There is trouble brewing in the corporate workplace. The fall of 2021 promises to challenge company leaders to engage better with their employees or risk further declines in morale—or worse. The rate of retirement in 2020 doubled over 2019; resignations and job changes are also increasing, and many companies have struggled to find the appropriate balance between work conducted at home and done on-site. The decisions being made right now will have lasting consequences. This is one of those moments when all leaders are in the spotlight and every move is judged in real time by employees comparing the places they might want to work. The companies that win will be able to accept current conditions, including the uncertainty, and navigate through them. There is a profound difference between leaders who view Covid-19 as an obstacle and those who see it as a catalyst for changes already underway. We have an opportunity to take advantage of the destabilization to find focus in chaos. This is a time for leaders.
The first step is to admit things are uncertain. No one knows if the virus or its variants will be controlled enough to ensure a safe workplace—or travel. If we name specific dates to be back in the office or set occupancy targets, we’re pursuing a strategy of hope at best, and hope has an unreliable history in business planning. So we should focus on things we can control.
Next, we need to pick objectives that move our organizations and clients forward. The financial advice industry was already earning poor grades from clients for failing to address some pretty basic needs—especially from retiring baby boomers. These problems were smoldering for some time and Covid-19 threw gas on the fire. Our think tank, Next Chapter, has come up with a partial list of things we need to address. Can we say we’ve made progress on these in the past year?
Retirees seeking advisors. Retirees are the fastest growing age cohort in America. Twelve thousand people are rolling out of work every day. They’re afraid and anxious about the future, and it’s a challenge to the entire industry to respond with care. This is the ultimate test of our value. We helped get many of these retirees to this stage of their lives. Now that they face new challenges, we can’t suddenly let them down, especially as nimble competitors from other sectors emerge (and promise the mother of all disruptions).
Clients’ cognitive decline. One in four Americans older than 65 suffers from cognitive impairment bad enough to keep them from making safe financial decisions. What will we do to help?
Clients’ liquidity. The largest asset class right now is residential real estate. Can we find an intelligent and economical process to unlock that value for the benefit of retirees? (Consider my 87-year-old mother, for instance. Her No. 1 objective is to safely live in her home.) We’re facing a massive conversion of wealth on the horizon as people’s personal home equity turns into income—a massive shift bigger than retirement plan rollovers. Crack this nut.
Financial literacy. Covid-19 has shown the world how little most people know about medicine—and the results have been devastating. A lack of financial literacy also threatens people’s well-being. Financial advisors might not be charged with explaining vaccinations, but it is our job to support people of all ages with the insights and tools they need as financial consumers, something we generally aren’t doing. Kids don’t learn the ropes in high school or college.
Young people aren’t engaged. One of the things we have to do is engage young people. If financial literacy were more prominent in our schools, we might have a better chance of attracting younger people to financial advice jobs. And if we’re really being ambitious, we might rethink the role of sales-based compensation for people we expect to deliver personal service. The advice industry is being helped by a historic bull market. If prices slip, the fallout will be bad. Let’s get the right people in place with the right incentives to do the work most needed. The right incentives—focusing on client need—mean we no longer rely on keyboard managers who pound their teams to do more without giving them the tools or support. We are better.
Not just innovation but adoption. Remember the Pareto principle: Eighty percent of success goes to 20% of the players. That principle hangs heavy over the fintech industry, where a generation of fabulous inventions has been roundly ignored by most professionals. Technology is a game changer only if people play. If engineers are going to succeed, they’re going to have to work with advisors, be creative and do things in concert and figure out the priorities. What is it that machines can really take over? What about investment policy questionnaires? If we can program a car to drive itself, certainly we can train a bot to walk a client through such a document. (Blind spot found!) Let’s try to let the machines do almost everything, but save the jobs requiring judgment for humans.
The search for meaning. Investing is not just about the returns. Clients are interested in how their money makes an impact. You don’t have to be a mindfulness pioneer to see that environmental, social and governance investing is the only truly interesting development in active management in decades. Don’t fight it.
Clients’ best interest. Consumer protection—i.e., regulation—is here to stay. Can we any longer deny that what clients want is a fiduciary standard of care (or an otherwise common-sense standard of suitability)? Can we rid the industry of bad actors, confusing policies and overpricing? Also, we’re confusing clients when they need things to be easier. Can we revive the concept of a “simple” prospectus, the type we once used to demystify mutual funds and a simpler generation of retirement products? If we don’t, we lose trust and credibility. And that feeling bleeds over to employees.
Peace of mind. Two Next Chapter sponsors, the Alliance for Lifetime Income and Allianz, have done surveys and found that nine out of 10 retiring consumers say they would like to discuss guaranteed income. Seventy-one percent are concerned about healthcare costs, 67% are worried about the rising cost of living, and 66% fear a declining market. This much uncertainty creates an incredible opportunity for organizations and advisors willing to have the conversations—and it spells doom for the unengaged. The first stage of industry disruption is someone’s inability to answer very basic questions and alleviate understandable concerns. For all of its brainpower, the financial advice industry is a sitting duck, vulnerable to interlopers who will be able to give consumers what they want with a new level of simplicity. Do you think massive organizations reading real time consumer data will ignore this opportunity? Thank goodness for the current distractions of space travel and driverless cars—and buckle up.
