I’m a big fan of quotes – both historic and current. Often, I’ll print out those I’ve heard or found memorable on topics such as leadership, happiness, culture and teaming and post them in my office at work or home. They serve as my ‘North Star’ to help centre and focus during these ever-changing times.
The Covid-19 situation has created significant challenges and new uncertainties for businesses and society at large. As I was reviewing EY’s recently released Capital Confidence Barometer (CCB) report, the question on the cover caught my attention: “How do you find clarity in the midst of a crisis?” A quote I have in my home office about resilience jumped out immediately:
“Resilience requires creativity and flexibility: the creativity to explore multiple viewpoints and the flexibility to embrace a positive but realistic assessment – or reassessment – of a challenging situation.”
There is no playbook for this pandemic and leaders are reconfiguring and readjusting in real time as events rapidly evolve. Resiliency isn’t just about addressing the ‘now’ but recognising the need to reassess the ‘next’ and anticipate the ‘beyond’.
Addressing the ‘now’
Like companies in most sectors, wealth and asset management (WAM) firms’ immediate focus has been on the wellbeing of their people, addressing client needs and overall business resiliency and operational continuity. Significant reduction in AuM based on market deterioration, attendant valuation and liquidity challenges are greatly impacting financial results. According to the CCB, more than 55 per cent of WAM executives expect a severe impact to their business’ profitability and margins.
Reassessing the ‘next’
Coming into 2020, many WAM organisations were in the process of executing transformational changes to their business. They may have been focusing on the digitalisation of customer experience and distribution strategies, making wholesale changes to data management and technological infrastructure, re-evaluating operating models and the use of automation, or identifying M&A opportunities for scale. But in the current environment, firms are reconsidering how essential these types of decisions are. Nearly 45 per cent of WAM executives said that due to Covid-19 challenges, they will need to re-evaluate their decisions related to speed of automation and digital transformation.
Beyond: reframing your future for the ‘new normal’
Although many organisations will face similar challenges, each will have unique needs to address as they consider how to move forward in a post-Covid-19 world. Almost 50 per cent of WAM executives stated they will need to re-evaluate operating models/supply chains.
Our team at EY foresees a significant focus on strategic cost transformation initiatives as organisations reassess third-party relationships, location strategies, operational continuity plans and workforce management. With valuations expected to be lower, nearly 40 per cent of organisations see opportunity to gain market share via M&A – though there will be a greater focus on the target’s business resiliency.
Resiliency going forward
With challenge comes opportunity. This crisis may well accelerate certain activities that had previously been plodding along. Some markets are already showing a greater openness toward virtual or digital approaches related to distribution and client interaction. New ecosystems are being created as participants recognise the sum of the parts (e.g. collaboration, partnering) may be greater than the whole (e.g. one doing everything).
We’re all in this together. Creativity, diverse viewpoints, flexibility – I see these characteristics being demonstrated by our teams and clients today. Such resiliency will be both a priority and mandate going forward. Just like we see healthcare systems uniting and sharing globally to defeat this common foe, our industry will need to do the same to drive financial wellbeing.
Mike Lee is global leader, Wealth & Asset Management, at EY. This article is a personal view from the author
