Wall Street Sends Wine, Masks to Clients With Steakhouses Closed

(Bloomberg) -- Wall Street investment funds won't let a pandemic and riots stop them from wooing clients.

With boozy steakhouse meetings no longer an option, evenings on the town are being replaced with wine tastings via conference call and online concerts. There are also care packages tailored to the times -- packed with masks -- and donations to food banks and charities.

Disruptions set off by the coronavirus pandemic, now complicated by protests and curfews, are prompting asset managers overseeing products such as mutual funds and exchange-traded funds to figure out new ways to remotely grab the attention of wealthy customers, institutional investors and financial advisers. That often means trying to hobnob in the virtual world.

It's accelerating a shift that was already underway, as big firms rely less on social outings to generate and work leads, said Amanda Walters, principal at Casey Quirk, a division of Deloitte Consulting. “Asset managers are asking, ‘Do we need to be face-to-face as much as we were before?' And the answer is probably no,” she said.

Country music artists including Darius Rucker and Luke Bryan performed from home for AllianceBernstein Holding LP's private wealth clients in a virtual concert last month that supported relief for Covid-19, said Adam Sansiveri, a managing director. The firm also sets up wine-and-cheese tastings for wealthy clients, featuring a remote sommelier.

Picking Charities

JPMorgan Asset Management has flooded its calendar with more than 170 virtual events since mid-March, according to a person with knowledge of the matter. Nuveen, a subsidiary of Teachers Insurance and Annuity Association of America, has a program that lets clients direct grants of about $5,000 to food banks and charities of their choice.

Sales staff are typically split between so-called internal wholesalers who use data to generate leads and external wholesalers who fly to meet with potential buyers of their mutual funds and other investment products. About 55% of asset managers considered hiring for their internal teams “high-priority,” compared with only 9% looking to expand those working externally, according to a Casey Quirk study.

Fund firms already were facing greater scrutiny over how they wine and dine customers. The U.K.'s Financial Conduct Authority admonished firms in 2016 over their use of social events such as golf, tennis and concerts that don't appear to “enhance the quality of service” they're providing. It noted that logs of those interactions often weren't well maintained. It's unclear how regulatory bodies view the new enticements.

Many in the industry expect virtual client entertainment won't last, particularity if a vaccine emerges, and that in-person meetings will again become the norm.

But any return will be gradual, said Jim Hirschmann, chief executive officer of active fixed-income manager Western Asset, an independent affiliate of Legg Mason Inc. that oversees about $448 billion.

“In our business it's traditionally been based on trust and confidence,” he said. “You have to earn that. It's difficult to earn that unless you're spending some time with someone face-to-face. And that will be a challenge for everyone.”

Picnics and Biking

The crush of virtual events can be overwhelming. Invitations to webinars spiked after lockdowns began, so much that they could easily fill entire workdays, according to one institutional investment analyst.

Financial advisers, who recommend investments to clients, are similarly hunting for ways to keep their attention. Some are venturing out to visit customers, especially any nearby. In areas with looser restrictions, some pre-pandemic pleasures remain.

“Golf!” said Tom Balcom, founder of 1650 Wealth Management, when asked how he's keeping in touch. His business is based in Fort Lauderdale, Florida. “We are playing a ton of golf with our clients these days since it allows us to socially distance from our clients while also spending time with them.”

Devin Pope, an adviser at Albion Financial Group in Salt Lake City, investigated mountain biking and picnicking options. Alex Caswell, a San Francisco-based wealth planner at RHS Financial, said care packages including items like face masks can do the trick. But the distance has been refreshing, he added.

“One of the benefits of the Covid-19 era is being able to focus on the core of relationship building,” Caswell said. “Which is human-to-human interactions without all the distraction of drinks and fancy dinners.”