Latest / Financial Planner Life Podcast / Behind the Headlines: Neil Woodford Reflects on His Career

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Behind the Headlines: Neil Woodford Reflects on His Career · Financial Planner Life Podcast

• 0:00
  Speaker 1: We were under so much scrutiny, there was so much pressure, there was so much media attention.
• 0:05
  Speaker 1: You know I was a tall poppy that everybody wanted to have a go.
• 0:08
  Speaker 2: People lost a lot of money and really upset as a result of that.
• 0:12
  Speaker 2: How did you feel, how did the people in your business feel?
• 0:20
  Speaker 1: It's hard really to describe what it was like because it was so extreme.
• 0:25
  Speaker 1: The external pressure, the internal pressure was intense.
• 0:28
  Speaker 1: The media attention was horrible.
• 0:31
  Speaker 1: There was no opportunity for us to counter all the lies and all of the inaccuracies in the media stories.
• 0:38
  Speaker 1: It was hard to ever come across anything that was actually right or true in what was said about what was happening.
• 0:44
  Speaker 2: Hindsight's always great.
• 0:45
  Speaker 2: Was there any points during that time that you started to feel things creaking or that you were concerned?
• 0:52
  Speaker 2: Great to have you here today, Neil.
• 1:00
  Speaker 2: Thanks very much for coming down.
• 1:01
  Speaker 2: I understand that you're currently in Abu Dhabi at at the finance week.
• 1:05
  Speaker 2: How's that going?
• 1:07
  Speaker 1: uh had the first day yesterday.
• 1:08
  Speaker 1: It was busy.
• 1:08
  Speaker 1: There's a lot of people there had a few meetings, so uh it's interesting.
• 1:12
  Speaker 2: Did you manage to get any of the formula one?
• 1:15
  Speaker 1: no, I didn't.
• 1:15
  Speaker 1: No, I I came yesterday.
• 1:17
  Speaker 1: I flew in yesterday morning, so I had a bit of a long day yesterday.
• 1:20
  Speaker 2: Yeah, fair enough, yeah, it's.
• 1:21
  Speaker 2: Uh, it was quite an eventful race.
• 1:22
  Speaker 2: I think McLaren ended up winning as well, which was good.
• 1:25
  Speaker 2: Yeah, good result.
• 1:26
  Speaker 2: It must be.
• 1:27
  Speaker 2: It's a busy time and, as I think we were saying before, it was Abu Dhabi business week as well, so it must be quite a run up to Christmas down there.
• 1:34
  Speaker 1: Yeah, it's very busy.
• 1:35
  Speaker 1: Yeah, there's a lot of people, a lot of international financiers there, quite a few big names.
• 1:41
  Speaker 1: Yeah, it's quite a thing.
• 1:42
  Speaker 2: Yeah, I've not been down.
• 1:43
  Speaker 2: To be fair, I've heard it's really starting to gather momentum and they're doing a lot of.
• 1:47
  Speaker 2: They've got a lot of interesting people down there talking and a lot of interesting people exhibiting their businesses and stuff.
• 1:53
  Speaker 2: So, yeah, sounds good.
• 1:53
  Speaker 2: I'll have to check it out next year.
• 1:56
  Speaker 2: But anyway, on to what we're here for today, which is obviously to talk about your career.
• 1:59
  Speaker 2: You know, you know how everything has gone post and pre what has happened.
• 2:07
  Speaker 2: So you know I really wanted to start off initially with talking, you know, right at the start.
• 2:13
  Speaker 2: So obviously you went to school, like most people then understand.
• 2:16
  Speaker 2: You went to was it Exeter University?
• 2:18
  Speaker 2: That's right?
• 2:19
  Speaker 2: Yeah, and then you got straight into investment management from there.
• 2:25
  Speaker 1: Yeah, more by luck than judgment, really.
• 2:27
  Speaker 1: When I graduated, there was a pretty nasty recession going on in the UK.
• 2:33
  Speaker 1: There were no jobs for graduates really at all, and I didn't really have any idea what I wanted to do.
• 2:39
  Speaker 1: When I left university, despite having done an economics degree, I really didn't understand much about business.
• 2:46
  Speaker 1: Frankly, and just more by luck than judgment, I ended up staying with my brother who had a flat just outside the city and I sort of kipped on his floor and thought, well, I might as well get a job.
• 3:03
  Speaker 1: I've got to start to earn a living and just went along to a few few employment agencies in the city and ended up ended up, really after a full start, um at a commodity brokers.
• 3:17
  Speaker 1: I ended up um getting a job as an assistant to a fund manager.
• 3:20
  Speaker 1: I didn't really know what a fund manager was at all, but it looked like an interesting job and it was my first break into that industry.
• 3:31
  Speaker 2: And your family aren't from you know.
• 3:33
  Speaker 2: A career in finance runs through the family.
• 3:36
  Speaker 2: You were the first person in the family.
• 3:38
  Speaker 2: No, not at all.
• 3:40
  Speaker 1: Yeah, my dad got into publishing book publishing originally and we lived, I was born and bred in a little village called Cookham in Berkshire, went to school in Maidenhead Grammar School, stayed educated and you know, one of those sort of you know money type sort of thing.
• 4:02
  Speaker 1: I grew up in the 70s Not a great period for the economy, not a great period really for society more generally in the UK.
• 4:13
  Speaker 1: I mean, there were strikes all the time and it was quite a tough time really and my dad didn't really earn very much money and you know, money often was the cause of rows at home.
• 4:27
  Speaker 1: Anyway, um, I, I went to stay educated.
• 4:30
  Speaker 1: Um my dad's background, my mom, you know, no, no, no, no relationship to finance at all well, and so what?
• 4:40
  Speaker 2: so you obviously decided, you know, you said, you fell into it.
• 4:43
  Speaker 2: Uh, having you know, having stayed at your brother's and realizing you needed to get a job.
• 4:48
  Speaker 2: So where was that first job?
• 4:52
  Speaker 1: My first job.
• 4:52
  Speaker 1: My first job actually was at this commodity brokers.
• 4:57
  Speaker 1: It was called First Day Lawson, which was it was soft commodities, not hard commodities, so agricultural products.
• 5:07
  Speaker 1: And I remember my first job was looking at a long contract to import honey, I think from Argentina, believe it or not and my job was to basically take a pen and a ruler and to rule out all the contract, all the all the clauses in the contract that weren't relevant to that particular, that particular deal between that supplier and the buyer.
• 5:33
  Speaker 1: Um, it was.
• 5:34
  Speaker 1: It was a pretty sort of boring job, frankly.
• 5:37
  Speaker 1: And uh, the the guy who'd employed me said that, um, previously he didn't, he would have employed in previous times he'd employed somebody who had no qualifications to do that job and it made me think that I'd sort of wasted my time getting a degree, really, yeah, and doing all the exams and all that stuff.
• 5:56
  Speaker 1: He just felt pretty deflating.
• 5:58
  Speaker 1: So, um, anyway, it didn't last very long.
• 6:00
  Speaker 1: It's a boring job.
• 6:01
  Speaker 1: I didn't particularly like the company either.
• 6:03
  Speaker 1: Um and um, that's when I found that job as um as to become an assistant to to a fund manager.
• 6:13
  Speaker 1: Yeah, it sounded much more interesting and that was my first job and that was um for dominion insurance company, which was a small italian, owned weirdly a general insurer yeah and the fund manager's job was managing the insurance funds and he, interesting at that time, was sounds weird now, but he managed the cash, the bonds and the equities and my job was to sort of assist him in doing all of that, to start with more, more as an admin clerk initially and then gradually getting to know, um, how those asset markets worked, and then gradually, bit by bit, I became much more interested in the equity side of things yeah and from from that time.
• 6:58
  Speaker 2: Is there any learnings that you still carry through to today?
• 7:00
  Speaker 2: You know was it was it.
• 7:00
  Speaker 2: You know a lot of people in their apprenticeships tend to either learn a hell of a lot and it's really it.
• 7:02
  Speaker 2: You know was it was it.
• 7:03
  Speaker 2: You know is a lot of people in their apprenticeships tend to either learn a hell of a lot and it's really it, you know.
• 7:08
  Speaker 2: It's really good for them and other people.
• 7:10
  Speaker 2: It's kind of, you know, like maybe like your first role you were saying was a bit of waste of time.
• 7:13
  Speaker 2: You know it was a bit boring.
• 7:14
  Speaker 2: You know what.
• 7:15
  Speaker 2: What learnings, if any, did you take from that period?
• 7:18
  Speaker 1: I think I think I I knew when I had that introduction to what equity investment was about.
• 7:25
  Speaker 1: That's what I was interested in.
• 7:27
  Speaker 1: I really liked the sort of the variation, the fact that you know different companies were behaving differently and reporting results and you know the whole sort of atmosphere of the equity market at the time was much more interesting to me than cash or bonds, which were just a bit boring and a bit technical really.
• 7:45
  Speaker 1: So during my time there I gradually developed more of an interest in that side of the of the business and I think then decided that's where I wanted my career to develop.
• 7:56
  Speaker 1: So I wanted to sort of become better at the equity side of of um of the business was you at tsb for a while I was, yeah, later in my career so quite early on I I realized partly because I wasn't in a sort of graduate sort of training scheme that if I was going to move on and take more responsibility I needed to move jobs.
• 8:19
  Speaker 1: So, um, after that first apprenticeship, really within Dominion, I then moved and worked, got a job after applying to a number of different private sector pension fund companies.
• 8:38
  Speaker 1: So in those days most big corporates had their own pension funds and they were managed internally and so there were quite a few jobs in in the industry, uh, working for pension schemes.
• 8:51
  Speaker 1: And I actually got a job working for reed pension scheme and they were based in piccadilly and I got a job there and I really enjoyed that.
• 9:03
  Speaker 1: Actually, I was a sort of basically an equity analyst and that's why I learnt my trade and learnt a lot there and I had some good people to work with, some really experienced, highly qualified people to work with.
• 9:15
  Speaker 1: So they taught me a lot.
• 9:16
  Speaker 1: And then from there on because again there wasn't a career escalation for me at Reed Pension Scheme, I then looked to move and then thought I needed to develop the sort of analytical and financial analysis side of what I was doing and a job came up at TSB and that was specifically working for the group economist in her team and at the time that team, under the commercial director, was going to have a mandate to develop a strategy for the business, for the bank because it was going to be privatized, for the bank, because it was going to be privatized effectively.
• 10:10
  Speaker 1: it was it was going to evolve from being a mutual into a plc and in that process, was going to raise a significant amount of money a billion pounds and that was an opportunity to sort of develop the bank, you know, to sort of diversify away from its sort of savings and loans focus.
• 10:24
  Speaker 1: And so my job really was to help the economist do the things that she was doing for the bank, but also to work on a team to develop a strategy for how to invest out the proceeds of that of that effectively, that IPO, and that was a really interesting job.
• 10:43
  Speaker 1: It was quite different from sort of portfolio equity analysis because you were looking at companies with a view to buying them all of them and it taught me a lot, uh, many of the same skills required, but it was a really interesting job.
• 10:57
  Speaker 1: So we we looked at all sorts of different companies in financial services, life insurance and general insurance.
• 11:03
  Speaker 1: Um, at the time there were a number of quoted estate agent businesses and things like that.
• 11:10
  Speaker 2: So I was looking at all sorts of different companies with a view to acquiring them, and one of the companies in weirdly that I looked at was a fund management business called perpetual yeah, and then that kind of nicely leads into, uh, into the next stage, which we'll which we'll come back to in a minute, if you don't mind me saying but how important would you say that the people that you surround yourself with in those early years it had an impact on your career, you know.
• 11:34
  Speaker 2: Were there any mentors, were there any people that you know really took you under their wing and helped you grow, or was it a lot of just you know yourself pushing?
• 11:45
  Speaker 1: you know, were you predominantly self-motivated, I think I was self-motivated.
• 11:48
  Speaker 1: Um, I didn't at the time have any clear mentors, although people helped me a lot on that journey.
• 11:55
  Speaker 1: So the, the fund manager at dominion was a really nice guy and really helped me a lot.
• 11:59
  Speaker 1: Uh, his name is bill seddon.
• 12:01
  Speaker 1: Um, and then when I moved to Reed, there were two really helpful people they're really experienced fund managers really who understood and appreciated the basics of fund sorry, of company analysis.
• 12:17
  Speaker 1: So they really taught me the basics, if you like.
• 12:21
  Speaker 1: And then when I was at TSB again was sort of I sort of jumped into a deep pool.
• 12:29
  Speaker 1: Really, you know, I had to learn to swim well, yeah and um, uh, and then I was sort of analyzing companies with a view to the business acquiring them.
• 12:40
  Speaker 1: So that was a very detailed process.
• 12:42
  Speaker 1: Um, lots of analysis, lots of financial analysis, lots of sort of strategic industry analysis, and I think that taught me a lot about how, how businesses you know exist and and and can command a certain amount of their own destiny, but ultimately, you know, they're also very affected by the industry that surrounds them and the economy that they sit in as well, and all those things are really really important in determining how well a business is going to do in the future yeah, at that point in your career, did you ever feel that you would want to go out and do something on your own?
• 13:18
  Speaker 2: or was it because you know you didn't do that immediately?
• 13:21
  Speaker 2: Um, and we'll obviously come on to perpetual and invest, go, uh, in a minute, but you know, at that point your career, was it ever in your head that you wanted to go and work for yourself?
• 13:31
  Speaker 2: Were you entrepreneurial at that point?
• 13:32
  Speaker 2: Not at all, no I was.
• 13:34
  Speaker 1: I always considered myself to be quite risk averse, a bit of a wage slave guy sort of.
• 13:40
  Speaker 1: You know.
• 13:40
  Speaker 1: I like the sort of certainty of being employed and taking home a regular paycheck.
• 13:47
  Speaker 1: I think maybe that's a product of my upbringing, really.
• 13:52
  Speaker 1: Oh, that security, yeah, the security of a regular income.
• 13:57
  Speaker 1: I never saw myself as a sort of entrepreneur setting out and building a business.
• 14:03
  Speaker 1: I just saw myself as getting better at what I was doing.
• 14:07
  Speaker 1: Yeah, and I, because I really enjoyed what I was doing and found it very sort of, uh, it was interesting, motivating, and yeah, I wanted to get better.
• 14:16
  Speaker 1: Um, you know, I didn't, I didn't have the time to think about.
• 14:20
  Speaker 1: Well, maybe you could do this for yourself at some stage.
• 14:22
  Speaker 2: Yeah, maybe it wasn't a theater, maybe it wasn't as much of a thing at that stage as well for people to, I don't know.
• 14:29
  Speaker 2: It's also interesting as well.
• 14:30
  Speaker 2: Like you said, it seems like you've taken your time with each of the parts, making sure that you learned that the the most.
• 14:35
  Speaker 2: What we see now a lot with people is is that they try and rush things they want to get to you know, to to career success in, you know, in in kind of two minutes, rather, as opposed to taking time to gradually, gradually build up.
• 14:48
  Speaker 2: How long did it take you to really hone your craft and become great at what you do?
• 14:56
  Speaker 1: I.
• 14:56
  Speaker 1: I don't think in this game you ever stop learning.
• 14:58
  Speaker 1: Um, you know the best in our industry, people like warren buffett.
• 15:02
  Speaker 1: You know, he's in his 90s, you know.
• 15:07
  Speaker 1: I bet if you asked him now, you know, are you still learning?
• 15:09
  Speaker 1: He'd say absolutely yes, and that's what's so fascinating about the industry that we're in.
• 15:14
  Speaker 1: So I think I am continually evolving and learning more and becoming better at what I do.
• 15:22
  Speaker 1: But in terms of mastering sort of basic skills, that takes time and, as you say, people are in too much of a hurry, I think too early on.
• 15:30
  Speaker 1: So I knew that I wanted to get to the point where I was able to run money in my own fund, hopefully.
• 15:38
  Speaker 1: But I knew I had to learn my trade before doing that.
• 15:41
  Speaker 1: So, and my trade was understanding how companies worked, how the economy worked, how economies affected businesses, you know, understanding financial analysis, returns yeah all those sorts of things.
• 15:55
  Speaker 1: You know that, all the basics that that help make you into a sort of a rounded fund manager, yeah, um, but not the complete package.
• 16:05
  Speaker 2: Yeah, for sure and you said that obviously you were, you know you was doing some analysis on perpetual.
• 16:11
  Speaker 2: Um, did that spark your interest in perpetual?
• 16:17
  Speaker 2: And that was, you know, saying otherwise, a business that I want to be a part of.
• 16:21
  Speaker 2: How did that?
• 16:22
  Speaker 2: How did that start?
• 16:24
  Speaker 1: a bit.
• 16:24
  Speaker 1: Yeah, I, I, I knew that I wanted to be in fund management and by that time I was reasonably well aware of, you know how how that industry worked and how it evolved and how responsibility was sort of distributed in in big organizations amongst fund managers and within smaller ones, and I sort of knew that ultimately I wanted to have my name on a fund.
• 16:50
  Speaker 1: And if you're working for a big pension fund, you know with lots of money under management, you know they tend to employ lots of fund managers.
• 16:58
  Speaker 1: They all contribute to a fund or funds.
• 17:02
  Speaker 1: It was really only in the retail fund management industry at the time where people because hedge funds didn't didn't really exist at the time, so it was only really in retail fund management where you actually had your name on a fund and it was your fund and and that's where I think I knew I wanted to get to and I I was interested in Perpetual.
• 17:22
  Speaker 1: It was an exciting little business that was making a name for itself in the unit trust industry.
• 17:30
  Speaker 2: Yeah, and what was your first job when you started?
• 17:37
  Speaker 1: At Perpetual.
• 17:37
  Speaker 1: Yeah, so yeah, on my journey to Perpetual, I left TSB.
• 17:44
  Speaker 1: When I left TSB, it was a moment of sort of a moment of enlightenment really, because we had.
• 18:00
  Speaker 1: It really taught me a lot, this incident.
• 18:02
  Speaker 1: So we'd spent two and a half years evolving a strategy.
• 18:08
  Speaker 1: We developed a series of recommendations as a big investor there were about five or six of us in the team to develop a strategy for what TSB needed to do to develop its broader ambition to become a diversified financial services business, and it had traditionally been just a retail savings bank, basically.
• 18:28
  Speaker 1: So we developed a series of recommendations.
• 18:31
  Speaker 1: This is the direction the business needs to go in, these are the businesses that it needs to think about acquiring and these are the businesses that it should not acquire.
• 18:39
  Speaker 1: This sort of diversification into these sorts of activities would not suit the culture or the aspirations of the business.
• 18:49
  Speaker 1: So there were don't do this, do this, yeah, recommendations anyway.
• 18:55
  Speaker 1: Um, after the ipo and the money, the capital, had been raised, tsb's board decided to do the thing, the very thing that we said they shouldn't do.
• 19:05
  Speaker 1: Okay, and it was a great insight into how businesses can get seduced into doing the wrong things.
• 19:15
  Speaker 1: Yeah, and TSB was seduced into paying up to buy basically a merchant banking business, investment banking business, banking business, which absolutely was the wrong thing for it to do.
• 19:27
  Speaker 1: Anyway, it taught me a lot.
• 19:28
  Speaker 1: I left tsb after that happened and got a job, um, at eagle star, yes, so that was my first real sort of break into into a big firm management team and there I worked as a trainee fund manager basically.
• 19:45
  Speaker 2: So you got your break.
• 19:46
  Speaker 1: That was sort of my break, but I knew that that was a staging post to my ultimate destination.
• 19:51
  Speaker 1: So there I worked in a big UK equities team yeah, part of a very big fund management team that managed fixed interest and equities, all on this sort of big trading floor in a building just off Bishopsgate, and that was a good break for me.
• 20:07
  Speaker 1: I mean it was a good job.
• 20:09
  Speaker 1: I worked with some good people there, but I knew it was because I didn't have my own fund.
• 20:15
  Speaker 1: I was part of a team managing a range of different funds.
• 20:23
  Speaker 1: I knew I wanted to get to a place where I had my own name on a fund and so this was, if you like, a staging post on that journey.
• 20:34
  Speaker 2: And then you joined Perpetual.
• 20:40
  Speaker 1: Yeah.
• 20:40
  Speaker 1: So, yeah, when I was at Eagle Star, I sort of knew that this wasn't going to be my long-term home.
• 20:49
  Speaker 1: Yeah, why?
• 20:50
  Speaker 1: Because it was that big institution.
• 20:53
  Speaker 1: You know, it was hard for people to make a name for themselves within the organization.
• 20:57
  Speaker 1: I think I wanted a bit more autonomy.
• 20:59
  Speaker 1: Really, I was developing by then a sort of an idea of how I would approach fund management.
• 21:05
  Speaker 1: Okay, and like your own identity, yeah, my own, my own fund management identity, yeah, definitely, um, and I was, because you're part of a team, you know, I had responsibilities for a range of different sectors and so I could express my, my sort of views in the recommendations that I um, that I made in those sectors.
• 21:24
  Speaker 1: But they sort of get lost in in the sort of mush of an overall portfolio which is being created as a result of five or six people's input or, as much as it was interesting and I was learning, still that wasn't what I wanted to do.
• 21:38
  Speaker 1: I wanted to have my name on a fund and be responsible for the fund management decisions of that fund, and I knew I wasn't going to get that at Eagle Star in the near term on a fund, you know, and be responsible for the fund management decisions of that fund, yeah, and I knew I wasn't going to get that at eagle star in the near term and what made you think you get it at perpetual?
• 21:52
  Speaker 1: well, because it was a smaller team.
• 21:54
  Speaker 2: Yeah, and it was how small, sorry, just how small was the business when you joined it.
• 21:59
  Speaker 2: Because obviously now you look at invest, go and it's in, you know, insanely large and you know, kind of saying, you know I was actually Eagle Star and that was much bigger than you know.
• 22:07
  Speaker 2: Perpetual people, you know, might not be able to, you know, comprehend that, but it was a small, not small business, but it was a much smaller team when you joined yes, it was, and I joined just after financial markets had had a wobble around 87.
• 22:25
  Speaker 1: So I joined Perpetual in 88.
• 22:27
  Speaker 1: And I can remember people at Eagle Star said you're absolutely mad joining a small investment, a unit trust business, a small retail fund management business.
