Until last year, the wealth management sector had been let off relatively lightly since markets recovered following the global financial crisis. Markets have been up and profits – for the most part – have been strong. Perhaps, this contributed to making this difficult year more of a shock. Many younger wealth managers have not worked in these conditions before.
Either way, there has been a clear shift in the tone of many of the commentaries and results firms are posting. Nearly all firms have reported a drop in assets under management (AUM), profitability is down in many cases and outlooks are less positive.
Clearly, the sector is experiencing a less positive period. Determining how long it will last would require a crystal ball, but most appear to be preparing themselves to be weathering a storm for a while longer yet.
During periods like this it is easy for all of us as individuals to become downbeat and simply go through the motions while waiting for the outlook to improve.
However, there are far more opportunities to be found in embracing negatives.
If conditions were positive all the time, it would be hard to distinguish between good habits and practices and simply getting lucky.
Reflecting and receiving feedback is not always an easy task. It can highlight weaknesses we would rather not address or bring out insecurities in ourselves.
But it is vital if we are to improve and develop – both as individuals and firms.
Reframing your mindset to view these areas as opportunities rather than shortcomings can help. A weakness is simply an opportunity for further growth and improvement.
Addressing these areas in need of improvement may not be a comfortable experience. Structural changes, overhauls of processes, and changes to established ways of thinking may all be required.
Implementing these changes takes time and should not be done in haste. Before any changes are made, the weaknesses and their causes need to be identified and fully understood to avoid unanticipated consequences.
This period of reflection and growth is also a way to prepare for future scenarios.
History may not repeat itself, but it often rhymes. Learning lessons from difficult market environments could help guide reactions and plans for future periods of difficulty.
It is not all about the negative periods either. We cannot – and should not - forget about the good times.
Using difficult periods to plan ahead, focus on development and improving practices can put you in the best position to capitalise on positive markets when they do come.
Perhaps, then, we should try to embrace this negative period.
