Return To The Office. What Does The Future Investment Management Firm Look Like?

As the vaccine rollout increasingly gathers momentum in the U.S., a sense of normality is starting to return. Having spent the last 12 plus months working remotely - to varying degrees of success - investment managers are now itching to get back into the office. But what will the new working model look like? Firms are now embarking on another great experiment - how to get their teams back together, in-person, at least some of the time. The U.K. is expected to ease restrictions on June 21, and New York City’s mayor wants NYC “fully reopened” by July 1.

Few expect the traditional five-day working week will resume quickly. Instead, most experts anticipate that a hybridized approach will emerge with employees working two to three days in the office at most, with the rest being spent remotely. Driven in some places by Covid concerns and others by a desire to embrace workplace change, hybrid work is the new center-ground - at least, in the short term. As more companies - including the buy-side - embrace mixed working patterns, many will look to downsize their offices or relocate to more affordable areas.

In light of the mass adoption of remote working, a handful of high-profile hedge funds - including Elliott Management - have moved their H.Q.s from New York to Florida. According to Bloomberg News, the decision by Elliott Management to open up a Florida HQ in Palm Beach was a direct consequence of the pandemic together with its longer-term impact on New York office space. It is likely that more asset managers - some of whom may be looking to obtain significant cost savings - will abandon New York and other financial centers altogether in favor of lower-cost alternatives. Across New York's Midtown and Lower Manhattan, the country’s two largest central business districts, there has never been more office space - 16.4 percent - for lease, much higher than in past crises, including after the Sept. 11 terror attacks in 2001 and the Great Recession in 2008.

For this new remote work set up to succeed, the technology and cloud solutions underpinning it needs to be robust and watertight. Furthermore, the industry has worked very hard to digitalize and automate core processes during COVID-19, and these changes must be made permanent once the pandemic subsides. At the same time, it is vital that investment managers do not create distance between themselves and their clients. As lockdowns end, investors will invariably want to see their managers again and vice versa. The businesses that prioritize client relationship management as life starts to normalize will be the ultimate winners. Although activities like due diligence have been virtualized, it is also important to note that this is only a temporary blip. Once it becomes safe to do so, on-site due diligence will resume.

As a result, we are likely to see more employees trickle back into the office in the months ahead. Overall, it is clear that will generally adopt a hybrid approach towards work, although we could see a handful relocate their H.Q.s from traditional finance centers such as New York in favor of areas with lower overhead.