My view is that we are still moving toward a “new normal” characterized by a steady state of narrower profit margins, lower fees and compensation, and generally tougher business conditions. It is amazing how a few short months after crawling away from the cliff, many are feeling really good again about business prospects. I believe we have had a dramatic snap back from the abyss that will run out of steam soon. Hope for a repeat of boom times does not produce them. We still have not flushed out all of the excesses created in the past decades. I don’t believe we will revisit the conditions of a year ago, but what we are currently seeing is just way too far too fast.

Investment managers must continue to prepare for the new normal. They need to be thoughtful and strategic about their businesses. They must focus on crisp execution. They must manage their costs carefully, including examining outsourcing options, and aggressively target growth opportunities.