WEDNESDAY 24 FEB 2021 1:19 PM

OPINION: FROM STAR FUND MANAGER TO PARIAH, HOW DID NEIL WOODFORD WRECK HIS OWN COMEBACK?

Exploring crisis and reputation, Steve Double looks at how one-time personal finance mogul Neil Woodford got his comms badly wrong as he looked to stage a comeback

Neil Woodford was once considered royalty by the personal finance world. Now, after a disastrous comeback interview, the man once considered king by retail investors has more in common with Prince Andrew. After two years of radio silence following the collapse of his Woodford Equity Income fund, the once-revered 60 year-old stock picker announced his planned comeback in an exclusive interview with the Sunday Telegraph.

In doing so, he unleashed the fury of an army of badly bruised investors, regulators, MPs and even fellow fund managers. It was an extraordinary (but predictable) backlash on a par with the aforementioned prince’s infamous interview.

He and his advisors presumably thought the time was right to go public on his plans for a new Jersey-regulated investment fund. Quite why, it is hard to fathom.

They went ahead despite Woodford still being investigated by the Financial Conduct Authority, £200m of his collapsed fund still locked from investors, and his fund being linked to least three class actions by law firms acting for many of his former 300,000 customers.

The least to be expected was a sincere apology for victims of the biggest ever retail fund scandal. Instead what followed was an exercise in self pity and, at best, a mealy mouthed apology. One commentator called it “a Trumpian attempt to rewrite history.”

He did manage an "I’m sorry for what I did," followed thereafter by adding, “I don’t want to, for the rest of my life, hide away and beat myself up about things that happened two years ago.” It apparently hadn’t occurred to him that is precisely what was desired by those whose life savings he had squandered.

To tug at our heartstrings, Woodford revealed he had had to sell his £30m Cotswold farm and stables (while keeping his £6m south Devon home, naturally) as part of the fallout from his fund collapse. Cynics were left wondering whether he’d simply downgraded to a more modest – perhaps only worth £20m? – country estate.

Rival newspapers wasted little time in putting the boot in. Predictably enough, hard-pressed pensioners were encouraged to once again tell of the financial pain that Woodford had inflicted on them. Regulators, blind-sided by Woodford’s comeback plans, pointed out that the 'appropriate permissions' had not been given. The negative stories poured out on a daily basis for a whole week.

The Financial Times, describing Woodford’s “rocky return,” commented that “a more remorseful man might have had a better chance of a comeback.” The Mail on Sunday simply asked, “How can this clown return as a fund boss?” Ouch. Even the Sunday Telegraph itself, a week after running the interview, described Woodford as “a pariah.”

As it is easy to criticise from the sidelines, what we would have advised?

First, timing is key. Launching a new venture when you are still being investigated for the failings of your last business is clearly undesirable. It’s an open goal for your critics, of which in this case there were many lying in wait.

Second, engage your key stakeholders in advance and factor in their reactions. The regulators hold your licence to operate, so is it really wise for them to learn of your plans via a press interview? The authorities in Jersey reportedly had no knowledge of Woodford’s intention to operate his new fund in their jurisdiction and were understandably unimpressed. They, and the FCA, should have been notified in advance.

Third, beware the exclusive interview. Although a well-placed interview can be a good start on the road to redemption, in the highly competitive world of newspapers, journalists are also only too happy to attack a rival publication’s scoop – and Woodford left them plenty of ammunition.

Last, if there is a need to apologise, do it properly. Place yourself in the shoes of those you are apologising to and set aside your own self pity. A half-hearted apology can be as damaging as no apology at all.

Steve Double, a strategic partner at crisis communications agency Alder

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