The Best Offense is a Good Defense
Introduction
No matter your market views right now, everyone would agree that we are in a period of intense uncertainty that has shocked the economy and the markets. There are many divergent views on how recovery will play out, not just in the coming months, but in the next year or two. COVID-19 has fundamentally changed how advisors should look at their business and operations. The full impact of COVID-19 is still unclear. Advisors can no longer rely on the AUM tailwind to drive revenue growth. Advisors must now focus on the expense side of the income statement, both cutting costs and investing in technology. The firms that will outperform their peers will do two main things:
1. Increase capacity while reducing costs
2. Leverage technology to differentiate
The firms that effectively accomplish these two tasks will be well-positioned to navigate the current climate and to accelerate growth in a post-COVID-19 environment.
Scaling smartly
COVID-19 has caused advisors to look at their businesses to identify areas to improve operational efficiencies. Optimizing middle and back-office processes will yield the greatest return on investment, including increasing capacity to process more portfolios, orders and trades while simultaneously cutting costs. Market volatility and trading volume are highly correlated and driven by behavior (both rational
and irrational), so it is imperative for firms to have the additional headroom to support unforeseen trading volume spikes. By automating the labor-intensive rebalance, trade, and allocation workflows, firms will be able to react quickly and effectively to these situations with fewer resources and fewer errors, while improving service delivery. Instead of hiring more operational team
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