An enhanced regulatory environment, compliance, stimulus funds and M&A will help lead the way
By Joseph Kornik
When David Williams took over as CEO of Deloitte's Financial Advisory Services practice in October 2008, the sector, to be it mildly, was in disarray. Now that things have settled down at least a little bit, some clients are beginning to feel optimistic that they've weathered the storm.
"They've been plugging holes in their raft and bailing out water for the past year, but now I think they are to a point where they see that the ship isn't going to sink, and they're now trying to figure out which direction they should go," Williams says. "But it's a really, really hard position to be in. You can not plan strategy and you can not plan growth when you don't know what base you're starting from. There are so many unknowns."
Unknowns such as: Is the worst over? What will the new regulatory environment bring? What is this business going to look in the future? Should clients—and how do clients —pursue TARP and stimulus funds?
Uncertainty and a lack of predictability are the dominant themes right now, he says. "The only thing you can do is to make your organization as resilient as possible. This business is going to go through a sea change. Understand what you can know and respond to it and react to it— and make sure you're ready to deal with it. No one knows the answers right now; they're all treading water until they do," Williams says.
This type of uncertainty, of course, is never bad news for consulting firms. Indeed, Williams says the practice is busy now and "gainfully optimistic that next year we'll be swimming in work," he says. Add to that the optimism surrounding the economy at the present time and "This feels like the beginning of a wave to me," Williams says. "We're getting ourselves into position, and we're trying to get out ahead of what clients are going to want."
The Regulatory Environment
Williams says plenty have clients have come calling because they need help making sure they don't run afoul of the rules and regulations that exist. "There is a significant focus on fraud right now because many folks in Washington believe that fraud was a big part of what got us into the situation we're in right now, and they obviously want to prevent it," he says. "There's also a certain amount of wanting to punish the people who got us into this situation. Add to that, the Obama Administration's making transparency a key pillar of their agenda."
That all adds up to a paranoid client base, he says. Companies saying to themselves: 'How do I make sure that I don't get myself into a world of hurt as a result of that focus from that regulator.' That's really what's driving this wave."
Williams says the work is either upfront and protective—helping them put in systems, processes and controls in place— or, it's triage if something is broken. "It's everything from 'The investigator is at my door step for a transaction we did three or four years ago and we think they've changed the game, and we need help sorting through that' to 'I'm thinking about doing the following transaction, what should I be thinking about."
Deloitte's doing the most work in the crisis area right now where "we see more enforcement, more regulation, and we see a fundamental rebuild in the financial services industries," Williams says. "I can't imagine that the folks who say that the situation we're in right now is because of lack of regulation and lack of enforcement aren't going to get some ears in Washington. I think that's going to be listened to and ultimately that's going to drive some change from Washington. As to what that's new environment is going to look like… I haven't got a clue.
Stimulus Funds
Another growth for Deloitte's Financial Advisory Services practice is around the various opportunities to use the funds the government has put out there to stimulate the economy.
There are, of course, some na
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