Jewish Journal

Insights for investors from one who knows firsthand

by Pierce Courchaine

Posted on Jan. 18, 2012 at 5:06 pm

Rebecca Rothstein

Rebecca Rothstein

Rebecca Rothstein, a managing director at Morgan Stanley Smith Barney in Beverly Hills, focuses on helping high net worth and ultra-high net worth investors with estate, tax and financial planning. But she hasn’t always been a Barron’s top 100 financial advisor. A high-school dropout who went on to get her GED and an associate’s degree in design and merchandising, Rothstein started out as a buyer for the Robinson’s department store chain but left the job because it required too much time on the road away from her four young sons. At her husband’s suggestion, Rothstein switched careers and became a broker for a small L.A. firm in 1987, one month before the market crashed. From there the Hidden Hills resident moved on to Bear Stearns and Deutsche Bank before joining Smith Barney in 1999. During her tenure with Smith Barney, she has become a member of the Investment Management Consultants Association and is a member of its Directors Council, which features the top 5 percent of the firm’s financial consultants. She manages $2.4 billion in assets for clients whose typical net worth is $10 million. Barron’s has her at No. 21 on its 2011 list of the Top 100 Financial Advisors and No. 2 on the list of Top 100 Female Financial Advisors.

Jewish Journal: I’m sure it’s an honor every time you’re named to Barron’s top 100 advisors. How does it feel after eight years of being on this list?
Rebecca Rothstein: It’s shocking to me that we make the cut every year. I’ve always been No. 1 or No. 2 [in the Top 100 Female Financial Advisors] and that’s even more stunning to me because I’m a high-school dropout. I don’t take that lightly. There are certainly people smarter on the list than me. I have a great team. I give most of the credit to my team.

JJ: Are you disappointed that you weren’t No. 1?
RR: I’d be lying if I said anything but ‘of course.’ The thing that I measure myself on and measure my staff on is: Every year we publish our numbers as dictated by a number of things, like number of households and things like that. But one of the things they tell you is the number of clients gained or lost in that year. My client retention is about 98 percent, which is about 20 percent higher than the rest of the industry. So that’s how I measure myself.

JJ: Are there any challenges unique to being a woman in this business?
RR: My old answer would have been yes, it’s challenging to get credibility. The other thing that was really hard was to convince a guy that I was as good as another guy at what I did. Very often, at the beginning, I would only get a small piece of a guy’s account and then I had to earn the rest. Men don’t have the same problem. Now I realize that that’s not really true. You’re having a tougher time because that’s the story you’re telling yourself. As time has evolved, I’ve become a lot more comfortable in the fact that when I go see a client, I expect to win. And I expect to win regardless of whether I am a man or a woman.

JJ: Are there any rookie mistakes that you felt like you made when you first started investing? 
RR: There wasn’t a mistake I didn’t make. You make them all. And then it’s only over time that you understand: ‘You know, I would have handled these situations a little differently.’ ... In the beginning, they train you in these places, but they don’t train you in the minutiae of the business, and that only comes with time. That only comes with getting your head punched in. That only comes with making a mistake, looking at it, understanding why it was a mistake and not doing it again.

JJ: What are the public’s thoughts about investing in this economy?
RR: I think that people are angry, very distrusting. I personally had to live with two years of people going: ‘You’re responsible for this!’ They were people I’ve known for many, many years, and I would say, ‘Really? Me personally?’ And they would say, ‘No, your industry.’ And, unfortunately, I can’t really disagree with them, because there was a lot of really bad behavior that occurred in this business: Madoff. The guy in Texas. These were people who behaved badly. But we [Morgan Stanley Smith Barney] didn’t behave badly.

JJ: What’s your advice for investing today as opposed to a couple of years ago?
RR: We’ve changed our investing mandate to be much more cautious. So, for example, in days gone by, if a bond was triple-A rated in California, we never thought about it. We’d buy it, and that was that. Now when we buy a bond for somebody, we look at the underlying rating for it and do they have enough money to service the debt. This is a much more granular way of looking at it. Because of the granularity, we’ve become smarter.

JJ: What are some of the things you do to prepare people for retirement?
RR: It depends really on what the client’s life story is, how many kids they have, where they are when I met them. So, if they’re 60 and they want to retire at 65 and they haven’t saved any money, it’s a little tougher to get them to that goal. It all comes back to spending. If they are making half a million dollars a year and they are saving 20 percent of that, 20 percent is sort of the goal post to me. If you save 20 percent of your money and you pay off your house, you should be able to get to your goal.

JJ: How do you advise clients who want to donate money to charities?
RR: For my clients who want to make donations and contributions, we are very helpful to them in how they set up the charitable giving account. More often than not, we use what is called a Donor Advised Fund (DAF). People open up these accounts and put in money and then they give away the money. So when they give away money to charities, more often than not, we look [the charity] up. These are things that we used to never even do. If a charity doesn’t spend at least 93 cents of every dollar directly to the benefit of the charity, we won’t allow our clients to give them money or we’ll strongly suggest to them [to not give the money].

JJ: Where are you headed? What’s in your future?
RR: The biggest problem that my industry has is people like me—I’m in my mid-50s, I have a wonderful client base. If I retired, what would they do? For me personally, I’m trying to build a pyramid that can pass [clients] to my other partners, where they can continue to be the trusted advisor to those families. If you don’t stay involved and don’t do things in your life, what are you going to do? I don’t golf. I want to have my intellect challenged, and I want to learn new things. But I definitely want to have more free time than I’ve had in the last 30 years. l

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