CORPORATE REPUTATION
website that he was ‘extremely sorry we’ve had to take this decision… we will use this time to reposition the fund’. He then wrote to investors, stating that he believed he could still turn around performance, and would shift the fund towards a more liquid portfolio. However, the fund never reopened. Link, the fund’s administrator, wrote to investors to say they had sacked Woodford and would wind up the fund, a decision that Woodford said he ‘cannot accept’. Further blows followed, with wealth manager St James Place pulling out of its £3.5 billion relationship with Woodford and his smaller fund closing. As payouts for investors from the main WEIF fund began at the end of January, investors faced huge losses, around 50 per cent for those who invested at launch, while anger at the man himself remains, especially around the fact that he continued to take £65,000 of charges a day when investors could not access their cash.
factors that tend to really harm companies, corporate individuals and sectors.’ McDermott agrees. ‘There’s no doubt that it
People of Woodford’s
has caused damage to the investment and fund management industry, where there are lots of good equity and bond managers who are very different to Woodford. They have been unlucky to be tarnished with it.’
prominence, and probably their disposition, are difficult for people to advise
WHAT CAN THE SECTOR DO? Experts insist all firms and financial advisers must act to ensure they guard their own reputations in the wake of the Woodford affair.
‘If one was managing the
communications of an investment firm, one should be doing things like making sure the communications are transparent and making sure that you’re communicating the fact that all decisions are being take as a
‘I shouldn’t imagine he’s worried about his mortgage,’ Barrow says wryly, adding that ‘reward for failure’ tends to make people particularly angry.
COMMUNICATIONS FAILURES Experts say that poor communication during this period made the Woodford problem far worse. ‘He started off by talking about being open and transparent, but by the end he had completely closed down communications,’ says McDermott. Samways agrees. ‘There was a poor management
of expectation – a bad surprise followed by another bad surprise, with insufficient expectation management,’ he says. ‘The situation just seemed to go on deteriorating and communication could have been much better.’ Barrow describes the reputational damage from
Woodford’s woes as ‘a disaster’. Not just for the man himself – who is, by all accounts, unlikely to make his way back into the investment world – but the entire financial services sector. ‘You have to ask yourself How do these things look? – and this looks good from nobody’s point of view,’ he says. ‘It’s the worst concentration of all those
CorpComms | February/March 2020
team approach,’ Barrow says. ‘Being seen to do the right things in the right way is more important than ever. ‘Reputation is a combination of communication and behaviour. They’ve got to fill in the gaps where the primary suspect didn’t.’ Samways agrees, and says that even if firms feel
they are nothing like Woodford, they shouldn’t assume that investors understand the distinction. ‘Many aspects of this were specific to Woodford, but that doesn’t mean that the industry hasn’t got things it can improve on – including a drive to greater transparency, particularly on transaction costs. ‘I would make sure that there is very clear
communication about risk management and how compliance is managed within a firm. If you go through all that in detail and are very clear, you could reassure investors, perhaps, who look nervously at Woodford and feel should not invest.’ As for whether Woodford himself could ever come
back to the industry, Samways is unsure. ‘If he did come back he’d have to come back with a different approach and hopefully a more humble understanding.’ For fund managers who are ever tempted to put
their own nameplates on above the door, the industry’s own Ozymandias ought to be a cautionary tale. CC
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