Wealth & Asset Management Post-Pandemic: What Sticks & How to Thrive

By Peter Fisher

Hysteresis: [in economics] the effects that persist even after the initial cause of the effects have long subsided.

We tend to overestimate the effect of an innovation in the short run and underestimate the effect in the long run. – Amara’s Law

The great pandemic of 2020 is now giving way to recovery and long-term adaptation. Our entire economy has experienced a pervasive shock to the system, forcing experimentation with new models across virtually all dimensions. I recently examined one financial services sector, wealth & asset management, asking: what changes will be long-lasting or even permanent, how should organizations adapt to thrive, and what opportunities lie ahead for growth-focused firms? The dynamics outlined here are not unique to the wealth & asset management (WAM) sector, of course. Rather, this was simply the most accessible empirical source of leadership perspectives, in this instance. Most of the findings and even the future outlook are either directly transferable or have similarly structured analogs in other large financial sectors, including banking, insurance, credit/payments, and fintech.

The Path of the Pandemic

2021 will likely be divided into distinct phases: the first quarter was largely a continuation of 2020 pandemic closures and social distancing regulations to mitigate virus spread as new vaccines were administered. In the second quarter, we are beginning to reach threshold levels of vaccination in the United States, enabling some relaxation of regulations. The latter half of the year should see very high vaccination levels, enabling, if not ensuring, at least a temporary return to many of our previous practices.

2022 will be the real test of what has changed. As the virus recedes in prevalence and memories, how will individuals, businesses, and policy-makers respond? It is tempting to think the pandemic was a rare black swan event that is now largely over, and that we will be permanently free to resume where we paused in March of 2020. However, at least three pandemic dynamics remain uncertain and powerful in influencing the future path, both as possible events and as drivers of continued risk-averse behavior:

1. Immunity duration – How long does immunity from the vaccines last? Lacking long-term data on vaccine effectiveness, we simply do not know. It’s possible that ongoing rounds of newly engineered vaccines will be necessary to maintain population immunity.

2. Seasonal mutation – Much like the common flu, it is possible the virus returns seasonally in modified form, requiring new and imperfectly matched vaccines to be re-administered.

3. Future pandemics – The ingredients that led to this pandemic could easily generate future pandemics of crossover pathogens. The possibility and fear that it can happen again in changed form, from any one of these three sources, will influence behaviors, and makes the future recovery path very uncertain.

Drivers of Change: Clients, Talent, Firm Operations

To gauge which effects are likely to stick longer term, we conducted informal interviews with 20 leaders of top wealth and asset managers across the spectrum of financial advisory, wealth management, and institutional asset management. They shared perspectives drawn from their leadership roles in early organizational planning for post-pandemic operations. In these conversations, expectations for the future path were ultimately driven by the interplay of top priorities across three key constituencies:

  • End clients: Priorities will be high-performance management of portfolios, ensuring that advisors address the top financial planning needs emerging from the pandemic, value pricing, and convenience/safety of advisor engagement.
  • Talent: Top priorities will be safety, workplace flexibility, reduced commute time, flexible schedules, and continuous high productivity.
  • Wealth & Asset Management firms: Priorities will be cost structure optimization, reduced office footprints, broadening of the talent pool, ensuring employee engagement and productivity, and preserving organizational culture & cohesion.

What Sticks: Predictions for Long-Lasting/Permanent Changes

  • The return to a “new normal” will be cautious and slow: There won’t be a clarion call of “all clear” for a safe return to previous activities. We are highly sensitized to public health risks, transmission mechanisms, and the uncertain validity of new information. With the threat of possible immunity reversions, new virus variants, and fluctuations in local immunity levels, the three important market actors (clients, talent, and firms) will proceed very cautiously until there is several years’ experience to draw upon.
  • Many clients will prefer virtual engagement: The convenience, feasibility, and safety of virtual client interactions has created an appetite to continue in this mode far more than before. Some client segments will be almost 100% virtual, as they realize how convenient and rich virtual meetings can be. Rapidly developing meeting technology will solidify this change. Other client segments will be highly selective about the need for in-person meetings, reserving those for annual check-ins or when discussing difficult or novel topics. And because virtual meetings are so convenient, meeting frequency will rise for some client segments as the threshold to engage is lowered. As in-person meetings become less frequent and less necessary, geographic market constraints will loosen, enabling formerly localized franchises to broaden addressable markets.
  • Client financial needs will be re-ordered and changed: Precautionary savings levels will increase, portfolio priorities will explicitly consider black swan downturns with risk mitigating allocations, estate planning will be a priority, real estate holdings will continue to shift, and the geographic proximity of clients & firms will matter less. Institutional clients will emphasize black swan resilience and asset-liability matching that explicitly considers a broad range of catastrophic events.
  • Employers and employees will prefer significant work-from-home models: Two powerful factors drive this change: improved employer cost structures and employee lifestyles. Prevalence of WFH will be driven by employee role, activities, and work pacing. Business travel will be significantly reduced, reserved for high-impact in-person events like deal closure, business partnership creation, and talent assessment. As the CEO of American Express remarked recently, “We will be more willing to let employees work remotely in the future, allowing the firm to hire talent in cities where it doesn’t have a presence. We will use our offices for team-building and networking. The work environment we come back to will not be the work environment as we left it – it’s going to be completely different.” And as a recent NBER working paper concluded after surveying 30,000 US employees regarding their preferences and employers’ planning, at least a quadrupling of work-from-home incidence is expected across the economy post-pandemic, and the upper bound in professional positions is expected to be much higher.
  • A new advisor model will emerge and grow rapidly in the market: A perfect storm of generational change in millennial client expectations, rapidly developing robo-advisor capabilities, price-sensitive engaged customers, and pandemic-fueled acceleration of these capabilities will give birth to a new robo-assisted advisor engagement model. Some clients will interact directly with robo-driven tools and communication algorithms, while direct advisor engagement will be more of a consultative wrap-around this structure to provide live client interactions where most helpful. These clients will be financially knowledgeable, tech-savvy, value conscious, and demanding. Robo engines will be augmented with AI/ML-driven behavioral tracking of clients to detect imminent actions and emerging needs, allowing the advisor to be more effective and to engage precisely at the time of need.

