Backed by over 20 years of experience, Stacy works with her clients to understand their goals, define risk, manage liabilities, and proactively plan for their overall financial future. Stacy’s focus on a client-centric wealth management process has spanned her entire career.
Octavius Reid is a Senior Vice President and Wealth Advisor with Morgan Stanley. Over the past 30 years, he has developed an area of focus, working with clients in the sports and entertainment industry. As a Morgan Stanley Global Sports and Entertainment Director, provides financial management services and helps guide many professionals through what can be an incredibly difficult space.
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SPEAKERS
Stacy Robinson
Financial Advisor & PIM Portfolio Manager
Wells Fargo
Octavius Reid
Senior Vice President
Morgan Stanley
EPISODE TRANSCRIPT
John Darsie: (00:07)
Hello everyone, and welcome back to SALT Talks. My name is John Darsie. I'm the managing director of SALT, which is a global thought leadership forum and networking platform at the intersection of finance, technology, and public policy. SALT Talks are a digital interview series with leading investors, creators, and thinkers. Our goal on these SALT Talks is the same as our goal at our SALT Conference Series, which is to provide a window into the mind of subject matter experts, as well as provide a platform for what we think are big ideas that are shaping the future. We're very excited today to bring you a talk focused on wealth management with two fantastic guests. Our first guest today is Stacy Robinson. Stacy has been in the investment industry for over 20 years. She joined Wells Fargo Advisors as a financial advisor and PIM portfolio manager in September of 2016. Prior to Wells Fargo Advisors, Stacy was with Morgan Stanley for 17 years.
John Darsie: (01:04)
Stacy's practice is comprised of corporate executives, entrepreneurs, closely held business owners, retirees, athletes, and entertainers. She and her team grow the practice through selective referrals. Her caring, commitment, and attention to detail creates mutually fulfilling, multigenerational relationships. Stacy graduated from Rutgers University with a Bachelor of Arts degree in Economics, and a Wealth Management Certified Professional. She continues to proactively pursue education and knowledge to strategically analyze the evolving landscape to address her clients' interests. We're glad to say that Stacy is a loyal watcher of SALT Talks. We're very grateful for her viewership here on these talks. Octavius Ted Reid the third is a senior vice president and wealth advisor with Morgan Stanley. Over the past 30 years, he has developed an area of focus working with clients in the sports and entertainment industry. As a Morgan Stanley global sports and entertainment director, he provides financial management services and helps guide many professionals through what can be an incredibly difficult space as they start to accumulate significant amounts of wealth.
John Darsie: (02:14)
He serves on the board of the Rhythm and Blues foundation and is a lifetime active member of the Omega Sci-Fi Fraternity. In 2012, he was inducted into the Black Entertainment and Sports Lawyers Association's Hall of Fame for his impact on the organization. He's on the Board of Governors for the National Academy of Recording Arts and Sciences as well. Hosting today's talk is someone with no rhythm or blues, Anthony Scaramucci. He is the founder and managing partner of SkyBridge Capital, a global alternative investment firm. He is also the chairman of SALT. With that, I'll turn it over to Anthony for the interview.
Anthony Scaramucci: (02:49)
You are literally the whitest person that I've ever met in my life and you're telling me that I have no rhythm.
John Darsie: (02:54)
Yeah. I've still got better moves than you, Anthony.
Anthony Scaramucci: (02:55)
You've got better moves than me? What are you talking about? After you go in for your breast reduction surgery, we'll see how good your moves are. Okay, Stacy, good to see you. Ted, great to have you guys on.
Stacy Robinson: (03:07)
Thank you.
Anthony Scaramucci: (03:08)
Don't mind the rapport between me and John. That's just typical of us. It's unfortunate, but what can I tell you? We have this young Millennial that we have to keep track of.
John Darsie: (03:20)
I have to get my shots in. The unfortunate thing is that Anthony is also the HR director at SkyBridge, so he might level a complaint on me after this talk.
Anthony Scaramucci: (03:27)
Yes. Well, I keep getting these anonymous complaints into my email box about the harassment that I'm causing inside the firm. Of course, I'm hitting the trash button every time it comes in, John. Give it up. Let's go right into managing wealth for athletes and entertainers. They have sometimes shorter careers, certainly the athletes do. NFL athletes is an example, would be the most vivid example of that because of the high injury rates, and the psychology. Let's just be candid with each other. We're managing divas. There's only one diva on this SALT Talk. I'll let you figure that out at the end of this call. Someone with blonde hair actually. He's the only diva.
John Darsie: (04:11)
Oh, I thought you were being self-aware, Anthony. I was going to admire that quality.
Anthony Scaramucci: (04:14)
No, no. I'm still in denial, my man. I've been in denial for 57 years. I'm going to stay in denial. How do you do it? How do you handle a diva, an egocentric maniac who has a short shelf life that's making a lot of money, and you want to keep them rich for the rest of their lives? Go ahead, Stacy. We'll start with you.
