Right now, the investment industry needs good PR. All levels in the food chain are under the spotlig...
Right now, the investment industry needs good PR. All levels in the food chain are under the spotlight like never before and the pressure for accountability is coming from many sources: investors, the press and, of course, the regulator.
Asset managers and advisers are now obliged to explain themselves to an audience that demands to be reassured when things go wrong.
Even before the recent disclosures of fraud at Worldcom, the spectacular collapses of Enron and Railtrack had done significant damage to confidence in equities. Corporate failures such as these, coupled with the debate over the future of an asset class such as with- profits, have created a steady flow of criticism towards the investment industry, each chipping away at investor confidence.
The negative commentary impacting upon investment companies is almost constant. With-profits aside, other recent industry issues have done little to stem the tide. The fund manager merry-go-round is gathering pace, pensions are in more of a mess than ever before, the endowment saga rumbles on and various accusations of mis-selling come back to haunt us month after month. While this presents opportunities for best practice to shine, it also creates a great deal of confusion and uncertainty.
Above all, it adds to the widely held view that the investment industry is failing to deliver on its promises. Consider how an investor feels right now. They have seen their Isa fund manager dash for cash, their pension arrangements changed for the worse and their mortgage endowment provider warn them their plan looks likely to deliver a shortfall. That's just for starters. The need for good communication should be perfectly clear.
Clients are worried, very worried. Statements landing on their doormats are red, showing severe losses. And with any gains of the past five years being completely wiped out for many investors, they are not paper losses either.
Some newer converts to the equity market are even worse off. They have not enjoyed the spectacular growth some investors have seen in recent years and many feel like they never will. In situations like this, people look for someone to blame.
Is it right for investors to blame their fund manager or adviser if their fund performs badly? The answer to this question matters because, rightly or wrongly, it is advisers that sold them on the idea of investing in a particular fund.
In this environment of damned if you do, damned if you don't, there is a heightened need for informed communications.
We all share a responsibility for ensuring clients are kept informed and upholding the good name of the industry. The danger of getting it wrong is that investors will cut their losses and run , some for good, or revert to sticking it under the bed.
The case for PR? It's not just about media relations, it's about client communication. Your neighbour might well bury his head in the sand but that doesn't mean you have to.
Roddi Vaughan-Thomas, Quill
Three years at Wells Fargo
Effective from 9 December 2019
One firm with permission suspensions left
Continuing the Architas education series for clients.
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