Posts tagged 'management'
No one knows if the recent market drop will turn out to be a minor correction or something more substantial. But if 2010 turns out to be a rocky year for the markets, are asset managers more prepared for difficult times than they were two years ago?
With the memory of the financial crisis so fresh in everyone’s mind, there is no question that managers will react more calmly and soberly in the event of a substantial setback. They should now be prepared from both an investment and business standpoint to better handle such an event. Already, clients are demanding more solutions-based investment approaches, with an emphasis on transparency and customization. Hedge funds, in particular, must make significant adjustments in their approach to meet these demands.
Business management within the industry is also responding. Firms have become leaner in anticipation of tighter margins as hiring decisions become more cautious, and the environment generally becomes more competitive. Outsourcing is increasing as firms recognize the availability of talented professionals who can provide top quality services at lower and more variable costs. The most successful firms will act strategically with increased focus on their core competencies.
Overall, the industry has begun to make necessary changes. If we have a particularly difficult year, we will see whether they have adjusted quickly enough.
February 1st, 2010
On the first business day of the year, we are all hopeful and optimistic for a successful and prosperous year, especially after the difficult environment we’ve recently experienced. However, while we may yearn for the easier environment we previously enjoyed, it is more likely that we will settle into a new normal environment, characterized by increased competition and thinner margins.
In some sense, this seems right, since the asset management industry enjoyed out-sized margins for many years. But it will require sharpened skill sets and new tactics. Resources will need to be deployed efficiently, minimizing waste. All logical alternatives for accomplishing tasks and executing functions should be considered, such as appropriate outsourcing. Strategies must be focused, based on careful planning, and executed crisply.
We all hope this year will bring an easier operating environment. But we must be prepared for continued challenges to come.
January 4th, 2010
While there are some nascent signs of recovery, and the markets like to climb the proverbial wall of worry, every day seems to bring more news of headwinds to the economy. Some of the headwinds are current events like debt problems in Dubai followed by financial problems within the EU. Some are longer term changes in attitude such as the well documented increase in savings by consumers which is likely to last longer than the immediate economic downturn. While this is healthy longer term, it does not help support the near term recovery. Overall, rather than solving for the debt overhang, the government seems to be adding to it.
These factors all fit within the typical scenario for credit induced downturns which tend to be much more difficult to recover from than cyclical downturns. This “new normal” environment will require management to follow careful and thoughtful strategies, and executive crisply and flawlessly. Executives will need to be on the top of their game. However, those that differentiate themselves from the pack could enjoy excellent success.
Dorothy, we are not yet out of the poppy fields. Let it snow, let it snow, let it snow!
December 17th, 2009
Much has been voiced already about the events coming out of Dubai. Are they small and contained, and will pass from the headlines in a matter of days? Or, are they indications of an ongoing pattern of debt defaults that will continue to spread for an extended period until global deleveraging runs its course? What does this all mean for industry, the economy, and asset management?
While, in absolute size, this event is not large, it seems to be reigniting some fears of contagion. As I wrote recently, market sentiment moved from fear to greed quite quickly in less than a year. This creates an environment which is ripe for disappointment. Further, since we do seem to be experiencing an extended period of deleveraging globally, Dubai provides a reminder that there is much work to be done before we get the all clear signal that conditions are relatively normal again. Indeed, as I’ve written before, we seem to be in a “new normal” environment which will be unlike the recent boom times.
For asset managers, as well as managers of other businesses, the events of Dubai remind us that we must manage our businesses with the very best practices in order to succeed in the “new normal” environment. We need to move forward, but in a cautious way with great respect for unknown risks and events which could appear without warning. A well managed business is the best way to overcome such events without losing significant momentum.
November 30th, 2009
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