Re-Writing The Wealth Management CEO’s 2020 Playbook

With historically dramatic swings in economic and market conditions taking place this year, leaders of wealth management firms have been forced to re-evaluate their objectives, priorities and plans for growth.


At first, a defensive approach was a natural strategic response after equity markets started the year with their worst quarter in roughly a century.

Scores of firms assessed opportunities to cut or maintain costs, while many put new strategic initiatives and growth plans on hold. Every wealth management firm, incredibly, had one item on their to-do list in the month of March: Understand the new world of market risk and work more closely with clients than ever to guide them through unprecedented times.

Now, just two months later, equity markets have surged more than 40% from the lows on March 23. The S&P 500 has inched ahead of where it started 2020, and the NASDAQ NDAQ hit its all-time high, despite the U.S. economy officially entering a recession. (For those of you still keeping score, each of the last three occurrences were just this week. Yes, this week. And yes, it’s only Wednesday.)

Bounce back, look forward

This bounce-back has created an opportunity for CEOs of wealth managers to start thinking about the future of their firms once again. I’ve talked with many industry leaders in recent weeks who are in the process of re-writing their playbooks as we head into the second half of 2020.

“We were in the trenches every minute of every day and living in the business – as opposed to working on the business,” one CEO of a $ 2 billion wealth manager told me today.

Now, she added, they can start to think about a mix of new opportunities that have emerged, while also addressing some weaknesses in their business that were exposed in recent months.

Going for growth

As an anchor, there are several considerations that should be on the minds – and in the strategic plans – of wealth management CEOs who are looking to distance themselves from the pack in the second half of 2020.

The team at ECHELON Partners will be hosting a webcast that explores each of these in-depth on June 23, but at a high-level, the revised 2020 CEO playbook should address:

Mergers & Acquisitions: A growing number of firms are now in the early stages of evaluating new merger and acquisition opportunities – particularly as some of the smaller and mid-size independent firms had a more challenging time absorbing hits to their assets and revenues in the first quarter. With valuations still strong, and thousands of advisors approaching retirement over the next several years, it’s likely there will be more merger and acquisition opportunities than ever before.

Talent acquisition: There is also a heightened emphasis on talent acquisition. As more firms have grown comfortable with remote employees and operations in recent months, forward-thinking executives are developing strategies to source talent from across the country.

Being a regional wealth manager no longer means that a firm’s recruiting has to be limited to its local market. While client-facing roles are likely to remain within the region, the infrastructure and workflows now exist for technology, operations and administrative positions to work from remote locations with greater ease.

Equity Sharing, Compensation Planning and Governance: The CEO Playbook for the second half of 2020 should also include strategies for addressing equity and profit-sharing, compensation planning and firm governance.

Each of these three areas will impact a firm’s ability to effectively execute on broader M&A and talent acquisition strategies. And they will ensure that a business can properly solve for several of the biggest needs and challenges facing wealth managers at the moment:

  • Succession and Continuity Planning: The rapid spread and wide reach of COVID-19 has highlighted the importance of planning for the unexpected – most notably, potential disruptions in leadership and business operations. A firm without a succession or continuity plan is exposing its employees and clients to major business risks.
  • Retaining Key Talent: With a shortage of top talent in the industry, it is more important than ever to offer key employees competitive short- and long-term compensation plans that also include ownership opportunities. If your firm doesn’t offer a potential path to an ownership stake, another firm will.
  • Pre-Deal Preparation: With many firms considering M&A, it is critical that ownership and equity levels are clearly defined before – and not during – a deal.
  • Organic Growth: When team members have equity, they are more motivated and appropriately incentivized to drive growth. A better alignment will translate to improved growth rates, and ultimately higher enterprise values.

While it’s premature to think the economy and markets have fully recovered, there are clear opportunities for thoughtful CEOs to re-calibrate and emerge from 2020 stronger than ever. The 2008-09 Great Recession was a starting point for some of the wealth management firms that experienced the fastest growth and strongest financial performance over the last decade. We can benefit from the brilliance of hindsight, while also building on some of the deep learnings from a historic 2020.

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Forbes – Entrepreneurs

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