From helping your clients to helping yourself.

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The severity of the falls in stock market put in jeopardy the revenues of asset based businesses. Put simply, if the markets fall 50%, so do revenues. What were profitable business models become unprofitable and sooner or later costs catch up on cashflows and businesses have to change or crumble.

What might have started as a correction for clients , is clearly now an existential threat to asset managers of all kinds, but most especially businesses that rely solely on revenues from assets under management or advice.

Messages from governments are stark, we are in this for the long haul. Sir Patrick Vallance over the weekend, Boris Johnson last night and Donald Trump overnight – all pointing to a detoriating picture that points inevitably to recession.

It is not just people who need to be in lockdown, so do businesses. Put simply – we all need a plan B.

We cannot look to our clients for help

To suppose that we can manage this situation by putting up prices is daft. We really are in this together. Clients whose assets fall below trigger points , should not be required to pay more, though I fear that many wealthy clients will lose their right to cheap management and find they are protecting their wealth managers rather than their wealth.

Businesses where tiered fees work in reverse need to manage disclosures very carefully. Many wealth managers will be writing to clients to tell them (as MIFID II requires) that they have breached a 20% loss, the double punishment of higher fees is unlikely to do down well.

Those rewarded by “ad valorem” fees are at least in the fortunate position of controlling their revenues, unlike those who must chase fees. Fee collection becomes considerably more tricky in a falling market.  Those of us in financial service must expect an increase in uncollected invoices, and a lengthening of the debtor’s register.

We must remember that however bad it is for us, it is considerably worse for many of our clients.

Managing costs

Many of the costs we incur , from season tickets to commercial rents are unavoidable. Variable costs, such as bonuses may be discretionary, but many in the financial services sector are formulaic and have already accrued.

The hard truths of a recession are that people lose jobs ,  businesses go under if they don’t.

Headcount , premises and remuneration are not guaranteed to rise and Plan B may need us to take some tough decisions on all three.


I give myself some credit for having enjoyed over 35 years in financial services. The 1987 crash, 9/11, 2008 and now 2020 are all milestones.

As I make my way around a deserted City today, I will see people – as I did yesterday, giving space to others on pavements.  This act of consideration was also an act of self-preservation.

This is how we must go forward. We must be considerate to our clients but we must conserve our capacity to deliver to them when things get better again.

In our planning, we can demonstrate to our clients the value of the plan, if not plan A, maybe plan B.

There is a fine line between the bravery of soldiering on regardless and being agile to change. What has happened over the past quarter, but especially over the past three weeks has been a genuine game-changer for many business plans.

We now must re-group and meet the challenges of the next few months accepting that things aren’t turning out quite the way we thought!

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About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
This entry was posted in Consolation, coronavirus, pensions and tagged , , , , . Bookmark the permalink.

5 Responses to From helping your clients to helping yourself.

  1. Hmm, this is the uncomfortable truth that we all talk about. I cannot bring myself to “like” this piece Henry, but it is certainly good, pertinent and poignant. Like others, I am very concerned about the direction of this panic which does not bode well and could simply become a self-fulfilling prophecy. We all know the theory but it is very difficult to stick with it when markets are crashing heavily.

  2. DaveC says:

    If your funds were managed over this cliff then the managers need their fees withdrawn.

    They were asleep at the wheel.

    Any fund managers who made money, or lost none, were properly diversified and watching things unfold in good time.

  3. DaveC says:

    Dominic, isn’t every bear market driven by a self fulfilling prophecy?

    Everyone is confident, in aggregate, until they’re not.

  4. Jnamdoc says:


    We need to look up from our desks. Never mind the assets skimmers, the real economy dislocation will be massive. Business will stop all but essential spend – think about that, and no travel. We’re taking about 4-5 million workers with no income, and a huge swathe of companies insolvent within days.

    We need emergency legislation today / this week :
    1 – akin to the US Chaptet 9 – to let business tread water in a protected environment
    2 – to allow employment to be suspended / unpaid leave, with IMMEDIATE access to benefits or working credits,

    3 – access to liquidity.

  5. George Kirrin says:

    I agree with Jnamdoc.

    Do politicians and central bankers really believe that some future tax reliefs, some deferred payment terms and zero interest rates will be enough?

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