As someone who advises a number of institutions on their asset allocation and manager selection decisions, I have been inundated in recent weeks with information and insights from asset managers. Some have been more proactive than others, with the focus and quality of communications varying notably.
While this is obviously a challenging time for managers, there are some very clear client service issues that should be considered in the current environment.
First, and perhaps most important, is that underlying clients want to be reassured and see clear demonstrations that managers are not just reacting to the current landscape, but are being proactive in their thinking and communications. Lots of investment providers have been quick to articulate how they are responding to the crisis from a business continuity perspective, outlining the various systems and processes in place to ensure a continued and seamless delivery of service.
These sorts of communications are of course welcome, but cannot be the end of the story. In many ways these are expected and, from the perspective of asset owners and their advisers, it is now much more about thinking about the longer-term implications of what is happening and how these should be shaping asset allocation and portfolio construction decisions.
Investors will be comforted if they see their managers anticipating their needs, not only in terms of explaining what portfolios look like today, but what their expectations are moving forwards and how this will affect asset allocations. These communications also need to be as sharp and concise as possible; investors will be receiving huge numbers of updates from the managers they employ and simply will not have the time to assess endless written materials and presentations.
An excellent recent example from one manager was very straightforward in nature – a ten minute presentation, undertaken via video, outlining current portfolio positioning. This type of engagement is vital in reassuring underlying clients and therefore, from a manager’s perspective, retaining business.
A final point to note is, however, perhaps the most critical one. Put simply, maintaining normal reporting and client contact frameworks is simply not sufficient. Investors cannot wait until the next quarterly meeting with their manager to take decisions on portfolio rebalancing; these need to be done now. Similarly, immediate decisions on the extent to which hedging strategies should be used are critical, particularly in light of weaknesses in sterling.
These are only a few considerations and, over the course of this JPES series, we will assess in more detail both best practice approaches and those that are clearly lacking. The key takeaway from all of this, however, is simple: asset managers want to appear as though everything is “business as usual”; for their clients, it is anything but and managers must think first and foremost from their customers’ perspectives.