The executives who lead recovery operations at large financial services companies are far from immune from the upheaval that is engulfing the financial services industry. 

Simply put, diversification by financial service companies through acquisition will require more diversification on the part of the recovery operations within the resulting conglomerate corporations.  Executives who lead these efforts will not only see more demand for their services in the form of greater placements; they will be called on to diversify their own recovery operations, as parent corporations extend more products and services to their customers. 

At the root of these challenges is a reality that has been overlooked by many recovery operations: the same borrower who takes out a mortgage takes out an unsecured personal loan, a credit card, a student loan, an auto loan, etc.  Financial services companies that extend customer credit in a variety of forms must understand and react to a customer’s entire set of financial obligations, at least within that institution, as post-chargeoff recoveries take place. 

As a result, it is increasingly unlikely that recovery operations within these companies will remain fragmented as financial services companies emerge from the current crisis.  We have seen separate recovery operations within the same parent companies for different types of debt, and different sets of service providers utilized to recover those dollars – all from the same customer, in many cases, who can receive disassociated collection calls from the same ultimate parent company.  At a time when credit issuers will be striving to retain all customers, these collection strategies are counterproductive.

It is tempting to argue that the wealth management functions of investment banks being absorbed into broader, consumer-focused depository financial institutions will be immune from these trends.  Without sounding like a Cassandra I would argue that the market should continue to turn, that personal fortunes should continue to be lost, that personal bankruptcies should continue to rise, and that the customers of wealth management operations will increasingly find themselves in post-chargeoff collection pools – a staggering development, in my opinion, that matches the staggering changes being experienced by financial services companies in this current upheaval.

In a recession, recoveries should return to a holistic focus on the consumer -- along with the financial services products and services being offered to the same consumer.