• 22:37
  Speaker 1: So I think at the time the business had about 400 million pounds under management across a range of funds uk um, us emerging markets, japan, asia yeah yeah, so it had a.
• 22:56
  Speaker 1: It had a range of funds, a range of fund managers, um, and I joined the uk team.
• 23:01
  Speaker 1: There were two other fund managers in that team and I was the sort of the more junior new entrant, if you like, into the UK team.
• 23:08
  Speaker 1: But it was a much smaller team and I sort of felt that there was the potential for the business to launch more funds and if I did well then I could have my name on a fund.
• 23:17
  Speaker 2: How important would you say that is for people starting their career to take maybe a chance on something earlier on, because obviously later on in your career it does become house, mortgage, kids, all the rest of the stuff it does.
• 23:32
  Speaker 2: You know it does become a lot more of a difficult decision to make at that time.
• 23:34
  Speaker 2: That's clearly.
• 23:34
  Speaker 2: You know that joining perpetual at that time clearly was a massive decision for you.
• 23:39
  Speaker 2: You're a well-established business, you know.
• 23:41
  Speaker 2: At the time it probably felt like, oh, am I making the right decision?
• 23:43
  Speaker 2: You got people telling you are making the wrong decision.
• 23:45
  Speaker 2: Um, you know how, what, you know what guidance would you give people?
• 23:53
  Speaker 1: it.
• 23:53
  Speaker 1: I would I by that time I took a risk, definitely I mean I.
• 23:57
  Speaker 1: I.
• 23:58
  Speaker 1: People in the, in my colleagues at eagle star said you're mad.
• 24:01
  Speaker 1: Um, I gave up a mortgage subsidy.
• 24:04
  Speaker 1: In fact, I took a big cut in salary yeah in remuneration to go to perpetual, wow.
• 24:08
  Speaker 1: But the idea was that's that I can see my career developing here rather than there so I think there is a lesson there.
• 24:17
  Speaker 1: maybe you know that to.
• 24:19
  Speaker 1: I think it's important to know what you want to do, what you're good at, what you enjoy.
• 24:24
  Speaker 1: Far too many people end up compromising.
• 24:28
  Speaker 1: I think they compromise on you, know they?
• 24:32
  Speaker 1: I'm not saying it's wrong to compromise, because lots of other things play a part in your decisions, but ultimately, you know, I was motivated to find to do a job that I really enjoyed doing to sort of to get to the point that I wanted to get to, and I was prepared to take a sort of sideways or a backward step to get there.
• 24:59
  Speaker 1: I think I learned an important lesson from my upbringing.
• 25:01
  Speaker 1: You know my dad did.
• 25:03
  Speaker 1: You know he didn't earn a lot of money.
• 25:04
  Speaker 1: I don't think he really enjoyed his job.
• 25:06
  Speaker 1: Yeah, uh, I think he was a bit unfulfilled in that, you know, in that respect of his life.
• 25:12
  Speaker 1: Um so, and I wanted it taught me.
• 25:18
  Speaker 1: You know that the, the, the.
• 25:21
  Speaker 1: I wanted to be happy in my job.
• 25:23
  Speaker 1: I wanted to be motivated and stretched by what I was doing professionally, and so I think that did sort of help drive me to that point.
• 25:33
  Speaker 1: So I would say to people you know, okay, financial security is very important, but first and foremost, do the thing that you love doing.
• 25:42
  Speaker 1: Yeah, do the thing that you're good at doing.
• 25:49
  Speaker 2: It's so true, isn't it?
• 25:50
  Speaker 2: And sometimes, I think the other lesson there is is two steps back to go 10 steps forward as well, which I think a lot of people constantly think they have to be going forward forward forward, forward and sometimes it's pivoting and taking that risk and taking that opportunity, um, and obviously that paid dividends for you.
• 26:03
  Speaker 2: So you're now in perpetual smaller asset management business 400 million of assets.
• 26:09
  Speaker 2: You're in the UK equity team and you know that was a hell of a ride that you had with them, so maybe you can talk to us a bit about that.
• 26:18
  Speaker 1: Yeah, it was a very exciting time really.
• 26:23
  Speaker 1: The industry itself was you, you know, very young really the retail fund management industry was very young, it would it.
• 26:31
  Speaker 1: It was.
• 26:32
  Speaker 1: It started to transform itself when, when regulations changed, the legislation was introduced to to incentivize people to invest in equities, and various tax incentives were introduced peps and ices basically and that really did change the industry.
• 26:49
  Speaker 1: So my, basically, I started a perpetual industry, in its infancy but exciting little company that I knew a bit about because I done the acquisition analysis of perpetual and, um, they had a uk fund, a very small fund it's a high income fund and so there were a number of funds that they'd launched that the uk team looked after.
• 27:12
  Speaker 1: After I was been there for a few months, I think they got the measure that I was a decent human being, yeah, so, um, they decided to give me the high income fund, which at the time was 14 million quid uh fund, and, um, I was given that mandate it was my name on on a fund.
• 27:33
  Speaker 1: Well, so now it was tiny, but but that was the thing that I um that that it was sort of my portfolio to, to, to, to manage um and from that moment on I started to make investment decisions that I was responsible for.
• 27:51
  Speaker 1: Um, uh, the portfolio was, was the performance of the portfolio was measured against the other uk funds in, in, in the stable and I started to do really well.
• 28:03
  Speaker 1: The performance was good um, and later, two years later, the much bigger fund that they they had in the UK, which was the income fund, which had been managed by uh um, one of the more senior colleagues in the team.
• 28:18
  Speaker 1: He retired or moved on, I think he moved on.
• 28:21
  Speaker 1: He didn't retire, but he left perpetual and I took over the income fund.
• 28:25
  Speaker 1: So those two funds together I carried on running for the next 20, 23 or 24 years.
• 28:33
  Speaker 2: Wow, so perpetual.
• 28:36
  Speaker 2: Then merged with Invesco.
• 28:38
  Speaker 1: Yeah, later in 2000 yeah, yeah, 12 years later and up to the run.
• 28:43
  Speaker 2: Up to that time, you know kind of talk us through the size of the fund and you know yeah, they grew um dramatically 14 million, and then I don't know how much it was about 200 million.
• 28:56
  Speaker 1: Yeah, okay, fine, so the income fund was 200 million, big each individual fund was, but together those two funds plus the other funds I took on at Perpetual that then became Invesco in 2000.
• 29:19
  Speaker 1: I was by 2014,.
• 29:23
  Speaker 1: I was running about 33 billion in those two funds 32, 33 billion, that's a lot of money.
• 29:30
  Speaker 1: And and in a couple of other funds, yeah, yeah, those were the biggest funds.
• 29:33
  Speaker 1: That high income became the biggest fund.
• 29:35
  Speaker 1: Uh, income was smaller and there were a number of other smaller funds, but but yeah, and you went through some difficult times when you were running those funds as well.
• 29:43
  Speaker 2: I mean, we had the dot-com crash, we had the 2008, 2009, all of which massively hit UK equity markets as well as global equity markets.
• 29:53
  Speaker 2: How did you manage during that time?
• 29:56
  Speaker 2: Because you were quite contrarian.
• 29:58
  Speaker 2: You were going you know you weren't high-tech, you know you were getting getting, you know, kind of a bit of stick for for not being as high tech yeah, I think at that time.
• 30:08
  Speaker 2: So how did that factor into how you felt during that time and how you was managing the money, and how did it feel to prove them wrong?
• 30:18
  Speaker 1: right.
• 30:18
  Speaker 1: Um, so yeah, I I, as I said, in way I sort of developed my fund management identity during my apprenticeship in the industry and I became convinced that valuation discipline was incredibly important.
• 30:38
  Speaker 1: It was at the center of the investment decisions, all the investment decisions I made, of the investment decisions, all the investment decisions I made, and I think that identity and that focus on valuation being an incredibly important investment metric shaped my personality as a fund manager completely.
• 30:58
  Speaker 1: So it was valuation discipline that delivered very good performance.
• 31:02
  Speaker 1: Obviously, it's not just about our valuation discipline, it's about other things as well, but the heart of my investment process is a rigid focus on valuation.
• 31:20
  Speaker 1: Now that paid dividends for the investors that were with me on that journey, from those early days at Perpetual through to the first real bump in the road came in 2000.
• 31:37
  Speaker 1: There'd been a couple of setbacks on the journey, but basically after a long period of good performance in the lead up to to 2000, as you know, the tech bubble, sort of um, inflated significantly and it was a valuation incentive sorry, evaluation insensitive bubble in financial markets.
• 31:58
  Speaker 1: There'd been many of them before in history.
• 32:00
  Speaker 1: Um, I was a bit of a student of economic history.
• 32:03
  Speaker 1: After I left university I became quite interested in in modern economic history and and had learned a lot about, uh, bubbles and how they inflated.
• 32:13
  Speaker 1: And I remember reading a book in about 98 99, when I was going through a difficult time that had been written in the middle of the, in the middle of the 19th century oh, 18th 19th century, sorry about bubbles, about investment bubbles, and it was focused on the South Sea bubble and the tulip crisis and things like that, things that were sort of I knew about from economic history but didn't really understand what had happened.
• 32:42
  Speaker 1: And this was sort of blow by blow account of how these things had happened and it just had so many hallmarks.
• 32:47
  Speaker 1: It was history was repeating itself, basically um, in 98 and 99 in the lead up to the 2000 bubble bursting, and it helped me understand what was driving that process.
• 33:02
  Speaker 1: It helped me persuade myself that I wasn't mad and I hadn't lost my mind.
• 33:07
  Speaker 1: Yeah, you know that that um.
• 33:08
  Speaker 1: It helped me understand how what I was experiencing and witnessing at the time was irrational investor behavior.
• 33:15
  Speaker 1: But this was not a new.
• 33:17
  Speaker 1: This was not a new thing.
• 33:19
  Speaker 1: Anyway, I was going through a very tough time at the moment.
• 33:22
  Speaker 1: Yeah, I think lots of criticism.
• 33:22
  Speaker 1: I was a reasonably high profile manager at the moment.
• 33:23
  Speaker 1: You know, I think, lots of criticism.
• 33:25
  Speaker 1: I was a reasonably high profile manager at the time.
• 33:27
  Speaker 1: As soon as the fund started to underperform, people started to write negative things about me.
• 33:33
  Speaker 1: There was never really any outflow from the fund, we just stopped getting inflow, okay, but there was a lot of negative publicity about Woodford's blown it.
• 33:44
  Speaker 1: You know he's not.
• 33:45
  Speaker 1: You know the underperformance was very visible.
• 33:48
  Speaker 1: Yeah, how did that feel it was hard.
• 33:50
  Speaker 1: It's hard because it tests every, all your investment instincts, all your investment.
• 33:56
  Speaker 1: If you're being honest and true to yourself and your investment process, all the answers to the questions that you post yourself are telling you you should do this.
• 34:05
  Speaker 1: But then every day you come into work and you see your investment process underperforming a market that's going mad.
• 34:16
  Speaker 1: It it takes.
• 34:17
  Speaker 1: It was a.
• 34:19
  Speaker 1: It was a great training ground to sort of build your resilience as a, as a firm manager.
• 34:23
  Speaker 1: And of course, all the negative criticism puts piles the pressure on yeah um, and of course it corporately.
• 34:33
  Speaker 1: The pressure began to build.
