Steering an investment business through the downturn

Choosing investments as a career is like committing to a really long rollercoaster ride because financial markets will go up and down just as predictably. But right now, investment professionals are finding their commitment pushed to the limit, as they struggle to steer their portfolios through a crisis so severe many are calling it the worst in history.

The crunch is also testing the managerial skills of leaders in the financial industry. While many companies are turning to traditional crisis measures like cost cutting, retrenchments and recruitment freezes, not all have opted for this strategy.

My strategy is to keep doing what we have been doing – but to do it even better – and to look for opportunities and bargains as much as possible. But first and foremost, I am focusing on keeping morale up within the business.

Communication has risen right to the top of our agenda. The very worst thing for me would be if our finance teams felt that our management had become inaccessible. As a result, we all spend a lot more time chatting to the teams to ensure they know how we are feeling and are comfortable with the decisions we are making.

I believe a common mistake made by companies when times are tough, is to cut back on the ‘guilty’ pleasures offered to staff, such as Friday evening social gatherings, breakaways and team-building exercises. These are more effective and definitely more critical in tough times.

On a strategic level, what we are doing successfully, is sticking to our core values and taking a long-term view on the situation. You don’t run a business for the short term, so, while the current environment may require some tactical adjustments to strategy, in the longer term, sticking to sounds business principles is still a priority.

I agree with American investment guru, Warren Buffet, when he states: ‘It is only when the tide goes out that you can see which people are swimming in the nude’. This is so true. When the going is good, it can be difficult to differentiate a business from its competition. But it is at times like these the true leaders in any industry emerge. It is also a good time to do things differently from your competitors. For instance, allocate budget to activities which will heighten awareness of your brand.

At Sanlam Investments we are in the fortunate position of having a conservative culture. So, while a number of organisations are having to adjust their strategies and cut back on new projects, we are actually in a position to take some risks and explore new territories. Internationally the landscape has changed so dramatically that companies around the world, which would previously have been far too expensive for us to even consider talking to, are suddenly within our reach.

For this reason, Sanlam Investments’ international expansion strategy, announced last year and focussed on forming JVs and partnerships with investment businesses in certain countries abroad, will continue as planned. Naturally we’ll adjust our approach to take into account the fast changing landscape, but working within these new parameters, we plan to form some strategic partnerships in Europe, America and Australasia in the near future and to continue our expansion into Asia and India.

Financial planners have a complex job. They work with many variables and in a constantly changing legislation environment. They usually work alone and if their advice is followed it is usually absolute and needs to be sound. As a result, an investment management company can go a long way to use internal resources to assist financial planners in their jobs. Ongoing thought is given to providing investment solutions that comply with legislation (especially from a pension fund perspective) and provide solutions for financial advisors rather than just adding to the myriad options available to them.

It is imperative that in uncertain times that there is close adherence to first principles i.e. don’t change your strategy to suit what you think is going on in the markets. The finest leadership can be demonstrated by keeping a cool head and thinking longer term as is always the case with financial planning.

The very nub of a good financial plan is that it is resilient to surprises. If your financial planner is worth his salt, your plan will be in line with your needs, risk profile and most importantly your expectations. Therefore, the only proactive thing a good financial planner can do now is pick up unhappy clients from less fastidious financial planners out there.

Finally, in terms of leadership support for clients, I would reiterate the power of sound and simple communication. Keep reassuring your clients that their plans were constructed and implemented for the long term and that only as their needs change, and not as the markets change, will the plans be altered.

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