Andrew Patrick White at FundApps

In Episode 2 we catch up with our favourite Irishman,  FundApps Founder & CEO, Andrew Patrick White.

Expect to learn how Regulators are moving towards more ethical-based practices, how technology can be a force for good in Financial Services, and what on earth the word ‘banjaxed’ means.

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Transcript

Sally Yates: Welcome to today's episode of Let's Talk, the podcast where we talk about people, profit, and the planet. Today, we're joined by Andrew White, CEO of FundApps. Welcome, Andrew.

Andrew White: Thank you very much, Sally. 

Sally: How about we start by introducing ourselves a little bit?

Andrew: Good Lord, yes. Obviously, from my accent, I'm an Irishman, been in London for 15 years, have worked in investment management, particularly on the technology side, for longer than I care to remember. I set up FundApps after working in a semi-corporate environment, set up FundApps in 2010. Our 13th birthday was just celebrated at the weekend.

Sally: Yes, absolutely. I think we've got some photos to share on our social channels, if anyone wants to have a little look-see.

Andrew: Excellent.

Sally: This season's episode is all about ethics. Let's start by talking a bit about how the financial services industry is set up and how and if that actually lends itself to strong ethical behaviour.

Andrew: I'd say that's a leading question, Your Honor. I think, unfortunately, humanity over history has very much proven when there's strong incentives, financial incentives to do something, maybe slightly dodgy humans will do it. I think the financial industry, above all others, over the last, since the Medici's in the 1400s has proven quite fallible to people, shall we say, taking shortcuts and taking advantage. It is a problem. It has been improved over the years.

I think there's a clear distinction between active criminal intent and then maybe people who bend the rules a little bit. Even then, sometimes the systemic problems, the incentives within the industry are so that people make short-term decisions. A lot of things that have been done the last 10 years in particular have been to incentivize people to make long-term decisions and not just hit your numbers for this year. That's the only thing that matters.

Aside from criminality, which has always existed, I think the middle one is that gray area. I think the Enron CFO still says he didn't really do anything wrong. It was just what was going on at the time. I think from an industry perspective, there's a lot to be improved there. Obviously, as somebody who works in financial compliance, I do believe it is getting better.

Sally: Like you say, good news that it is getting better, but by the sounds of it, Andrew, a long way to go.

Andrew: Yes. It is still an industry that has lots and lots of people that are bending the rules too far.

Sally: Actually, to that point, there was a recent Gartner report where it says that only 53% of employees believe reporting compliance infractions is the right thing to do. Why do we think that is? I think in particular, I also noticed the other day that it was about the same number 10 years ago. Why are people still hesitant to actually talk about those infractions?

Andrew: I was surprised by those numbers, to be honest, from my first-hand experience of working with lots of young people in FundApps is that I do sense some more stronger morals or things certainly that wouldn't have been acceptable many, many years ago. That's obviously a direction of travel for humanity. Women couldn't vote a hundred years ago and now it's unquestionable. I think there is a direction of travel that certain things are no longer acceptable.

I think society or corporate entities need to enable people to speak up more. I think technology is a great way of doing that, whether that's anonymous whistleblowing systems or having boards or non-executives that are around that will then take such things seriously. Because again, the disincentives if somebody tells their boss and their boss would be disadvantaged by that information, then again, that would probably stop people going forward. I think a lot of the technology recently has enabled people.

I think, for example, the SEC, going back to regulators, recently had the largest whistleblowing fine in history, 270 million or so, I believe. I think more and more people are able to do it. It's been incentivized. Of course, there is the very human thing that people are afraid of consequences. I think that in an economic downturn, people want to keep their jobs. I think that it has to be clear to people that it's okay to speak up. No, as I said, I do think it's happening, the O'Day scandal, et cetera. People are speaking up and saying when behaviour or things aren't right.

Sally: Yes, I agree. Obviously, we've still got that sort of conflict with the whole sort of growth, profit, optimising investments, and like you say, keeping your job. Is that going to impact my career going forwards if I am sort of known in the industry as a whistleblower? Because at the end of the day, financial services is a small industry.