• 34:34
  Speaker 1: I was going to say, was there pressure from above?
• 34:36
  Speaker 2: on you.
• 34:36
  Speaker 2: Yes, there was yeah.
• 34:37
  Speaker 1: So I'm not sure I would have lasted much longer in that firm.
• 34:42
  Speaker 1: I think I would have been sacked.
• 34:45
  Speaker 2: Yeah.
• 34:47
  Speaker 1: If it had gone on another six, nine months, maybe a year.
• 34:50
  Speaker 1: At no stage did anybody say to me you know your job's on the line here.
• 34:56
  Speaker 1: But I just got the sense that because the fund because my funds had been the engine of growth behind perpetual, perpetual had grown from being a tiny company to being a bit of a force in in in the retail fund management industry, we'd had huge amount of inflow.
• 35:13
  Speaker 1: The business was very successful.
• 35:14
  Speaker 1: I mean, it ended up, uh, being sold for um a billion quid.
• 35:19
  Speaker 1: Um sold for a billion quid in 2002 in vesco yeah and um.
• 35:28
  Speaker 1: The chairman who founded the company owned half the business, so he had a lot of money hanging on the on the line and and because my funds were the engine of growth in the business, of course, when I started to underperform, it meant he was worried about the valuation of his business of course so yeah, it was.
• 35:47
  Speaker 1: It was a tricky time, so lots of pressure from the market, from the media, from investors and from my bosses did you like the accountability?
• 35:57
  Speaker 1: yeah, I did, uh, and I was it forced me to be very clear about why I was doing what I was doing?
• 36:07
  Speaker 1: If you're, if, at any time, you're uncertain or you're confused or you've got a mixed message, or if you're not clear about your investment discipline and what your investment discipline tells you to do as a fund manager, I think you are in a very dangerous place, because you can get knocked off course very easily.
• 36:27
  Speaker 1: And if you end up chasing a market, if you end up chasing stocks just because they've gone up, if get succumb to the greater fool theory, then, frankly, you've lost your mandate as a manager.
• 36:38
  Speaker 1: I think, um, so I think you have to stick to your knitting, and that taught me some very important lessons, I think, which obviously played out later in my career.
• 36:47
  Speaker 1: But, um, um, so I stuck to my discipline, I stuck to the strategy that I had pursued, but not without having to explain myself.
• 36:57
  Speaker 1: I had to say look this, this is my investment, this is why I believe this and this is why I'm not buying things on 500 times earnings.
• 37:06
  Speaker 1: Yeah, you know, I, I, you know, these businesses are not, uh, cannot justify the valuations that they're trading on.
• 37:15
  Speaker 1: I remember doing an exercise at the time Lots of people were promoting basically it was TMT bubble, so it was technology, media and telecommunications and at the time it almost became standard for valuations to be justified on the basis that if a business could grow its revenues at 10% per annum for 10 years, then you could justify X valuation for that company.
• 37:44
  Speaker 1: So I thought well, let's see how many companies are there in the whole of quoted Europe that includes the UK and all of Europe how many companies have grown their earnings at 10% per annum for the last 10 years?
• 37:59
  Speaker 1: The answer was three, only three.
• 38:03
  Speaker 1: One of them was Sage, actually, but nevertheless not 3,033.
• 38:11
  Speaker 1: And yet the whole market was obsessed with with.
• 38:14
  Speaker 1: Well, that's a bare minimum.
• 38:15
  Speaker 1: If you can grow at 10 percent brandon for 10 years, then you deserve x.
• 38:19
  Speaker 1: But there were, you know there were loads and loads of companies on valuations that were just completely unjustified would you say you were too early with your more defensive position?
• 38:28
  Speaker 1: yes, yeah, hindsight was great, yeah because, because, when, when valuation expands and when you're in a sort of, when you're in that sort of market environment, inevitably the first part of that environment, the first part of that sort of bubble inflation looks very, can look quite rational and okay.
• 38:51
  Speaker 1: so the market, and remember, you know, know, evaluation is not a science, it's an art yeah and it's about judgment and, and so there isn't a precise point at which a company becomes overvalued or undervalued.
• 39:03
  Speaker 1: It's a sort of range, yeah, and so companies could move up in that range and and still look rationally valued, but still be quite expensive.
• 39:12
  Speaker 1: I think in the bubble they went way beyond expensive to ludicrous, but so the performance so it's a bit like the temperature gets cranked up.
• 39:26
  Speaker 2: So initially my valuation discipline kept me out of those businesses that were looking a bit more expensive, but those were the ones that were performing well, was underperforming, and then, of course, the bubble started to inflate dramatically, and that that's when I really underperformed yeah, and then obviously so you know we got the bit you underperformed, but then you got it right, yeah, and you know there was a lot of people that didn't get it right and you had, um, and that almost kind of you know, it's that kind of godlike status of you.
• 39:58
  Speaker 2: You time the market and you've, and actually what you said.
• 40:01
  Speaker 2: You know people soon forget the negative bit when all of a sudden they're you know it's it spins around.
• 40:07
  Speaker 2: How how did that feel at that point?
• 40:09
  Speaker 2: Was it relief or was it?
• 40:10
  Speaker 2: Yeah, I'm really good self-confidence um, the.
• 40:18
  Speaker 1: The first was relief.
• 40:19
  Speaker 1: Yeah, I remember in march 2001 when the market really started to sort of rotate and and the gas came out of the bubble.
• 40:29
  Speaker 1: You know, pretty, pretty quickly.
• 40:31
  Speaker 1: I can remember feeling a sense of relief when the performance numbers start.
• 40:36
  Speaker 1: You know when you start, when you come in every day and you're under performing and you know you're going to underperform, it's a pretty depressing environment to be in.
• 40:43
  Speaker 1: But when you come in and things are starting to turn, you don't not every day is a great day, but you start to get more good days yeah, that's when the, the pressure comes off and you start to think, yeah, I was right about this, but I don't think at any stage.
• 40:58
  Speaker 1: I, I sort of you know, metaphorically, I didn't sort of lean back in my chair and light up a large cigar.
• 41:05
  Speaker 1: Yeah, go, yeah, I absolutely nailed it.
• 41:07
  Speaker 1: I, I've never done that, never.
• 41:09
  Speaker 1: Um, you just think, yeah, my, my investment discipline's right, I got it's right to keep focusing on the things that I I think are important.
• 41:19
  Speaker 1: Um, and that continued for many years, I mean for several really.
• 41:23
  Speaker 1: You know, the bubble didn't burst overnight, it.
• 41:26
  Speaker 1: It took a long time for those really inflated parts of the market to sort of to move to a more rational basis.
• 41:33
  Speaker 1: And because they dominated the market, the index fell over a number of years in the wake of the 2000 bubble bursting to 2001.
• 41:47
  Speaker 1: No, it was in March 2000.
• 41:49
  Speaker 1: Sorry it burst.
• 41:50
  Speaker 1: It started to burst march 2000.
• 41:58
  Speaker 1: Sorry it burst.
• 41:59
  Speaker 1: Uh, we started to burst but, um, I, my fund, basically went up when the market was tanking, yeah, and it was.
• 42:01
  Speaker 2: That was quite a lot of attention as well, because when everything else is falling and you're either static or you're going up, you know that a lot of people go right.
• 42:09
  Speaker 2: That's where I want my money yeah, yeah, it had.
• 42:12
  Speaker 1: It had an important effect and and it resulted in a significant.
• 42:16
  Speaker 1: I mean, I was, you know, lots of stuff was written about what I'd done because I was already high profile.
• 42:23
  Speaker 2: Um, and yeah, money flowed into the fund and the performance was very good for a period of time after that and then you joined with Invesco and yeah, in 2000 at the time yeah, and then grew the funds significantly from there, would you say a large part of that was off the back of the good decisions that you made at that point.
• 42:43
  Speaker 1: I think there was, there were a couple of factors that played a part, I think.
• 42:46
  Speaker 1: Um, when Invesco, when Invesco acquired Perpetual, obviously we had access to a much broader distribution infrastructure, much more professional.
• 42:57
  Speaker 1: So good performance sold well because we had a powerful distribution infrastructure.
• 43:05
  Speaker 1: So, yeah, it was a good combination.
• 43:08
  Speaker 1: We had the right funds, they performed well, they were in the right place.
• 43:13
  Speaker 1: The UK was a popular destination yeah, not like now, of course and the funds sold well.
• 43:20
  Speaker 1: So, you know, the assets under management grew and, of course, that was very good news for the acquirer because the business became much bigger and more profitable.
• 43:29
  Speaker 2: Yeah, let's talk a bit about the transition then next so obviously you grew.
• 43:33
  Speaker 2: Was it 30 billion, you said, over?
• 43:42
  Speaker 2: I think it was between 32 and 33 billion at the peak.
• 43:43
  Speaker 2: Yeah, so at its peak, an insanely large business.
• 43:45
  Speaker 2: And also, you know, I hope that might be saying, but you're off, you know, you're later on in your career at that point as well.
• 43:49
  Speaker 2: You know, in terms of age, um, you've been there for 24 years, like you know, most people go.
• 43:54
  Speaker 2: You know you've had a good run time to kind of, you know, pat yourself on the back, go and play some golf, go and do some.
• 44:01
  Speaker 2: You know, whatever it is that you might do in retirement walking, hiking, you know what.
• 44:07
  Speaker 2: What then made you decide well, do you know what?
• 44:10
  Speaker 2: I'm going to go with others and start up Woodford Investment Management.
• 44:16
  Speaker 1: Yeah, there were a number of factors that played a part in that decision.
• 44:19
  Speaker 1: In a way they were push and pull factors.
• 44:23
  Speaker 1: First of all, the push factors, the more negative factors.
• 44:26
  Speaker 1: In a way, the business that I joined back in the perpetual, the UK business changed a lot.
• 44:30
  Speaker 1: So it changed when we were acquired by Invesco and in some ways that was a good change.
• 44:32
  Speaker 1: I joined back in the perpetual.
• 44:33
  Speaker 1: The UK business Changed a lot, okay, so it changed when we were acquired by Invesco and in some ways that was a good change.
• 44:39
  Speaker 1: But over a period of time we became increasingly a part of a much bigger global for management business and there were things about that I didn't like Okay, the amount of control that was exerted over us, the way we were institutionalized.
• 44:56
  Speaker 1: It became a very US-centric organization and a number of decisions were taken about how the business should behave and how it should be structured, which I didn't like.
• 45:14
  Speaker 1: So I was a reasonably senior sort of person within Invesco and so I was exposed to some of these decisions and didn't like them particularly.
• 45:23
  Speaker 1: And it just became.
• 45:27
  Speaker 1: It changed.
• 45:30
  Speaker 1: It changed into an organization the sort of organization I didn't particularly like, didn't like the culture, didn't like the people, frankly, and so those were the push factors.
• 45:41
  Speaker 1: The pull factors were well, if you don't like it, what are better way to do the things that we're doing?
• 45:51
  Speaker 1: I think we can structure a business, a uk for management business, and if I was starting, I've had a blank sheet of paper.
• 45:57
  Speaker 1: How would you set up a uk for management business?
• 45:59
  Speaker 1: Well, I'd set it up differently, I would do this differently, I'd do that differently.
• 46:03
  Speaker 1: Um, and so there were pull factors.
