ResearchEducationDialogue

How Work Is Evolving for Investment Managers

Coping with COVID-19

1

Table of Contents

Executive Summary 2

Respondent Demographics 3

Meeting Frequency and Format 4

Office Closures 5

Projected Office Reopenings 6

Remote Work Policies 7

Visitor Guidelines 8

Business Travel Resumption 9

2

Executive Summary

Survey Overview

Key Findings

Callan surveyed over 100 investment managers regarding how their firms were responding to the COVID-19 pandemic, focusing on office closures and reopenings, work-from-home approaches, business travel, and meetings. Respondents reflected a wide variety of firms by location, employee size, assets under management, and ownership structure. The purpose of the survey is to better understand how investment managers are navigating the COVID-19 pandemic as both Callan and the investment industry would greatly benefit from learning what actions and policies firms are implementing relating to COVID-19 in these uncertain and frequently changing times.

The following summarizes our findings as of June 5, 2020.

‒ Offices remained closed for 84% of the respondents, with the vast majority of employees working remotely across essentially all firms.

‒ A greater percentage of smaller firms (<$50bn in assets under management) kept their offices open relative to larger firms, and almost one-third of the offices in the Southeast were open versus 25% or less for other regions.

‒ Approximately 60% of respondents had a specified reopening date, with half of those noting July or earlier and 96% indicating they planned to reopen by mid-September.

‒ A majority of smaller firms had either already opened or planned to by July, while a majority of larger firms planned to reopen in August or later.

‒ 97% of respondents banned outside visitors.

‒ More than 40% of respondents conducted all of their meetings via video conference call.

‒ Nearly two-thirds of respondents said the number of meetings they had in May either increased or stayed the same.

‒ Just under half of the respondents provided an anticipated date for resumption of travel, with the majority of those targeting Sept. 8 (the Tuesday after Labor Day) or earlier.

3

Employee-owned42%

Other18%

Partnership7%

Publicly owned18%

Subsidiary16%

<$15 bn29%

$15 bn-$50 bn22%

$50 bn-$300 bn26%

>$300 bn23%

Respondents by AUM

Respondent Demographics

*As of 1Q20, or most recent quarter available.

108 investment managers responded to the survey.

42% were employee-owned, making that the largest manager type represented.

29% were “small” managers with less than $15 billion in assets under management,* the largest share of respondents by AUM.

Respondents by Ownership Structure

4

Decreased37%

Increased35%

Unchanged28%

Meeting Frequency and Format

*As of 1Q20, or most recent quarter available

63% of respondents said the number of meetings they had in May either increased or stayed the same. This trend held true across firms by asset size, ownership structure, or location.

48% of respondents conducted at least 80% of interactions with clients and consultants via video conference call in May.

66% of larger firms (>$50bn AUM) conducted at least half of their interactions via video conference call versus 54% of smaller firms.

Roughly half the respondents from the Northeast and overseas conducted 100% of their interactions via video conference call.

Number of Meetings Compared to One Year Ago

48%

4%8%

29%

11%

80%-100% 60%-80% 40%-60% 20%-40% <20%

Percentage of Meetings with Clients/Consultants Done via Video

“Based on our conversations with clients, I would say most have said that video conferences have been great and more efficient.”

Respondent Perspective

5

16% 84%

Office Closures

Are Your Offices Open?

84% reported offices remained closed.

As expected, managers whose primary office is located in the Northeast region of the U.S. (higher number of COVID-19 cases, more stringent shelter-in-place restrictions) had the lowest percentage of offices currently open (13%), as was true for managers in the Central region, while managers in the Southeast had the highest percentage of offices open (31%). All overseas managers said their offices were closed.*

Offices remained open for a greater percentage of firms (22%) with under $50bn in assets versus those with over $50bn in AUM (9%).

13%

31%

13%

23%

87%

69%

87%

77%

100%

* Only one manager represented the Mountain region and its office is currently open.

All

Non-U.S.

Pacific

Central

Southeast

Northeast

Yes No

6

41%

10%

17%

5%

25%

1% 2%

DateUnknown

June2020

July2020

August2020

September2020

October2020

January2021

When Respondents Say Their Office Will Reopen

Projected Office Reopenings

41% of respondents were uncertain as to the timing of their office reopening, while 59% had a specified reopening target, with half of those noting July or earlier, and 96% indicating they planned to reopen by mid-September.

The majority of firms with over $50bn in assets were targeting a reopening date of August or later, whereas a majority of firms with under $50bn will reopen in July or had already reopened. For those that have reopened, many have implemented a rotating schedule for employees.

Over half the respondents located in the Northeast were planning for a Sept. 1 or later reopening, whereas the majority of respondents in the Central, Pacific, Southeast, and overseas regions were targeting July or earlier.

7

Remote Work Policies

Percentage of Employees Working Remotely

The vast majority of employees were working remotely across essentially all firms regardless of firm size and location.

87% of those surveyed said that a minimum of 90% of employees were working from home. Only 2% of managers said that less than 50% of employees were working from home. A few smaller, employee-owned firms continued to work in the office, where they have been able to practice social distancing.