Stacy Robinson: (04:35)
Yeah. Anthony, thanks again for having me. This is an honor. Athletes, like you said, often experience peak earnings relatively in a short duration, early in their life. Entertainers are often contract to contract. There's a lot less predictability around their earnings. They also live with the knowledge that their careers could, like you said, abruptly come to an end. Though there is an understanding that their career could end, there is still always a sense that another opportunity is going to be right around the corner for them. Many feel a duty in support of their family and friends financially. They have that sense of duty because they were included in the support that they had before making this deal. Many, most unfortunately, don't understand that that deal came, and it's going to be a lot less after taxes and the number of fees. Their income can truly be 50% or less than their take home.
Stacy Robinson: (05:40)
They have pursued goals that put them where they are, and they beat a lot of odds. Now they have to consider planning life beyond. That can be daunting for any age. However brief this period is, their peak earnings are typically, and they dwarf typically the average individual who earns in a decade or a lifetime. They still have to establish a reasonable budget that reflects their current reality, along with the longterm needs and goals that they have and the legacy that they'd like to leave behind. Yes, having the come to Jesus moment has a lot to do with getting them to understand that this could be it.
Anthony Scaramucci: (06:27)
Ted, give me the speech. I'm coming in to you. I've got a $25 million a year contract. To Stacy's point, I've come out of probably a lower middle income family. I'm going to have some people that I want to take care of obviously. There's survivor's guilt too, right? We all know that. There's a person that's coming out of that situation. They saw two or three of their friends not make it. Some of them have died perhaps and some of them are just not doing well. Now they're at the top of the food chain, so they want to give some money away, yet you want to keep them wealthy. Go ahead. Give me the speech, Ted. Let me hear the speech.
Octavius Reid, III: (07:06)
I guess the first part is to get them to understand that in both sports and entertainment, they make a lot of money for typically a very, very short period of time, and they're young. That means they're typically going to have to live off of it for a long period of time. The average life for the NFL is 3.6 years, and the NBA almost 4.8 years. To get them to understand that if you start giving away all your money in the beginning, then you're going to run out of money at some point and you're not going to be able to take care of friends and family. I used to call it the MCI program back in the day. For folks that remember that, MCI, friends and family that suddenly come out of the woodwork that come to you. They want you to finance every investment idea they've ever had or help get them out of some financial decisions they may have made.
Octavius Reid, III: (07:59)
Yes, you do want to be able to take care of family. You do want to be able to take care of friends. But if you make the right decisions early, then you're afforded to be able to do that later on in life. It's not something going directly into the draft right away that you just automatically write a check. I think one of the best ways to help out friends and family, one of the things that I recommend to players and artists and actresses and actors that I work with, is while you have this celebrity, take advantage of this celebrity. Everybody wants to get to know you at that moment. Okay, well as you're meeting people in different businesses, introduce them to family members and say, "Hey, they want to learn about your business." Or, "Can they get a job? Can they work with you right now?" It's the old saying, "Teach them how to fish instead of giving them a fish."
Anthony Scaramucci: (08:48)
Let's go back to you, Stacy, for a second. You do a lot of coaching. It's interesting because you're in the psychology business. You're in the coaching business, and you're in the Dr. No business. That's my assessment. Maybe I'm wrong. But literally, someone is calling you. "I want to do this, I want to do that. I want to buy that G-Wagon with the extra mag wheels and you're saying no. You're saying no to somebody that's usually getting what they want, and they had the adulation of fans. They had the adulation of the sort of social network and ecosystem, so go ahead. Tell me what you do. Give me some more tidbits. How do you handle it?
Stacy Robinson: (09:30)
I am not in the business of telling my clients "No," because this is the money that they've created. What they've sacrificed to being able to put themselves in this position. But what I will do is say, "This is not a part of the goals that we initially established. If you remove these resources from what those goals are, how is it going to affect what you said you planned for?" There's always going to be a signee, something somewhere, that somebody is going to bring to them. My goal is to have them understand the process that we've taken, to put them in a position to realize a lot of the things they say they wanted to do. If we do something that's alter to that, how is that going to affect them? If they can understand the longterm effect, again, if this is something you really want to do, then if we remove it, this is how it's going to look based on the goals that you said you already established. Saying no, I don't necessarily say, "No." I say, "This is how it's going to affect you."
Anthony Scaramucci: (10:40)
Okay, that's fair enough. I think that's well said. I mean, obviously you want to be respectful of the fact that they're earning but you're also... One of the things I've tried to do with clients over the years is delay gratification.
Stacy Robinson: (10:53)
Yes.
Anthony Scaramucci: (10:54)
You can delay gratification and teach compounding. What ends up happening is they have a nest egg that grows. Then they can earn money off of the money that they made, which at some point in their careers they're going to need to do. In fact, all of us obviously will need to do that. Ted, let me ask you this question because it comes up all the time. Stock market volatility. There's no wizardry. The four of us know, we're in Wall Street, and there's no panacea. A client calls up and they have the perfect story. It is the uncle's sister's aunt's nieces dog that just invented the next internet sensation, and they want to put a tremendous amount of money into that. Go ahead, Ted. What do you say?
