Fund managers feel misrepresented by Woodford — we have to fix it

Written by Bev Shah

A recent BBC documentary has left many in the industry feeling aggrieved, but it’s up to us to put things right

Last month, I sat down with a reporter and film crew from BBC’s long-running documentary series Panorama to record an interview about the Woodford Investment Management saga.

I was told the programme was intended to put our entire industry under a microscope, to view some of our practices for better and worse. But it would look particularly at Neil Woodford, who the show billed as “the rock star of investors”. A phrase that made me chuckle when I watched.

I am not sure they managed to achieve this goal. I found myself shaking my head through most of the exposé and disagreeing with much of the fairly emotive and provocative vernacular used to describe fund managers — who were called “gamblers … guessing which way the financial wind is blowing”.

And although the Panorama team had fully investigated the part played by the Authorised Corporate Director — Woodford’s fund administrator Link — and the “platforms”, or fund supermarkets, such as Hargreaves Lansdown, they seemed to feel the need for more than one scandal to build a case against the industry.

The decision to include another item on Capital International manager Mark Denning, whom the Panorama reporters accused of wrongdoing, felt shoehorned-in. (Denning denies the charges).

I said at the time to the producer that they needed to be mindful of the impact they could have on the financial health of their viewers. But the programme-makers are in the business of ratings, and not in the business of ensuring people retire comfortably.

If the debates and comments on social media are anything to go by, people in the industry were horrified by the show. And of course we are: we have been totally misrepresented.

But why are we so surprised? The bandaid has well and truly been ripped off, and we are now being forced to confront the very uncomfortable fact that this is exactly how the majority of those outside of our industry see us.

They don’t know that the City is comprised of many distinct, and very different industries. That investment banks, hedge funds, law firms and the Big Four accountancy firms sit alongside our industry, and do distinct jobs.

And it gets even more confusing when we don’t have a single all-encompassing industry name to go by. Asset management, investment management and fund management are terms which are all valid but can also be interchangeable.

The memories of the Financial Crisis and the impact they had on the lives of our underlying clients linger on. So of course they will continue to see us in the same light as they do our cousins, the bankers.

Image: Neil Woodford

From some of the responses that I have seen to the programme, it is clear that some thought this negative image of the City and the industry was behind us, and nowadays people understood that this was no longer an accurate or fair description.

Personally, I can’t claim to have been surprised. While cases like Woodford clearly negatively impact the reputation of the industry, and can be sensationalised by the media to further cast doubt over the integrity of who we are and what we do, we have to face up to what else we may be doing that is making our negative reputation so difficult to shake off.

The perhaps uncomfortable truth is that as an industry we have spent far too much of our time only really speaking with each other. Our key aim has been to gather assets, and with this goal in mind, we have focused our efforts on marketing and engaging to very specific and niche demographics.

While this has proved to be a successful tactic for many, it has sadly also meant that we have lost touch with the very people that we are supposed to serve. When we only speak amongst ourselves, appear to do little other than gather assets, and are rarely seen to demonstrate how our interests are aligned with our customers, is it any wonder that we are perceived as secretive gamblers?

So now we know how we are seen, how do we change this perception? The industry as a whole needs to accept that we need to really examine how we can really build trust with the underlying investors that we are supposed to be serving.

Yes, we know the truth about our industry, and that there are many great, hardworking fund managers out there who are sticking to the rules. We all know that with the correct guidance, investing is a viable option for people looking to grow their various pots of money.

However, how many people outside of the industry also know all of this? The truth is that we cannot rely on mainstream media or other sources to show who we are really are. We are the ones with the reputation problem so we must also be the ones to fix it.

This article first appeared on Financial News.