Just over half of the respondents anticipated that some employees will work permanently from home, with the majority of those noting that one-third or fewer employees will have this arrangement.

Asset size, ownership, or location did not appear to influence a clear trend in permanent work-from-home arrangements.

<75% of workforce

80%-89% of workforce

90%-99% of workforce

100% of workforce

Percentage of Employees Expected to Permanently Work Remotely

79%

17% 2% 2%

0%-25% 25%-50% 50%-75% 75%-100%

46%

41%

7%6%

8

Visitor Guidelines

Are Visitors Permitted into Your Offices?

97% of respondents continued to ban outside visitors. All of the respondents allowing visitors were small, employee-owned firms, and they were located in the Pacific, Southeast, and overseas regions.

3%

97%Yes

No

“I would not be surprised if the official guidance prohibits visitors this year. At current, they are discussing what checks we would do, how we would limit where outsiders would be allowed, etc.”

“Visitors are permitted on-site with appropriate approvals in accordance with WHO and CDC guidelines.”

Respondent Perspective

9

53%

1%

7% 6%

17%

5%1%

10%

DateUnknown

June2020

July2020

August2020

September2020

October2020

December2020

January2021

When Respondents Predict Business Travel Will Resume

Business Travel Resumption

47% of the respondents provided an anticipated date for resumption of travel, with the majority of those targeting Sept. 8 (the Tuesday after Labor Day) or earlier.

10% said they will not resume business travel until January.

68% of larger firms (>$50bn) were targeting Sept. 8 or earlier for travel resumption vs. 53% for firms with under $50bn in AUM.

But for the majority of respondents, the date was uncertain. And nearly half of the respondents that were uncertain about resuming business travel hailed from the Northeast.

“Like everyone else, we have certain people that want to travel tomorrow and others saying they don’t want to travel at all.”

Respondent Perspective

10

About the Authors

Gregory C. Allen, chief executive officer and chief research officer, oversees the firm's fund sponsor consulting,

trust advisory, database, client report services, operations, and all research and education groups, including the

Callan Institute.

Greg is a member of Callan’s Management Committee, Alternatives Review Committee, Institute Advisory

Committee, Client Policy Review Committee, and Editorial Committee, as well as the Investment Committee,

which oversees all of Callan’s discretionary multi-manager solutions. He is also a member of the Callan Board

of Directors and is a shareholder of the firm.

Shane Blanton is an assistant vice president in Callan's Published Research Group, covering business

analytics. He is responsible for data analysis and visualization to support Callan's research endeavors.

Previously Shane was a member of the Analytical Solutions Group for three years, training Callan's clients to

use PEP software.

Amy Jones is a senior vice president and co-manager of Callan’s Global Manager Research group, which

provides fundamental and statistical research on investment managers. She is responsible for the group's

operational functions, and oversees the quantitative and qualitative analysis of investment managers and the

production of client reports. Amy is a member of Callan’s Institute Advisory committee as well as Callan's

Inclusion Committee. She is a shareholder of the firm.

About Callan Callan was founded as an employee-owned investment consulting firm in 1973. Ever since, we have empowered institutional clients with creative, customized investment solutions that are backed by proprietary research, exclusive data, and ongoing education. Today, Callan advises on more than $2 trillion in total fund sponsor assets, which makes it among the largest independently owned investment consulting firms in the U.S. Callan uses a client-focused consulting model to serve pension and defined contribution plan sponsors, endowments, foundations, independent investment advisors, investment managers, and other asset owners. Callan has six offices throughout the U.S. For more information, please visit www.callan.com.

About the Callan InstituteThe Callan Institute, established in 1980, is a source of continuing education for those in the institutional investment community. The Institute conducts conferences and workshops and provides published research, surveys and newsletters. The Institute strives to present the most timely and relevant research and education available so our clients and our associates stay abreast of important trends in the investments industry.

For more information about this report, please contact: Amy Jones at jones@callan.com

© 2020 Callan LLC

Certain information herein has been compiled by Callan and is based on information provided by a variety of sources believed to be reliable for which Callan has not necessarily verified the accuracy or completeness of or updated. This report is for informational purposes only and should not be construed as legal or tax advice on any matter. Any investment decision you make on the basis of this report is your sole responsibility. You should consult with legal and tax advisers before applying any of this information to your particular situation. Reference in this report to any product, service or entity should not be construed as a recommendation, approval, affiliation or endorsement of such product, service or entity by Callan. Past performance is no guarantee of future results. This report may consist of statements of opinion, which are made as of the date they are expressed and are not statements of fact. The Callan Institute (the “Institute”) is, and will be, the sole owner and copyright holder of all material prepared or developed by the Institute. No party has the right to reproduce, revise, resell, disseminate externally, disseminate to subsidiaries or parents, or post on internal web sites any part of any material prepared or developed by the Institute, without the Institute’s permission. Institute clients only have the right to utilize such material internally in their business.

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