Monday, September 29, 2008

Who Speaks For the Financial Industry?

The previous post touches on something that I have been considering for the past couple of days: who speaks for the Financial Industry as a whole? After one of the worst days in Wall Street history driven,  in no small part, by confusion and resentment around a - largely sensible - Congressional proposal, one has to wonder why the best equipped, best funded, and most sophisticated industry worldwide - the Financial Services Industry - isn't better at making its own case

Love it or hate it the petroleum industry has used public relations with increasing success to convince consumers and lawmakers of two inalienable facts: 1) carbon fuels are a necessary evil which fill an immediate need while we search for viable alternatives and 2) for all the talk of 'big' oil and corrupt cadres, "around 41% of oil company stock is owned by 401k retirement plans and mutual funds" i.e. by you and me. 

Very similar arguments could be and should have been made around today's 'bailout' bill but the administration and its proponents have, as so often happens, failed to pay sufficient attention to the only thing that really mattered in the end: successfully framing the debate. 

The fact that the word "bailout" is now well and truly cemented in the vernacular demonstrates the need for a more cohesive and frankly more effective communications strategy industry-wide.

Can communications keep up?

The speed of activity in the markets goes someway to explaining the perceived lack of ability of communications functions in financial institutions to effectively carry out their role over the last couple of weeks. With the HBOS merger story in the UK apparently being leaked to the media, rather than properly communicated, it seems that communications functions are struggling to keep up, let alone take advantage of what opportunities are presented to in the market.

Business managers would do well to remember that, where possible, good communication with key stakeholders and publics is crucial at this time to build understanding, support and confidence.

"Memo" to Congress

President Bush’s statements regarding the crisis on Wall Street have been clear and to the point.

However, the extent to which they have failed to persuade could have more to do with format than the facts.

As communications professionals, we guide clients not just on what to say, but how to say it.

This writer believes that the President might make more headway with a song. Perhaps the following, influenced by Warren Zevon, might be useful.


Everyone, sing along!

Send Lawyers, Guns and Money

Well, they went home with their bonuses
The way they always do
How were they to know
The markets were filled with glue

They were gambling in New York
They took a little risk
Send lawyers, guns and money
Paulson, get me out of this

I'm the innocent bystander
Somehow I got stuck
Between the rock and the hard place
And I'm down on my luck
And I'm down on my luck
And I'm down on my luck

Now I'm hiding out in Washington
Waiting for the Plan
Send lawyers, guns and money
The shit has hit the fan
Send lawyers, guns and money...

Thursday, September 25, 2008

Northern Wok?









Proof perhaps that the fabled decoupling of Asia from the US is still some way off. When we sneeze it would appear that the world continues  to catch a cold. 

Financial Technology Congress - A Mixed Picture

I visited Boston this morning to attend the Financial Technology Congress where Cognito was a media partner. Unlike the SIFMA or other large industry events the show is designed to be a select affair but even bearing that in mind proceedings were more subdued than expected.

Perhaps not surprising: we're hearing from other conference partners that even where travel budgets haven't been cut executives are still choosing to stay close to their desks while industry news still seems so unsettled. As one client I spoke to put it: "When my house is on fire I may one day be very interested in a discussion about flame proofing your home, but right now I just need a hose."

On the flip side one of the speakers discussing data mangement challenges was a senior operations exec at JPMorgan who until recently was a senior operation executive at Bear Stearns. His tone was measured and his vision was decidedly long-term and one delegate remarked that he gave the same speech only days after the Bear acquisition. Clearly then, per the earlier post, despite a lot of turbulence in the market there is also no shortage of business as usual.

Wednesday, September 24, 2008

DealBook Grows Up

Among the winners of the Wall Street chaos are the spunky, literate editors at the New York Times DealBook. Begun as a daily e-mail by the “other” Sorkin in 2001, DealBook has blossomed into a full-on blog page with writers covering the intricacies and personalities of the deal world, along with the deals themselves and the financial services firms behind them.

Historically, actual coverage of the financial services industry in New York’s daily papers has been surprisingly light, considering that the city is the world’s financial center. DealBook has changed all of that, and one can only assume that the Dealbook offices have been buzzing non-stop over the last few weeks as the team works to get out the coverage.

Give it a read, if you haven’t already.

Tuesday, September 23, 2008

Don't shoot the messengers

In today's Times http://www.timesonline.co.uk/tol/comment/columnists/guest_contributors/article4805311.ece Oliver Kamm, a former hedge fund manager, argues that short sellers are not the cause of the chaos and have ensured that bad news is reflected quickly in market prices. Too much debt, he says, coupled with failure by banks and politicians to constrain the credit bubble, are largely to blame.

