This summer, Backstop assembled a roster of experts representing investment consultants, third-party marketers, and compliance advisors of industry-leading companies to discuss the impact of COVID-19 on the financial sector. To get the global perspective on this matter, we hosted webinars for both the US and EU markets.
Both panels were united in their observations on varying topics including the industry’s response to the pandemic, as well as what it means for the industry in the long run.
Let’s take a look at a few of the insights the panels shared with us.
How are People Weathering the Pandemic
Without a doubt, we’re in a unique time now. There’s no roadmap for doing business during a global pandemic.
It does, however, bring up comparisons to 2008, with events like Hurricane Sandy. But now, the financial sector is much better operationally than in 2008. Additionally, disaster recovery and due diligence practices which didn’t exist in 2008 are much more prevalent today.
For the most part, people reacted and transitioned well. They’ve been forced to evolve and be resilient to the unexpected and have managed to adjust not in a matter of weeks, but days. While performance has been difficult for some, others have done extremely well and have managed to make good money.
The Importance of Communication
As people adapt to the current reality, communication has slowed because people are still adjusting. And while everyone has thought through a remote scenario because investors have demanded it in their due diligence, now it’s implementing it.
From a business perspective, checking in is critical. Even a simple “Hey, how you doing?” lets your vendors, counterparties, and allocators know that outside your responsibilities, they have a partner and were there for them in the bad times. Talking to investors in good times – and being overly communicative in bad – keeps them informed and builds trust. This helps ensure that they don’t make any rash decisions based purely on performance numbers alone.
On an internal level, communication is also key. Make sure your people know that management is talking to each other to get ahead and stay ahead of the curve. Human interaction is still important. Even though you might not be catching up at the copy machine or meeting at the water cooler, keep doing the work as though you were. Finding ways to keep your finger on the pulse of what’s going on and reconnecting with a personal touch is vital to business.
Virtual Communication and Work Environments
With no end in sight, no one knows when we can meet face-to-face. This has created an increased reliance on virtual communication apps like Zoom or WhatsApp. But doing so comes with both positives and negatives.
One positive for businesses who may not have the travel budget to send analysts out to conferences, they can now attend virtual webinars from anywhere in the world. Smaller businesses, though, where face-to-face meetings are more important, are now missing out on these key opportunities. Communication is key and reinforces culture and keeps employees connected to the firm.
From a regulator’s perspective, with more communication being done via video conferencing and instant messenger, this raises greater concerns about security flaws and encryption, including security breaches. Technological change can help businesses operate, especially in challenging work environments, provided they put safety measures in place.
Is Capital Getting Raised?
In short, yes.
What hasn’t changed is that it’s competitive: managers are competing with thousands of other managers for dollars from institutional allocators. The fundamental problems for investors haven’t changed. Business has to move forward and the ones who can adjust will win and those who can’t will go away.
At the end of the day, investors need to make returns, interest rates are low, and equity markets have rallied. And while it’s still too early to predict defaulting and distress, there’s still a possibility to raise capital later this year.
Backstop would like to thank all the panelists who were able to take time out of their busy schedules to join us for the webinar and provide their expert analysis during these uncertain times.
For more insights into COVID-19’s effect on the financial sector, including advice for managers, thoughts on accepting relief, and what the pandemic means for ODD, access the webinar on-demand recordings below: