Brian joined JM Finn in 2007; he has been a longstanding contributor to Prospects magazine and JM Finn’s market commentaries, as well as many other publications and media outlets. Prior to his tenure at JM Finn, he worked for a variety of well-respected city firms, spending his career variously between working as an investment manager looking after private clients, and an investment communications specialist.
It was in mid-July in 1963 that, armed with seven 'O' Levels and two 'A' Levels, I alighted from the Central Line tube at Bank station to start my first post-school job with stockbrokers Grieveson Grant. I had not decided that the stock market was where I wanted to start my career. This firm was one of three that offered me a job as I left school, the other two being a shipping company and the Totaliser Board. Grieveson simply offered the highest starting salary.
Such is the degree of chance that surrounds those decisions made as you start out on life’s working journey. I have never underestimated the amount of luck that was part of this important decision, made purely on economic grounds. And my luck continued. Having started as a back-office clerk, marking punch cards for the firm’s computer (Grieveson Grant was very progressive as computers were a rare commodity in those days), I was given the opportunity to move to the floor of the Stock Exchange as an unauthorised clerk, or 'Bluebutton'.
The Stock Exchange floor was being demolished as I spent my last days in the Exchange, to make way for a more modern building.
We were termed unauthorised as we were not authorised to deal in stocks and shares on behalf of our firm. And we were known as 'Bluebuttons' because that was the colour of the badge we wore carrying the name of the firm we represented. Then, dealing took place face to face. Communications were slow and news often took days to percolate down to the floor of the exchange. And regulation was relatively light, with the Stock Exchange itself taking primary responsibility for policing its members, much on the basis of knowing where problems might arise.
Contrast how we went about things then with the way in which dealing in stocks and shares takes place today. Back in 1966, when I was asked to return to the office to take up a job talking to clients, I said I really didn’t want to go. I liked the camaraderie of the floor of the Stock Exchange, but the senior dealer in our firm told me in no uncertain terms that the future did not lie on the floor of the market. So I went, initially to support those brokers dealing with institutional clients – pension funds, insurance companies and the like – and then to deal with private clients, which remained my role in some form or another for the rest of my career.
How right that dealer was. The Stock Exchange floor was being demolished as I spent my last days in the Exchange, to make way for a more modern building. This didn’t last too long. Face-to-face trading survived a few more years, but dealing on the telephone was becoming commonplace and soon trades were being carried out automatically – computer to computer. Today by far the bulk of stock exchange transactions are carried out in this way.
Back in the middle of the 1960s, as a junior investment manager, the options for investment on behalf of my clients were relatively limited. The Exchange Control Act of 1947 (ECA 47) restricted the ability to invest outside of the United Kingdom. And the use of Open Ended Investment Companies (OEICs), then known as unit trusts, was comparatively rare. Today OEICs, along with investment trusts, are quite likely to play a significant role in portfolio construction for private investors, while the choice of investments is positively global, ECA 47 having been abolished by the Thatcher government.
In 1994 I wrote a book – The Second Financial Services Revolution. The first had taken place some eight years previously: known as “The Big Bang”, it transformed the City out of all recognition, ending fixed commissions and eliminating the divide between brokers and jobbers (known as single capacity). It also opened the door for other financial institutions, both domestic and foreign, to acquire City firms that had until just a few years before operated as partnerships, with the partners carrying unlimited liability.
Embracing change is important for investment managers and their clients.
The revolution that I wished to bring to everybody’s attention was the way in which technological advancement was changing the face of investment just as dramatically as those events of 1986. In carrying out transactions, monitoring portfolio performance, carrying out investment research and even determining which shares to buy, computers were playing an increasing role. At the end of this book, I wrote a rather self-indulgent chapter in which I posited how a private investor might be constructing a personal portfolio fifty years in the future, based on the opportunities thrown up by technology. We are not yet thirty years since this was written, but already many of the developments I thought might happen have come to pass.
Don’t get me wrong. I’m not holding myself out as a soothsayer. I missed out on some aspects of investing and made mistakes in other areas. But the overall message was on the button. Change is inevitable and will continue. Embracing change is important for investment managers and their clients. One of my favourite quotes comes from the eminent economist, John Kenneth Galbraith. He said: "There are two kinds of forecasters - those who don't know, and those who know they don't know." I’ll make one forecast with confidence: change will continue.
Illustration by Adi Kuznicki