Preservation of investment culture worries execs in COVID-19 aftermath

With the likely advent of a much larger remote workforce in the wake of the coronavirus pandemic, preservation of the unique investment culture of their firms is top of mind for money management executives.

"One of the biggest impacts of the COVID-19 on asset managers likely will be on investment management culture," said Kevin P. Quirk, a Darien, Conn.-based principal of Casey Quirk, a practice of Deloitte Consulting LLC. "Many firms have built a pervasive, singular, in-office culture."

Casey Quirk advises money management companies about their business operations and Mr. Quirk said that over the past few months, CEOs have expressed concern about retaining their firm's culture if most workers are not in the office. They also are worried about the mental health of their employees if they must continue to work in isolation, he said.

"There's a social contract embedded in an investment company's culture that's focused on face-to-face interaction in the office with portfolio managers sitting next to traders and research analysts all sharing investment ideas. What happens to that reliance on each other if the relationship remains largely remote?" Mr. Quirk said.

Sources agreed that culture preservation is essential to the success of managers going forward.

"Culture is extremely important to money management firms because there's a huge human element to the business," said Christopher Thompson, director global equity manager research based in the Stamford, Conn. office of Willis Towers Watson PLC.

"Companies that create an environment of flexibility with a caring focus on individuals and succeed in navigating the secular industry shift to remote working and effective communication with employees will be the winners going forward," Mr. Thompson said.

Senior money management executives are using remote communication technology to engage their investment teams in day-to-day investment, research, risk management and trading activities as well as for client relationship management.

PGIM Inc., Newark, N.J., is tightly focused on "retaining our culture on the investment side because it's critical to maintaining performance," said Taimur Hyat, chief operating officer.

PGIM's portfolio managers have an average tenure of 17 years and are "quite bonded together. The culture pervades our public and private market teams. Ours is a culture of debate and discussion and the richness of the debate is essential for money management," Mr. Hyat said.

The debate — albeit conducted remotely rather than shoulder to shoulder in the office — is centered on interpreting the coronavirus-altered investment landscape, Mr. Hyat said as portfolio managers assess long-term changes to the companies in PGIM's portfolios.For example, one issue PGIM portfolio managers and analysts are evaluating is how supply chains will be redesigned and move from being country-specific to more multicountry oriented, which may raise the cost of doing business for industrial companies in PGIM's portfolios.

The firm's investment teams also are focused on a move from "just in time" inventory to a "just in case" model particularly for health care and pharmaceutical companies enabling them to respond quickly to urgent needs, such as a virus outbreak, Mr. Hyat said.

PGIM managed $1.3 trillion of the $1.55 trillion of parent company Prudential Financial Inc. on Dec. 31.

The investment culture at Fidelity Investments Inc., Boston, is "alive, well and stronger than ever" as employees increase their proficiency in using Zoom as a replacement for in-person meetings, said Bart A. Grenier, head of asset management.

"We're seeing more crispness and better organization by employees during meetings as they get used to the Zoom format. When you're looking at a 'Hollywood Squares' mosaic view on your screen, you tend to be more concise. We're finding that our meetings, which often went over time in person, now tend to end on time," Mr. Grenier said.

Fidelity managed a total of $3.04 trillion as of Dec. 31.

J.P. Morgan Asset Management, New York, is "trying to recreate what we had when we were in our offices. For example, even if our equity and fixed-income traders aren't together, they're leaving their lines open and are in communication all the time using Jabber and many of our teams, especially on the sales side, are doing a lot (more) huddle meetings," said George Gatch, chief executive officer.

J.P. Morgan Asset had $1.98 trillion in AUM as of Dec. 31.

In addition to the serious side of running an asset management firm, money managers recognize that their culture relies on human relationships and encourage employees to share online personal and social topics and funny moments that happen in their lives.

"You get a different angle seeing a side of people when you're meeting on camera remotely than you see day-to-day, face-to-face," said Gregory Davis, managing director and CIO of Vanguard Group Inc., Malvern, Pa.

Vanguard is hosting an array of virtual lunches and happy hours that are a bit less formal than they would be in person, Mr. Davis said, adding "it's not the same as in-person, but it's a way of strengthening personal connections."

Vanguard managed $6.15 trillion as of Dec. 31.

At Boston-based State Street Global Advisors, remote working has created "great opportunities to do things we wouldn't have before," including virtual cycling and running clubs and an investment team recipe book, said Richard F. Lacaille, SSGA's London-based global chief investment officer and executive vice president.

SSGA managed $3.12 trillion on Dec. 31.

Given higher stress levels for employees working at home in the current environment, some money managers are encouraging their staff to take time off.

Fidelity has asked its employees to book vacation days soon because many employees canceled spring break trips after schools closed and COVID-19 travel restrictions were instituted.

Mr. Grenier said Fidelity's suggestion that employees use vacation days now is motivated by concern about employees' "mental health" as well as to avoid having too many employees off at the same time later in the year.