US author Sebastian Junger’s 1997 novel The Perfect Storm is, despite its status as a bestseller, probably best known today for the idiom taken from the title. A perfect storm is a rare combination of events or circumstances which, when combined, create an unusually dreadful situation.
The combination of the coronavirus and historic market turmoil has created such an event for business developers at some of the world's largest asset managers.
According to Ulrik Holm Oxfeldt, head of Nordics at US-based firm Columbia Threadneedle, it is difficult to separate the impact of coronavirus and current market turmoil. Nobody really knows how the economy and companies will land when the crisis has settled down.
"Corona obviously limits what I can do, and as a general rule all direct client activity is canceled," he says to AMWatch.
At first, Holm Oxfeldt thought he could continue regularly interacting with potential clients by phone or on a conference call but that has been impossible, he says.
"There's basically very limited interest at the moment, given the current market environment and uncertainty," the Copenhagen-based business developer says.
In Stockholm, where Henrik Jonsson, head of Nordics at Schroders, resides, the message is similar:
"Doing business right now is obviously somewhat challenging, as our business includes many in-person meeting, and these have been reduced significantly," he tells AMWatch, adding that the UK-based asset manager was planning larger events in all Nordic countries in coming two months which are now postponed.
"Potential clients are completely swamped by monitoring their existing portfolios"
While potential client interest is limited, existing customers are eager to learn about Columbia Threadneedle's stance on current market developments, their portfolio as well as how the US-based asset manager has set up procedures to maintain business continuity, Holm Oxfeldt explains.
"When markets have declined by 30 percent or more within weeks, this is not the time for pushing for meetings with potential clients," he explains.
"Potential clients are completely swamped by monitoring their existing portfolios and day-to-day desk jobs. Even when there's specific interest, the potential client would want to meet the portfolio managers, which is currently impossible given the travel ban. As a result, I’m spending most of my time engaging with existing clients and preparing ideas for after the market has normalized," he says.
Turns to technology
At Northern Trust Asset Management, all non-essential international business travel has been halted, and all staffers are encouraged to minimize non-essential domestic travel, including office commutes.
"As the spread of COVID-19 continues, the health and safety of our workforce and clients remains our top priority. We are leveraging established policies, plans and procedures to ensure continuity of client service and global business operations. We have employed social-distancing strategies including encouraging employees to avoid large-scale, face-to-face meetings and, whenever possible, to leverage technology and communication tools such as video conferencing, Skype, etc," a spokesperson from Northern Trust Asset Management tells AMWatch.
Across Europe, a similar travel ban has already prevented staffers from European asset managers such as Amundi and Robeco to travel to client meetings in the Nordic region.
In its efforts to support clients during this market distress, Schroders has moved to other types of media, including an internal communications platform entitled SchrodersTV
"SchrodersTV offers our clients and prospects a weekly live audience with our economists, senior investors and business leaders," Jonsson tells.
"Each Tuesday for six weeks, SchrodersTV will help our clients navigate through the fast-changing macro and market conditions. This is a forum where we share market comments and other client- related matters. More broadly, however, Schroders has been investing in its technology over the past four years, empowering staff with genuinely agile working conditions and establishing a deep relationship of trust," he says.
Schroders' workforce of over 5,000 personnel have divided into two teams, those that undertake similar tasks will work in different teams.
"In some offices we have gone fully to home office, such as in Denmark, and we are fully operational in these situations," he says.
Keep focus on the long-term
The current storm's long-term impact is yet to unfold but it should already be possible to see whether a portfolio has delivered according to its label and that the asset manager had not been tempted to add more risk during the upswing.
If clients face negative performance surprises in the current turmoil, Oxfeldt Holm expects the managers will face a difficult time when markets normalize.
"Clients spend more time on their due diligence processes when selecting external asset managers. Being part of a large organization provides the ability to be flexible in disruptive circumstances, making sure that the right proceeds are in place to make clients safe when market is in distress," he says.
"I think that the future success for people in roles such as mine to attract interest in investment products will highly depend on whether the investment strategies have performed according to their label in times such as these where all markets fall," he adds.
At Schroders, the message is to keep the long-term view despite the circumstances.
"There is obviously a lot of stress, emotions and volatility in the market as people are impacted both in terms of business, but also personally. From what we can see, however, people are trying to deal with this as sensibly as they can, making short-term decisions when needed, but primarily still maintaining a long-term perspective," the Nordic head tells.
This post originally appeared on AM Watch.