At last some sensible defence of hedge funds who were last week reviled publically as spivs, speculators and sharks. Lone voices in their defence will not be enough however. The hedge fund industry now needs a concerted effort to help correct misperceptions about its role in the current crisis. Unless it moves quickly to mend its shattered reputation, it will soon have to contend with another negative descriptor: scapegoat.

Monday, September 22, 2008

Japan Rising

As you will have seen by now, Nomura Holdings Inc. (8604.TO), Japan's largest brokerage house, has bought the Asian operations of Lehman, and Japan's Mitsubishi UFJ Financial Group Inc. (8306.TO) has agreed to purchase a stake in Morgan Stanley. This raises quite a lot of interesting questions including what does Japanese investment in the US financial services market mean about Wall Street's competitiveness, how will these storied firms integrate considering the cultural clash between American independence and Japanese teamwork, and of course, will the Japanese be able to keep these assets down the road or be focused to sell when the crisis hits home in Asia? Stay tuned to find out who might be next, and what the proposed integration plans are. Some of our clients will certainly be in the press commenting on these topics.

Despite the turmoil, there's alot of BAU going on..

Despite everything, there's alot of business as usual going on in the financial services sector. For instance, several of our consultants from our teams in London and New York have just returned from the Sibos conference and exhibition in Vienna (which covers back office and payments issues) which was attended by many thousands of people. Next month we're running the press function for the world's premier corporate treasury and banking event - EuroFinance - that will be attended by over 2,000 senior bankers and corporate representatives. There are many less high profile areas of the industry that provide essential services that plough on and keep things working.

Sunday, September 21, 2008

So that's it...

Within a space of just two weeks the four remaining titans of Wall St. investment banking have, essentially, ceased to exist as they were. In a few hours we will see what the market thinks of this new financial landscape, along with the Fed's proposed plan to launch what will be, in effect, the biggest distressed debt fund in history. 

It's (not) the end of the world

I don't think I've managed to walk by a newsstand for the last week without seeing a) a picture of stricken traders with their heads buried in their hands or b) a headline with the words "CRISIS" or "PANIC" or "WHO'S NEXT?". Even my most artsy/non-financial savvy friends have asked, "Okay, what is a credit default swap and why is it causing the apocalypse?"

It makes anyone want to line up at the bank, withdraw their savings, and tuck bundles of cash under the mattress - where at the least, you'll know it's safe because, literally, you'll be sitting on it.

Seems like financial firms are starting to roll out the "It may feel like the end of the world, but don't panic" message.

Example:

Schwab - During times like these, count on us for the help you need.

Fidelity - With the recent market volatility, it’s only natural for you to be concerned about your investments. We understand. Volatile markets can make you wonder if you're on track to meet your investment goals. It’s time to put that uncertainty to rest. Fidelity has helped clients through all types of markets for over 60 years. Let us put that experience to work for you and give you the guidance you may need.

Firms can't afford to be adopting a "no comment" strategy right now, even if you're not an investment firm, but a service provider to this markte. Whatever the message may be, getting the message down and getting it down right is going to be crucial in the months going forward.

Saturday, September 20, 2008

Better Hedge Funds Communications

Between skittish investors, a rapidly shrinking pool of prime brokers and knee-jerk (some argue counter-productive) regulation, this week was not a pleasant one to be a hedge fund. This year has already seen the highest number of redemptions on record and this looks only set to continue apace as Q4 approaches.

More than ever hedge fund managers, big and small, need to fully harness the power of communications to reassure investors, potential investors, counterparties, and their own teams. One thing that has become very clear over the past two weeks is just how potent and destructive the combination of rumor, misinformation and fear can be. In a world where even Goldman's future is called in to question nobody believes that ducking for cover and riding it out is a workable strategy any longer.

Hedge funds, individually and as an industry, need to get out in front of negative stories and speculation and to do this they need strong messages, a consistent story and a willingness to engage the market head on.

Thursday, September 18, 2008

In the eye of the storm

What a week to be in New York. Our offices here are just a few blocks from Lehman's and scenes on the street have been easily as interesting as what's hapenning on CNN or the Bloomberg terminal.


Experiencing something first hand rather than through the media lens certainly yields a different perspective. In two weeks we will be moving out of mid-town in to larger offices in the heart of the financial district and it will be interesting to see how the atmosphere differs downtown.

Unprecendented times in financial services..

there's so much activity and challenge in the markets at the moment and we're involved in such widespread and diverse activity for our clients, we felt this was a good time to start sharing thoughts, experiences and opinions amongst ourselves first. we can open it up beyond the firm as and when..