Executives at money management firms are determining on a case-by-case basis the essential staff members who are being requested to venture into offices while most work remotely during the coronavirus pandemic.
Financial services firms have been deemed "essential" businesses in states like New York and California, making some workers exempt from stay-at-home orders. A large majority of the asset management workforce, however, has been able to continue their work from home, unlike front-line workers such as health-care professionals, first responders and grocery store clerks.
Despite this, some employees still are going into the office amid the pandemic; they typically fall in one of three roles — traders, IT professionals or facilities management staff, said Josh Hall, global head of operational due diligence at Willis Towers Watson PLC, New York.
Mr. Hall has seen instances in which traders have been asked to come into the office and others in which traders requested to come in themselves, preferring their in-office setup. Most traders are used to working with several monitors, for instance, so they can watch the news and track markets simultaneously, he said.
Over the course of two weeks, he has talked to about 170 money managers, and "all of them are determining themselves" who is essential, Mr. Hall said in an April 8 interview.
Decisions have also depended on the location of firms, he added. "If (money managers) have offices in locations that haven't been ravaged by the pandemic yet, they tend to still be going into offices." Places like New York or other pandemic hot spots aren't going to be seeing a lot of people in the office.
Overall, those still going in "must be critical for everyone else to be able to continue to work from home," Mr. Hall said.
Amid the shift to remote work, Willis Towers Watson has seen money managers making some adjustments such as increasing the bandwidth of their technology infrastructure.
"The megafirms have never tested having 20,000 employees remote at the same time," Mr. Hall said, adding that so far, firms have been able to address IT demands.
"We've seen no massive blowups or failures in disaster recovery," he said.
On March 29, BlackRock Inc. CEO Laurence D. Fink, in a letter to shareholders, said: "On many days in recent weeks, we have had over 90% of our people around the world working from home — managing portfolios, serving clients and building technology. This is no small task."
Mr. Fink also said asset managers will have to "fully integrate technology to connect with clients, generate investment insights, create operational efficiencies and unify their organization on a single platform. … Volatility of the markets, and the speed with which they have moved these past few weeks, reinforces once again how essential technology is to managing risk today."
In response to the spread of the coronavirus, BlackRock on March 16 moved to a modified operations model across its offices in the Americas, Europe, the Middle East and Africa, splitting employees into two teams with rotating access to office locations, a spokeswoman said an email. While each team has access to the office, they are still encouraged to work from home, the spokeswoman added.
As local and federal officials take action to stop the spread of the coronavirus, managers are caught in a balancing act of keeping critical financial services running for investor clients such as retirement plans while protecting the well-being of staff.
Stephen Wilkes, a San Francisco-based partner who leads the investment management law practice at The Wagner Law Group, said manager business continuity plans will be "under greater scrutiny" during this pandemic. Still, he thinks that "firms should try to keep people home and safe" when possible.
"The country got caught by surprise, and we are still learning about the virus from a pure health point of view," such as how long those testing positive for COVID-19 can infect other people, Mr. Wilkes said.
"There are so many unknowns. These are just really tough issues and I think the industry will respond, adapt and survive," he added.
One challenge managers are facing in the new normal with most employees out of the office is making sure there are no service gaps affecting the overseas call centers that have closed, Mr. Wilkes said.
"It's not that easy just to move (those operations) to another location offshore," as workers need to be licensed to give investment advice, he said.
"Given the number of call centers that have gone cold, they need to be replaced in the States. If you call in with a question about your account, you'll probably get put on hold longer than usual," he continued. "People are concerned, so calls are going to spike."
One key business risk for asset and wealth management firms is IT capacity risk, according to a March report by PricewaterhouseCoopers LLP.
Since technology-related infrastructure "is already under considerable strain," increased remote work demands over time could cause the situation to "degrade," the report stated. As such, firms should notify employees about their remote work guidelines and protocols and implement medium- to long-term (six- to 18-month) plans "to ensure capacity can be met should disruption continue." Additionally, asset and wealth management firms should create strategies for alternate vendor sourcing for IT, the report said.
As the number of worldwide coronavirus cases continues to rise, along with the death toll, companies will no doubt have to determine how they handle employees becoming infected.
So far, J.P. Morgan Chase & Co., New York, has experienced cases of coronavirus infections among employees in its corporate and investment bank trading operations at 383 Madison Ave., two sources familiar with the matter told Pensions & Investments. Roughly 95% of corporate and investment bank employees were working from home as of April 8, including 80% of traders, the company said in an emailed statement.
"We recognize how stressful this is for those employees on the front lines who are supporting global markets," the statement said.
"While we do have some 'essential staff' in the office supporting global markets, we've stated many times that anyone who doesn't feel comfortable coming into the office doesn't have to. Our protocols have been in line with CDC guidelines and, in most cases, we have gone beyond them," the statement said.
As of early April, at least 16 people on J.P. Morgan's Manhattan trading floor had reportedly tested positive for COVID-19, with some staff claiming they received conflicting messages from middle and senior managers about coming into offices, a Bloomberg report said.
About 70% of all J.P. Morgan staff firmwide are working from home, and for some business groups the percentage of staff working remote is "well north of 90%," Jennifer Piepszak, chief financial officer, said during the company's April 14 earnings call.
J.P. Morgan's asset and wealth management businesses had $2.24 trillion in AUM as of March 31.
Chris Thompson, CEO and co-head of the global client group at Aegon USA Investment Management LLC, with headquarters in Cedar Rapids, Iowa, said all of its 1,200 employees are now working from home.
"Certainly, we thought about who would have come in, if they needed to," Mr. Thompson, who is based in Chicago, said in an April 7 interview. Those roles that would have been most essential to come in would have been portfolio managers, analysts and traders, he added.
Aegon had $395 billion in global AUM as of Dec. 31, with U.S. institutional assets representing $114 billion.
In March, before everyone began working remotely over an extended time frame, Aegon's U.S. offices in Cedar Rapids, Chicago, San Francisco and Baltimore were able to test remote work capabilities, Mr. Thompson said.
"As it turns out, everyone in the firm can work from home and we didn't have to differentiate who could be in the office or not," he said.
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