For Asset Managers, This May be Their Most Important Mid-Year Review Ever

As a matter of sound management and practice, most asset managers conduct assessments twice each year to establish goals and develop strategies to meet those goals, while monitoring their plan along the way to ensure they are on track. However, considering the unprecedented level of upheaval caused by an unexpected pandemic, even the best-laid plans are bound to fall off the rails, resulting in a current picture that looks nothing like what was envisioned six months ago.

The purpose of a mid-year review is to assess how well your strategies are working, or not working, and whether your firm is on track to achieving key milestones for the year. Under normal circumstances, such an assessment at mid-year provides ample time to tweak strategies or change direction altogether to get on track for year-end goals. For firms that are on track, it is an opportunity to ratchet things up to build on what is working.

This Year’s Mid-Year Review Takes on a Whole New Meaning

But these are not normal circumstances. With an uncertain economic outlook, anxiety-stricken investors and their advisors questioning their strategies, some asset managers have retreated into reactionary mode, hoping for a return to normalcy when it all blows over. However, for the asset management industry, the return to normal will take some time.

For those firms using the economic shutdown as an opportunity to assess their strategies, it won’t be enough to ask the typical mid-year review questions such as, What is working and why? Or What is not working, and why not? Because, not only have circumstances changed, the entire context has changed. Asset managers will not just be planning for the next six months. They may be planning for the future of their businesses.

Questions for Current Circumstances

As of this writing, the country is still in the thick of the pandemic with volatility and uncertainty driving the markets for the foreseeable future. Here are some of the vital issues many firms need to address in the next six months:

  • Is your investment strategy performing the way investors expected? For example, many alternative mutual funds did not protect portfolios, while some dividend-oriented equity funds held up reasonably well.
  • Is your investment strategy now in favor, which could spur expanded marketing efforts? Or is it now out of favor, which might require a reallocation of resources to deal with redemptions?
  • Have your priorities shifted from increasing sales to managing retention? To what extent are you continuing to prospect? Are your resources correctly allocated to achieve your priorities?
  • With travel restrictions in place, how can you utilize your sales team so they can still be productive?
  • How are you reallocating your travel budget? Virtual communications such as digital marketing or thought leadership, or a cash cushion?

Challenges for the Changing Context of the Industry

Significant new trends have been challenging the asset management industry for several years. While many firms have been gradually adapting to the challenges of fee compression, new technologies, and changing investor preferences, the events of the last few months are accelerating those trends, which has shortened the time frame in which firms must adapt.

These are among the critical issues firms need to address to secure their future:

Virtual communications tools: The COVID crisis has accelerated the demand for digital servicing. Going forward, advisors will need digital platforms to serve their clients. Tools such as chat, co-browsing, and video are no longer technological luxuries. They are must-have digital touchpoints for advisors to collaborate in real-time with clients.

Timely content development: With information being disseminated 24/7 at digital speed across multiple channels, clients have a clear expectation of timely, clarifying, and personalized responses in times of market uncertainty. The ability to meet those expectations with timely content will be the most significant differentiator among asset managers.

Marketing automation: Asset managers can no longer rely solely on asset inflation to grow their revenues. To survive, they need to achieve sustained, organic growth while retaining assets. In the context of a “don’t call us, we’ll call you” world, a digital marketing strategy supported by actionable digital analytics, is the only path forward for reaching the investment consultants and financial advisors who want to hear from you.

Sales teams: The largest sales expense to many asset managers is the sales team that includes compensation and travel. For the time being, their roles have shifted from rainmaking on the road to servicing from their homes. How can sales managers ensure they stay productive? How will sales teams continue to evolve over the next 6-12 months?

Strategy innovation and diversification: Boutique asset managers are discovering the limitations of having a single investment strategy in the current market environment, not to mention the added risk exposure. Now is time to diversify investment strategies to prepare the business for what lies ahead by focusing resources on understanding investor needs and preferences.

Under normal circumstances, the mid-year review is an opportunity to assess your plan and make the necessary adjustments to stay on course to meeting your year-end objectives. At a time of incredible change such as this, many firms will have to think through the situation and make important decisions.

Dan Sondhelm is CEO of Sondhelm Partners, a firm that helps asset managers, mutual funds, ETFs, wealth managers and fintech companies grow through marketing, public relations and sales programs. Click to read Dan’s latest Insight articles and to schedule a complimentary consultation.