Back to Wonderful
12/24/20 | by Eric Alexander
In the Frank Capra classic, It’s a Wonderful Life, Jimmy Stewart's George Bailey is besieged by a series of setbacks and mishaps. Driven to the brink of bankruptcy and facing certain arrest, a drunken Bailey walks out onto the bridge prepared to accept that -- with his $15,000 life insurance policy in hand -- he is worth more dead than alive. Fortunately, his guardian angel has already been dispatched to his rescue. "Is he sick?" Clarence asked when given the assignment. "No, worse," responded the angel Joseph. "He's discouraged."
It's easy to grow disheartened, lose enthusiasm and even feel less confident when circumstances seem to conspire against you. Ask almost any owner of an asset management firm with decades of experience trying to prove their worth against well performing, trillion-dollar index funds, and simultaneously struggling to keep pace with the ever-increasing costs of data, distribution, technology and regulation. Even successful firms can find themselves stymied by the complexity of telling a compelling story to an increasingly jaded legion of gatekeepers. And communicating with a generation of digital native investors raises the bar even further. Owners can become frustrated to see an innovative strategy, once executed with energetic enthusiasm, now mired at a crossroads between expansion and stagnation. It can be downright depressing to consider that a lifetime's work may not deliver its true value to long-time clients, successors, and family.
George Bailey is given a second chance. Clarence let's him see what life would have been like had he, as he wished on the bridge that night, never been born.
Quarantined and separated from their colleagues and clients, owners of asset management firms have a similar opportunity to reflect on the value of their firm and their leadership. For most, a reflection on the wealth they created for their clients and the good those families and institutions did with that capital will be a comfort. They can also look back with pride at the teams they built and the success of the strategies they executed together. But, this pandemic pause also provides an opportunity to explore threats and weaknesses exposed by the upending so many norms and expectations. To maximize the value of their assets, both financial and human, owners must be thoughtful and deliberate in determining the right questions to ask and which answers to heed before setting a course. Through a disciplined process that yields a deep and granular understanding of the current state of their firm owners can discern and create actionable plans.
No two firms are the same. Some face challenges in portfolio performance, others may be stymied by faltering distribution. Investment processes and research agendas may have sputtered in the face of disruptive, unexpected themes. Brand messaging and product stories may have become muddled. Sales and marketing resources may have lost focus and efficiency. Even sacred cows, like trading desks, may no longer be considered mission critical by owners or clients. Ultimately, owners must decide if the team, organizational structure and product mix they built over the years is optimal for today and the challenges ahead.
Such a process can be invigorating and rejuvenative, even if some of the applied solutions disrupt long-standing practices and traditions. But, arriving at a shared understanding of vulnerabilities and opportunities is essential to assuring the durability and permanent value of an organization.
George Bailey gets a second chance as he walks back off the bridge to find that his family and friends have rallied to pay off his debt and his younger brother toasts him as "the richest man in town." Owners can assure their happy ending, their back to wonderful, by understanding what truly comprises the value of their firms and making active choices now to protect and bolster those assets. As George Bailey learned, seeing reality clearly is often the best way to banish discouragement.
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