Asset management and COVID-19 – how to deal with the impact of the global pandemic

This year has been dominated by the global pandemic and of course it is affecting every business sector in every country. As we wait to see exactly how the economic fallout will affect us globally and nationally, we must all learn to live and work along with COVID-19.

Asset management as a sector is grappling with this ‘new normal’ and adapting to new ways of working. In this blog I’m looking at the challenges facing asset management firms and business leaders.

Multiple challenges facing asset management business leaders

The kinds of challenges caused by COVID-19 include everything from how to enable remote working, implement distributed work practices, navigate difficult economic and regulatory environments and work to mitigate ever evolving risk.

We’re dealing with everything from changes to sovereign wealth funds to pension funds and all kinds of asset management classes ranging from real estate to hedge funds. At AUM Asset Management, our team is focused on supporting clients with up-to-date information and supporting staff.

We are here to help our partners, clients and customers to navigate all of these challenges and to work together to find a way through. How well asset management firms manage to do this depends on following an effective crisis management plan.

Asset management firms must follow crisis management plans

Crisis management plans should be part of every experienced asset management leader’s remit. They must be decisive, well-formed, and clearly organised. However, while many asset managers will have had crisis management plans ready for all kinds of scenarios, the unprecedented impact of a global pandemic may not have been among them.

COVID-19 presents asset management with unique challenges, particularly in terms of the scope of its impact among a constantly evolving environment. Having said this, I know that asset management leaders have the tools and the ability to minimise disruption for employees and clients. Our role is to continue to manage client assets throughout this period of uncertainty and ensure that every plan is in place to mitigate problems down the line.

It’s worth remembering that the asset management sector successfully came through the global financial crisis of 2008 and managed to thrive afterwards. In fact, this helped our industry to become more resilient and better prepared for any future challenges. And while a global pandemic and its economic impact is, in many ways, unprecedented, we have managed periods of economic crisis before.

This hard-won experience and the lessons we’ve learned from previous difficult times helps to form an optimistic and confident outlook as we collectively navigate the rest of 2020 and beyond. The first and most important step along the journey towards this ‘new normal’ lies in how we communicate.

The importance of communication for asset managers

It has arguably never been more important to communicate often and effectively. The markets are in turmoil and this will continue until the inevitable market stabilisation. COVID-19 will continue to dominate headlines everywhere for the foreseeable future, and it’s important for our clients and employees to hear regularly from business leaders.

I’ve been following the impact of the global pandemic from my vantage point in Malta, and ensuring that we are regularly communicating with clients, stakeholders, partners and staff. We are always quick to respond to queries and careful to remain accessible. It’s not possible to communicate too much in the current climate, including with employees working remotely.

Clients inevitably have urgent and pressing questions about their investments. And our role as asset managers is to provide the calm, consistent and confident voice. We must be completely on top of any developments in market conditions and our client portfolios and make it clear that protection the value of their assets is our biggest concern. Experience in managing market volatility goes a long way to reassure clients and staff alike.

Communicating with employees is the other priority for asset management business leaders. Staff of course still have questions about working arrangements, distributed working, remote working and whether there are job losses on the horizon. This is where internal communication comes in. Managers and company leaders must avoid any speculation by providing timely and honest information to staff on a regular basis. Stick with the facts and update on changes and you can’t go wrong.

It’s also possible that regulators will have questions too. Keep a two-way, open dialogue with regulators and always ensure they’re up to date with any specific stresses.

Have the right people in the crisis management team

Asset management firms must have effective crisis teams that work to provide reassurance for clients and business stability. Managers must also be aware that these crisis plans will need to evolve as the situation changes. We’ve all seen how quickly governments around the world have brought in previously unthinkable lockdown measures. Now that we are seven months into the pandemic, these are changing often on a weekly basis. This means, depending on your jurisdiction, always being ready for significant disruption.

Resiliency plans must also include the wellbeing of employees, particularly portfolio managers and those on the client front line. To ensure long-term remote working, security and tech policies and infrastructure must be up-to-date and modified. And, of course, the COVID-19 crisis continues to move. Markets are highly volatile and likely to remain so, meaning budgets for the rest of the year must be reviewed and scaled down. A good piece of advice is to completely eradicate any discretionary spending until the smoke has cleared.

The pandemic is a difficult and distressing situation. Asset management firms that can be flexible with their plans and communicate in empathetic but authoritative tones will steer their clients and employees through this crisis and out the other side.