Andrew: Indeed.

Sally: Maybe people have to think a little bit too hard and a little bit too long to actually make those reports.

Andrew: Yes.

Sally: Let's talk now a bit about ESG. Obviously, ESG has had a lot of attention in recent years. It's not new, it's not standardised, and it has a fair few issues. Why is it needed? What are some of the pros and cons, for example?

Andrew: I wish I was an absolute ESG expert. I could be a millionaire by now with all the people with pundits with opinions on it. As you said, it comes from a good place. Good standards are good. Something that sets a standard that everybody can understand is a really good thing to do. Even in the investment management industry, there's really nice examples of that.

For example, UCITS, which is a pan-European framework for investment funds introduced in the '80s, basically every single investment fund sold to the public in Europe has the same basic requirements, which is fantastic. It means investors know what they're getting, they know what the brand stands for, they know the fund is managed well. I think from that background, presuming that good standards work well, et cetera, that's where ESG needs to go. As you said, the main issues with it at the moment, it is not a standard. It is a rough set of measurements of things.

I think the other main issue is trying to measure three different things. The E for environment, S for social, and G for governance. They're three things that don't really tangent to each other. You could have a very well-governed company that is terrible for the environment. You could have a company with amazing societal impact that is a shambles. There's classic examples that Pepsi normally scores very well on ESG scores. Selling sugary water to people is probably not the best thing for the planet. Likewise, British American Tobacco also scores high on ESG scores because they've got a great governance framework and they've got good social policy.

The idea that you can have one single number that tells you how good a company is, is a bit crazy. I do think there needs to be breaking them down into various areas. The other is because of the lack of standards, people have come out of the woodwork measuring, as I counted yesterday, about 30 different ESG rating companies that all have their own version. On one rating, Tesla might be 100. On the other hand, it might be 30. That just really makes the general population unsure. What does it all mean? Then, obviously, people staying away from it.

Of course, that means that, again, the less scrupulous people will maybe choose the ratings agency that gives their preferred company a good rating. They'll say, well, for this stock, we'll choose this rating agency. For this, we'll choose that. It is a bit of a mess at the moment. I do think it's going to improve. It's a classic something that came out of nowhere very quickly. It comes from a good place. I do think with very clear scores and directives on how to measure things, it could be a very good, very nice way of judging if you're investing into a company or into a fund that is not screwing over the planet, shall we say. It's a long way to go. Obviously, things like technology will help it.

Sally: Yes. Actually, what you say there mirrors what some of our other guests on this series have said as well. You can be good at one, terrible at the others, but actually do really, really well. You could be really good at reporting, having the right policies, but the actual environmental impact could be devastating. As you say, with one single number, anyone looking at that one single number can't tell. Do we completely strip it out? It's three scores or whatever, like you say, there's lots of work to be done there. We talked a bit about sort of tech and automation and that can help. When we talk about technology and automation with regards to compliance and ethics, what's the role? How can it help?

Andrew: I think that the one – let's stay away from AI for a second here. We don't have enough time for that. If we presume that technology by definition just is following a strict set of algorithms that are being coded once upon a time or well-documented, it means that you're taking out the subjective. It means that you're taking out any kind of human judgement, which in some areas might be a bad thing. I do think when it comes to finance and investment decisions, having a strict set of objective rationale for making decisions is good so that you can't say, "Well, in this case, I just let that go because my gut felt it's okay." That means that there's also less room for human judgement and error and maybe subjectivity and so on and so forth.

I think that the technology being brought in can do a lot of these things and make the decisions. Of course, at the end of the day, a human can generally overrule the decisions. I think by and large, most decisions being made by technology or most ratings being come up with technology, you give it, say, here's the SG algorithm to score. You don't have somebody there with a clipboard going, "I'll give this company a B+." Technology means that by definition, it comes up with a rational objective score, which again, going back into history where things have gone wrong is generally when a human made a mistake because they were incentivized maybe to not make the right decision.

