financial risk / William_Potter

This article appears in the March 2021 issue of Investment ExecutiveSubscribe to the print edition, read the digital edition or read the articles online.

The Covid-19 crisis may still be far from over, but we can see the beginning of the end. With this in mind, the investment industry should ask itself what returning to normal should look like.

In terms of bottom-line results, the Canadian investment business seemingly has sailed through this dreadful period. The independent, full-service retail segment of the industry in particular stands out for its success over the past year.

Much of the credit must go to the people in the business who navigated the sudden imposition of public health restrictions and continued to provide service to their clients during these uncertain times. But the regulators who have accommodated that transition deserve a nod too — as do governments that supplied extraordinary fiscal support to both households and businesses to limit the economic damage.

Some of that subsidy to household income, coupled with unwelcome curbs on discretionary spending — no vacations, no dining out and no fun — surely has found its way into retail investment accounts, fuelling the investment industry’s continued growth over the past year.

As the industry flies high, companies should take care not to squander these gains. Firms that are flush should be investing for the future. For many, that is likely to mean beefing up compliance and technology — the guts of the back office that made it possible to seamlessly sustain operations when the pandemic first hit. Reinvesting gains will build capacity to ensure that future calamities can be endured.

Firms also need to think about how to serve clients better in the future, which probably means relying even more on technology. But now that the pandemic has revealed our inescapable interconnectedness and the increasing significance of social and environmental risks, firms also should pay more attention to issues of fairness and sustainability.

The risks we face won’t evaporate once we reach herd immunity for this particular virus. Instead, the investment business must ensure that clients have the same kind of resilience in the future that the industry is enjoying now.