David Harrison is a quietly spoken man with a ready laugh and a warm handshake. His manner it courteous, even self-effacing and one would not guess he built and sold a multi-million pound company and is now heading up a second.
He is managing director of True Potential, a Newcastle-based financial services group, which employs 126 people, has an annual turnover of £220m and last year made a profit of £3.6m. Part of the group, True Potential Adviser Services, claims to provide technology and business support services to more than 22% of the UK’s IFA, independent financial adviser market.
His previous company Positive Solutions, in which he was a major shareholder, was sold to multi-national insurer AEGON in 2002 for £130m.
Harrison was born in 1950 and was brought up in Annfield Plain, County Durham. His father was a butcher in neighbouring Stanley and his mother worked with him in the business.
He went to Consett Grammar School and when he left, he joined Consett Iron Company as an apprentice, the first of a series of jobs in which he never settled.
He says: “I did a variety of jobs but I just didn’t like any of those jobs, I just did lots and lots of jobs. I never stuck it at school, I was not an easy scholar. I’ve always worked but I moved from job to job.”
He began in engineering and then moved to working on building sites throughout his 20s throughout the North East and beyond – “Anywhere there was work”.
He and his wife Sylvia, whom he married in 1980 built up a business employing more than 60 building workers. That was his working life until he was 33 when he broke his leg playing football. It was a bad break and with his whole leg in plaster for six months working on building sites was not practicable.
A friend convinced him to go into sales and he started selling life assurance for Hambro Life. He did the necessary training courses, passed his exams and found that he had got into a job he liked.
“I took to it well, I enjoyed it,” he says. “I enjoyed dealing with people. I think I’ve just been very lucky because financial services was just beginning to take root then. By chance I ended up in what was a growth industry. It’s much easier to do well in an emerging industry than in maturing industries.
He was with Hambro, which became Allied Dunbar, until 1996, becoming northern area sales director working from the company’s head office in Swindon. He had 2,300 people reporting to him.
During this time he did an MBA at the Open University.
He explains: “The whole area of management and leadership was something I was interested in. I had feelings of great trepidation about it because I had never bothered sticking to it at school but felt that I wanted to learn and I found it relatively easy to do. The subject matter was difficult and I found the examinations difficult but passable. Having paid for it myself I was motivated to do it and take it seriously.”
By 1996, as executive sales director, he began to have doubts about the way Allied Dunbar was managed and he did some work with the management consultants McKinsey and concluded that change was needed.
“It was too costly, it was too costly for the consumer, there was too much administration, too many people working in back offices in an industry where there is nothing physical, the money isn’t physical, it’s just a series of electronic messages. To have huge numbers of staff and management put the cost of the basic product up unnecessarily.
“My proposal would have resulted in lots of people in administration and middle management becoming redundant, so I wasn’t that popular. However, at that time Allied Dunbar was not for changing its model.”
In 1996 he left and took a break, doing some travelling in the US. He toyed with the idea of taking a job in California but by then he and Sylvia had four children aged between seven and 14 and so decided against it.
He returned to the UK and with a business partner set up Positive Solutions, an IFA company. That was built up to become the largest IFA firm in the UK. They sold that to Aegon in 1992 for £136m. The proceeds of the sale were shared by him as a major shareholder and 800 IFAs and staff partners. There was an earn-out period so he stayed on until 2006.
“The plan was to go to live in Spain but Aegon asked me to stay on for a period and help run it so I missed that opportunity to go to Spain and get out of financial services,” he says.
After leaving Positive Solutions, he gathered another team around him, some of whom had worked at Positive Solutions and formed True Potential.
“The thing that I felt really needed to be done in the UK which had been interrupted by the sale of Positive Solutions,” Harrison says. “If we hadn’t sold it, it would now be a different company and would have incorporated our current proposition.”
Why bother? Why not take the money and take things easy?
“There’s not an easy answer. It would be great to think that there’s a lot of deep thought goes into these decisions but in my case there wasn’t. We had a notion that we would go and live abroad but I don’t think that was something either myself or my wife were ready for. We still had a young family and lots of things to do here.
“I set up True Potential because we had a team of people who wanted to do that and I felt obliged.”
The company was formed in 2007 and started doing business in 2008. It was operating in a very different market to that which Harrison joined back in the early 1980s and one which is still changing but he doesn’t believe it has changed enough.