Sally: Yes. Obviously, technology and automation absolutely have a role to play. As you say, AI aside, because that's a minefield when it comes to people

baking in their own sort of biases. How about things like integrity, honesty, trust, culture? I mean, that's just as important, isn't it? It's that 360 degree view we have to look at.

Andrew: Yes, I think, yes, going back to my point here, technology is written by humans at the end of the day, and it has to be somebody programming the right thing. Volkswagen was a classic case there where somebody used technology to obfuscate the results of the diesel emissions. Technology can be used for bad. I think at the end of the day, it always does, as you said, come back to the human element and that humans are the people that are in the company and have to be making the right decisions. That's generally based on a strong moral compass, a strong set of values, et cetera, that people aren't incentivized to go for the short term, aren't incentivized to screw the customer over, aren't incentivized to hide issues, et cetera, et cetera.

I think for a company to succeed nowadays, those core sets of values need to be there and that you have to have a board and a management team that is there, is looking for the long-term, is looking to make the right decisions and not just the quick and easy decisions or to screw things over.

Sally: Now, I know culture and values is something you hold very dear to your heart, Andrew, and it's something that's big at FundApps. How do you keep that alive? How do you keep that sort of sustained while the company grows? How does that work?

Andrew: Yes, that's a funny one for me, because I must say as a fairly down-to-earth Irishman, I always thought these lofty company values written in stone or steel on the company's entrance were always a bit lofty and a bit of a joke. Especially for those, I think Enron, going back to them, they had their values written in the hallway and they didn't obey any of them. For me, I put them on paper relatively early on. To be honest, it's one of the best things I did, because going back to the word "moral compass", it does give every decision that you make as a company, for one of them, is transparency.

We always, if we're making a decision, what is the more transparent decision? Should we be hiding this information or should we be publicising it or making it open? Then we default to being transparent or things like having courage. Sometimes it's easier to take the easy way out and having courage means that you're going to make the difficult decisions.

I think for us as a company, the five values really means that people do know them, which is all surprising. Even people that join relatively recently know them and take them to heart. I think that as a company means that everybody understands where each other's coming from and why we're doing things. It means that you don't question everything. Why are we making this transparent decision? Because it's our company values. I think, if you look around, companies like Patagonia, et cetera, these poster boys for doing good, they attract the right people and retain the right people because they are there and they feel aligned with the company.

Sally: And going back to ethics, obviously there's no single definition of what good looks like when it comes to ethics. Regulators have clearly set out in different parts of the globe to say, it's not their place, not their role to define what ethics are and what good looks like. Obviously, as we just talked about, company's ethics are typically based around company values. What role for the regulators with ethics and how can we as an industry move things forward?

Andrew: It's a tough one to answer. I think, as you said, regulators that they set not quite the law, but they set the framework for what's right and wrong and everything else is down to judgement. I think though more and more, the regulators are trying to create an ethical culture. There are things around principle-based regulation where if you get into the nitty-gritties of thou shalt not do this, that, this or that, but if you, like as a general principle, a regulator said, for example, the FCA, treat your customer fairly, treat your customer well. I'm not going to tell you what that looks like. I'm not going to tell you what that means, the dos and don'ts, the 10 commandments, but I am going to tell you, we will judge you on are you treating the customer fairly and we will come down on you on a ton of bricks if you're not.

I think more and more the regulators are getting away from trying to prescribe everything and actually then leaving it up to people to judge themselves and of course, people will make mistakes. I think while they will never on an individual basis be able to ensure that every decision is made correctly, I do think this more principle-based approach will mean that more businesses, and certainly the good businesses do well because they can at least justify why they made that decision. Others will, obviously, try and obfuscate why they did certain things a certain way, but in general, it does mean, I think, that the industry is more transparent, and things like technology as well. They make decisions more open, information's more freely available, so it is harder to hide bad decision-making or bad ethics.

Sally: As you say, a good framework, a sort of code of conduct, as it were, and we've seen in the past, there's an element of trust there from the regulators. Do what is right and if you don't, then we will become more prescriptive. It's the opportunity for the industry to push in the right direction.

Andrew: Correct.

