needs of the clients and provide them with the outcomes they are looking for. Leaving the asset management industry only as provider of the cake’s ingredients. Or will the GAFA say, no thank you, the industry is too regulated; we know how to sell but the burden of, lack of experience or willingness to manage the regulatory environment is too daunting.
Sales & marketing
An area that has had potentially the biggest impact is the relationship-led area of business; which focuses on sales and marketing. Engagement with clients has moved completely online and only video – conference calls no longer cut it. Travel to meet clients has largely disappeared as there are risks involved for those who do. How much of this will come back? How much of this needs to come back? Will we see technological innovation really enter the sales side with significant digital communication with the clients. And if so, what will this look like, how do we create the long-term trusted relationship (especially in wealth management), can we use innovative tools to better understand the needs of the individual client or potentially multi-generational families.
ESG considerations were becoming higher on the agenda pre Covid-19 and probably have even become more to the forefront given the positive impact we have seen on pollution levels during Covid-19; they were reduced to almost zero and showed what would be possible if we set our mind to it. Not a long-lasting impact for now however as with the easing of the lockdown, pollution has gone back to normal levels and nature has gotten a “paracetamol” but not a vaccine.
This brings up the question, if we want to make a real difference to our environment, should we not think beyond ESG and move to the wider concept of Impact and impact investing? This would mean measuring our actions (business decisions, investments, etc.) against the benefits to society and the planet, look beyond the measurement of risk and return of our activities and focus on the outcomes it creates.
Many challenges lie ahead, and the most urgent have been (partially) answered or even put in place already but there is more to be done. More strategic thinking is needed before the right solutions can be put in place and this will take time. As challenging as the past 100 days might have been, it has and will create further opportunities. Although technology is not the answer to everything, it has shown in the past 100 days that it can significantly support and even improve the business.
We can only imagine how it could change our industry if we wholeheartedly embrace the current situation of change, better understand it and start with identifying and understanding the real issues and challenges. This then can improve further efficiency in our operations but equally enter innovation for the products and services to clients, beyond the marketing and regulatory communication, and provide the outcomes clients are looking for.
Podcast 5 Coffee with AlgoMe Consulting innovation – What is Covid-19 bringing to the Wealth and Asset Management industry?
Posted by Luuk Jacobs on 6 July 2020Read post