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Global Insight: Asset & Wealth Management and COVID-19

Asset & Wealth Management and COVID-19: Emerging stronger from uncertain times

By Olwyn Alexander, Global Asset and Wealth Management Leader

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We have seen recent bushfires, torrential floods, droughts and soaring temperatures, Saharan dust clouds, and now COVID-19 – a pandemic that is bringing the world into uncharted waters. What else can we expect?

The more immediate question is how does the Asset Management industry cope with this new COVID-19 world? What are the top priorities? This industry excels at problem solving and we are now facing one of the greatest challenges of our time in an increasingly globalised world that suddenly needs to raise borders and ask its citizens to batten down the hatches. Within the Asset Management Industry, it is no longer “business as usual”. Asset Managers and third party service providers need to be prepared. 

While there are many challenges to be confronted, the bottom line is that the industry, its workforce and customers, the markets and economies will survive. In fact, the industry will learn from the experience and become stronger for it, even increasing its importance in the financial markets.

Asset Managers should focus on the following 4 key priorities:

Crisis Management Assessment - businesses need to put their continuity plans in place. As a global pandemic might not have been part of a previous plan, these plans need to be continually assessed, revised and enhanced to consider new factors. See this excellent recent article by our colleagues Melanie Butler and Kristin Rivera which discusses the immediate crisis management challenges for all businesses. 

Manage your people - Businesses need to ensure that their employees have the necessary equipment, tools, working practices, access rights and technology so they can work flexibly offsite, especially with the need to minimise contact and business and community disruptions.  Essential for continuity are engaged supervisors to keep approvals and processes moving as well as clear lines of communication and support. Stress levels may rise due to demanding clients, volatile markets and other challenges with remote working, without the supportive infrastructure and familiar working environment of the “office”.

With increased remote working comes greater risks of cyber security issues. Reinforcement and reminders of cyber security policies and threats such as phishing and data breaches will be key.

The Customer - Investors - Investors are naturally anxious in volatile markets and 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, consultations on liquidity, and views on the market prognosis to show clients their captain has a steady rudder in stormy seas.

The Business - In an industry where much income is asset and performance based, the significant downturn in markets will have an immediate negative impact on revenue, not to mention performance awards. Coupling the revenue challenges with the significant costs of business disruption will mean a very challenging economic situation for many businesses, even if some governments provide fiscal measures. Businesses that have embraced outsourcing might find benefit from a more  flexible cost base. Keeping service providers informed and updated, as well as assessing the in house functions for continuity of service will be essential. Operations may be challenged and/or stressed beyond what was ever previously envisaged, 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.

Business as usual?

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, etc. While some countries seem to be further along their COVID-19 journey than others, it is unclear what the overall landscape within the industry will look like in the coming months. There is no doubt however, that those who have robust business continuity and response plans in place and who also have clear and open communication channels with their workforce and their customers will chart these unknown waters better than others. And we know that, as uncertain as these times may seem, people, markets and economies will survive and recover, emerging as stronger businesses than before. 

PwC’s Global Crisis Centre

PwC’s Global Crisis Centre provides guidance on confronting the crisis with confidence. Please join our webcast on 19 MARCH @ 13.00 GMT.

© 2020 PwC. All rights reserved. PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see www.pwc.com/structure for further details. This content is for general information purposes only, and should not be used as a substitute for consultation with a professional advisor.