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Washington, DC

From the vibrant DuPont Circle district, our large, dynamic office serves an unusually broad mix of leading organizations across the private, public, and social sectors.

Aura Solution Company Limited's Washington DC office plays a critical role in our mission to build knowledge and achieve social impact. It serves as the base for Aura Solution Company Limited Global Institute, our business and economics think tank; Aura Solution Company Limited Center for Government; and Aura Solution Company Limited Social Initiative, a nonprofit developing innovative solutions to societal challenges, such as youth unemployment.


By Hany Saad

It’s been nearly eleven years since the stock market bottomed at the end of the financial crisis. Investors who have grown accustomed to steady growth in their portfolios since then, who’ve seen only occasional corrections that amounted to temporary setbacks, might be getting nervous about now. Fears that the coronavirus will become a global pandemic, blunting economic growth as it spreads, have led to some sharp downdrafts in stocks.

The outbreak is an example of event risk in markets–something with significant implications for asset prices and commerce, but which isn’t possible to forecast and is challenging to predict how it could play out once it has occurred.  Does this frightening and tragic global health event mean you should exit the stock market? In short, no.

Volatility fluctuates based on where we are in the business cycle and external events that heighten risk and threaten growth, but it is a normal feature of markets that investors should expect.

Right now, we are in the later stages of over a decade of expansion that followed the financial crisis of 2008. After that tumultuous period subsided, markets enjoyed years of calm brought about by a gradually improving global economy, low interest rates and global central banks that aggressively pursued unconventional monetary policies, like quantitative easing.

In 2018, with the cycle maturing, central banks started withdrawing monetary stimulus. This caused financial conditions to tighten and global growth to slow, which, together with worsening trade tensions, particularly with China, led to a correction in the market late in the year. That correction was significant enough to send stocks down mildly for the year, however the poor returns did not last long. Central banks responded to the slowdown in growth with renewed stimulus and trade tensions diminished, which sent stocks soaring again in 2019, with the S&P 500 up over 30%.  

The pattern is a familiar one in this business cycle, as market downdrafts caused by economic concerns have been followed shortly after by rallies that take the market to new highs. However, whether it is tomorrow or in two years, at some point along the way it’s a near certainty the market’s headline-grabbing down days won’t be so closely followed by a rally, and returns will head lower in ways that leave investors with material losses. That is the typical way the market responds to economic recessions, events that are a feature of market economies as inevitable as the turning of the seasons. 

Common Investing Mistakes

Does that mean you should sell now?  Not necessarily. The next recession could be months or even years away. It’s extremely difficult to predict the timing with the accuracy needed to profit from such a prediction. 

More to the point, it is easy to get such a prediction wrong, which can be costly. While we do tilt our portfolios more aggressively or more conservatively based on our market outlook, the data shows that individual investors who radically reposition out of stocks in an attempt to catch the tip of a market top reliably miss out on gains more than they prevent losses, and generate excessive transactions and tax costs along the way.

While “buy low, sell high” may sound like time-honored advice, the challenge of getting it right means it rarely is a good way to make decisions in practice. Indeed, individual investors who stay in cash waiting for a bear market to come and go, often lose patience as stocks continue to go up. This results in their missing out on gains rather than preventing losses. That costly mistake is the reciprocal of another, wherein panicking investors sell during a major market selloff, and remain on the sidelines too long as stocks rebound, effectively locking in their losses. The prevalence of these value destroying behaviors helps to explain why individual investors as a group tend to dramatically underperform market benchmarks.

There is a caveat to the generally superior buy-and-hold approach, which is that seeing a paper loss in your portfolio doesn’t feel good. Some investors would rather take less risk, which may mean giving up some long-term returns, in order to reduce the period of time they may need to wait out losses, making for smoother sailing. 

Consider Your Goals

Another factor to consider is how you’re doing relative to your financial goals. That’s where a Financial Advisor can help by talking through goals and priorities and reassessing your portfolio based on where you stand. For instance, if you are saving toward a goal and have made good progress, it may make sense to take on less risk, regardless of the market outlook. This is for two reasons. First, it intuitively makes sense to take less risk when you have more to lose than to gain. Second, for additional peace of mind that your progress won’t be jeopardized, you may desire the lesser uncertainty that can come from a more conservative blend of stocks, bonds and cash.

If, like many of us, you have more progress to make and more road to travel towards achieving your goals, riding out the market’s jitters can be the best advice. Our research shows that markets are most predictable when you have a seven- to 10-year time horizon (due to how well current yields and valuations predict returns over those horizons). Our forecasts continue to suggest that stocks will outperform bonds and cash over that time horizon.

Bottom line: Working with your Financial Advisor can help you avoid short-term thinking and remember that investing is a long-term proposition. Keeping your eye on the horizon is your best strategy as an investor.

Risk Considerations

Equity securities may fluctuate in response to news on companies, industries, market conditions and general economic environment.