He says: “The UK financial services industry has just not moved on, it has not kept pace. It was a new industry that brought in new concepts in the 1970s and 1980s but from the 1990s it stood still. You then have the recession, which was not the fault of financial services, it was the fault of the government, the fault of the banks and of consumers worldwide, but mostly in the UK and USA. That has repercussions, instead of being an industry which is growing, people have stopped saving.”
He argues that technology and particularly the internet will have huge repercussions for financial services and the implications have only really been felt over the last two or three years. The whole process is now accelerating with the advent of wi-fi, iphones and ipads.
“We had a view 12 years ago that people would be watching Channel 4, see the news, see the stock market had gone up and be able to switch the screen in half and see their own personal portfolio. This is what we have been trying to do, to make sure people have information about themselves in a way that they understand it.”
That, he argues, is against the background of an industry that overcomplicates tings and makes them difficult to understand.
He smiles. “The cynic might say they do it on purpose. Because if you make things complicated you need a whole batch of professionals to translate it for you.”
True Potential is made up of a group holding company with three LLPs in the group: True Potential Investments; True Potential Adviser Services; and True Potential Wealth Management.
True Potential Investments has developed an electronic platform which has a number of investment vehicles and funds which are risk-rated. It has an online tool allowing the investor to consolidate all their investments and allow their financial adviser to build and manage their portfolio through one system. Dealing in mass volume it can make investments at wholesale prices.
“That’s the heart of what we do, the rest of it is just helping people find the platform and understand it.”
True Potential Adviser Services provides technology and compliance services to IFAs. True Potential Wealth Management is an IFA firm with about 240 partners.
Harrison’s belief is that Joe and Josephine Public are much shrewder investors than they are generally thought to be. He says: “People are much brighter than the government or anybody else gives them credit for.
“A generation of people have been put off saving because they have been encouraged into debt or simply to buy property as a way of saving. By now everybody can see it isn’t as simple as that.
“One of the reasons is the complexity with which things such as pensions have been served up. I’m a private investor myself and I actually think that investing is very straightforward.
“People just need to put their money away over the long term in something that’s going to beat inflation and pay as little tax on that saving as possible.”
He believes government could help here.
“It has never made sense to me that the government has this huge problem with the savings gap. We read these stories about people not having enough in retirement, yet they continue to tax savings and they don’t tax borrowing. That’s upside-down. They also fiddle about with pensions every year and that puts people off and there’s no need for that.”
So what is his ambition and what’s the true potential of True Potential?
“We genuinely just want to make it something which is hugely useful. I think it’s a mistake to try to plan things in great detail because you don’t know what the future holds. It would be easy to say we may wish to float the company or sell it at some point. I think the minute you say that you begin to have problems doing so. Our ambition is to make it as profitable as possible for everybody concerned and see what happens.”
No imminent retirement to Spain then?
“We have a good outfit here and I would like to look back and be able to say I had a hand in that. Therefore I’ll stay around until somebody better than me comes along.” He laughs. “I hate false modesty.”
What car do you drive?
Lucky to have two currently, Aston Martin DBS, Audi RS6
What’s your favourite restaurant?
Ponteland Tandoori, although I hardly ever get there now.
Who or what makes you laugh?
My wife. Most things make me laugh.
What’s your favourite book?
A Tale of Two Cities, Charles Dickens.
What was the last album you bought?
Tomahawk Technique, by Sean Paul.
What’s your ideal job, other than the one you’ve got?
I love my job, if I wasn’t doing this then something to do with physical activity.
If you had a talking parrot, what’s the first thing you would teach it to say?
What’s your greatest fear?
I genuinely don’t have one.
What’s the best piece of business advice you have ever received?
Sell ideas, they are repeatable at no extra cost.
And the worst?
Anything to do with minutiae and risk management – you can’t avoid risk.
What’s your poison?
Depends where I am, gin and tonic or Mexican beer here, rum in the Caribbean, sherry in Spain.
What newspapers do you read, other than The Journal?
The FT and The Economist
How much was your first pay packet and what was it for?
£6 as an apprentice at Consett Iron Company.
How do you keep fit?
Train hard, with and without a personal trainer three to four times a week.
What’s your most irritating habit?
What’s your biggest extravagance?
Which historical or fictional character do you most identify with or admire?
Probably Winston Churchill, and I like most James Bond movies.
Which four famous people would you most like to dine with?
Hannibal Lecter, Hugo Chavez, Maggie Thatcher, Will Rogers.
How would you like to be remembered?
For being generous.