In March, the global pandemic came into this country like a lion but unfortunately has yet to go out like a lamb. American society—our families, our healthcare and education systems, as well as corporate America and small businesses alike—had to navigate quickly in unchartered waters. The Covid-19 crisis brought with it significant economic market volatility. These sudden challenges came at a time when the wealth management segment was already scrambling to comply with the heightened standard of care requirements of Regulation Best Interest (Reg BI). Recognizing the irony of how this traditionally relationship-driven business would have to quickly reinvent its client service model while simultaneously complying with a client-centric regulation, I decided to canvas a variety of firms to understand their readiness for these challenges, how they have had to pivot, and what this might mean for the future.

I spoke with several financial advisors, firm leaders and operations executives from major wirehouses, independent RIAs, and leading broker dealers to learn how their firms have responded to these unprecedented conditions. The common themes gleaned from these conversations fall into three key areas of concern: 1) meeting technological challenges; 2) maintaining company culture/employee engagement; and 3) staying connected to clients.

THE “E” (ELECTRONIC) STREET SHUFFLE
Financial services firms reflect an interesting combination of innovative technology and long-standing legacy systems. In this digital age, most, if not all, firms have detailed business continuity plans in place. However, few of those plans likely accounted for an emergency that would be so all-encompassing of firm operations for the duration of time this crisis has proven to be.

Across the board, firms had to address employees’ remote setup needs including internet connectivity, laptops, monitors, VPN access. Then, at the firm level, challenges included: How sufficient is our tech stack for remote operations? Do our systems speak to each other? Do advisors have secure, remote access to critical client data? One firm explained that their VPN system was initially overloaded in the first few days of the pandemic since it went from about 1000 users to over 7000 users in the blink of an eye. Some firms had to quickly invest or expand their investment in video-conferencing services (and figure out how to train their employees remotely on how to use it). A common issue was that some employees were uncomfortable forwarding their desk phones to their personal phone numbers full time for business purposes. In addition, some firms had to scramble to quickly implement a digital signing solution. The technology checklist became as long as Santa’s naughty and nice list overnight!

HUMAN TOUCH
Firms have struggled with the loss of the coffee machine type of social interactions. There is knowledge sharing that organically happens when you are in a collaborative work environment. To fill this void, firms are turning to video conferenced town halls, “all-hands” meetings and/or daily standups. While these virtual meetings do allow for the communication flow to continue, team calls may be attended by colleagues in their pajamas which, as one advisor observed, “makes it feel like you are working with your college roommates.” Certainly, a key challenge for employers has been balancing the need to keep productivity levels up while recognizing their staff is being forced to work under unusual circumstances. And while some employees thrive (and may even prefer) working remotely, others find it very disruptive. One branch manager shared that without the daily structure of in-person collaboration, he struggled initially feeling like he was less productive. Of course, it goes without saying that the segment of the workforce with school-aged children at home had a whole other type of juggling act to factor into the equation.

In addition to sustaining employee engagement, the element of continuing the culture of the organization has been important to many firms. “We need to keep people feeling a part of something bigger than their jobs,” a firm executive emphasized. Whether it is for distinct teams or departments, or the entire firm, some companies have instituted social events like employee “virtual happy hours” or “remote yoga classes” to try to maintain camaraderie and cohesion.

THE TIES THAT BIND
Priority one for firms has been the client relationship and making sure they are meeting client needs under these extraordinary circumstances. At the onset of the pandemic, clients were anxious in the face of so much uncertainty and looked to their advisors for guidance. The wealth managers I talked to said they found themselves reaching out to clients on a much more frequent basis than usual. The clients they normally checked in with quarterly were now weekly calls. The weekly “regulars” were now on a daily speed dial loop. The difference was, those communications were now limited to only remote interactions. Some clients were accustomed to reviewing their portfolios in person with their advisor/broker. Now clients had to adapt to web presentations and video conferences. One director noted that her firm was providing virtual tutorials to help less tech-savvy clients get comfortable with using their client portal and other web-based communication platforms.

By the end of April, the market started to settle, client panic tapered off and the level of outreach began to normalize. But advisors and firms were still left with questions about how to strengthen and add value to client relationships when you are unable to spend time with your client in person. One approach mentioned was to make lifestyle-focused outreach such as sharing a movie, book or recipe recommendations. On a substantive level, firms and broker-dealer platforms have resorted to webinars to provide thought leadership to RIAs and advisors as well as underlying investors. Virtual “client appreciation” happy hours have been organized and one firm pivoted from an annual RIA/advisor retreat in the Caymans to a virtual wine tasting.
While responding to client needs remains the priority, many firms have “grounded” their advisors and employees at least through September. Additionally, as conferences and major off-site internal and external events get postponed, canceled or converted to a virtual format, the future of business travel and in-person networking remains uncertain.

BETTER DAYS
One of the most unsettling aspects of this pandemic is that we just don’t know when, or if, life will go back to “normal”. But I would posit that in the business world, we will be redefining normal and it appears that the wealth management space has adapted well to that reality. When I asked if there was any silver lining to what they’ve endured, there was no shortage of responses:

• Firms were forced to modernize their technology and address gaps that may have been lower on the priority list
• Advisors have had more frequent contact with existing clients
• Firms will be able to accommodate remote working situations for the foreseeable future which may enhance employee recruiting and productivity for staff who thrive in that environment. There also may be real estate overhead reductions as a result.
• In-person attendance for certain meetings/events may be deemed “non-essential” resulting in a decrease in travel expenses
• The “we are all in this together” element of the situation has had some positive impact on strengthening relationships with internal colleagues
• Firms/Advisors have had to be creative to meet the needs of their clients and continue to differentiate their services

This last point is particularly critical. With this week marking the start of the SEC’s enforcement of Reg BI—which requires greater disclosures to clients and an elevated standard of care—firms have invoked the spirit of this client-centric regulation in their pandemic response by placing their clients’ best interests at the forefront of their evolving operations. As the new world order continues to unfold, firms would be well-served to stay ahead of this trend by exploring new services and ways they can continue to deliver value, enhance the client experience and uphold their clients’ best interests in all areas.

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