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CORPORATE REPUTATION


together with his then secretary, and now wife, ‘six foot blonde’ Madelaine. Patrick Barrow, managing director of Reputation Communications, says that part of the issue here was ‘tallest poppy syndrome’, with the press revelling in the star’s downfall. ‘There were a lot of people waiting for him to fail.’ However, he added that although


it was inevitable that the press would turn on Woodford, the communication surrounding the crisis resulted in far worse coverage than would have occurred had there been more transparency and willingness to talk. ‘It was not beyond the wit of man to have been more upfront.’ ‘There was a general assault from


be reassured that their hard-earned savings are in good hands. Clearer communications are paramount alongside good governance and liquidity management among others, so that savers fully understand how their investments work.’ Woodford may not be able to come


Reputation is a combination of communication and behaviour


the press,’ adds McDermott. ‘I feel it was somewhat over the top, but the communications had just closed off, so it isn’t surprising. There was a total bunker mentality.’ What’s more, industry experts believe Woodford’s


fall, and the associated communications, has damaged the entire investment industry and contaminated all of financial services. ‘It was a very high-profile failure,’ says Julian Samways, founder of communications consultancy JPES, while the Investment Association (IA), which represents the entire industry, also acknowledges the issue. ‘There is no doubt that Woodford has cast a


shadow over the industry,’ adds Emily Walch, director of corporate affairs. ‘A regulatory investigation is currently underway, and where there are lessons to learn they need to be addressed, so that savers can


WOODFORD IN NUMBERS 300,000


investors trapped in Woodford’s Fund


3,500 investors so far signed up for legal action against Woodford


£112 million paid to Neil Woodford and his associate Craig Norman since the fund opened in 2014


back from this, but the rest of the industry has some serious damage limitation to do as well. ‘This has the worst concentration of all those factors that tend to really harm companies,’ says Barrow. ‘You’ve got a high-flying and, shall we put it politely, robust character who takes on an over-prominent role. You’ve got lack of transparency, and you’ve got reward for failure. Add this all together and you have a real hairball of trouble.’


HOW THE STORY UNFOLDED While critics today talk of Woodford’s lack of transparency and communication, his new fund venture begun six years ago with very different ideas. Woodford left Invesco Perpetual in 2013 with his


reputation riding high. Many investors came with him. Data from financial information firm Morningstar shows that £6 billion was taken out of Invesco’s flagship funds that had been run by the star manager after his exit, much of which landed at Woodford’s door. He launched equity income fund (Woodford Equity


Income or WEIF) in 2014 raking in £4 billion in the calendar year, despite only launching it in June. Woodford and his new associates pledged greater


50pc loss that those who invested in the fund at launch are likely to experience


£10 million cost of winding up the Woodford fund


£10.2 billion the peak size of the Woodford fund


transparency about the investment process, with Craig Newman, Woodford’s business partner, writing on the firm’s website that July that the group was ‘breaking away from the industry norm’ and publicly disclosing the fund’s entire portfolio, rather than just the top ten companies that the fund had bought shares in. ‘50% strongly believe that all of our investors have the right to know where their money is invested, from the biggest holding in the fund to the smallest,’ he blogged. For the first year, Woodford’s star continued to rise. Between June 2014 and June 2015, the fund’s investors found that the value of their investments had increased by nearly 20 per cent. For every £10,000 they invested at launch, they now had £11,960. By the end of 2015, the fund was still a top performer, and Woodford


40 CorpComms | February/March 2020


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