• 46:06
  Speaker 1: There were, there were things that made it attractive to want to do, to want to do things differently in a way that that we felt was the right way, or I felt, and other people that were keen to do this with me you know felt was the right way to do this.
• 46:22
  Speaker 1: So, um, anyway, a combination of push and pull resulted in um in in the business, in me deciding to leave, basically.
• 46:36
  Speaker 2: Why did you not stop working?
• 46:37
  Speaker 2: Because you clearly didn't have to work at that point.
• 46:40
  Speaker 2: You know it wasn't to go and earn more money.
• 46:42
  Speaker 2: I mean, money's always nice, don't get me wrong.
• 46:46
  Speaker 2: But you know clearly you could have stopped working at that point if you would have wanted to.
• 46:51
  Speaker 1: Yeah, I don't think money's ever been.
• 46:58
  Speaker 1: I mean, it's nice to get paid well to do the job that you love doing.
• 47:01
  Speaker 1: Yeah, that's, that's definitely true.
• 47:03
  Speaker 1: But money's never been the prime motivating influence in in any decision I've taken in my career, really.
• 47:11
  Speaker 1: Um, so I think what motivated me was to want to carry on doing what I was doing, to do that in an unconstrained in sort of environment in which we weren't being sort of compressed, if you like, to do to, to abide by the sort of big cultural thing that that that the U S organization wanted us to do, to abide by the sort of big cultural thing that the US organization wanted us to do.
• 47:38
  Speaker 1: I think, in a way, some of the motivation that had prompted me to want to join Perpetual was the same motivation that prompted me to want to go out and do it on my own Now.
• 47:50
  Speaker 1: But why didn't I want to?
• 47:51
  Speaker 1: I just wasn't ready to stop working.
• 47:53
  Speaker 1: I mean, I love what I do, I enjoy it.
• 47:57
  Speaker 1: It's very intellectually motivating.
• 48:00
  Speaker 1: You know I wasn't at all ready to stop and I'm not now.
• 48:07
  Speaker 1: You know I want to carry on doing what I'm doing.
• 48:09
  Speaker 1: So, yeah, maybe I'll carry on working until I drop.
• 48:13
  Speaker 1: I don't know, but you know, the fact is that I was nowhere near ready to retire.
• 48:16
  Speaker 1: I don't play golf, you know.
• 48:18
  Speaker 1: I don't really, you know, um, I have a young family and of course, I'd like to spend more time with them, but ultimately, you know, I want to be, want to be sort of fulfilled as a, as a, as a dad and as a, as a dad and as a professional you need a purpose.
• 48:32
  Speaker 2: Yeah, exactly, and that's your purpose.
• 48:34
  Speaker 2: Yeah, and have you ever got bored of the purpose?
• 48:36
  Speaker 2: Because you've been doing it for a long time.
• 48:41
  Speaker 1: No, never.
• 48:42
  Speaker 1: This job can be many things, but it's never been boring.
• 48:46
  Speaker 1: It's perpetually interesting.
• 48:49
  Speaker 1: I find it's really.
• 48:54
  Speaker 1: You know, you'll never master it, that's one thing which is sort of a frustration, but also it sort of drives you on as well.
• 49:01
  Speaker 1: Um, the world changes all the time.
• 49:04
  Speaker 1: There are new challenges, there are new things to understand, there are.
• 49:08
  Speaker 1: The world evolves, um, um, you know it's.
• 49:16
  Speaker 1: We live in a dynamic environment.
• 49:18
  Speaker 1: I mean, just look at this part of the world.
• 49:21
  Speaker 1: I mean, you know, 20 years ago it was very, very different.
• 49:23
  Speaker 1: Another 20 years it'll be very different again.
• 49:26
  Speaker 1: Um, you know, the world has evolved.
• 49:28
  Speaker 1: We we're in an area where, you know, know, when I first started working, you know, climate change wasn't even a concept.
• 49:37
  Speaker 1: I mean, at the time I think we were more worried about the next ice age than we were about, you know, carbon emissions and global warming.
• 49:44
  Speaker 1: You know the Internet didn't exist.
• 49:48
  Speaker 1: You know we got artificial intelligence.
• 49:52
  Speaker 1: Now, you know, a new potential industrial revolution, global conflict, global sort of geopolitical movements.
• 50:00
  Speaker 1: I mean China really hadn't emerged as a major economic geopolitical force in the world when I first started working.
• 50:08
  Speaker 1: Now it is right up there with the US.
• 50:10
  Speaker 1: So all of these things, all of these sort of things, evolve over time.
• 50:15
  Speaker 1: They're really interesting.
• 50:17
  Speaker 1: They impact how you think, or how you should think day to day.
• 50:20
  Speaker 1: Some things are constant, like that important valuation discipline.
• 50:25
  Speaker 1: Those sorts of things don't change, but lots of other things do and they become.
• 50:30
  Speaker 1: It's very interesting and I'm very interested in it and I want to learn more about it and stay on top of it and keep progressing.
• 50:38
  Speaker 2: It's interesting and so so you left.
• 50:43
  Speaker 2: So you left investco.
• 50:45
  Speaker 2: You were managing a lot of money.
• 50:48
  Speaker 2: Was there a worry that when you set up the fund um, or set up the investment management business that advised the fund, that the money wouldn't come with?
• 51:03
  Speaker 1: There was a risk.
• 51:04
  Speaker 1: I think there was a risk that my clients would stay put, but I don't know what probability I'll attach to that risk.
• 51:14
  Speaker 1: But equally, there was also a decent probability that a good number of them would come with me and follow me yeah now, of course I knew that not all of them would do so.
• 51:22
  Speaker 1: There's a lot of, there's a lot of stickiness in fund management, um and um.
• 51:28
  Speaker 1: So you know it would be ludicrous to expect all of those clients to move their money, but I've, I was reasonably convinced that a decent proportion would move.
• 51:37
  Speaker 1: Yeah.
• 51:38
  Speaker 2: Because you had I mean up to the, you know the largest point of the fund.
• 51:43
  Speaker 2: It was 17 billion, wasn't it?
• 51:44
  Speaker 2: I think it was the peak.
• 51:46
  Speaker 1: Yeah, the peak AUM at Woodford was Woodford Investment Management was about 17 billion pounds.
• 51:53
  Speaker 2: Yeah.
• 51:53
  Speaker 1: So we went from a standing start in three years to about 17 billion pounds.
• 51:55
  Speaker 1: So we went from a standing start in three years to about 17 billion.
• 51:57
  Speaker 2: Which is huge.
• 51:58
  Speaker 2: Yeah, do you think scaling that or growing it that quickly had a negative or positive impact?
• 52:07
  Speaker 1: It was a challenge.
• 52:08
  Speaker 1: I think it was a great team of people at Woodford Investment Management a fantastic team.
• 52:16
  Speaker 1: We work really, really hard.
• 52:18
  Speaker 1: I think a lot of very talented people throughout the organization.
• 52:23
  Speaker 1: We were able to actually did to build what we wanted to build.
• 52:26
  Speaker 1: I think I said earlier when I you know, we wanted to set up a business that did things the way we felt they should be done, and that's what we achieved.
• 52:35
  Speaker 1: I think it was a lot of satisfaction from that.
• 52:37
  Speaker 1: So it was a challenge, but it wasn't it didn't overwhelm us at all.
• 52:44
  Speaker 1: I think we were more than capable of delivering, if you like, or managing that growth.
• 52:54
  Speaker 2: And as obviously the business is growing, you guys are doing well, when would you say?
• 52:59
  Speaker 2: You know, obviously it took a turn, and what hindsight's always great.
• 53:03
  Speaker 2: Was there any?
• 53:04
  Speaker 2: Was there any points during that time that you started to feel things creaking or that you were concerned?
• 53:12
  Speaker 1: um, the business didn't creak, but the the we were.
• 53:16
  Speaker 1: Underperformance comes with the territory yeah okay.
• 53:21
  Speaker 1: So I I'd been through difficult periods of performance in my career before, so I knew I knew that this was going to happen.
• 53:31
  Speaker 1: We the first three years, were very good.
• 53:32
  Speaker 1: I put out before in the market outperformed.
• 53:34
  Speaker 1: My index outperformed.
• 53:35
  Speaker 1: Peer group did well.
• 53:37
  Speaker 1: Funds grew.
• 53:37
  Speaker 1: Then I started to underperform and I knew why I was underperforming.
• 53:43
  Speaker 1: In a way, it was, in part, a product of what had happened in 2016.
• 53:48
  Speaker 1: Of what had happened in 2016.
• 53:53
  Speaker 1: So, if you may remember, there was a Brexit vote in 2016 in the UK and, in a way, that vote and its aftermath, the result of that vote and its aftermath, was a profound influence on the UK economy and the UK market and UK politics for many years after, and probably still is in some ways now.
• 54:17
  Speaker 1: You know, eight years on.
• 54:18
  Speaker 1: So the Brexit vote occurred.
• 54:23
  Speaker 1: The aftermath of the Brexit vote was that the market, international investors and domestic investors believed what they were being told by the politicians, which was this was a disaster for the UK economy.
• 54:38
  Speaker 1: We were going to hell in a handcart.
• 54:40
  Speaker 1: Frankly, property prices, commercial property prices, residential property prices would collapse.
• 54:46
  Speaker 1: There were all sorts of awful prognostications about what was going to happen if we voted to leave.
• 54:52
  Speaker 1: We did vote to leave.
• 54:53
  Speaker 1: We did vote to leave.
• 54:54
  Speaker 1: The economy and the market shifted almost immediately and what happened was that domestic stocks just collapsed.
• 55:05
  Speaker 1: Yeah, now, my view was that there was this introduced this massive discontinuity.
• 55:11
  Speaker 1: So, basically, the economy I felt the economy would do okay.
• 55:14
  Speaker 1: I didn't believe any of these sort of political views, about these extreme political views about what would happen in the wake of a Brexit vote to leave.
• 55:25
  Speaker 1: Equally, I didn't believe the more bearish.
• 55:32
  Speaker 1: I was somewhere in the middle and, frankly, I didn't believe that the Brexit vote would really alter the trajectory of the UK economy significantly one way or the other.
• 55:41
  Speaker 1: Not only did I believe that, but we'd actually commissioned a very significant piece of economic research that delivered the same conclusion.
• 55:57
  Speaker 1: Basically, it wasn't significantly positive.
• 56:00
  Speaker 1: It wasn't significantly negative.
• 56:01
  Speaker 1: So my view was the economy would carry on doing pretty much what it had been doing before and the trajectory for the economy would be largely unchanged.
• 56:11
  Speaker 1: The market believed it was a disaster and, as a result, domestic stocks absolutely collapsed.
• 56:18
  Speaker 1: I start because I'm valuation driven.
• 56:21
  Speaker 1: I could see an evaluation opportunity in those domestic parts of the market where share price had become detached from reality, and that's how I started to move the portfolio towards those stocks and they carried on underperforming and that was really the source.
• 56:34
  Speaker 1: Move the portfolio towards those stocks and they carried on underperforming and that was really the source of the underperformance yeah, and it, and at that, what point did you, what point did you start to see the outflows happen?
• 56:47
  Speaker 1: well, this is.
• 56:48
  Speaker 1: This was a contrast.
• 56:49
  Speaker 1: Really, as I said in back in 2000 in the lead up to the the bubble bursting, uh, investco, we didn't really see any significant outflow from the funds I was running.
