Malcolm Brown talks to a man who has had the private investor's interests at heart.
1953
Born in Cheltenham. Father a miner, mother a nurse. 'I'm very working class.'
Educated in Cheltenham and at Swansea University. BSc in Psychology.
1976-78
Joins Alusuisse (Star Aluminium) as sales administrator. Promoted over two years to run all sales order systems, client accounts, production planning and production control.
1978-79
Plessey Communications.
1979-81
Nexos Office Systems.
1982-85
British Telecom. Creates new division which is later expanded to handle all telephone enquiries for BT privatisation and subsequent government privatisations.
1985
Joins Unipart to set up cellular communications company. It was a mistake. He got bored and resigned.
1985-86
Resigns and does consultancy work. Approaches BT and Albert E Sharp with plans to create telephone based share dealing service for private investor.
1987
ShareLink established.
David Jones, chief executive of ShareLink, Europe's largest execution-only share dealing service, has a small identity crisis on his hands.
His three children (two boys and a girl, all under four) know who he is, but seem rather uncertain as to precisely what he is. He is, of course, their dad, but Jones is pretty sure that they think he earns his living as a building labourer or a carpenter.
The confusion is understandable. They see him for only 10 minutes on weekdays, just before he sets off at 6.30am. for a 14 or 15-hour working day in London or Birmingham. He is home all weekend but since the family moved into a new house in the Cotswold village of Teddington at the start of the year, most of his leisure time has been spent shifting muck and humping paving stones. He is landscaping the garden and building all the walls, fences and patios himself. He has just finished making a 25 by 15-ft fishpond and thinks nothing of starting at 7.30 in the morning (which considering his weekday schedule, must amount to a 'lie-in') and working through until dark.
He finds it all rather therapeutic: 'It's a very good form of exercise. I don't have much time to do sport or anything. Move 20 tonnes of gravel or build three brick walls and that's better than 20 games of squash.' It is also a game the whole family can play: 'They've each got their own little plastic wheelbarrow and shovel. They're very skilful at using shovels.'
Jones's own (non-manual) skills are focused, for the moment, on building up ShareLink, which is basically a stockbroking firm minus research and advisory functions. It concentrates, says Jones, on the 'boring' bits of stockbroking, the mechanics of buying and selling shares. Traditional stockbrokers, he says, are really selling their advice but to do so need to package it in a transaction. ShareLink, which is aimed at the little man - the private rather than the corporate investor - is selling the transaction pure and simple. Because it doesn't have the expensive advice side to worry about it can do so at a low cost. The average cost of dealing through ShareLink around £20, about half the cost of a traditional ('with advice') stockbroker.
The formula seems to work. Since 1987, ShareLink has built up a private client list of 200,000, many of whom have come to it through word of mouth recommendation operating out of offices in Birmingham (because most of the business is transacted by telephone or Prestel, it doesn't need prestigious premises in London) it now accounts for about one in four of all daily private client transactions handled through the Stock Exchange. It also offers tailor-made services to the customers of more than 500 companies, including Allied Dunbar, Abbey National and the readers of the Daily Telegraph.
ShareLink is not a traditional stockbroking firm and David Jones is certainly not from traditional stockbroking stock. He was born in Cheltenham but was not part of the upper middle class milieu (retired army officers, horsey folks and wealthy farmers) which that name usually conjures up. In fact his background is resolutely working- class. His father was a miner who, after war service in the marines, drove lorries before progressing into junior management in a light engineering firm. His mother was a nurse.
His first school was 'extremely rough'. It had just been rebuilt and the emphasis, he says, was 'more on discipline and maintaining the building than on education'. The pupils' aspirations were normally to be factory workers or farmers.
'That was it. For many years I was one of only three people that ever went to university. Even getting O-levels was quite an accomplishment. In fact the time of my O-levels was the first time they'd done them.'
He transferred to a neighbouring school to do A-levels, then went to Swansea University to read psychology.' I was thoroughly lazy. I did my degree, almost the whole syllabus, in six weeks at the end.'
He was briefly at Birkbeck College in London doing a PhD, but abandoned his studies pretty rapidly after talking to some students a couple of years ahead of him. They were working in the then fashionable area of ergonomics but the pinnacle of their ambitions seemed to be, in the words of one of them, 'to design ladders for Black and Decker'. Jones has always liked being practical, but not that practical.
He quit academia and went to work, first in the sales office of a Welsh-based aluminium company, Alusuisse, then in the central marketing department of Plessey Communications. While still at Plessey he found himself being offered a job by a fellow passenger on a flight back from Germany. The passenger, Muir Moffatt, had just been asked by the then Labour government to set up Nexos Office Systems, the sister organisation to the government-funded microchip maker, Inmos. Jones became project co-ordinator for a joint-venture with British Telecom, selling computer-controlled answering services. Nexos was wound up but BT still liked the idea...and Jones. He stayed with BT for four years, ultimately setting up a new division which handled all the telephone enquiries for the BT privatisation and subsequent government privatisations.
In 1985 Muir Moffatt appeared to tempt him again, this time wooing him away from British Telecom to launch a cellular phone company for Unipart. It was a mistake. Jones got bored and resigned. 'I soon discovered that straight cellular retailing was intellectually unstimulating. It was very much "box shifting". He spent the next year living on his wits and doing consultancy work. It was then that he hit on the winning idea which led to ShareLink and his re- involvement with BT, which owns 64% of the company.