Sally: Move forward. Thanks so much for talking to us around all the topic around ethics. What we want to do now, Andrew, is get to know a little more about you on a more personal level, and as you know, this season, our theme is ethics, and on that theme, what would be the most ethical way you would give away $5 million?

Andrew: Yes, one of my favourite topics is philanthropy. Very simply, I would probably go to a website called  . They themselves have done a great job of actually measuring how effective charities are and not just using gut feel, I want to help a donkey in Cornwall, I want to help malaria. They actually have a rank listing of charities and they've actually found out that some charities are 10 times more effective as others, which is a bit shocking, but it's normal.

Some companies are 10 times more profitable than those. They maintain a list of charities that are effective and I would probably look for something that fitted in with my values. Some people want to help children. Some people want to help adults. Some people are into animals, et cetera, so I'd look for something. It would probably have to do with education myself. I think educating the next generation is probably the single best thing we can do. We're ensuring the next generation gets a good education around the world and they go on themselves to be good adults. I think that would be where my five mil would go.

Sally: Excellent, and a quick fire round.

Andrew: Oh, God. What was your first job? I did a work placement in secondary school where I installed toilets in a psychiatric hospital. They actually let me use a pneumatic drill, which is scary in hindsight.

Sally: Unexpected answer, I have to say.

Andrew: Thank you.

Sally: I take it you clearly didn't choose to continue down that path.

Andrew: Yes, it probably put me off plumbing or working in hospitals for the rest of my life, but yes.

Sally: What's your favorite month?

Andrew: September, this month, because everybody and their kids are back to school and I generally go off for a longer holiday and enjoy myself.

Sally: Like it. Favorite word?

Andrew: Banjaxed, which is an Irish word for broken, but just has all kinds of nice meanings about how broken it is.

Sally: Sounds good as well, doesn't it?

Andrew: Yes, banjaxed.

Sally: Yes, good sounding word. Favorite food?

Andrew: With lack of definition, I'm just going to go for Japanese because it is an amazing cuisine and there's so much going on there.

Sally: And least favorite word?

Andrew: Synergy. Synergy or leverage. I'm torn between them. Anything that's corporate mumbo jumbo, trying to distend the truth or sound more intelligent than you are. I hate those words.

Sally: Yes, there's some websites out there where you can actually build bullshit bingo cards. You can pop them all in and you can sit in meetings and see if you can get a full house.

Andrew: Hopefully not at FundApps, but yes.

Sally: Normally, a lot of meetings, it's very easy to get a line.

Andrew: Circle back and reach out and all that, yes.

Sally: Blue sky.

Andrew: Blue sky thinking.

Sally: Okay, it's time for Room 101. For our listeners not familiar with the concept, Room 101 was a BBC series where celebrities, and today that's Andrew, get to throw away their least favorite things, their pet hates, their worst nightmares. What are you proposing to put in Room 101?

Andrew: I had a short list and mosquitoes is up there, useless creatures that kill lots of people, but that's done and dusted. I already said that. Then I went for walking around with your mobile phone in front of your face. That's very close, but I have gone with meetings. I think meetings as something that is so insidious in modern culture that we all have multiple times a day. That I don't know anybody who has a good opinion of them or anybody who's recently come out of a meeting and said, "My God, I'm really glad I had that meeting. I love that meeting." "Hi, honey," when you come home in the evening saying, "I had some really lovely meetings today," I think is something that is so common, but yet so few people like or rate the fact that meetings still exist is beyond me. I try and do as few as possible and keep my communication to written, but yes, you can burn that in hell, please.

Sally: No, I think that's fair enough. For the listeners, this is definitely something that Andrew holds true to his heart and puts all sorts of things in place, telling people to get rid of meetings at their diaries and everything, which I have to say, I really appreciate.

Andrew: [chuckles] Good.

Sally: Thank you for that. What's the best piece of advice you've ever been given? It doesn't have to be about business, it could be personal.