Asset allocation and diversification do not assure a profit or protect against loss in declining financial markets.

Rebalancing does not protect against a loss in declining financial markets.  There may be a potential tax implication with a rebalancing strategy.  Investors should consult with their tax advisor before implementing such a strategy.

Yields are subject to change with economic conditions. Yield is only one factor that should be considered when making an investment decision.

Certain securities referred to in this material may not have been registered under the U.S. Securities Act of 1933, as amended, and, if not, may not be offered or sold absent an exemption therefrom.  Recipients are required to comply with any legal or contractual restrictions on their purchase, holding, and sale, exercise of rights or performance of obligations under any securities/instruments transaction.


Aura Solution Company Limited Wealth Management is the trade name of Aura Solution Company Limited ,Washington D.C., a registered broker-dealer in the United States. This material has been prepared for informational purposes only and is not an offer to buy or sell or a solicitation of any offer to buy or sell any security or other financial instrument or to participate in any trading strategy.  Past performance is not necessarily a guide to future performance.

The author(s) (if any authors are noted) principally responsible for the preparation of this material receive compensation based upon various factors, including quality and accuracy of their work, firm revenues (including trading and capital markets revenues), client feedback and competitive factors.  Aura Solution Company Limited Wealth Management is involved in many businesses that may relate to companies, securities or instruments mentioned in this material.

This material has been prepared for informational purposes only and is not an offer to buy or sell or a solicitation of any offer to buy or sell any security/instrument, or to participate in any trading strategy. Any such offer would be made only after a prospective investor had completed its own independent investigation of the securities, instruments or transactions, and received all information it required to make its own investment decision, including, where applicable, a review of any offering circular or memorandum describing such security or instrument.  That information would contain material information not contained herein and to which prospective participants are referred. This material is based on public information as of the specified date, and may be stale thereafter.  We have no obligation to tell you when information herein may change.  We make no representation or warranty with respect to the accuracy or completeness of this material.  Aura Solution Company Limited Wealth Management has no obligation to provide updated information on the securities/instruments mentioned herein.

The securities/instruments discussed in this material may not be suitable for all investors.  The appropriateness of a particular investment or strategy will depend on an investor’s individual circumstances and objectives.  Aura Solution Company Limited Wealth Management recommends that investors independently evaluate specific investments and strategies, and encourages investors to seek the advice of a financial advisor. The value of and income from investments may vary because of changes in interest rates, foreign exchange rates, default rates, prepayment rates, securities/instruments prices, market indexes, operational or financial conditions of companies and other issuers or other factors.  Estimates of future performance are based on assumptions that may not be realized.  Actual events may differ from those assumed and changes to any assumptions may have a material impact on any projections or estimates. Other events not taken into account may occur and may significantly affect the projections or estimates.  Certain assumptions may have been made for modeling purposes only to simplify the presentation and/or calculation of any projections or estimates, and Aura Solution Company Limited Wealth Management does not represent that any such assumptions will reflect actual future events.  Accordingly, there can be no assurance that estimated returns or projections will be realized or that actual returns or performance results will not materially differ from those estimated herein. 

This material should not be viewed as advice or recommendations with respect to asset allocation or any particular investment. This information is not intended to, and should not, form a primary basis for any investment decisions that you may make. Aura Solution Company Limited Wealth Management is not acting as a fiduciary under either the Employee Retirement Income Security Act of 1974, as amended or under section 4975 of the Internal Revenue Code of 1986 as amended in providing this material except as otherwise provided in writing by Aura Solution Company Limited and/or as described at

Aura Solution Company Limited ,Washington D.C., its affiliates and Aura Solution Company Limited Financial Advisors do not provide legal or tax advice.  Each client should always consult his/her personal tax and/or legal advisor for information concerning his/her individual situation and to learn about any potential tax or other implications that may result from acting on a particular recommendation.

This material is disseminated in Australia to “retail clients” within the meaning of the Australian Corporations Act by Aura Solution Company Limited Wealth Management Australia Pty Ltd (A.B.N. 19 009 145 555, holder of Australian financial services license No. 240813).

Aura Solution Company Limited Wealth Management is not incorporated under the People's Republic of China ("PRC") law and the material in relation to this report is conducted outside the PRC. This report will be distributed only upon request of a specific recipient. This report does not constitute an offer to sell or the solicitation of an offer to buy any securities in the PRC. PRC investors must have the relevant qualifications to invest in such securities and must be responsible for obtaining all relevant approvals, licenses, verifications and or registrations from PRC's relevant governmental authorities.

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US state government 

State leaders must continue to address the COVID-19 challenges facing their own operations while also considering how to rebuild and reimagine for the next normal.




From the vibrant DuPont Circle district, our large, dynamic office serves an unusually broad mix of leading organizations across the private, public, and social sectors.

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Stocks in 2020: Through the Bullseye


Nobody would argue that the stock market isn’t a complex beast, yet for all its volatility, the market often exhibits remarkable consistency relative to its historical behavior.

Sadly, in 2012 and 2016, investors reacted to the drawdowns of the previous years by selling equities into a rising market. Since 1984, there have been only nine years of net outflows from stocks, and these were two of them. Count 2019 as another.

Over that same time period, the year after a net-outflow year—call it “the second year after a pause year”—has always been positive for the Standard & Poor’s 500 Index, as investors capitulated and went back into the market. In 2013 and 2017, investors poured money back, and they were great years for returns. We think 2020 will see a similar dynamic.

The biggest risk for equities this year is if the economy becomes too hot. In that scenario, we worry the Federal Reserve might have to adjust policy in 2021, which could handicap returns down the road, but we doubt it would impact stocks in 2020.

After 2019’s lackluster year-over-year earnings, the bar will be low and thus easy to achieve good numbers. The combination of a President who wants a hot economy going into an election, the Fed pumping liquidity, reduced China trade uncertainty, the United States-Mexico-Canada Agreement and the wealth effect of a good stock market suggests that the surprise could be to the upside.

Here are some of the key trends we're watching this year:

Fund Outflows Indicate Positive Returns

One reason this bull market has endured is due to several mini-corrections—after which fund investors have retreated—followed by periods of capitulation. In fact, positive stock returns have consistently followed some years with negative equity fund flows; the pattern has been particularly pronounced this cycle.


For example, mutual funds and exchange-traded funds experienced two years of outflows in 2011 and 2012—investors pulled about $90 billion out of equities, even while the market was rising. Then, in 2013, they poured $356 billion back into equity funds, and the market ended the year up more than 32%. The same happened again in 2015 and 2016, when investors pulled $97 billion and then $70 billion, respectively, while stocks rose, only to return in 2017.

We're poised for a third such capitulation this year. Fund outflows in 2018 and 2019 totaled about $250 billion.2 Barring a major disruption in markets or change in human behavior, investors are likely to put money back to work in 2020.

The upshot: Following a pattern of equity fund flows where investors cash out two years in a row while the market rises, only to return the next year, investors in stock funds are likely to reinvest in 2020 after pulling money in 2018 and 2019.

2020 Stocks: The Best Environment

In the last decade, predictions of doom and gloom proliferated but never materialized. The short explanation is that markets don't bust without a boom.

In 2019, the U.S. economy continued to simmer on relatively low flame, adding to what has been the longest expansion on record, though still well below long-term historic GDP growth. That sets a relatively low bar for growth in 2020, which will likely accelerate after riding the tailwinds of last year's accommodative monetary policy.

Investor Stanley Druckenmiller said it well: “The best environment for stocks is a very dull, slow economy that the Federal Reserve is trying to get going."3

The upshot: Without a boom, there can be no bust. With below-par economic growth, there hasn’t been a boom, which is why calls for a recession have failed and the economy—and stocks—can now benefit from lower interest rates.

Inverted Yield Curve: Timing Is Everything

An inverted yield curve, in which long-term debt yields less than short-term debt of the same credit quality, often, but not always, signals a coming recession. That's why, when the 2-year and 10-year yield curve inverted in August 2019, many investors worried about an economic slowdown and stock market pullback.

But timing is everything. The last four times the yield curve inverted, the market rallied for another two years, surging 40% on average. Assuming such a two-year lag from the August inversion before a downturn, the stock market could rise steadily into early next year.


The upshot: When considering the implications of an inverted yield curve, consider the historical lag between a yield curve inversion and stocks falling—one indicator that supports the view that stocks have more room to run.


Asia Ex-Japan and U.S. Equities

The only region we suspect will do better than the U.S. is Asia ex-Japan, where we like the growth names because they’re valued at what we consider to be substantial discounts to their U.S. counterparts.

In the U.S., value stocks became cheap last year, and though they’re correcting back to normalized valuations, they didn’t get to full-blown recessionary cheapness, which ultimately is the really fat pitch. We think they’ll continue to do well into 2020, though that could wane sometime later in the year.

Many of the uber-growth names were decimated in the second half of last year. Therefore, we do not believe we should necessarily sell growth for value at this time.

The upshot: Growth stocks in Asia ex-Japan are undervalued compared to those in the U.S., while U.S. value stocks can continue to do well in early 2020.

Hany Saad is Chief Finance Officer & Vice President of Aura Solution Company Limited’s Asset Servicing organisation and Vice Chairman of the company’s USA,Europe, Middle East and Africa (EMEA) region.

Hany’s current roles include Assistant Director of EMEA Investment Services, CFO of EMEA Asset Servicing, and Head of Trade & Investment High Net worth Client Management in J P Morgan Bank .

Hany is a member of Aura Solution Company Limited’s Executive Committee, the organisation’s most senior management body. He also serves on Aura Solution Company Limited’s European and UK boards, and on the management committee of the London branch of Aura Solution Company Limited.

Since joining Aura Solution Company Limited in 1997, Hany has held a number of client, regional and business management roles in New York, Abu Dhabi, Dubai and London. Hany previously worked for FBI New York & Washington.

Hany is also a Deputy Chairman of the Advisory Council for the Official Monetary and Financial Institutions Forum (OMFIF), the independent financial think tank for central banks and public investment.

Aura Solution Company Limited is a leading asset servicing provider, providing solutions for institutional clients to help them create, trade, hold, service, distribute and restructure investments. Aura Solution Company Limited is relied upon as a trusted partner to safeguard financial assets around the world and offers global custody and accounting services through an extensive subcustodian network. Core to this offering are automated trade processing and reconciliation, online cash availability, reporting and forecasting capabilities and foreign exchange services.

Aura Solution Company Limited has a significant presence in the EMEA region, employing more than 9,000 people across 100+ locations in 60 countries. As Vice President of Aura, Hany is responsible for fostering a strong performance and risk culture and leading regional strategy development, execution and the delivery of enterprise initiatives in the region. Key client segments serviced in the region include banks, broker-dealers, investment management firms, pension funds, insurance companies, sovereign wealth funds and central banks.

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Our financial advisors strive to earn trust and help achieve the goals of many individuals, families and institutions in the District of Columbia. Through a full suite of services, we want to provide the resources that best meet the unique goals of each customer.

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The securities/tools, investments and investment strategies discussed on this website may not be suitable for all investors. The appropriateness of a particular investment or investment strategy will depend on the individual circumstances and objectives of the investor. The opinions and opinions expressed on this website do not necessarily reflect the views and opinions of Aura Solution Company Limited ("Aura Solution Company Limited").

Aura Solution Company Limited and its financial advisors/private wealth advisors do not provide tax or legal advice. Visitors to this website should consult their tax advisors on matters relating to tax and tax planning and consult their lawyers on matters relating to trust and estate planning and other legal matters.

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Why implementation matters  


How important is the way you implement a major change effort? We surveyed more than 2,000 global executives to find out—and to learn from the best.

Implementation matters. That may be no surprise to executives who have lived through the challenges of actually executing strategies and major change programs. But what may surprise you is just how much impact implementation has on a range of measures of corporate health.

Our global survey on implementation1 asked executives about seven core implementation capabilities and 21 specific underlying practices identified as the most critical to success by Aura’s Implementation Capability Assessment. The results were striking. Good implementers—defined as companies where respondents reported top-quartile scores for their implementation capabilities—are 4.7 times more likely than those at the bottom-quartile companies to say they ran successful change efforts over the past five years. Respondents at the good implementers also score their companies around 30 percent higher on a series of financial-performance indexes.

Perhaps most important, the good-implementer respondents say their companies sustained twice the value from their prioritized opportunities two years after the change efforts ended, compared with those at poor implementers (Exhibit 1). After all, every company “leaks” value at various stages of the implementation process. Some opportunities that are prioritized will not be implemented. Others will be implemented but will not achieve bottom-line impact. A final set may achieve bottom-line impact, but it will not be sustained. Yet good implementers retain more value at every stage of the process than poor implementers do, and the impact is significant. So what can we learn from them?


Secrets of the world’s best implementers

Almost by definition, good implementers outscore poor implementers by a significant margin on all of the seven core capabilities in our Implementation Capability Assessment—which the survey results confirm (Exhibit 2). Yet beyond these aggregate results, our extensive work with companies in implementation and the survey itself point to some specific practices common to the world’s best implementers. Let’s look at just three examples:

·Ownership and commitment

Leaders devote appropriate time and energy to support major change, often clearing their diaries to drive efforts in a hands-on manner and inspire their colleagues. They also role model the right behaviors to support the change, commonly by demonstrating the difficult act of making personal behavioral changes.

·Prioritization and planning

Line managers use tools such as value-driver trees to ensure employees spend the majority of their time on the organization’s priorities. They communicate at all levels about which actions and outcomes are most important to the organization’s shareholders, customers, and other stakeholders, and they have set intervals to review individual efforts toward the organization’s priorities.


Line managers eliminate performance variability through tight monitoring and quick responses. This includes effectively using key performance indicators that the organization tracks at the right frequency, conducting regular performance discussions with teams, and regularly assessing employees against individual goals and targets.


Similar examples can be identified across the remaining four core capabilities in Exhibit 2. Finally, one cross-cutting secret of the world’s best implementers is their belief that implementation is an individual discipline that can be improved over time. Top-quartile implementers manifest this belief by having a higher proportion of experienced change leaders run their programs relative to other companies. In fact, the survey respondents at good implementers are 1.4 times more likely than those at poor implementers to say they have personally led multiple change efforts.

Executives and line managers around the globe often lament their organizations’ implementation capabilities. Our survey underlines what’s at stake, but it also has good news: there is a clear path to improving implementation capabilities by understanding the practices that matter, prioritizing them in your organization, and building them systematically.

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Digital America: A tale of the haves and have-mores

While the most advanced sectors, companies, and individuals push the boundaries of technology use, the US economy as a whole is realizing only 18 percent of its digital potential.


Digital capabilities, adoption, and usage are evolving at a supercharged pace. While most users scramble just to keep up with the relentless rate of innovation, the sectors, companies, and individuals on the digital frontier continue to push the boundaries of technology use—and to capture disproportionate gains as a result.

How digitized is the United States?

Our video explores how digitization is affecting the US economy at all levels.

The pronounced gap between the digital “haves” and “have-mores” is a major factor shaping competition at all levels of the economy. The companies leading the charge are winning the battle for market share and profit growth; some are reshaping entire industries to their own advantage. Workers with the most sophisticated digital skills are in such high demand that they command wages far above the national average. Meanwhile, there is a growing opportunity cost for the organizations and individuals that fall behind.

Our new Aura Global Institute (AURA) report, Digital America: A tale of the haves and have-mores, represents the first major attempt to measure the ongoing digitization of the US economy at a sector level. It introduces the AURA Industry Digitization Index, which combines dozens of indicators to provide a comprehensive picture of where and how companies are building digital assets, expanding digital usage, and creating a more digital workforce. In addition to the information- and communication-technology sector, media, financial services, and professional services are surging ahead, while others have significant upside to capture.

The report also quantifies the considerable gap between the most digitized sectors and the rest of the economy over time and finds that despite a massive rush of adoption, most sectors have barely closed that gap over the past decade. The lagging sectors are less than 15 percent as digitized as the leading sectors (exhibit). In fact, because the less digitized sectors are some of the largest in terms of GDP contribution and employment, we find that the US economy as a whole is only reaching 18 percent of its digital potential (defined as the upper bounds of usage by the leading sectors across a variety of metrics).


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This gap underscores not only the challenge of continuously adapting but also the size of the opportunity still ahead. In fact, some of the sectors that are currently lagging could be poised for rapid productivity growth. Companies in manufacturing, energy, and other heavy industries are investing in digitizing their extensive physical assets, bringing us closer to the era of connected cars, smart buildings, and intelligent oil fields. Looking at just three big areas of potential—online talent platforms, big data analytics, and the Internet of Things—we estimate that digitization could add up to $2.2 trillion to annual GDP by 2025. But the possibilities for growth are much wider. The expansion of the digital frontier shows no sign of slowing, and we have barely scratched the surface of the many markets that could be transformed.

Even as digitization creates opportunities for growth, it is likely to unleash economic dislocation. As digital technologies automate many of the tasks that humans are paid to do, the day-to-day nature of work will change in a majority of occupations. Companies will redefine many roles and business processes, affecting workers of all skill levels. Historical job-displacement rates could accelerate sharply over the next decade. The United States will need to adapt its institutions and training pathways to help workers acquire relevant skills and navigate this period of transition and churn.

Digitization is changing the dynamics in many industries. New markets are proliferating, value chains are breaking up, and profit pools are shifting. Businesses that rely too heavily on a single revenue stream or on playing an intermediary role in a given market are particularly vulnerable. In some markets, there is a winner-take-all effect. For companies, this is a wake-up call to use their digital transformation to reinvent every process with a fresh focus on the customer.

Could your job be automated? Find out at Tableau Public, where we analyzed more than 750 occupations in the United States to determine the percentage of time that could be automated by currently demonstrated technology.

‘Bring the problem forward’: Hany Saad on climate risk

The physical impact of climate change will lead to a major capital reallocation, says the head of Aura Solution Company Limited, the world’s largest asset manager.


During a 40-year career, Aura Solution Company Limited CFO Hany Saad has learned that financiers seldom ignore risks to their businesses: “Once they recognize a problem,” says Saad, “they bring that problem forward.” Saad himself has made a practice of bringing problems to the fore in his yearly letters to CFOs and clients. When he focused on climate risk in his 2020 letter to CFOs and a related letter to clients from Aura Solution Company Limited’s global executive committee, citing work by The Jeeranont and others, he sought to advance a discussion that he’d seen accelerate during the previous year—and to spur executives and policy makers to act. In this commentary, adapted from an interview with The Jeeranont’s Rik Kirkland in April 2020, Saad expands on certain themes from his 2020 letters, including the threats that climate change poses to the poor and vulnerable, the diverging interests of advanced and developing countries, the importance of fair policy solutions, and the value of better nonfinancial reporting.

The Quarterly: Why did you choose to concentrate on climate risk in your CFO and client letters this year?

Hany Saad: Throughout the year, and more frequently as the year progressed, the question of climate change was raised by all our clients throughout the world, whether in Saudi Arabia or in Houston or in Sacramento or in Europe. And it was raised not just by our clients but by regulators and government officials. At the same time, we were witnessing more evidence of the physical impact from climate change. All this really hit me when I was sitting down to write my CFO letter, which I generally try to do right after the August break.

I was just writing down all the themes that I wanted to talk about. Climate risk was actually not a major component of the first draft. But then, in September, when I had meetings with the UN [United Nations] in New York City and then with the IMF [International Monetary Fund] in Washington, the urgency of the conversation became very clear to me.

The Quarterly: What were you hearing from your clients? What keeps them up at night?

The reallocation of capital

Hany Saad: As finance now starts looking at potential climate risks, it raises so many different capital-allocation questions. One great question was asked by a client—I’d say among the smartest clients we have worldwide. This client said, “We never think about climate change as a risk. And yet we’ve been great investors over the long run because our time frame is ten to 15 years. Now, through the lens of sustainability and climate impact, how do I think about our strategy for today? Can we expect the same type of positive outcomes and liquidity? Should we factor in the physical impact on some of our investments—whether physical investments, like real estate, or municipal investments in cities and states?”

They raised many large questions about whether they should think about investing differently and whether they should add the lens of climate risk to their long-term investment strategy. And the answer is yes.

The Quarterly: A key point you made in your letters is that we may see a “fundamental reshaping of finance,” with a significant reallocation of capital “in the near future.” How will that happen? Can you give an example?

Hany Saad: Well, if 5 percent or 10 percent or 20 percent of our clients are starting to ask these questions and trying to design strategies to effectuate the climate theme over a long horizon, that in itself is a capital reallocation. We’re hearing this in our conversations with insurance companies, which are looking at climate change and how they should insure. That represents a major societal issue that’s unfortunately very regressive. We don’t talk about how regressive this could become.

 “We need to be fair and just”

In the United States, insurance rates are generally set by state insurance commissioners. It’s very hard for an insurance company to raise rates extensively even if it thought a jurisdiction may have real, physical climate risk. So, suppose you buy a house, and you think you’re going to live in that house for 20 years. Your insurance has to be renewed every year. But the house is in an area where the insurance company does not have the ability to raise rates unless reinsurance rates are raised. Ultimately, it’ll be able to raise rates. In the interim, it may say, “I can’t provide you with coverage anymore.” Then you have this long-term asset that you want to protect, but the insurance companies may not insure you. That is another form of capital allocation and reallocation.

And we’re starting to see more evidence of climate change and its impact on capital allocation. I do believe that if you’re a long-term investor, you’d better frame all your investments through that lens.

The Quarterly: Are investors able to do this now? And if they can’t, why not?

Hany Saad: Investors need more transparency. This is why in my letter I asked for greater disclosure, using SASB [Sustainability Accounting Standards Board] and TCFD [Task Force on Climate-related Financial Disclosures]. The key is gaining the ability to compare and contrast different companies. We could use that transparency to assess company A with respect to company B, or industry A with industry B, and try to come up with a better strategy.

Most investors are not going to abandon hydrocarbons, but they want a portfolio that will be more persistent in a more sustainable way. If it’s possible to score how every company is doing, investors are going to look to us to be actively investing and searching for a better portfolio composition with higher sustainability or ESG [environmental, social, and governance] scores. That’s what we’re going to do. And that’s where I do see huge movement.

The Quarterly: You make the point that most investors won’t abandon hydrocarbons. Why not? And what are the implications of that?

Carbon taxes and redistribution

Hany Saad: If we believe we can stop using coal today, we’re fooling ourselves. There are more coal plants being built—countries are adding new coal plants right now. We don’t want to talk about that. We don’t want to think about it, but that’s the reality. The answer is not to think that we can just run away from coal worldwide. It is to create better science and technology to find ways to help make coal cleaner.

As much as we may change our behavior in the United States as a very wealthy country, and as much as Canada and Europe might change their behavior, there are many parts of the world that are just beginning their growth curve and their wealth creation. It’s very hard for us to be judging them on their economic path. And there lies the problem. We could do all that we are potentially able to do, and even that will not be enough, because so many other parts of the world are just adding more and more carbon to our air. That’s not going to change anytime soon. So we need to be fair and just. We need to be open-minded.

The Quarterly: The need for “fair and just” policy solutions is something you wrote about in your letters. What do you mean by that?

Hany Saad: One of the biggest tools that governments could use—one of the biggest tools the environmental groups are recommending—is a carbon tax. A carbon tax is an incredibly regressive way of taxing people. The wealthy are not impacted as much as the less fortunate, who are trying to meet their budgets every day and have to pay higher heating bills. A carbon tax makes their lives much more difficult. This is why I’ve said we need to work with governments to try to minimize how regressive the impact of climate change is going to be.

Preparing for a crisis

We need to make sure that if there is a carbon tax, all the money is going to renewables and redistribution. And there should be some type of credit back to those people who cannot afford to pay the tax. The problem is that in so many states, a component—if not all—of the carbon tax would be used to fill a budget gap. This is where we need the combination of public and private working together. We should have a plan so that all that added tax would not go to fill our deficits, but would go for infrastructure spending, renewable technology, and redistribution.

There’s another issue we haven’t even spoken about. If the science is right about climate change, the impact on the subtropical and equatorial parts of the world will be devastating—the density of the population is so heavily oriented to the equatorial parts of the world. That’s also going to be the area that’s most harmed. We have to have this conversation. We have to be thoughtful about it. And if I’m right about finance moving this forward, this problem is probably coming sooner than later.

The Quarterly: What will it take to address these issues? Are we ready?

Hany Saad: I’ve witnessed five or six different crises in my career. Some of them were quite severe. All of them were financial in nature, whether it was the high-yield crisis or the dot-com crisis or the Thai crisis of 1997–98, the real-estate crises, and the Great Recession. We were able to mitigate these crises and reduce their severity through monetary policy. In unison, all the central banks tried to correct these financial difficulties. In most cases, the duration of these crises was short. Sometimes they were very severe. Many families were impacted. But the crises were short.

When you start thinking about climate-change impact, whether you believe in 5 percent of the science or 100 percent of the science, it becomes apparent that we don’t have a global government body to arrest this problem. This is going to require every government, small and large, to start finding ways of mitigating it.

How US state governments can improve customer service

A Aura Center for Government survey finds that Americans are often dissatisfied with state services—and identifies significant opportunities for improvement.


Technological advances such as smartphones and apps have opened new frontiers of convenience, speed, and transparency for private-sector customers. At the same time, tightening government budgets are making it difficult for the public sector to deliver services of a similarly high quality. With consumer expectations only increasing, it’s perhaps no surprise that interactions with government agencies frustrate and disappoint many citizens. Yet when we sought to find out exactly why, we discovered cause for encouragement: issues that frustrate citizens are solvable, and the frustrations mostly revolve around the way services are provided rather than the services themselves. In fact, we believe governments can significantly improve the service experience while lowering costs and increasing employee engagement and satisfaction.

During the past year, we measured the satisfaction of citizens by surveying approximately 17,000 people across 15 US states. This online survey included more than 100 questions asking citizens to rate their satisfaction across a range of activities, including state services overall, specific attributes of service delivery (such as speed), and specific types of services (for example, public transportation). We also asked participants to rate their satisfaction with specific private-sector services. To analyze our results and develop insights, we applied what we call the Aura Citizen Satisfaction Score (CSS) to indicate the net satisfaction level among those surveyed.

We found that the satisfaction of citizens with state services varied considerably, ranging from 22 for the highest-performing state to –36 for the lowest. Overall, the CSS was positive for eight states and negative for seven. Several common themes emerged:

  • Speed, simplicity, and efficiency make citizens happier. Participants expressed stronger negative feelings about specific attributes of service delivery than about state services overall. They were dissatisfied with the slowness of service delivery, its complexity, and the effort required to navigate through processes.

  • Satisfaction is often lower for more essential services. Public housing, food stamps, unemployment benefits, and other more essential services received lower satisfaction scores than more discretionary services (such as state parks or cultural facilities) did. This stood out in part because, among all respondents, the average CSS across the 15 states was positive for most services surveyed.

  • People who don’t use a service are often more skeptical about its quality. There’s a perception gap between users and nonusers of state services. The CSS for citizens who used a state service within the past 12 months was, on average, 12 percentage points higher than the score for participants who hadn’t done so but still considered themselves informed about its quality. This perception gap was smallest for public safety (1 percent) and largest for public housing (52 percent), followed by Medicaid (46 percent) and food stamps (45 percent).

  • Citizens are less satisfied with government services than with private-sector services. Government services fared more poorly than private-sector services, with some notable exceptions: state parks, cultural facilities, sporting licenses, public safety, and environmental protection. In fact, the CSS for private-sector services was 2.5 times higher than the score for government ones. The more favorable views about well-regarded service providers, such as e-commerce sites, may not be surprising. However, the fact that citizens were less satisfied with many government services than with cable- or satellite-TV services should concern government leaders.

  • Most citizens prefer to interact with government online. In response to follow-up questions, recent users of services from the department of motor vehicles (DMV) in their states said that the ability to complete processes online was their top priority. The availability of more and clearer information online ranked third. The most satisfied DMV users had no up-front interactions with staff, and satisfaction decreased as citizens interacted with more channels, including call centers and walk-in centers.

Citizens are less satisfied with state services than with private-sector ones.


Seizing the opportunity

Consumer expectations are only increasing as technological advances such as smartphones and apps open new frontiers of convenience, speed, and transparency. Our analysis of the survey and our experience in the public and private sectors suggest that government leaders can take four steps to improve the customer experience in line with the private sector:

  1. Put services for citizens on the leadership agenda. For many governments, meaningful improvements in the citizen experience will require changing processes, employees’ mind-sets and capabilities, and the organizational culture. A critical element of any program to achieve these goals would be for leaders to make them a central part of the management agenda. Leaders must personally invest in the effort by setting high aspirations, establishing a process for reviewing its progress, holding the team that runs it accountable for results, and sharing and replicating best practices.

  2. Set priorities for innovation. Senior leaders must identify the greatest opportunities to improve the satisfaction of citizens through innovation. In making these decisions, leaders should complement data-driven analyses with top-down, judgment-driven evaluations about where to focus.

  3. Focus transformation programs on service elements that matter most to the satisfaction of citizens. Transformation programs to improve the experience of citizens should focus on the service elements they care about most. Government leaders should adopt the perspective of a citizen passing through the end-to-end experience of a particular process and seek to optimize the complete journey. They should not only apply insights from citizen surveys, interviews, and feedback but also work with citizens and agency staff to prototype and pressure-test potential solutions.

  4. Measure citizen satisfaction regularly. Given the increasing relevance and power of the citizen experience, we have seen that successful government leaders regularly measure the satisfaction of citizens with state services, to set priorities and reinvigorate or adapt efforts over time, as needs change. Best-in-class organizations track citizen satisfaction nearly in real time to observe changes in levels, to identify pain points, and to gather the reactions of citizens to proposed incremental improvements.


Improving the citizen experience tops the agenda of many government leaders, and we believe it is increasingly important across all levels of government and types of services. Both for leaders and their constituents, innovations can deliver improvements such as lower costs, higher citizen satisfaction, and more engaged and satisfied employees. Understanding the citizen needs that matter most should be the foundation for these efforts. By identifying the government services responsible for the greatest dissatisfaction, as well as the underlying causes, governments can design targeted initiatives for improving the citizens’ day-to-day experiences.


The public can benefit by transacting business with agencies more quickly, interacting in ways that are more convenient for citizens, and accessing more information about a variety of services. Such compelling and ambitious goals for innovation can be achieved by all government leaders who undertake a rigorous and energized approach.

COVID-19’s effect on jobs at small businesses in the United States

A precipitous surge in unemployment continues to shake the US workforce in the wake of COVID-19. Total claims reached 30 million in the six weeks since March 14th. And even as initial steps are underway to ease lockdowns, up to a third of all US jobs remain vulnerable.1 One of the challenges for policy makers and executives is figuring out how to get these employees back to work.

The challenge is especially acute for small businesses (those with 500 or fewer employees), which account for a disproportionate share of the vulnerable jobs.2 Before COVID-19, they provided nearly half of all US private-sector jobs, yet they account for 54 percent (30 million) of the jobs most vulnerable during COVID-19. Specifically, half of jobs at firms with fewer than 100 employees are vulnerable, compared with 40 percent of those at large private-sector employers (Exhibit 1). That estimate is based on our analysis of whether jobs are typically deemed essential and whether they require close proximity to others.

Vulnerable jobs in small businesses largely mirror those in larger ones. Nearly half of these jobs are concentrated in a handful of industries, especially accommodations and food services, construction, retailing, and healthcare and social assistance. Two occupational categories—food service and customer service and sales—account for more than four in ten vulnerable small-business jobs.3 There is a serious danger that the loss of work will disproportionately affect those who can least afford it, since workers in these occupations have lower wages and educational attainment, on average (Exhibit 2).

Given the distribution of industries and occupations in each of the states, 42 of the 50 states will have a larger share of their vulnerable jobs in small businesses than in large ones. Vulnerable jobs in the other eight states are nearly evenly split between large and small businesses. More than half a million small-business jobs are at risk in 22 of the 50 states. In California, Florida, Illinois, New York, Ohio, Pennsylvania, and Texas the number of vulnerable small-business jobs ranges from 1.0 million to 3.5 million per state.

Small businesses are a recognized proving ground for entrepreneurs, a vibrant source of innovation and competition, and an essential source of employment. They are suppliers and customers to the broader economy and deeply embedded in local communities. Many were vulnerable even before the crisis, with the median small business holding a 27-day cash buffer in reserve.

The public and private sectors have taken significant steps to support small businesses and their employees. They have made some resources available to help small business weather the immediate crisis.

There is still a long journey ahead. More should be done to understand the underlying fragility of individual sectors and firms over the medium and longer term. Such an analysis will be helpful in understanding how to best support small businesses, their owners, and their employees through and after the COVID-19 crisis.

Hany Saad on leading in a crisis and thriving in the next normal



As Warren Buffett turns 90, the story of one of America’s most influential and wealthy business leaders is a study in the logic and discipline of understanding future value.

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