Hand-holding in the pandemic: Wealth managers grapple with new reality

Business

During the early days of March, Jill Fopiano was having trouble sleeping, waking up at 3 o’clock in the morning, maybe 4 o’clock. She’d been watching news of a virus in China, first out the corner of her eye – was this like swine flu? – then more squarely, as headlines rushed in about outbreaks on the west coast of America. Fopiano wondered, in the darkness, if she should shut down her office in Boston’s upscale Back Bay neighborhood.

The chief executive officer at O’Brien Wealth Partners, a firm overseeing $700 million in assets at the beginning of the year, Fopiano is used to being in charge. She began trading securities in 1992, a time that Fopiano notes “really was a very male dominated world.” Two decades later, she joined O’Brien Wealth, and today she owns the place.

But with the new coronavirus spreading from across the ocean and now bearing down on her, Fopiano no longer felt in control. “I was thinking, there’s no precedent for this,” said Fopiano, the firm’s majority owner. “I didn’t want to be responsible for making people or their families sick.”

She announced on March 11 that O’Brien Wealth would temporarily close its doors, while keeping her team of 12 on the payroll.

That was five weeks ago.

Today, Fopiano does not walk across the floors of her offices to get a coffee or to pause at views that stretch across Boston down to the harbor. As the world’s stock markets have crashed and spiked during the economic seizures brought on by the COVID-19 pandemic, Fopiano and others who manage money for the wealthy have found themselves, like so many other white-collar professionals, working from home. They are far outside their comfort zone of lunches, meetings and handshakes as they guide their clients through the chaos.

Interviews with more than a dozen wealth managers whose firms collectively oversee tens of billions of dollars in assets across the United States, Europe and Asia, reveal how these financiers have adapted to the new reality of virtual hand-holding. They listen to concerns, execute instructions and dispense advice to clients – but never while in the same room.

Meanwhile, indexes have ricocheted wildly – down 31% for the year in late March, then rebounding 27% from the lows by mid-April. More than 20 million Americans have filed for unemployment benefits. The International Monetary Fund warned of the worst economic downturn since the Great Depression of the 1930s. Client conversations now veer into shades of risk that wealth managers aren’t typically trained for, like epidemiology.

Investors understand the current market chaos wasn’t presaged by fundamental economic issues, like the U.S. mortgage crisis in the recession of 2008, said Rob Weeber, chief executive officer at Zurich-based Tiedemann Constantia, a European joint venture with Tiedemann Advisors, which oversees about $22 billion in assets. But the uncertainty about what turns the coronavirus might take, and the implications that could have for the economy and markets, have left the moneyed class jittery. A Bank of America survey of global fund managers during the first week of April found “extreme investor pessimism,” with levels of cash in their portfolios – a sign that investors are sitting on the sidelines – at the highest point since the September 2001 terrorist attacks.

Fopiano recounted one client, who’s invested about $1.5 million with her firm, calling to discuss whether or not he should cancel a credit card that just raised its annual fee. The markets were down about 20% at the time, and that clearly was not what he really wanted to discuss, Fopiano said.

“Rarely do we get a call from someone who says, ‘Oh, my God, what’s going on in the markets,’” she said. “It’s usually couched in another question.”

Another client, with over $5 million in his account, started off by chatting about a home loan. By the time they hung up, both clients decided to keep their investments. For now.

“Each market pullback has its own flavor,” Fopiano said, during a series of telephone conversations from her brownstone home in the Boston suburbs, where she now works out of a nook off the kitchen. “And this one is particularly frightening to people in a lot of ways, because [the cause] is potentially harmful to their physical health as well as their economic health.”

She paused to acknowledge a noise in the background. “There goes the dog,” she said. Her two kids, both teenagers, are home as well. She has learned to give a standard disclaimer at the beginning of a call: there may be outbursts of barking or videogame noise.