Personal Stake
We also need to start thinking about how Covid has changed the personal lives of advisors—how they want to work and what they get out of the industry. The need for masks, the need for safety and distance and a regard for health have all made our employees rethink the ways they want to work.
The corporate workplace was ripe for change anyway. Long before Covid came along, employees were already quitting because of lousy commutes and the need to prioritize life, family and lifestyle. But the trend went nuclear with the pandemic. Life for many people has been running too fast for too long. I, for one, have wondered what I gained flying three to four days a week for 30 or more years.
“Flextime” is not a new concept. Christel Kammerer, a management consultant, wrote a paper in 1965 promoting a flexible work schedule as an incentive to stay-at-home mothers to offset the significant labor shortage in West Germany. Mold was turned into medicine faster than the uptake of flextime. Maternity leave, one of its first forms, was not mandated by law in the United States until the 1993 passage of the Family and Medical Leave Act. And that applies only to companies with more than 50 employees (though many states have extended the benefit to smaller firms). Importantly, the federal mandate is only for unpaid leave. Most younger workers at companies today are not aware that their grandmothers did not get time off to bear children and so it was difficult for them to seek and hold jobs.
I worked for a number of years at a big company with 50,000 employees. Every year we filled out an employee engagement survey. And each time the question was asked, “If you could change any aspect of your job, what would it be?” The top choice was, “I’d like to work one day a week at home.” The frenetic pace of life has made it harder for people—especially with small children, pets and aging parents—to conduct their lives. Someone at one of the big companies I work with told me it’s now suffering more employee turnover and having to grant more unexpected time off to workers because of the variable demands of eldercare, and that this problem has overtaken the hours lost to parental leave. That new development comes courtesy of the nation’s largest demographic, the baby boomers.
It’s likely this more complex world might be dismissed by corporate leaders who fought their way to the top in simpler times and expect employees to suck it up and pay their dues. Worse still, the daily grind may be invisible to leaders now used to a world of executive perks like car services and first-class travel.
Given these challenges, one of the most underrated qualities in corporate leadership is empathy, but it’s something those leaders are going to have to develop quickly for the sake of both their employees and customers. Not too many CEOs would pick empathy as one of the traits that got them to the top. But several now see the value of mindfulness. My view of empathy is that you should first have genuine interest in other people, and then make an effort to truly understand them and ask them questions. Empathy is part of your character (scientific research suggests it has genetic roots, and not everyone is so gifted). But empathy is also a process that requires proactive steps. A recent article in The Wall Street Journal featured the work of Ravi Saligram, the CEO of Newell Brands, with the headline, “A No-Jerks Policy Ignited Morale at the Company Behind Yankee Candle.” Saligram’s leadership presentation began with a slide that said “no a—holes.” He got attention, and it seems impossible that any modern company would tolerate a—holes today, especially in a world dominated by social media. Ever checked out your company on Glassdoor? Get ready for the cold water. If a “toxic work environment” can run wild at a feel-good company, what chance do we have in the rough-and-tumble culture of Wall Street?
Today’s leaders are conspicuous—there’s no place to hide. Many know what their skills are and aren’t, summed up when they say, “I’m a finance guy.” So they actively seek leadership partners with complementary traits. If you’re a leader, you don’t have to be perfect for sure, but you do need to be worth following. And empathy creates understanding that builds trust and confidence. That’s what’s really at the heart of the flexible work issue. You won’t hear valuable employees saying, “If I don’t like you, the company, the people, I’m not going to work for you.” They just won’t show up. Employers who think this debate is only about commuting convenience are just as tone deaf as the managers who allow “toxic” conditions to exist. The best workers of our time know their value and vote with their feet.
What you need to do is light a compelling path toward your organization during this unprecedented opportunity to attract talented, willing associates. And while you’re at it, take a look at some of the more experienced people with plenty of energy left—and learned perspective to offer.
I’m too much of a realist to believe companies will be able to harness this power of empathy and achieve the long-term results they seek. Our time horizon of management has shortened; we have marvelous analytical tools that capture our every movement, but they strangely fall short of understanding what we are measuring. And until now, we’ve gotten away with it.
Start small. A mindful organization drives change from the bottom up, not top down. Pronounce all you want from the C-suite, but this generation is waiting to follow “worthy” leadership. Little actions can have an impact—both good and bad. Catching people doing something right is a step. Modeling desired behaviors is critical. The world is always watching and recording you on a smartphone.
You can prove to clients you care about them by engaging more on tricky topics like bear markets and healthcare costs—these are your values and they should be displayed prominently and with pride. Referrals will follow. And above all, model those behaviors you admire in others who lead people out of uncertainty. We have important work to do together in a time of unprecedented uncertainty. We need one another.
Steve Gresham is CEO of the Execution Project, a consulting firm dedicated to rethinking and rebuilding “retirement.” He also leads Next Chapter, an initiative focused on retirement with partners Financial Advisor magazine and the Money Management Institute. Formerly the head of the private client group at Fidelity Investments, Steve is the author of The New Advisor for Life (Wiley) and Conspicuous Leadership: The Nine Habits of Successful Transition Leaders—coming soon. See more at theexecutionproject.com.