INVESTING Individual Investor Financial Adviser Institutional Investor FUNDING Entrepreneur Real Estate
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Trust and transparency in a post-coronavirus world

9 Jun 2020

Trust, for me, is the new battleground for business.

If you’re anything like me, I now find it impossible to turn on the television or pick up a newspaper without reading or hearing about another breach of trust. Sports teams, charities, businesses, politicians are all equally guilty, routinely putting their own interests ahead of the people they serve.

Coronavirus, however, has added another dimension to this. People now wake up every day to read about hundreds of thousands of redundancies or dozens of high-profile businesses struggling to keep the lights on. Trust and transparency has become about more than just behaviour. It’s about survival.

How to treat your customers in a crisis

My latest personal experience is with British Airways — a case study in what not to do. 

I was booked on a flight to Sweden in July which has obviously now been cancelled. Legally, I know I’m allowed a full refund. British Airways, however, is offering me a voucher. If I want the cash refund I have to navigate something akin to the Crystal Maze. 

In 15 minutes of searching, I couldn’t find the information on their website, nor could I find an email address to send my query to. The chat function is run by a machine, not a person, and none of the choices I’m offered allow me to ask the question I want to. When I call the customer services helpline, the lines are so busy that they automatically cut off after the recorded message. 

All of this from a company whose motto is ‘To fly, to serve’ and where its values include respect, responsibility and fair play.  

The thing I think they’ve misjudged is that I’d genuinely be OK if they were open and transparent and explained that coronavirus is having such an impact on their business that the only way to ensure survival is to issue vouchers rather than refunds. 

But they’re not. They’re avoiding transparency with their customers at a time where it would go a long way. It’s something I (and presumably millions of other customers) will never forget.

The lesson in all of this is simple — great companies are simply about how they make their customers feel. And this is particularly true in times of crisis. Companies would do well to recognise that the world is so connected and so transparent that everyone can now see not only what you do but also how you do it. Total transparency is the only way forward.

It’s with this in mind that I thought I’d set out how Octopus is faring in light of coronavirus. 

If you’d like to read about our products and how they’re performing, you can also visit the Live Product Update Centre on our website.

Our approach to building the business

Our intention when we started the business back in 2000 was to build a business that would last for generations. While we still think like entrepreneurs, the reality is we are now an established and sizeable business that has been going for 20 years, and we’re very disciplined from a financial perspective. 

We’ll never take on lots of debt or put at risk the business we’ve built so far. That hasn’t and won’t change. 

Our balance sheet is very strong and our net assets as at 30 April 2020 were £152m, including £106m of cash and £20m of holdings in our funds and products.

What’s more, we are not, and never will be, a quoted business and this allows us to take long-term decisions which we believe are in the best interests of all our stakeholders.

Profitability this year

As a fund manager, we’re fortunate that our business model generates a high level of recurring revenues in the form of management fees on the funds that we run. We’re also relatively diversified, investing in both quoted and unquoted assets across a range of different sectors and industries including real estate, venture capital, smaller companies, and renewable energy.

We’ve modelled various scenarios for the year ahead which reflect different levels of potential inflows into our products. In all scenarios, even the most pessimistic case, our fund management business remains significantly profitable.

The furlough scheme

We feel a great sense of responsibility to our employees. As such we chose not to furlough any employees and we won’t be implementing a redundancy programme for those people unable to carry out their roles from home. 

Instead we’ve redeployed these people into other businesses within the Octopus Group or encouraged them to help the wider community through our charity, Octopus Giving.

This, in hindsight, was absolutely the right decision. The reaction from everyone across the business has been very encouraging and will, I believe, bind us even more tightly together in the future.

What the future holds

While we’re still a long way from business as usual, the last few weeks have seen some sense of normality return. 

We’ve run Octopus Live, with more than 3,000 financial advisers tuning in to listen to our inheritance tax planning ideas. And the feedback was such that we’re now setting up Octopus TV as a means to stay in contact with advisers.

We’ve also run countless webinars and teach-ins for our various products, some of them deliberately recorded in a way that you could share them with your clients. And, lastly, our IT team has replaced the AA (the breakdown service not anything alcohol related) as the fourth emergency service.  

We’re also offering their services to any advisers who’d appreciate some technical help in working from home. Just shout if you need some help.

Finally, if you or any of your clients would like to talk about Octopus, our products or how we’re responding to what’s going on around us, I promise the experience will be much smoother than it is for British Airways. 

Simply email me at [email protected]