RIAs have found ways to be more efficient with workflows, but as the pandemic continues on, firms should consider physical space efficiency and their long-term office space needs.
The coronavirus is still in full swing here in the US, and even as the situation improves to where life can resemble a semblance of pre-pandemic normalcy, people’s habits and mindsets won’t be so quick to change.
For Registered Investment Advisors, that means continuing on with working from home. Fortunately, most firms have fared pretty well working remotely. According to an Investment Adviser Association survey, close to 90% of firms surveyed said the pandemic had no material impact on their business when working from home.
Nearly five months in a state of off-and-on lockdown, the industry has held up fairly well from a remote work standpoint. “If it ain’t broke, why fix it?”
The real question is what to do about your office space.
Just as idle employees reflect staffing inefficiency, office vacancy and underuse reflect space inefficiency, which costs your firm just as it would idle staff.
So, what will RIA office space needs be in a COVID-19 and post-pandemic world?
How important is it to you that you meet clients in person? Does it require an office to do so?
Also, how important are in-person meetings to the client?
If client considerations are a top priority, then think about their preferences.
Although serving the clients is most important, are the costs justified to keep a physical office if fewer clients are willing to come in?
Sure, there are other reasons to keep office space without the consideration of visitors (i.e. team-building through collaboration and direct communication).
But if having that space has primarily been a central meeting place for clients, who will come in less frequently, do you need to pay for all that space?
Similarly, as many RIAs have made a successful transition from office to home, it shows how firms can do more with less.
They don’t need all the tables, desks, chairs, couches, file cabinets, printers/copiers, phone lines, and other legacy technology.
Similarly, RIAs should look at reducing paper storage, digitizing documents on secure platforms.
In short, firms can save a lot of money by downsizing.
It’s a lessee’s market. It’s no secret that many businesses are either downsizing their office space or moving entirely to a remote operation.
With more options available, you could find a better location (maybe it comes with a view!) that gives you the space you need at a favorable rate.
Maybe you don’t need the entire office apparatus, and even though you are working remotely, you’d like to have that meeting room from time to time, with clients or coworkers.
Places like WeWork and other coworking spaces have more flexible terms.
Minimum cost of membership gives you access to a common area. If you then want an office, you can sign leases that are monthly, annually, or somewhere in between. Desks and chairs are already there, though you can bring your own if you like.
Some places let you rent meeting space for a day without having to pay for a membership. In the long run, it will save money if you have a membership and you’re using the spaces frequently, but if you need the space infrequently and your meetings are productive, it’s worth paying one-time costs as you go.
What’s more, shared workspaces simplify billing. Instead of separate bills and receipts, shared workspace pricing comes all in one, covering rent, WiFi, printing, and other office niceties like coffee, tea, and snacks.
Maybe you like where you are, but there could be a location that gives you equal space and a better location for less.
Try negotiating for a better deal at your current place. After all, you have leverage like at no other point.
Cities like New York and Chicago, for example, have seen steep drops in commercial property sales, and commercial real estate developers and investors have “gloomy and dismal expectations” for the state of California through 2023. Demand for commercial real estate is on a downward trend pretty much everywhere.
The landlord or property manager might reject your request, but who will they replace you with? Even if they find someone, the replacement won’t come quickly.
Besides, you’re already doing them a favor by staying. Not only do they maintain a stream of revenue, but increased building occupancy makes the the place look more attractive to prospective tenants. Leverage as you can.
Although much of the talk is around downsizing, there may be a case to upsize.
If bringing the entire team back to the office remains the number one priority, consider an office with more space.
Staff members and clients alike may have their concerns, and increasing the space would help alleviate fears and risk of spreading the virus.
With increasing vacancies, lessors should be more willing to negotiate leasing terms.
The pandemic has completely changed the way RIAs look at office space, as firms realize they can do more with less.
Certainly, there are many factors to consider around clients, finances, relocating, downsizing and even upsizing.
But even during a pandemic, some things never change. Investment advisory firms always look for ways to increase efficiency and improve the client experience. COVID-19 is simply the monkey wrench thrown into their plans that they must react to.
On the operations and technology front, Empaxis helps firms increase operational efficiency and simplify their technology requirements by using the TAMP1 platform. TAMP1 is cloud-based and lets RIAs see all clients’ investment data, reports, and documents in one place.
In the end, RIAs will be more efficient in all aspects, spacing being one of them.