• 56:59
  Speaker 1: What what I did see was money stopped coming in yeah the difference, uh, in about 2017, which is roughly when performance peaked three years after we'd started.
• 57:19
  Speaker 1: The difference this time was that I suppose maybe I was a taller poppy.
• 57:25
  Speaker 1: Maybe the fact is that the UK media, the financial media they love to build people up, but they also absolutely, absolutely, what they love even more is to take somebody down, and I think a combination of the massive media profile that I attracted at the time, the fact the funds are underperforming, combined with the fact that I think that we made a mistake in in publishing, for we we gave full portfolio disclosure once a month.
• 57:50
  Speaker 1: We published the full portfolio this is where your money's invested.
• 57:54
  Speaker 1: That was accessible to all our investors and obviously more broadly accessible too, and because we gave that degree of transparency, we were the gift that kept on giving.
• 58:06
  Speaker 1: So, when one of the stocks in the portfolio announced disappointing results or its share price went down significantly, that enabled the media to write a story about a woodford has x and this has gone down and this is terrible.
• 58:20
  Speaker 1: And the underperformance of the fund became a sort of uh, something that the media wanted to write about a lot, and they did, and this time there was outflow, significant outflow, um, and I think it's, in part, a product not just of more media attention, but also the the the makeup of the industry changed.
• 58:45
  Speaker 1: Remember, back in before 2000, really most, most people who invested in funds were advised by ifas, wealth advisors, etc.
• 58:57
  Speaker 1: In 2017, lots of people invested with no advice.
• 59:04
  Speaker 1: They just invested off platforms.
• 59:06
  Speaker 1: Yeah, they just followed what the media did.
• 59:08
  Speaker 1: Yeah, um, and the media are completely unregulated, so the media can write whatever they like about a fund or a fund manager.
• 59:14
  Speaker 1: They have a lot of influence, but, of course, they're not regulated in the same way an financial advisor would be regulated, so they can say whatever they like.
• 59:21
  Speaker 1: Pretty much, and, importantly, what they do write, people follow.
• 59:27
  Speaker 1: So lots of people on unadvised platforms were sort of investing in the fund because it had done well and then, when the media started to write negative stuff, of course they started to sell.
• 59:37
  Speaker 1: So there was a lot of outflow, partly as a result of that change.
• 59:43
  Speaker 2: Yeah.
• 59:43
  Speaker 2: So you started to see the outflows and what was the feeling in the firm?
• 59:45
  Speaker 2: Because obviously you'd experienced tremendous success at that point.
• 59:46
  Speaker 2: And then you know, success starts to diminish.
• 59:51
  Speaker 2: It then turns to more of a negative feeling.
• 59:55
  Speaker 2: How was the feeling in the business at that point and how was you reacting to it?
• 1:00:02
  Speaker 1: It was a challenging time for sure, not least because it's not nice to be on the receiving end of a sort of an assault, a media assault.
• 1:00:13
  Speaker 1: I mean, essentially we were.
• 1:00:14
  Speaker 1: But the business was a very tight business and it had a lot of incredibly talented people in it and we just, I think as a team, we just it brought us together really as a team.
• 1:00:27
  Speaker 1: We knew we were going through a difficult time.
• 1:00:30
  Speaker 1: Everybody sort of rolled their sleeves up and got on with it really.
• 1:00:35
  Speaker 1: I mean it was in some ways it was a defining moment for the people in the business, a defining time.
• 1:00:48
  Speaker 1: We were under so much scrutiny, there was so much pressure, there was so much media attention.
• 1:00:53
  Speaker 1: You know, I was the tall poppy that everybody wanted to have a go at.
• 1:00:57
  Speaker 1: It was horrendously uncomfortable but at the same time it sort of brought us together as a team and I think we were.
• 1:01:07
  Speaker 1: I'm incredibly proud of the team that we had at Woodford Investment Management Brilliant people working really, really hard.
• 1:01:14
  Speaker 1: Incredibly proud of of the team that we had at woodford investment management brilliant people working really really hard, knowing what they needed to do to to um, to deliver ultimately what we hoped would be better outcomes for investors yeah, and then you, you're going through this adversity and, like you said, you know it, know that brings a lot of people together.
• 1:01:34
  Speaker 2: If you're in difficult situations, you know you know who's good in your team and you know who's maybe not as good in your team when they're really put under pressure.
• 1:01:41
  Speaker 2: But at that point there's a route back, as you know.
• 1:01:46
  Speaker 2: And then when the fund got suspended, there was not.
• 1:01:50
  Speaker 2: You know.
• 1:01:50
  Speaker 2: Well, you would imagine, you would hope that there would be a route back, but it's getting less and less likely.
• 1:01:55
  Speaker 2: Did did things change during that time?
• 1:01:58
  Speaker 2: Did people's attitudes changed?
• 1:02:00
  Speaker 2: Did you lose anyone?
• 1:02:03
  Speaker 1: um, I'm just trying to remember we we had to as the business shrank because we had peak.
• 1:02:12
  Speaker 1: We had assets of about 17 billion and the biggest fund was the income fund.
• 1:02:24
  Speaker 1: Yeah, that shrank from over 10 billion to 3 billion.
• 1:02:29
  Speaker 1: So assets under management shrank significantly.
• 1:02:32
  Speaker 1: We had other mandates that we ran, but that was the biggest sort of fall, if you like, in AUM and because we had a lot of outflow obviously the revenue and the profitability of the business.
• 1:02:44
  Speaker 1: So we did shrink as a business from our peak employee count, but we were still investing in the business, still building other things within the business.
• 1:02:50
  Speaker 1: We were still investing in the business, still building other things within the business.
• 1:02:52
  Speaker 1: So that the atmosphere in the business, I think, was very good.
• 1:02:55
  Speaker 1: Uh, sentiment was great.
• 1:02:57
  Speaker 1: I think the team was amazing.
• 1:02:59
  Speaker 1: Um, we were under attack in a way, but but it did and people's heads didn't fall.
• 1:03:08
  Speaker 1: Um, with respect to the fund suspension, I mean that was a decision that we had no notice of.
• 1:03:15
  Speaker 1: We didn't take that decision.
• 1:03:16
  Speaker 1: That was done to us, not by us.
• 1:03:18
  Speaker 1: That was a decision taken by Link.
• 1:03:20
  Speaker 1: We had about 15 minutes notice that that decision was going to be taken.
• 1:03:23
  Speaker 1: We had no warning, none at all.
• 1:03:26
  Speaker 1: Fund was suspended, I think, since that.
• 1:03:32
  Speaker 1: I don't know the exact number, but there's been over 200 other fund suspensions since.
• 1:03:37
  Speaker 1: The fact is that fund suspension even though that was a decision we played no part in the fact is that fund suspensions are quite common in the industry and typically funds come out of suspension and the rules dictate basically, when the the circumstances that have led to a fund suspension are no longer relevant, the fund comes out of suspension.
• 1:03:59
  Speaker 1: So my expectation was after that decision in june, fund suspension was early in June 2019.
• 1:04:08
  Speaker 1: My expectation was well, we got a period of time during which we can do various things that we're being told to do by Link, whose fund, effectively.
• 1:04:21
  Speaker 1: What's not probably well known is that Link owned the fund.
• 1:04:26
  Speaker 2: Yeah, it's not your fund, it was.
• 1:04:27
  Speaker 1: Link's fund.
• 1:04:28
  Speaker 1: They delegated fund management to us.
• 1:04:29
  Speaker 1: Yes, okay, so it was their fund.
• 1:04:30
  Speaker 1: They then Link's fund.
• 1:04:30
  Speaker 1: They delegated fund management to us.
• 1:04:30
  Speaker 1: Yes, okay, so it was their fund.
• 1:04:32
  Speaker 1: They then told us what they wanted us to do.
• 1:04:34
  Speaker 1: Yes, okay, so they had the power to suspend the fund.
• 1:04:38
  Speaker 1: They did suspend the fund, as I said.
• 1:04:39
  Speaker 1: We had no notice.
• 1:04:40
  Speaker 1: They then said right, we want you to do X, y and Z, yeah, and basically, basically changed the liquidity profile of the fund.
• 1:04:50
  Speaker 2: And the liquidity profile was 70%, was allowed to be invested in illiquid.
• 1:04:55
  Speaker 2: Was that correct?
• 1:04:57
  Speaker 1: We were given a liquidity framework by Link, so we had to manage liquidity based on the framework they gave us.
• 1:05:06
  Speaker 1: That's part of their regulatory responsibility, so they imposed a liquidity framework on us and on the fund.
• 1:05:14
  Speaker 1: Yeah, um, uh, and basically without getting too sort of into the weeds of it, but basically it's it's.
• 1:05:22
  Speaker 1: The liquidity is measured on a bucketing model.
• 1:05:24
  Speaker 1: So most liquid buckets going one bucket, most liquid stocks going one bucket, bucket one and the fourth bucket, or four buckets.
• 1:05:27
  Speaker 1: The most liquid stocks go in one bucket, bucket one and the fourth bucket, or four buckets the least liquid stocks go into the fourth bucket.
• 1:05:35
  Speaker 1: What, what the?
• 1:05:36
  Speaker 1: There are triggers and limits based on where, how liquidity changes over time.
• 1:05:41
  Speaker 1: What the?
• 1:05:44
  Speaker 1: The limit on the bucket three and four, which are the less liquid, not illiquid, are the less liquid, not illiquid, but the less liquid stocks is that 70% of the fund could be in those two buckets, which meant, of course, that 30% was in buckets one and two.
• 1:05:59
  Speaker 1: Now, in the lead up to the fund suspension, we were close to, but within the framework's limits.
• 1:06:05
  Speaker 1: The framework enabled us to meet redemptions when they fell due without harming our investors.
• 1:06:10
  Speaker 1: We had done that throughout the process of the fund outflow and indeed we were meeting redemptions on the day the fund was suspended.
• 1:06:19
  Speaker 1: Anyway, the fact is that then Link decided no, we want you to change the fund, we want you to have a more liquid fund.
• 1:06:26
  Speaker 1: And they gave various targets for buckets one and two and three and four.
• 1:06:32
  Speaker 1: So that was my job, to change the profile of the fund, which we did.
• 1:06:35
  Speaker 1: Um, I had no expectation, by the way, then, that that they would take a decision four months later to liquidate the fund, no idea at all.
• 1:06:44
  Speaker 1: Um, we were given a mandate you're going to transform the liquidity profile of the fund.
• 1:06:49
  Speaker 1: Please, crack on and do not, please.
• 1:06:51
  Speaker 1: You know, crack on and do that please, which I did.
• 1:06:53
  Speaker 1: I transformed the liquidity profile of the fund.
• 1:06:56
  Speaker 1: So we were, we.
• 1:07:00
  Speaker 1: We pretty much delivered the target that we were expected to deliver and by september, we, we had a much more liquid portfolio.
• 1:07:08
  Speaker 2: Okay, and how was your relationship with Link during that time?
• 1:07:14
  Speaker 2: Would you because obviously a lot of the issue, it sounds like, was down to liquidity or their perceived perception of liquidity Would you say that there's an issue with the way that funds are run, because you can't have a liquid vehicle and then enable it to invest in illiquid assets?
