Trust in financial services ‘broken’ due to ‘arrogance’: Octopus

Trust in financial services ‘broken’ due to ‘arrogance’: Octopus
Ruth Handcock, chief executive of Octopus Investments

Trust in financial firms is still half “broken” because of an assumption made by companies that clients simply would not understand things even if they explain them, Ruth Handcock has said.

When asked what she thought trust meant in financial services, the chief executive of Octopus said she tends to break it down into two halves.

The first, she said, is the “table stakes” expectation that a firm isn’t going to lose all of an investor’s money, whilst the second is whether a firm is going to act in an investor’s best interest.

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It’s the second part, Handcock said, which “is the bit that's broken”. 

Speaking on a panel hosted by white-label platform provider Seccl, Handcock commented: “Regulation has largely succeeded in the former, it's not perfect, it’s not like there aren't scandals occasionally. But it's largely succeeded.

“The latter is a really big deal, because if you ask most people ‘do I think financial services organisations are on my side?’ you get anything from someone just laughing to, occasionally, someone saying ‘I can give one example of someone that might be’.”

For Handcock, this part of the ‘trust puzzle’ can simply be solved by transparency. She said during the pandemic, Octopus Investments - an asset manager - made a concerted effort to issue updates from fund managers to clients “almost daily” in the first instance.

“We knew everyone was going to be really worrying about what was going to happen to the money they had invested with us, rightly,” she said.

“We decided to immediately spin up a bit of our website and put updates from the fund managers, almost daily in the first instance to say, ‘look, this is what we know, this is what we're doing, this is what we think the outlook view is’.

“We were absolutely as transparent as possible. And I think it was exactly the right thing to do, because there's sometimes a little bit of arrogance in saying ‘don't worry, I've got it, I know what I'm doing, I'll just deliver the results for you’.”

In Handcock’s opinion, investors are now expecting more. “They’re expecting you to say, ‘this is what I'm doing’, ‘this is why you can understand this just as well as I can, so I'm going to be open with you’,” she said.

“It's not just fees. It’s about asking yourself: ‘am I acting in the right way?’ It’s not assuming that people aren’t going to understand. They will understand if you explain it clearly. We all have an obligation to be transparent. That's how I think you build it [trust] over time.”