Despite all this upheaval, however, asset management as an industry appears to have been remarkably unaffected by events. Indeed, with the exception of the selloffs seen in the first months of lockdown, investment managers have benefitted from the strong performance of markets, whilst a number of prominent businesses have recorded increases in assets under management.
Though this is clearly a positive, it is important to recognise that the COVID-19 pandemic might have created something of an artificial environment for the investment industry and, as such, companies must avoid being lulled into a false sense of security.
The UK fiduciary management market is a case in point. Anecdotal evidence suggests that retendering is now happening at a much faster pace than was expected two years ago, when the impact of the Competition and Markets Authority guidance began to first be felt. Even more pertinently, research published last year suggested that over one-third of these retenders are moving to new managers.
A similar trend can be seen within the wider asset management market. The general consensus over the last year has been that ‘new’ mandates have been relatively few in number, with asset owners instead choosing to manage their portfolios by rebalancing and reallocating assets across managers they already employ, rather than seek new providers.
On this basis, the retention of mandates and assets might not necessarily indicate high satisfaction levels; it might simply reflect an unwillingness among asset owners to change providers during a time of considerable stress. With such pressures now hopefully coming to a final end, asset owners may well feel more comfortable about reviewing their current arrangements and making changes, particularly if their experiences over the last year have been less than exemplary.
For providers themselves: now is a time for review and subsequent action. Businesses must show they have understood the pressures their customers have felt, learning and applying the lessons of the last twelve months. Taking the temperature of an underlying client base is, quite simply, critical to long-term success in a post-COVID world.
All aspects of the ‘client journey’ need to be considered: the delivery of performance; the standards of client service delivered; the quality of reporting; the standard and volume of communications; the level of responsiveness and accessibility (particularly to portfolio managers directly responsible for client portfolios and assets); the use of technology and other solutions to navigate remote working environments.
Only by careful and thorough evaluation can asset managers know what worked, what didn’t and, critically, as a result identify clients that are at risk, even if they do not appear to be so at first glance. This, of course, then needs to be acted on quickly and efficiently.
When considering the potential impact of COVID-19 a year ago, I suggested that it represented a very important juncture for asset managers. This, I believe, still holds true and if anything has been heightened. Asset owners may have felt the need to ‘kick the can down the road’ due to COVID-19, but this will quickly change as restrictions ease. Asset managers must therefore take this opportunity to act. Those that do so can given themselves a platform for future business success; those that do not might still find themselves victims of the pandemic.