This article examines recent work to estimate how the pandemic is changing the way in which the asset management industry operates, with implications likely to endure for many years.

A global pandemic that shows every sign of not going away has upended the asset management industry.

“The pandemic has redefined workplace dynamics,” according to the 2021 Talent Trends Report, an annual industry survey from executive search firm The Kathy Freeman Company. “The lockdown changed priorities, and employees are now choosing quality of life over an all-encompassing career.”

The past year has also seen the emergence of a strong seller’s market, with demand for talent exceeding supply, resulting in rising compensation, the survey of asset management firms found. In addition, employees expressed a strong desire to continue working from home and said that flexibility was a top priority.

Asset management firms face a major challenge going forward, the report concluded. 

“Many employees are less interested in skills development, collaboration and the long-term business objectives of their employers,” according to Freeman.

“Motivated by rising industry compensation, talent is more open to changing jobs than we’ve seen in years.”

-- Working from home – 42 per cent of asset management executives surveyed for the report said there is “meaningful resistance” from their employees to returning to the office.

One executive reported that even after telling employees that they could work from home Monday and Friday but had to come into the office Tuesday, Wednesday and Thursday, 90 per cent disapproved. “Firms may need to offer even more flexibility than they originally planned,” Freeman said.

One-third of surveyed asset management firms said they are losing key people to competitors and 40 per cent said they are having difficulty making key hires. One quarter of surveyed executives said their firms have changed work-from-home policies to enhance employee retention and 96 per cent said they believe a hybrid model is here to stay.

-- Compensation – Pay is going up, the Talent Trends Report found. 42 per cent of surveyed executives expect cash compensation to rise, 42 per cent expect to see an increase in equity allotments and profit sharing and nearly one-third expect to see richer employee benefits.

This second year of the pandemic has seen a significant shift in management thinking. While nearly four-fifths of executives thought cash compensation would decrease in 2020, only one-third thought it would decline in 2021.

-- The Great Resignation – 20 per cent of survey respondents said key personnel at their firms had accelerated their retirement plans and 10 per cent said their firm has already experienced a wave of retirement.

Prominent industry executives who announced their retirement this year include Kathleen Murphy, president of personal investing at Fidelity; Bill Stromberg, CEO at T Rowe Price; and Barbara Novick, co-founder and vice chair at BlackRock.   

As a result, succession planning has become even more important, Freeman says. The survey found that 13 per cent of firms were revising their succession plans, but 38 per cent said their succession plans were not yet fully developed.
 

-- Talent development and diversity – The pandemic also disrupted the asset management industry’s efforts to develop existing talent and attract candidates from a diversity of backgrounds.

Two-thirds of firms surveyed said their leadership teams aren’t diverse enough yet and one-third said there isn’t measurable impact from their diversity strategies.

Firms shouldn’t lose sight of the need to diversify a largely homogenous industry, the report warned. “The creation of measurable programs to train, educate, mentor and communicate regularly with diverse employees is critical,” Freeman said.

-- Lessons – Asset management firms need “fresh thinking about employee engagement” and to respond to the pandemic with “new creativity, empathy and commitment to team building,” Freeman said.

Companies should consider customizing an employee’s career path, she suggested. And, in a work-from-home environment, leadership’s challenge “is keeping teams connected to a firm’s mission and goals.”

Executives must make a “greater effort to get to know their employees, understand their family dynamics, personal challenges and passions,” Freeman emphasized. “The lesson learned from work-from-home is the importance of personal bond in work relationships.”