6 Lessons RIAs Can Learn from COVID-19

The fight against COVID-19 may be ongoing, but the valuable lessons learned will serve advisory firms well in the long run, long after the virus has been defeated.

If there is something good to come from COVID-19, it is the ability to learn from this experience.

Sure, valuable lessons can be learned without a pandemic, and while nobody asked to be on lockdown for 2020, we must make do with the cards we've been dealt.

A post-COVID-19 world will not be the same as the world before it, but RIAs that adapt to the changes will be better off for it.

Below are some valuable lessons RIA can learn from COVID-19.

What RIAs Can Learn from COVID-19

Expect the Unexpected

Prior to January through March of this year, could anyone (with the exception of a few) have predicted a world in lockdown?

We've seen recessions, natural disasters, nuclear accidents, terrorist attacks, political and military conflict. We've seen public health scares before, but COVID-19 is the most severe in the last 100 hundred years.

Even small investment firms should be thinking about disaster recovery and business continuity. During bull market runs, cash reserves should be built for times like this.  Planning makes life much easier in scenarios like what we are experiencing today.

At Empaxis, we have made plans for situations like this. We did not know what thus situation would be but knew there might come a time when we would not have access to our main facility. As the virus slowly crept into other countries, we implemented contingency plans to ensure operational normalcy, and we shared our plans to our clients.

Firms that develop such plans are that much more prepared for future challenges.

Serve Existing Clients Well

Improving the client experience is an opportunity to cement long-term relationships, which ultimately helps and RIA's bottom line.

To start, reach out to all clients and be ready to address their concerns. They want to know things will be ok, a plan is in place and professionals like you are taking care of them

Just as politicians are frequently letting the public know how they are responding to COVID-19, advisors should do similarly and let their clients know. More communication is better than less.

As for the politicians, their message might not be perfect, but at least the public knows they are making an effort to do what they can. Likewise for advisors, the message may not be perfect, but clients need to know and appreciate that professionals are working on their behalf.

Next, think about digital optimization. Look at how to incorporate a cloud-based, digital platform to make it easy for clients and advisors alike to view portfolio details and communicate with each other.

Whether a firm is looking at a new platform or planning to get one for the first time, consider options. Our TAMP1 platform can help with improving the client experience.

Adopt an Opportunity Mindset

A COVID-19 market downturn does not have to mean all is lost. There will be companies and sectors that outperform the rest of the market, as these wealth managers found.

In a market selloff, assets are available for purchase at discount prices. For those with cash and the appetite to buy, now might be the time to invest; those assets will eventually appreciate. And as Warren Buffett once said, "Be fearful when others are greedy and greedy when others are fearful."

When drastic events occur, consumer habits may change, and society will place value in new solutions and ideas.

For example, think about items in grocery stores now commonly out of stock. Which companies are selling those products?

For work and school from home, think about the demand for video conferencing applications and cloud-based services.

How about home entertainment? Streaming services, online games, and toys need to keep all occupied when at home for an extended period.

Fitness? Home workout equipment will be in demand as gyms are closed.

Telecommunications? Home phone and Internet connections need to work well if people are to work and study from home.

Shipping? Demand for home delivery is up, and some companies are hiring workers in droves.

And how about fighting COVID-19 directly? Biotech and pharmaceutical companies are working hard to develop vaccines, and they need investors.

Are these good short-term or long-term investments? That is for investment managers to decide. The point is, there is opportunity out there, and one has to always be in an opportunity mindset.

Improve Remote Work Setup

As the coronavirus has RIA employees working from home, companies are adapting to their new remote work setup.

But even after the virus runs its course, people will not venture out as freely as they did before, not for the next several months at least.

And even when employees do return to the office with regularity, some remote work will remain a permanent fixture.

With that in mind, RIAs should "get comfortable" with working from home and make the necessary investments to improve remote work effectiveness.

  • Meet with team members meet regularly. Use a video conferencing system like Zoom or GoToMeeting, and use the camera. Video calls increase trust and accountability among team members.
  • Have a system in place for note sharing and internal messaging, such as Microsoft Teams.
  • Have a system to keep track of tasks and team performance. Make sure all team members are staying productive and accountable for their work.
  • Minimize reliance on remote access to locally stored servers. Consider a cloud-based system.

Remote Work Benefits

Assuming equal levels of productivity, if employees are getting work done at home as they would in the office:

  • do employees really need to commute to an office every day? After an hour of being in the car or on the train, is your employee ready to perform at the highest?
  • how much happier would employees be knowing they can work from home, at least some of the time? (Saved money saved in transportation costs, less time sitting in traffic, a reduction in carbon footprint, more time freed up for one's personal life)

How about the costs for sick days? A UK-based survey found that employees who work from home are not only happier, but they take fewer sick days than those who work primarily in an office.

Think about perception of the company. If working from home has proven effective, employees may be less willing to work with employers that are not so flexible.

Maintain Health of Employees

What the coronavirus will do is heighten our awareness of public health.

We will wash our hands and disinfect surfaces more frequently than before, and when returning to the workplace, even mild symptoms of sickness will be enough to keep ourselves and others home.

In the past, RIA staff may have felt pressure to show up even when they were a little under the weather.

But in a post-COVID-19 world, showing up sick to work will not be so tolerable or necessary. After all, working remotely has proven viable once before.

If one is mildly sick but able to work, team members should be encouraged to stay home.

Know That Better Times Have Always Returned

A pandemic is not entirely without precedent; it's just unprecedented within our lifetime. Furthermore, the impact of COVID-19 on the global consciousness is reason to believe lessons learned today should last for years if not decades to come.

For some clients and investment strategies, it may be best to stay the course. For other clients, it's best to reassess risk tolerance and asset allocation. When changing strategies, always talk with the clients.

Whatever the investment lessons learned might be, RIAs should know things get better.

Look at how US markets fared during previous crises, including the 1918 pandemic. The markets took a hit but always recovered, without exception.

Granted, some recoveries take longer than others, but one way or the other, the recoveries do happen. Patience is key.

RIA Lessons from COVID-19, Lessons Built to Last

The coronavirus is a long-term fight, but the lessons RIAs learned can only make an investment advisory firm stronger for the long run.

By truly expecting the unexpected, focusing on existing clients, looking for investment opportunity, improving the remote work setup, maintaining the health of employees, and ultimately knowing that better times do return, RIAs are covering all their bases.

The world will change, and as long as RIAs keep up with the changes, no challenge will be too big to prepare for or too small to ignore. These firms are the ones built to last.

Chat with an Expert

Get the latest in automation, investment operations technology, & outsourcing

Our monthly newsletter features helpful resources, articles, and tips to implement at your investment firm. Enter your email below to subscribe: