Pandemic Resiliency and Response for Asset Managers

-By Grant Thornton

Playing a critical strategic advisor role in the pandemic and beyond

The COVID-19 pandemic has created obvious short-term implications and many anticipated long-term implications. Asset management organizations are at the center of this disruption and are uniquely positioned to help working individuals, retirees, pension funds, governments and other institutions navigate global market volatility and swift re-pricing of assets based on the daily news cycle, infection rate statistics as well as fiscal, monetary and health policy responses across the world.

Top immediate impacts

Now is the time for asset managers to think beyond previous approaches to their strategic advisor role. Three critical questions will help you determine you readiness:

  • Can you still advise your clients in an effective manner?
  • Are your strategies and advice as relevant today as they were yesterday?
  • Has your cost of distribution and operations adjusted to the challenges in fund flows?

Looking at future impact & opportunities

Through our experience across all facets of the industry we have seen several trends arise, which we expect to continue to accelerate and have significant operational, accounting and tax implications:

  • Profit squeeze exacerbated. With AUMs marked down significantly, near-term revenue will put financial pressure on asset managers. Survival via M&A is a route many will take while doubling-down on efficiency and digital initiatives.
  • Digital-first and automation imperative intensifies. Scale and a comprehensive product portfolio will be a winning strategy for the largest players while specialists that deliver performance will attract significant investors. Many will be caught in the middle and seek new ways to differentiate through performance plus client experience. The automation imperative remains and all responses will need to be grounded by a dynamic data infrastructure.
  • Sustainability and ESG Integration accelerates. While the COVID-19 crisis is an exogenous event, the societal reverberations will significantly increase attention to the risks behind the “S” in ESG. Asset managers should increase focus on companies’ emergency response mechanisms, cyber security, employee benefits and operational integrity. These concepts apply to the investment process and the investment management firm itself.
  • Opportunities abound for innovative tax planning and cash management. Significant opportunities for new and innovative tax planning position you for instant cash savings while planning beyond the 2020 tax year –at an investor, fund and management company level.

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