The sales pitch was really very simple, says Jones. BT was earning about 60 pence a phone call in those days, yet in the space of that call a stockbroker talking to his client would probably be making £10.
'I told them: "You're providing basic services to someone who rings someone else. You're earning 30p, 60p. Why don't you actually be the provider of the service and multiply it by 10 or 20 times?"'
Jones believes that his success is based on the failure of traditional stockbrokers to provide for (or even care about) the private client.
The institutions dominate the stock market. The small investor is seen as a nuisance.
'The ordinary man is afraid to approach a stockbroker,' he says. 'Most stockbrokers now will turn you away unless you've got £50,000 or £100,000.'
That was bad for the small man who wanted to become part of the share-owning democracy that the politicians have all been telling him about and it was also bad for British industry which paid more than it needs for investment capital.
'If you offer £6,000 to a traditional PEP manager, who will manage your funds, he will take away from you £600 for the privilege of doing his job. That's 10% of your money that never gets invested with British industries...10%, it's a phenomenal amount of money. Now direct investment, by contrast, doesn't cost 10%, it costs about 1 or 2%. So the difference between 1 or 2% and 10% is the amount of money that's getting siphoned off, not invested with UK industries. The numbers are enormous. We're talking about billions of pounds.'
The Government's privatisation programme had gone some way to kindle the interest of the man in the street in stocks and shares but it hadn't gone far enough. Privatisation, by itself, was only the start: 'The problem is that the mechanics and the motivation of buying those first shares in privatised industries are not the same mechanics or motivation of then coming back into the ordinary stock market and doing it again and again and again.'
The Government has done a splendid 'first lap', he says, but 'the traditional broking industry and the Stock Exchange have just dropped the baton. There's total disinterest, a desire to concentrate on global trading, institutional business, a belief that the private investor is a nuisance, unnecessary.'
The Government, which seems quite as frustrated as Jones at that disinterest, is trying to shake the industry up. As part of the £5 billion second tranche of the BT flotation in a few weeks investors will be offered preferential treatment if they deal through one of eight government-approved share shops, effectively high street shops in which shares can be bought and sold across the counter with minimum fuss. Investors dealing in BT shares through the share shops will get coupons allowing them to buy and sell shares in BT and other shares for three months at special commission rates.
ShareLink will be one of the eight under its own name and will also be processing the transactions of the Abbey National and the Bank of Scotland, so one way or another the BT float will be a testing time for it. Ultimately, Jones believes, there will have to be a parallel, specially designed financial services industry specifically for the private investor. The present system simply wouldn't do: 'You can't paint the wall with a lawnmower. It's not the tool that's designed to do that particular job. If you want to do institutional, global business then our industry's well structured and we're leading the world, even at the moment. But in achieving that success we've actually not realised that the rest of the business isn't being done very well.'
The evidence that the public is interested in becoming part of a share owning democracy is there in ShareLink's own records. The private investor is a lot more sophisticated and intelligent than he is given credit for, says Jones. ShareLink is not based on 'Sids', the name borrowed from the character in the British Gas privatisation advertisements which brokers now use dismissively to describe punters who simply buy privatisation shares, wait for the appropriate price then sell, never to be heard from again.
'We have got a number of Sids - tens of thousands of them are just getting rid of their privatised shares - but we've got tens and tens of thousands of very serious private investors who take control of their own destiny, who use us as a gateway to the central market and who do very well.'
As to Jones's own destiny, that is likely to remain with ShareLink of which he owns 4% (the other shareholder, besides BT, is the Birmingham-based independent agency broker Albert E Sharp with 32% of the equity.) Jones has a seven-year plan which eventually could see ShareLink becoming a market-maker and will certainly see it becoming much bigger. That should make him a wealthy man but it is certainly not money per se which drives him. It is something much more basic: an overwhelming desire, a driving need, to make his family secure.
A bit of cheap psychologising might put his motivations down to his upbringing, but that would be wrong - he came from modest but not poor beginnings. One can certainly see just the glimmer of insecurity when he talks about people he has seen made redundant and who have lost their houses, but then, many people have seen that happen around them.
No, what adds a special piquancy to David Jones's drive for security, what makes him do a 15-hour day and a 13-month year, if necessary, is the simple fact that he came late to fatherhood. He and his wife Carolyn were childless for the first 12 years of their marriage and had pretty well given up hope, he says, when the first of their brood arrived, then the second, then the third.
He is aware, of course, of the danger that hard work could turn into an obsession but says he won't become a workaholic.
'No. I think if I were I'd work at weekends and I wouldn't be able to walk out of the office when my wife needs me. If the day comes when I can't stop working at weekends and I can't walk out of the office then I will have become addicted, but I can't see that happening.'
Neither can Carolyn: 'The children are still too young to miss out. When they're able to play football with him and go swimming with him is the time he'll need to spend at home and he is planning to do 50.'
Possibly even more than they think. There is a lot still to be done, he says. 'I have to work hard. I'll then sit down and review what I've done in seven years' time. I want to create an option for myself in seven years that if I want to retire, I'll retire.'