How to Adapt and Thrive: Implications for Leaders

Leaders in the Wealth and Asset Management sector should take immediate action, both to solidify their current market footprint and to begin evolving their business models for the longer-term changes that this pandemic experience has unleashed.

  • Engage clients on emerging needs and preferred engagement model: Clients have experienced dramatic stress and uncertainty during the past 18 months, including health threats, unexpected deaths, unemployment, sudden work-from-home arrangements, extensive virtual interaction, significant changes in portfolio values, and a reconsideration of geographic choice. Advisors need to engage, listening carefully to re-ordered priorities, fears, and aspirations, in order to retain and solidify client relationships. Expect more engagement on estate planning, geographic choices, target retirement ages, and risk-mitigating recalibrations of portfolios to account for low probability/high severity events. With client engagement, take stock of new preferences for a richer mix of virtual vs. in-person interactions and frequency. Many clients will prefer more virtual engagement longer term, both for reasons of personal safety and convenience.
  • Incorporate value-enhancing automation and robo-capabilities to pre-empt attrition: Most clients will continue to value personal management of their financial lives, but the mix between personal and automated will shift more toward virtual. The rise of robo-advising and automation has been continuous leading up to the pandemic, driven by advances in technology, relentless pressure on cost structures from fee compression, and generational shifts in the client base. The pandemic experience is likely to accelerate these changes. To pre-empt client attrition, begin selectively incorporating robo-automation and AI/ML client behavioral tracking to create the highest-value mix between personal and automated management, calibrated by the preferences of different client segments.
  • Design optimal workforce configuration: A new mixed model of employee in-person/remote configuration can improve employee satisfaction, reduce fixed overhead costs, and meet or exceed current levels of organizational performance. The ideal mix will be driven by employee role, tenure with the organization, level, and culture considerations. Well-crafted compensation and location policies will be necessary to address talents’ preferences for permanent relocation, shifting labor-market compensation rates as employees and firms relocate, and handling of compensation policies for tenured vs. newly hired talent. A good way to start is measuring employees’ perspectives through well-designed surveys and interviews to identify preferences, patterns, and expectations.
  • Re-assess office footprint & location: The ideal real estate footprint will be determined by talent preferences for in-person/remote, client engagement preferences, and prevailing real estate rates. The newly optimized footprint will likely be smaller, more flexible, less costly, and may be a mix of dedicated and shared spaces, possibly in new locations.
  • Consider expanding geographic reach for new business and talent sourcing: Geography will continue to be important but will be a significantly relaxed constraint for both clients and employees. Consider selectively developing new client relationships beyond your historic geographic markets. As markets evolve, client considerations of specific expertise, engagement model, and pricing structure can dominate location considerations as communication models become more flexible, virtual, and automated. Likewise, for some roles a broadened geographic market for talent is viable and can deliver higher value in terms of specific expertise, costs, and flexibility.
  • Continue to place a premium on flexibility: In the face of significant remaining uncertainty around the duration of C19 immunity, possible variants, and flexing public health policies, it makes good sense to build in as much flexibility around operational and business model changes as possible. Before making changes, strong weight should be placed on the adaptability and reversibility of the action. Specific criteria to examine are required investment, the extent to which investments are sunk vs. recoverable, time horizon of the commitment, effects on organizational functioning and culture, immediacy of the target benefit, and sensitivity to changes in environmental assumptions as the pandemic experience evolves.

The C19 pandemic has been a sudden systemic shock to the global economy and business operations like nothing we have seen in recent history. With new vaccines, we can increasingly return to some of the activities we once considered routine, but economies, business operations, and individual behavior will be forever changed. This permanence element is both because the effects of disease transmission will linger and evolve, and because of the ‘hysteresis’ effect – in which the new equilibrium state remains long after the original causal disturbance has subsided. In this sense, the economy is less like a rubber band and more like a sheet of stretched metal, that once pulled, remains in that state.

Leaders cannot wait “until it’s over” to make important operational and business model decisions. And we shouldn’t assume we will simply pick up again exactly where we left off in March 2020. The best leaders will develop a small set of likely scenarios, create options to pursue opportunities and optimize operations within that new landscape, and choose specific actions with an eye toward realizing maximum benefits with strategies that are as flexible as possible and robust across the broadest range of future outcomes.


Peter Fisher is a former Fidelity Managing Director, Bain Engagement Manager, and Financial Services Practice Leader with more than 20 years of experience leading efforts in strategy, business development, restructuring, product development, and market entry for companies across the financial services sector.