Things Change in Finance
Just because you’ve excelled in your job up until now, it doesn’t mean it will last forever. It doesn’t matter whether you’re in Hong Kong, New York or London. Things change in finance.
So tells the tale of Neil Woodford, British fund manager extraordinaire. He was, the BBC declared in 2015, “the man who can’t stop making money”.
He seemed to do no wrong. Until now.
His Woodford Equity Income Fund holds the pension savings and investments of tens of thousands of people. But it has been performing so badly that investors were withdrawing money at the rate of £10m a day.
After 23 consecutive months in which withdrawals from the fund had been greater than the new money coming in, Woodford found he couldn’t realize cash quickly enough to meet the withdrawal requests. He closed the fund to withdrawals, leaving investors angry.
He even posted a YouTube video to apologize to investors for having to stop them from pulling money.
As you can well imagine there was panic among long-term devotees. Flagship funds don’t tend to shrink by two-thirds from a peak of £10bn. You can see why investors were shocked.
When the 28-day suspension is lifted on Woodford’s now £3.7bn equity income fund, the consensus is that the illustrious career of the highly celebrated English fund manager will be all but over.
Yet until recently, Woodford had consistently denied that anything was wrong with his investment approach. And he certainly didn’t do himself any favors.
In December 2017 he said in an interview that the key to successful investing was to “have a sufficiently strong arrogant gene to back your judgment, back your conviction”. That arrogance is now stoking anger. The banking regulator also wasn’t too happy, looking to open a formal investigation.
You’re probably not going to be the next Neil Woodford. Rockstar fund managers don’t turn up every day. What this episode does show, however, is just how fickle the hand of fate can be.
When you’re earning the big bucks and everyone’s fawning over you it’s very easy to believe your own press. You may even think you’re invincible. There are plenty in the financial services industry like that.
But when things turn against you, they can really turn. Maybe it’s time to leave the industry.
Let this be a warning. Stay humble, remember that nothing lasts forever. Adapt to circumstances. Let’s face it, Covid-19 will make you adapt to change. Banking and functions in banking change, across Asia and the world.