• 1:07:38
  Speaker 2: We see it with property funds all the time where they go into suspension.
• 1:07:41
  Speaker 2: If you hold that asset, you then are in a fire sale because everyone knows you've got to sell it to meet the liquidity, or you've got to sell bits of it or you know whatever it is.
• 1:07:53
  Speaker 2: So it doesn't put you in a great situation allowing those types of you know investments within the, within that liquid fund yeah, I mean you're touching on some important points, mean the fact is that property funds are very different from equity funds.
• 1:08:15
  Speaker 1: The fact is that the fund was a liquid fund.
• 1:08:21
  Speaker 1: We were meeting redemptions.
• 1:08:22
  Speaker 1: We were meeting, on average, nine million redemptions, nine million pounds of redemptions a day over the period that led up to the suspension.
• 1:08:29
  Speaker 1: We'd met them when they fell due.
• 1:08:32
  Speaker 1: We never, at no stage, did we not meet a redemption when it fell due and in delivering the cash we needed to do to meet redemptions, we never impacted price.
• 1:08:48
  Speaker 1: But effectively, the test is that you can raise liquidity without harming the value of the securities that you're selling.
• 1:08:55
  Speaker 1: And we did transaction cost analysis, very sophisticated transaction cost analysis, which proved that we were delivering liquidity appropriately without taking hits to value.
• 1:09:07
  Speaker 1: So we met all of our redemptions.
• 1:09:09
  Speaker 1: The fund was suspended.
• 1:09:11
  Speaker 1: We didn't have any visibility or notice on fund suspension.
• 1:09:16
  Speaker 1: Fund was suspended, um, obviously.
• 1:09:20
  Speaker 1: Then outflow stops.
• 1:09:24
  Speaker 1: I was instructed to transform the liquidity of the fund, the liquidity profile of the fund, which you did um and then early in october in 2019, the fund was the link to a decision to liquidate the fund.
• 1:09:36
  Speaker 1: Now probably not for here I can't tell you what we believe really now is the motivation for that decision.
• 1:09:45
  Speaker 1: It's hard even now to to know quite what the motivation was for the decision in October to liquidate the fund.
• 1:09:51
  Speaker 1: It's a completely irrational and damaging decision, but nevertheless it wasn't taken for liquidity reasons.
• 1:10:00
  Speaker 2: Interesting and the people obviously that were impacted.
• 1:10:07
  Speaker 2: So obviously everyone sees it and the press have made a big thing of the clients.
• 1:10:12
  Speaker 2: Clearly you know the underlying people that held the funds?
• 1:10:14
  Speaker 2: Um, what were impacted as a result of that decision to liquidate at that point?
• 1:10:19
  Speaker 2: obviously, if it had been suspended and then you've been allowed, allowed to come out of trading you know I'm assuming from you know what you've said so far you would have, you know, continued to like to have managed the fund and you know you would have taken it out and you know similar to what you would have done during uh your times with the dot-com burst and uh and um 2008 how, how did it affect you and how did it affect the other people in your business so obviously the client's point of view.
• 1:10:49
  Speaker 2: You know people lost a lot of money and really upset as a result of that and obviously a lot of the flack then comes back on you.
• 1:10:56
  Speaker 2: How, how did you feel, how did the people in your business feel?
• 1:11:09
  Speaker 1: it was a horrendous time.
• 1:11:10
  Speaker 1: I mean the whole the lead up, the, the year really that led up to the fund suspension decision, and then that period from fund suspension through to the decision to liquidate was horrendous.
• 1:11:24
  Speaker 1: Um, the it's hard, it's hard really to to describe what it was like, because it was, it's.
• 1:11:36
  Speaker 1: It was so extreme really.
• 1:11:38
  Speaker 1: Um, the pressure, the external pressure, the internal pressure, um was intense.
• 1:11:45
  Speaker 1: Uh, the media attention was horrible.
• 1:11:49
  Speaker 1: The fact that we had no what was what was so incredibly difficult, so we had no control at all over what was happening.
• 1:11:58
  Speaker 1: Um, there was no opportunity for us to counter the, the, all the lies and all of the inaccuracies in the media stories.
• 1:12:11
  Speaker 1: It was hard ever to come across anything that was actually right or true in what was said about what was happening, but we had no mechanism to counteract that.
• 1:12:24
  Speaker 1: It was incredibly frustrating.
• 1:12:27
  Speaker 1: When I think back, it's almost as if it never happened.
• 1:12:34
  Speaker 1: It's like I've read a really unpleasant novel.
• 1:12:37
  Speaker 1: You know it was hard At the time.
• 1:12:44
  Speaker 1: The challenge of doing what we were doing as a team, the fact that we'd sort of pulled together as a team, meant that every single day you sort of roll your sleeves up, take a deep breath and get on and do the job that you've got to do.
• 1:12:56
  Speaker 1: Um, and the fact that the pressure was sort of intensifying almost day by day, um was something that you sort of became acclimatized to.
• 1:13:07
  Speaker 1: Yeah, but when I look back now I wonder how I got through it.
• 1:13:09
  Speaker 1: I wonder how anybody got through it.
• 1:13:10
  Speaker 1: But in a way it was sort of became acclimatized to, yeah, but when I look back now I wonder how I got through it.
• 1:13:11
  Speaker 1: I wonder how anybody got through it but in a way it was sort of worse, maybe for me because I was the figurehead.
• 1:13:18
  Speaker 1: Yeah, I was.
• 1:13:18
  Speaker 1: My name was on the door, you know, I was the one that attracted all the attention.
• 1:13:23
  Speaker 1: It was.
• 1:13:25
  Speaker 2: It was very unpleasant, I can imagine and I imagine I had quite a severe effect on your mental health personally yeah, it was.
• 1:13:33
  Speaker 1: Yeah, I mean I.
• 1:13:34
  Speaker 1: Um, sometimes you go through life and you think you know I mean everybody.
• 1:13:40
  Speaker 1: All families go through tough times you know the loss of parents, relatives, you know, death, divorce, illness.
• 1:13:47
  Speaker 1: You know these are very challenging times and this, in a way, was a bit like that.
• 1:13:51
  Speaker 1: It was.
• 1:13:57
  Speaker 1: I mean, it pushed me to the edge in many ways.
• 1:14:02
  Speaker 1: My family, you know, obviously I couldn't share all the things that were happening with my wife or with my kids.
• 1:14:11
  Speaker 1: My kids were quite young at the time so fortunately they weren't exposed to the day-to-day hideous sort of environment and they weren't aware of the media coverage at all and they didn't have any agro at school.
• 1:14:26
  Speaker 1: But you know, obviously my wife was aware of what was going on and and it was um incredibly difficult, I had people turning up on my doorstep with film, you know, with cameras and and microphones, and people writing all sorts of crap about who I was and what I did, and you know stuff.
• 1:14:50
  Speaker 1: That was not true but it was.
• 1:14:52
  Speaker 1: I remember at the time, later, I think, caroline Flack.
• 1:14:56
  Speaker 1: You remember Caroline Flack?
• 1:14:57
  Speaker 2: Yeah.
• 1:14:57
  Speaker 1: Caroline Flack was this incredible sort of young personality in media.
• 1:15:02
  Speaker 1: She had an amazing career.
• 1:15:04
  Speaker 1: Then she fell out with her boyfriend.
• 1:15:06
  Speaker 1: Something happened.
• 1:15:07
  Speaker 1: She suddenly became a media obsession and the next thing she's committed suicide.
• 1:15:11
  Speaker 1: A young, attractive woman, you know, with a career ahead of her, and I could completely understand how she got into that place mentally, because I'm not saying I ever envisaged doing anything like that, but I but.
• 1:15:22
  Speaker 1: But I could understand the when the pressure is that intense and when when you're so out of control because you can't, you can't undo the lies, you can't undo the narrative, you can't, you can't say hang on a second, everybody.
• 1:15:37
  Speaker 1: That's just not true yeah this is what actually happened.
• 1:15:40
  Speaker 1: This is the truth.
• 1:15:41
  Speaker 1: That's the you know that loss of control, the fact that your life is suddenly this thing, that the media is kicking around, and you know that, even though your friends and your relatives and the people are close to you and that matter to you, don't believe it.
• 1:16:01
  Speaker 1: The fact is that you think everybody else does, and when people come up to you in the street which they did and said you're that bloke who, you know that it's quite a challenge, it's not pleasant at all, I can imagine.
• 1:16:14
  Speaker 1: Yeah.
• 1:16:16
  Speaker 2: I suppose I probably can't imagine how tough that must have been, and obviously you know there was a lot of clients that were impacted through that as well, some less so than others.
• 1:16:29
  Speaker 2: Some were really impacted.
• 1:16:29
  Speaker 2: Did that play on your mind as well?
• 1:16:30
  Speaker 2: Um, some less so than others.
• 1:16:31
  Speaker 2: Some were.
• 1:16:31
  Speaker 2: Some were really impacted.
• 1:16:32
  Speaker 2: Did that play on your?
• 1:16:34
  Speaker 1: mind as well.
• 1:16:34
  Speaker 1: Yeah, yeah, I just felt well again.
• 1:16:39
  Speaker 1: This loss of control was a massive sort of burden, really, because, you know, up until that moment when the phone was suspended, I it, you know, I developed a very good relationship with with the ifas that had backed me for many, many years and who I'd done well for and done well for their clients.
• 1:16:58
  Speaker 1: Um, and because I was going through a difficult time, I felt I needed to sort of repay them, if you like, for the loyalty that they had shown in me.
• 1:17:06
  Speaker 1: So I invested a huge amount of time and effort into communicating with them, and we did, as an organization, communicate very clearly to our investor base, but particularly with those IFAs that had backed me.
• 1:17:20
  Speaker 1: And so, immediately after the fund suspension, for example, I went out on the road for three weeks and met across the country, meeting IFAs, packed out meetings, answering questions, making myself available, and the whole objective was we're going through a tough time, the fund has underperformed.
• 1:17:43
  Speaker 1: This is my investment thesis.
• 1:17:44
  Speaker 1: Okay, so you're locked into the fund, but this is the investment strategy, this is what we believe, this is why I'm doing what I'm doing, and the overwhelming message from the ifas was we back you, the reason we bought, the reason we bought your fund, the reason we invested in your fund for our clients, is because we believe in your strategy.
• 1:18:03
  Speaker 1: So stick with your strategy.
• 1:18:04
  Speaker 1: That was the over.
• 1:18:06
  Speaker 1: That's the overwhelming message I got from from that network.
• 1:18:09
  Speaker 1: Now, not everybody believed in what I was doing, absolutely, but the fact is that when I went out on the road and spoke to people that's the message I got back from my investors and I think in part that's because many of them have been with me for 25, 30 years.
• 1:18:26
  Speaker 1: Yeah, so they they'd seen me go through tough times before and they were prepared to back me through those difficult times because they knew that enduring that would result in, or they believed that enduring that would deliver, better outcomes in the future.
• 1:18:41
  Speaker 1: And that's what I had the ambition to deliver.
• 1:18:45
  Speaker 2: But subsequently wasn't allowed to.
• 1:18:46
  Speaker 2: I wasn't allowed to no, but subsequently wasn't allowed to, wasn't allowed to no.
• 1:18:51
  Speaker 2: So obviously you've been through extreme highs and then extreme lows and now you know we're.
