Travelers' Tom Jones: Militant On Investments
On his second day on the job, Thomas W. Jones seems right at home in his plush office at the Travelers Corp.--a long way from his role as a militant student leader at Cornell University in 1969. His office is still unfurnished, but it is prime real estate, with a corner location and panoramic view of the New York harbor--as befits the chief executive of Smith Barney Asset Management, a new division of parent Travelers.
Jones, a dynamic, articulate workaholic, has his work cut out for him. While Smith Barney Asset Management has $120 billion in assets under management in various in-house money market and mutual funds, it is not a top fund manager. That's because it offers only a limited array of stock funds. And the funds' overall performance has been modest: only 7 of the 94 Smith Barney funds rated by Morningstar earned the top Morningstar Inc. ranking of five stars. "It is incumbent upon us to have four- to five-star funds in most fund categories. That's not the case," says Jones.
AIMING HIGH. The former president of giant teachers' pension fund TIAA-CREF aims to change that. Jones believes he can import TIAA-CREF's risk- and investment- management techniques to beef up Smith Barney's returns. Although he has no experience as a money manager, he has overseen since 1989 the launch of four new TIAA-CREF funds that were all rated either four or five stars by Morningstar. He is reviewing Smith Barney's mutual-fund business and writing a three-year plan, which he will present to the board by yearend. Jones intends to rely on current staff as well as hire "key players" and sell more funds through other Travelers units, such as Primerica, which has 28,000 insurance agents licensed to sell mutual funds. "At the end of three years, we will have emerged as a leading asset-management complex" on both the retail and institutional side, he says.
Jones is not a man to bet against. Starting as a consultant, he then joined accountants Arthur Young & Co. The firm put him through night school at Boston University, where he earned an MBA. He also earned a CPA. In 1982, he signed on with John Hancock Mutual Life Insurance Co., and by 1989 had worked his way up to treasurer. Stephen L. Brown, Hancock's chief executive, credits Jones for putting in place cost- tracking and strategic-planning systems. "He really modernized our corporate reporting area," says Brown.
In 1989, Jones left to become chief financial officer at TIAA-CREF, which has $200 billion of college and university professors' pension money under management. At the time, the private, nonprofit organization had huge stakes in troubled real estate and junk-bond markets. Jones went to the rating agencies, which had never rated TIAA-CREF before. He managed to secure a credit rating of AAA by explaining why TIAA-CREF's portfolio wasn't as risky as it looked. In 1993, he became president.
Jones has always been a quick study. His father was a Presbyterian minister and a nuclear physicist who designed missiles for the Defense Dept. Jones grew up in Queens, New York, and entered high school at 12, having skipped fourth and eighth grades. He went to Cornell University at 16, where he was elected president of his freshman class.
In his senior year, Jones earned nationwide notoriety. In April, 1969, he was a leader of an armed takeover of Cornell's Willard Straight Hall to protest the university's disciplining black students who had demonstrated for a black studies program. Jones appeared in a famous photo clenching a rifle, fist raised. Later, addressing demonstrators, he declared: "In the past, it has been the black people who have done all the dying. Now the time has come when the pigs are going to die, too...Cornell has until 9 o'clock to live." In a controversial move, the university capitulated, which led to its president stepping down and some faculty leaving.
How does the pinstriped Jones feel about the incident? Of those tumultuous times, he says today: "I'm absolutely proud that we stood up for ourselves." He admits, though, that "a lot of lives got wrecked." Cornell later embraced Jones, making him a trustee in 1993. And Jones even owes Cornell his new job. He met Travelers Chief Executive Sanford I. Weill when both served as trustees of Cornell Medical College. At Travelers, Jones can expect to earn far more than the $1.3 million he made in 1996 at his old job. Not bad for, as one friend calls him, a "preacher's kid."