What's weighing on wealth and asset managers struck by coronavirus?

Global consulting firm asks industry leaders, and shares guidance for specific challenges

What's weighing on wealth and asset managers struck by coronavirus?

The global coronavirus pandemic has brought the global economy as we know it to a virtual halt, with businesses and consumers alike struggling as their everyday lives and livelihoods are short-circuited. In the case of the wealth and asset management industry, firms have been able to adapt to new virtual work situations — but that hasn’t addressed all concerns.

In PwC’s inaugural COVID-19 CFO Pulse Survey, finance leaders from the U.S. and Mexico were asked to share their top three concerns with respect to COVID-19.

Based on answers collected on March 25, the most prevalent worry was that concerning a potential global recession, cited by 84% of respondents. Next was the financial impact of the crisis (cited by 64%), including its effect on results, future periods, and liquidity and capital resources.

Others identified concerns with reduced consumption from decreased consumer confidence (45%), supply chain issues (31%), impact on workforce or reduced productivity (29%), and difficulties with funding (15%).

Offering its own take on some issues, PwC noted that asset managers face challenges with respect to crisis management and response. Aside from stresses in various parts of the financial markets, firms have to go beyond the typical business continuity plan, which may not have accounted for a scenario requiring “more than moving operations from one place to another or deploying remote server backups.”

“Revisit and implement your crisis communication plan,” PwC said, underscoring the potentially far-reaching impact a company’s response to stressful events can have on employee, client, and public attitudes. “Post it publicly to provide transparency. Communicate with key stakeholders proactively and be ready to pivot if needed.”

PwC also recommended that firms assess and bolster their continuity plans, sharing them with key internal and external stakeholders. Clear and flexible plans to handle larger transaction volumes from shareholders and customers, as well as trades made by portfolio managers, will be important as well.

Cybersecurity is another key area, which can be addressed by reminders on best practices, random phishing exercises to identify gaps in protection, and strengthening remote access policies and procedures, among other measures.

With respect to business models, PwC stressed that failures in the traditional 60-40 balanced portfolio model could test consumer confidence and affect their spending. The company further argued that passive fund products, which proved their value during the long bull market, could lose favour amidst market volatility.

“Alternative managers, in contrast, may be positioned to invest in special opportunities at more favorable valuations, as well as distressed companies,” the firm said. “This could be an opportunity for active managers to prove their value.”


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