The New T&E Budgets: Technology and Engagement

With the world opening back up, it seems that some flavour of return to office is in the air for almost every organization. There is definitely going to be a spectrum of responses: some firms are pushing for a return to pre-covid dynamics, with close to five days a week in office (BofA just joined many other firms in New York who are pushing for such). Some firms are taking a more decentralized approach with regional offices. Finally, some firms are sticking to a more remote approach with a focus on working the majority of time remotely, with limited in-person interaction.

From my own personal perspective, I see a lot of value in spending at least some portion of time in person for a variety of reasons. Conversations are more natural and fluid – you get a chance to leverage serendipity of connections in the hallway, elevators, and at lunch. People connect much more with those outside their direct day to day work circles, building greater connections and relationships across the firm. It promotes information sharing, work becomes less transactional, and ultimately more engaging. That being said, I also appreciate the benefits to remote: focus, commute time saving, and flexibility.

Over the next year or two we’re likely going to exist in some blend of both worlds: a combination of remote and in person work. My feeling is that on the buy side (and to a similar degree, amongst corporates), remote setups are going to be much more popular (and available) than on the sell side, where there is a focus on getting the trading desks and banking teams back in person.

One thing that I’ve been thinking about recently is what the “Travel & Entertainment” (T&E) budgets look like as we get back to a more normal state of things. There are two reasons for this: both logistical, and functional.

Logistically, it’s going to be much harder to coordinate times to connect when everyone isn’t in the office five days a week. It means there will be less overlap with clients, which means fewer opportunities to connect for meals, events, and entertainment. Functionally, there is just going to be more sensitivity to big events, which likely means fewer events, and thus less travel/entertainment at a macro level (conferences, etc.).

On the flip side, the last two years has driven an explosion in tools and technology that the average sellside person is using, especially for anyone in a client facing role (between both banking and markets). This has likely significantly expanded the software expense number for firms: virtual meeting software, CRMs, email and client intelligence software, scheduling software – the list goes on. All of these are new costs where the key driver of consumption is the individuals that need it.

Ultimately, I also think the street is moving away from steak dinner and Yankee games as the only way to engage with, and build the relationship with, clients (although not fully away)

T&E budgets post covid: “Technology & Engagement”

Increasingly I’m starting to help our clients think about the new paradigm in a sense of expanding their traditional “Travel & Entertainment” budgets to capture this idea of “Technology & Engagement” – what are all the individual costs that you should be capturing and associating with each individual, and how do you empower them to spend that budget in the way they deem most effective. Technology captures the cost of the tools and technology that the individual needs to do their best work: client intelligence, automation, or any other software. Engagement captures the costs of engaging with their clients, whether that be dinners, travel, or general entertainment.

What this means is that firms can start setting an overall budget and empowering each client-facing individual to understand what resources they have available, and to allocate those resources across their technological and client engagement needs. For a relationship manager whose clients are mostly remote, they could focus on investing more in technology, and less in engagement. For a relationship manager whose clients are mostly local, they can invest in in-person engagement and traditional entertainment.

The important part of this though is a cognitive shift from seeing these as two different items to seeing technology & engagement as the same thing: a way to better understand and serve the client. Whether you get that understanding from understanding how they read the email and research you send over, or from what they tell you over dinner or at a Yankee game, the end result is the same: incremental understanding of your client to better understand and serve them, and ultimately grow the relationship.

On the ground, we’re already starting to see the thinking around this shift: salespeople who use Street Contxt as a client intelligence software to better understand and engage with their clients are increasingly being asked to leverage their own T&E budget for the software, a request that is always approved. At the end of the day, every relationship manager is looking for the best return on investment to better understand their clients, and in many cases that is an industry specific piece of technology over an incremental dinner.

In a world of in-person, remote, and hybrid offices, having the right technology and engagement strategies is going to be localized to the specific individual, and their specific clients. Giving individuals the independence and agency to make the decisions themselves and seeing both technology and in person engagement as both means to the same ends is a cognitive shift that the industry will need to make.

As always, we’re here to help, and I wish you the best of luck in your own return to office planning, and thinking through your own technology & engagement strategies and budgets.

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