Andrew: I think probably, and I don't, advice is always such a weird word. It's like you're going to somebody to tell them what to do. Stories are things that I've heard when I was younger. I think probably in my young 20s, I met somebody traveling and they said, oh, just feck your ego. Your ego

will cause all kinds of bad decisions and you'll do things for the wrong reasons and you'll carry on through your life not actually accepting who you are." I think, really getting rid of the ego, trying to make decisions on the best reason as possible and not worrying what you look like or what people think of you or what, do I look attractive or this or that? Just get on with your life and not worry about what people's perception or how you perceive yourself and you'll lead a happier life in general.

Sally: Keep it simple. Like it. I'd like to end on B Corp for this particular sort of round. Obviously, FundApps has been a B Corp since 2018 and was one of the first ones in the financial services industry. The whole ethos is around good people, good business, good ethics. a couple of things here, Andrew, what does B Corp mean to you? You and I sort of have also talked about how there's the good side and the bad side to B Corp. I'd like to hear a bit more about that as well.

Andrew: Yes, it was a bit like ESG. It's trying to standardize or trying to give companies a way of proving that they're not screwing over the plan, that they're not bad actors, that they're doing something vaguely worthwhile. I think it's a relatively new thing. I think, as you said, that the idea that a company for me, which resonated very early on, was a company exists for far more than just profits, and that is the old school, the Kenzian way that, yes, the company is there to maximize revenue and profits for its shareholders. That's the only reason a company exists, but that just never gelled with me.

I feel that companies exist for multiple reasons. Going back to maybe the 1900s and 1800s, the Guinness trusts and Cadbury's that companies were there. They were looking after their employees. They were building, they were doing things that weren't just around profits. I think the idea that a company is composed of hundreds or thousands of people, that it should exist for more than the maximizing profit, and it can go on, improve the planet, donate to charity, help people volunteer.

There's so many things companies can do, because let's face it, so many companies have so much money, the Googles and Apples of this world that they could be much more than many governments have. The idea that in this modern age, it's a bit like you're going back to the Medici's, et cetera, that the rich should be looking after the world and not just putting it in their bank vaults and swimming in gold to go a little bit far, but the idea that companies should be donating, they should be helping out because there are so many of them nowadays. That for me was what resonated and what made me want to become a B Corp from early on. It does work.

I think you see the people that join FundApps, they resonate with that. Some don't understand this, but after a while it becomes something that isn't-- after a hard day's work where maybe the company was profitable or sold a deal, but you also feel like you did more than that, that the company that you're working for was giving back and helping the world be a better place and not just, as I said, raking in the cash.

Sally: Really good chat with you today, Andrew. Just before we go, is there anything else you'd like to share with our listeners that maybe we haven't covered today?

Andrew: I think the one that we-- between B Corp and ESG and investment industry is the big question of our time is how do we carry on as a society growing? Can we keep on growing? Really reanalyzing what's important in life and going back to, consumption, mindless consumption, endless consumption cannot go on forever

I think people really, one of my favorite sayings is that every dollar you choose to spend is a vote for the world that you want to live in. Really people should be thinking about every time they buy a takeaway coffee, every time that they buy something, do you really need to do that? Yes, the economy needs you, but at the end of the day, the planet's much more important.

We all make a difference. I think that's the other thing. A lot of people are expecting the government to make decisions for them or to help out, but every small change starts with an individual making decision. As I said, the takeaway coffee cups, a classic one, or the amount of people I see walking around East London with a takeaway coffee cup, they think they're not a problem, but multiply that across five billion people, multiply that across every single day of the year and this is where things have gone wrong and we need to change radically.

Sally: Obviously, September being your favourite month, we're in secondhand September as well.

Andrew: Indeed.

Sally: As you say, many different ways to do it, lots of small things add up to really big things.

Andrew: Exactly.

Sally: Even if it's a really small thing, just do it.

Andrew: Just do it.

Sally: Really appreciate your time, Andrew. Obviously, we will definitely have you back on again for another season.

Andrew: Excellent.

Sally: We might even allow you to be a bit more controversial next time as well.

Andrew: I was told not to be this time, but definitely next time.

Sally: Excellent. We look forward to that one, then.

 Andrew: Thanks very much, Sally.