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Crisis = An Opportunity Not to be Missed

by Eric Daugherty

There is a silver lining around the turmoil in the financial markets over the last nine months: people are paying attention and taking things seriously. Yet some asset managers are not capitalizing on this unprecedented opportunity to be pioneers.

In 1999, I attended a contingency planning conference where the organizers polled attendees. Question: What needs to happen for contingency planning to be taken more seriously in your organization? The #1 answer: A real disaster.

Contingency budgets ballooned after the tragedy of 9/11, and there was a laser-like focus on contingency planning. The parallel to the current financial markets meltdown is clear. Investor engagement in financial affairs is at a peak not seen since the Great Depression. A Money Management Executive article from July states that more retirees are worried about their finances and that 61% are working with a financial adviser (up from 56% in 2008).

"Turbulence is life force. It is opportunity. Let's love turbulence and use it for change."
-Ramsey Clark

There is a huge opportunity for asset managers to seize the day. Some firms seem to realize this; others do not. Over the last three months, we have spoken with senior managers and executives at most of the asset management firms. Their reactions to the markets crisis fall into three clear categories:

• Denial - the thought process here is, "This too shall pass. If we just duck and cover, conduct business as usual, and let time lapse, we will wake up in 2010 and the world will be right again."
• Defensive - "This is too serious to ignore. Clients and regulators expect us to be doing something. So, let's do what we can to avoid being labeled as the bad guy, and make some cursory changes in communication, product lineups, and management to show that we are part of the solution."
• Opportunistic - "The world has changed. There is an opportunity for innovative solutions and products and there is a dearth of communication and trust. We will fill that gap. Now is the time to be bold. We are here to help our clients and to lead them to greater financial security by being a trusted partner."

Note that these attitudes exist not just for companies, but for divisions, departments, and individuals. This is important because any person or entity can drive a discussion around which of these paths to take. For example, we spoke to one sales manager who said (paraphrased), "My team cannot afford to deny that the world has changed, and we cannot wait around for our clients, our competitors, or our firm to impose change on us. We must redefine what role we play, how we play it, and how it adds value to our firm in the new reality. My job as a progressive leader is to drive that redefinition."

Now more than ever, people are looking for straight talk, simplicity, products that meet their unique needs, and advice. There will be winners that emerge from this crisis. The winners in our industry will be the ones who take the opportunistic approach to confronting the crisis and meeting it head-on.