• 1:19:01
  Speaker 2: Is it seven years on, I think, from the fund suspension no?
• 1:19:04
  Speaker 2: Five and a half years?
• 1:19:05
  Speaker 2: Five and a half years on from that?
• 1:19:10
  Speaker 2: Has things got easier, like you said I?
• 1:19:12
  Speaker 2: Things got easier, like you said I think I, I get, we said when you're constantly under the cost, you almost normalize.
• 1:19:16
  Speaker 2: At that point and it becomes that's the norm, then you, your normal, your norm adjusts.
• 1:19:21
  Speaker 2: Um, has it, has it become easier to you know, there's, there's that saying, isn't there?
• 1:19:32
  Speaker 2: Uh, today's news, tomorrow's fish paper, kind of thing.
• 1:19:36
  Speaker 2: Has.
• 1:19:36
  Speaker 2: Have you found that that media attention has died down over time?
• 1:19:40
  Speaker 2: You know, often I do see your name in in the media, um as as well.
• 1:19:44
  Speaker 2: Um, has it become less?
• 1:19:46
  Speaker 2: Have you just got better at dealing with it and people going through challenging times?
• 1:19:50
  Speaker 2: Maybe not to the extent that you have, but people will go through professionally very challenging times as well.
• 1:19:57
  Speaker 2: You know, what would you say to them about the time after?
• 1:20:05
  Speaker 1: I would say initially that, yes, it's got slightly easier.
• 1:20:09
  Speaker 1: You sort of acclimatize initially, of course, but the pressure is incredibly intense.
• 1:20:17
  Speaker 1: I would say the intensity is diminished.
• 1:20:19
  Speaker 1: I'm not saying the media wouldn't jump on a bandwagon as soon as they had the opportunity to, because they would, but the interest in me and the subject has has diminished.
• 1:20:33
  Speaker 1: So it's less.
• 1:20:34
  Speaker 1: It's less sort of newsworthy.
• 1:20:36
  Speaker 1: As far as the media is concerned, um, I still get some pretty unpleasant coverage from time to time, but having launched my blog, interestingly, um, weirdly, that sort of interestingly, um, weirdly, that sort of slightly silenced the media because I think they don't want to drive traffic to my blog.
• 1:20:57
  Speaker 1: So, okay, you know.
• 1:20:58
  Speaker 1: So well there's any publicity is good publicity.
• 1:21:00
  Speaker 1: I think, on the whole, they've sort of stopped saying yeah, too many unpleasant things about me and stop featuring me up to a point.
• 1:21:09
  Speaker 1: Um, um, so that's been an interesting and unexpected outcome of of of launching my own blog.
• 1:21:17
  Speaker 1: Um, as far as advising people on you know I mean, everybody will encounter everybody in every career you know is going to have a tough time.
• 1:21:28
  Speaker 1: They're going to something's going to go wrong, and time they're going to something's going to go wrong, and there aren't many people in life who have this sort of dreamlike experience of you know, everything goes brilliantly forever um, we all go through challenging times.
• 1:21:42
  Speaker 1: Um, maybe my challenges were just a little bit more sort of public and taxing than than most, and I wouldn't wish what happened to me on anybody.
• 1:21:49
  Speaker 1: But, um, I think it's.
• 1:21:52
  Speaker 1: It's an important part of of life in in in that it teaches you how to be resilient, yeah, um, it teaches you to be able to sort of put things into context um to value the things that really matter in your life.
• 1:22:06
  Speaker 1: You know family, health, things like that.
• 1:22:10
  Speaker 1: Um, you know those.
• 1:22:14
  Speaker 1: Those are the really, really important things yeah um relationships, friendships, um my god, you get tested you know, sometimes you think, for people who invest too much emphasis on their career, their remuneration, their financial wealth, if something like that, if what happened to me happens to them, if you get things out of perspective, it can take you down Absolutely.
• 1:22:46
  Speaker 1: So you have to hang on to the things that really really matter.
• 1:22:49
  Speaker 1: I think they become more important to you when you go through something like this.
• 1:22:52
  Speaker 1: So I think my advice to people will be you know, don't underestimate your resilience, but make sure you focus on the things that really matter.
• 1:23:01
  Speaker 1: Yeah.
• 1:23:02
  Speaker 2: And surround yourself with people that matter to you as well, I suppose.
• 1:23:08
  Speaker 2: So obviously, look, the FCA investigation is still ongoing, as I understand, which is five and a half years on, is is is something as well.
• 1:23:15
  Speaker 2: At what point would you, or do you think there will ever be a point that you will sit down and you know cause, you, you, you.
• 1:23:26
  Speaker 2: Whilst you can be vocal, there's obviously things you can say and can't say.
• 1:23:30
  Speaker 2: I mean, if I was you, I would love to put my, my thoughts to my thoughts in a book or on, you know, on paper.
• 1:23:37
  Speaker 2: And because it's at the moment, it's been someone else's side as opposed to your side that's been betrayed.
• 1:23:43
  Speaker 2: So will you ever do that going forward?
• 1:23:47
  Speaker 1: um, well, there are.
• 1:23:50
  Speaker 1: There are things that at the moment that I can't say of course I weirdly.
• 1:23:57
  Speaker 1: I mean, if I was to sort of summarize what happened, you know I underperformed as a fund manager.
• 1:24:02
  Speaker 1: I had underperformed before as a fund manager.
• 1:24:05
  Speaker 1: All fund managers who do what I do will go through periods of underperformance.
• 1:24:09
  Speaker 1: Maybe I was a bit more high profile than most, but the fact is that that the underperformance was what I was guilty of.
• 1:24:17
  Speaker 1: Okay, I delivered on performance.
• 1:24:18
  Speaker 1: That's what I was responsible for and I think you know and I apologize for for that, and you know it was something I I take, have to take responsibility for, and I'm very sorry about what happened to investors.
• 1:24:34
  Speaker 1: You know, as a result of what happened, but I'm not going to take responsibility for decisions I didn't take.
• 1:24:44
  Speaker 1: I'm not going to take responsibility for the impact that those decisions that I didn't take had on investors take responsibility for the impact that those decisions that I didn't take had on investors.
• 1:24:52
  Speaker 1: Yeah, um, uh, I'm fighting the assertions um the fca's assertions.
• 1:24:58
  Speaker 1: I'm fighting them robustly, um, as you'd expect me to, and uh, that's what I'm.
• 1:25:04
  Speaker 1: That's the fight I'm engaged in at the moment.
• 1:25:06
  Speaker 1: Yeah, um, at some stage in the future, the truth will come out and I will, in some form or another, I will make sure that the truth does come out.
• 1:25:18
  Speaker 1: Um, it's quite interesting.
• 1:25:19
  Speaker 1: I mean, if anybody's, if anyone.
• 1:25:22
  Speaker 2: I don't know if anyone's gonna be interested to want to read it, but but the fact is that the I'll make sure that the truth comes out I think there will be a lot of people that will be uh wanting to, uh wanting to read that for sure, um, and you know, kind of talking about writing and how you, um, you know how you've kind of evolved that as well.
• 1:25:43
  Speaker 2: So you've obviously got your blog, um, which you, which you started when, when did you start?
• 1:25:48
  Speaker 2: that um earlier on this year april this year, I think and how many people have you got that have subscribed to it roughly, I think we've got 10 000 subscribers so we've recently gone through 10 000 subscribers there's a lot of people that want to hear what you're saying, then yeah, I was quite pleased with that.
• 1:26:05
  Speaker 1: I know that there are lots of bloggers who have millions of subscribers.
• 1:26:09
  Speaker 1: I'm not, I'm not in that league, but I was very pleased that we um, without much fanfare and with with not you know a minimal sort of song and dance, really.
• 1:26:20
  Speaker 1: We've managed to get 10 000 subscribers and I've recently also, um, started doing the odd video from time to time, which I found very awkward and difficult.
• 1:26:29
  Speaker 1: But, um, why just?
• 1:26:32
  Speaker 1: I'm not, I'm not made for the video age, really reading into that it is quite hard to condense um what are often quite complex issues geopolitical or economic or market issues into a sort of pithy, interesting sort of 90 second long video.
• 1:26:52
  Speaker 1: It's quite hard to do that, but I've managed.
• 1:26:55
  Speaker 1: It's been good discipline for me.
• 1:26:56
  Speaker 1: I've been trying to do that, um, but so I have a few instagram followers, um, but yeah, 10 000 subscribers to the uh blog, which is good that's great, and and what are you hoping to do with that going forward, what was, what's the plan?
• 1:27:12
  Speaker 1: well, I think we just want to grow it.
• 1:27:13
  Speaker 1: I I, you know, I there is in our industry.
• 1:27:17
  Speaker 1: There's a thirst for knowledge and an insight.
• 1:27:19
  Speaker 1: I think, um you know, I've got a lot of experience.
• 1:27:22
  Speaker 1: I've been around for a long time, um, I've seen a lot of things happen in, in markets and in the economy.
• 1:27:28
  Speaker 1: I've learned a lot over the years.
• 1:27:30
  Speaker 1: Um, some of that might be useful to to investors, um and advisors.
• 1:27:36
  Speaker 1: So my hope is that I can grow that, that reader base um, that the the people who read it find it valuable and interesting.
• 1:27:47
  Speaker 1: I get some good feedback.
• 1:27:48
  Speaker 1: You know I I'm enjoying expressing, you know, my opinions without having to sort of have my content filtered by somebody else.
• 1:27:59
  Speaker 2: Yeah, and in terms of, you know, moving forward, what, what next?
• 1:28:03
  Speaker 2: So obviously we've got the blog.
• 1:28:04
  Speaker 2: Is there any?
• 1:28:05
  Speaker 2: Is there any hope to try and get back into running money again?
• 1:28:09
  Speaker 2: You know what does that look like.
• 1:28:12
  Speaker 1: Yes, that's the ultimate destination.
• 1:28:14
  Speaker 1: I want to get back into what I was doing.
• 1:28:18
  Speaker 1: Maybe not for the same sorts of clients or maybe they're not the same types of vehicles, but that's what I want to do and that's what I'm focused on.
• 1:28:29
  Speaker 1: So, you know, my people might say, well, why on earth would you want to do that?
• 1:28:36
  Speaker 1: You know you're, you're 64, you know you.
• 1:28:39
  Speaker 1: You know the time has come to settle down and put your feet up.
• 1:28:42
  Speaker 1: But I, I'm not, I'm not ready to do that.
• 1:28:44
  Speaker 1: I'm, uh, I feel in my, you know, I don't feel that much different from you know, when I was 20, 30 years younger.
• 1:28:52
  Speaker 1: Really, in many ways, I still have the same energy and enthusiasm for the industry and for what I'm doing and for the subject.
• 1:29:00
  Speaker 1: So I want to carry on doing that.
• 1:29:02
  Speaker 1: Good luck to you.
• 1:29:03
  Speaker 2: Thank you very much.
• 1:29:04
  Speaker 2: Good and thanks very much, and also thanks very much for being so open with us today.
• 1:29:08
  Speaker 2: That was really good and I hope the people listening enjoyed it and I thoroughly enjoyed it.
• 1:29:13
  Speaker 2: So thank you very much, it's been a pleasure.
• 1:29:15
  Speaker 2: Thank you for having me.
• 1:29:16
  Speaker 2: Thanks, thank you.