Will Wall Street Layoffs Hurt Service for Pension Clients?

According to "Pink slips on Wall Street" by TheDeal.com staff (February 23, 2009), there are going to be a lot of empty chairs in service provider land. The number of individuals being laid off, redirected or otherwise allocated to different duties is staggering. This begs some important questions.

  • Will those individuals who remain employed by banks, law firms, consultancies and so on be able to handle the work that erstwhile colleagues heretofore addressed?
  • Will the sell side feel even more pressure to close deals and will that in turn create heightened discomfort on the part of pension buyers?
  • Will the stress of imminent layoffs demoralize some professionals enough to discourage them from doing the best job possible (if they think they will be out of a job soon or unlikely to be rewarded for going the extra mile for clients)?
  • Will shrinking staffs (plan sponsors and service providers alike) cause people to take shortcuts? After all, we only get twenty-four of them every day. Time is a binding constraint, especially when "to do" lists are growing exponentially. New accounting rules and regulations only add to everyone's work.
  • If short cuts occur, isn't fiduciary liability exposure for everyone involved likely to rise because there is an increased probability that some risks will be ignored or improperly managed?
  • Could a nasty spiral ensue wherein untended risks create undue exposures, possibly leading to litigation and/or regulatory enforcement which in turn consumes time, money and energy, thereby reducing available hours to carry out prudent policies and procedures?

Things are really tough right now. However, the reality remains. Never a good idea to shirk from investment best practices, new challenges arguably demand even more of a commitment to problem-solving. How many people do you know who go home at 5 pm any more? Work is becoming a 24/7 commitment, especially as supporting resources become scarce.

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