These offices had to figure out how to communicate with their team members and keep them supported, all while still serving all of the client and business needs that they had to take care of every day, as well as setting up remote work environments where privacy and security were maintained. In fact, cybersecurity has been one of the biggest concerns of family offices. Ensuring that families and employees were working remotely without the risk of their data and systems being compromised had to be addressed quickly, and it appears that this now will be part of normal life for most advisory professions moving forward.
Yet, although family offices have had to adapt quickly to the short-term impacts of the pandemic, one panellist explained why they’re actually better prepared than other businesses when planning for the long-term effects of the coronavirus.
“Family offices are generational – they think and they plan long-term – so they are more prepared, in my opinion, than other businesses who don’t necessarily have that strategy or that culture in their organizations,” said Patricia Soldano, president of Family Enterprise USA and president of the Policy and Taxation Group. “Family offices tend to be prepared for uncertainty and disruption, so they have plans in place for many events … In a recent survey, 55% of family offices were expecting a market downturn in 2020, and half had begun shifting their investment strategies to reduce the risk. With the outbreak of COVID-19, their concerns and actions have been validated and their preparation was helpful.”
Given their anticipation of a market downturn and the volatility seen in 2020, 42% of family offices have already begun increasing their reserves, regardless of the pandemic. Now, 60% of offices expect a significantly better market situation by March 2021, noted Soldano.
Alongside this optimistic outlook, many family businesses have to face concerns about the return-to-work environment, which initially arose when government-mandated shutdowns started to ease in the summer and have now come up again amid the second wave of the coronavirus.
“The return-to-work question has been very troublesome,” said Seth Spreadbury, national family office practice leader for Marsh & McLennan Agency, pointing to some businesses’ concerns about their employees being exposed on their way to work via public transit, and how to manage that risk, as well as instituting plans for adapting their offices with appropriate signage, personal protective equipment, including masks and hand sanitizer, and a myriad of other concerns.
Other top of mind thoughts for family offices that have come up revolve around, “‘We want to be sympathetic to our employees that are concerned, but it is an employment at-will environment, so if we do have to draw a line in the sand as employers, we’re able to do so,’” said Spreadbury. “But most of our conversations are more sympathetic, that if someone’s afraid to return to work, how do we make exceptions to our return-to-work policy?”
Some of the changes brought on by the pandemic will undoubtedly be here to stay. As a result, family offices need to rethink how they have provided services to clients in the past, said Soldano, as she provided guidance for advisors.
“Look even harder at the needs of your clients, and what needs they now have versus pre-pandemic,” she said. “Are these needs and services more extensive, or could they be less than extensive? How has the business operation changed? You need to consider everything – don’t assume anything is the same, and make sure you have that in-depth conversation with your client about how you might be providing them the first opportunity to really sit down and think hard about how their world is changing.”