Octavius Reid, III: (11:46)
No, flat out no. Contrary to Stacy, I feel like I am in the business of saying no. I say no all the time. As you mentioned, people come to players every day, whether it's in the locker room, whether it's out in the club in a social atmosphere. For artists, it's in the studio. Everybody is coming up with some new great idea. The first thing that you've got to look at is, I can't recommend that they put money or don't put money into it. But what I start to do is point out the risks. What are the risk involved in this? Let's start. I start teaching them the right questions to ask about this situation so that they begin to understand, hey, maybe this isn't a good investment to begin with.
Octavius Reid, III: (12:38)
The other thing is that for somebody that has a very short lifespan in their career, and once again has to live off of this money for a long time, one of the biggest mistakes that I see people make is that they want to put a large portion of their money into risk assets. Realistically, they can't afford that type of risk. Now, maybe later in their career as they've gotten into their second or third contract where they're seeing significant money. Okay, you can take a percentage, put that money away, and we'll allocate that to higher risk assets and maybe look in the case of a fund or something like that. But I don't know if I would necessarily be going into some of those projects, especially like the one you mentioned.
Anthony Scaramucci: (13:20)
Okay, all right.
Stacy Robinson: (13:20)
I guess mine is not directly saying no. Mine is a motherly way of saying, "Let's think this out because it's not going to be in your best interest. But let's put it all out there to see how this is going to affect you longterm."
Anthony Scaramucci: (13:33)
That's interesting. Ted is saying no, but you're saying, "I want you to get to know on your own." You're trying to coach them. I think it's an interesting thing because you're struggling with all of that. Stacy, how do you manage intergenerational wealth planning for wealthy families that you're doing business with?
Stacy Robinson: (13:53)
Oh, it's a lot about discovery. What's your interest, your values, the passion around that. What you want to leave as a legacy. Analyze what your client's goals are, what their objectives are. I have access to great internal wealth planning where I am. Often we use strategic relationships. It has a broad range of services that includes even things like family dynamics coaching. They also have a team of attornies that help me and my clients drill down on what their transition of wealth looks like for them. Whether it be trust, some kind of giving tools. The best way to do those taxes, gifting estate, even philanthropic concerns. Will they have a share in the findings that we can coordinate with other advisors and make suggestions to their attorneys that can provide actionable ideas and strategies to keep them on that successful wealth plan? And generationally.
Anthony Scaramucci: (14:54)
Ted, anything you want to chime in there?
Octavius Reid, III: (14:57)
I can say that from my standpoint, when I'm talking about generational wealth, part of it is educating kids. I spend a decent amount of time with clients' children talking to them and trying to teach them how the capital markets work, and how to create a budget, and how to focus early so that they learn these habits early. Because ultimately, they're going to be the ones to inherit the money. I'll leave it at that.
Anthony Scaramucci: (15:25)
The stock market took a really hard hit in March of 2020, and then it recovered to a new all time high. Stacy, take us through that. Take us through how you communicate to clients during extreme volatility like that.
Stacy Robinson: (15:43)
I guess keeping just like they did with their coming up and trying to get to where they are ultimately in their professional career. Keep the eye on the ball. Focus on the goal, what the priorities are, what the goals are. It sounds kind of remedial, but it's held true throughout my career through different market cycles. We've seen, and Ted's been around 30 years, I've been 20 years plus, that there's been a lot of different things that have come along to effectively tell where clients feel like, "Should I be in this? Is it time for me to get out?" What I try to do, now if they've been with me a season, they understand that the adjustments to the investments isn't always... it might seem natural, but that's not the natural cause to address these market conditions or what we've experienced in March.
Stacy Robinson: (16:35)
They now are kind of trained to say, "Are my goals intact? Do I need to make any adjustments to my priorities of those goals?" Yeah, communicating during volatility is always on top of mind because we don't know what's going to happen. We can only control what we can control. Addressing it with what their goals are, and maybe making adjustments if that's necessary. But not necessarily going directly after the investments.
Anthony Scaramucci: (17:04)
If you have a high profile client, a demanding personality and always used to the word yes, we were just talking about no. Have you been in a situation where you've had to let a client go? Have you been in a situation where you've had to have a tough talk, Ted? How does it go?
Octavius Reid, III: (17:26)
That happens very often. I had a client many years ago who had a thing for private planes several times a week. Was living a lifestyle that was costing probably close to several hundred thousand dollars a week. Actually, probably a bit more than that. At one point-
Anthony Scaramucci: (17:54)
Does he know my kids, Ted? I mean, it sounds like my kids you're talking about. Do one of my kids happen to be one of your clients? I'm just asking.
Octavius Reid, III: (18:00)
I know your son is in the industry. Probably not any of the people I've seen that he works with, but yeah, he's probably been around them but-
Anthony Scaramucci: (18:10)
He just dropped a killer video with this kid Travis Barker. He's a drummer.
Octavius Reid, III: (18:17)
Yeah, that's cool.
Anthony Scaramucci: (18:17)
And a kid named Poorstacy. I've got to send you the video. It's blowing up right now. I didn't mean to interrupt. Go ahead, so you've got this...
Octavius Reid, III: (18:25)
Yeah, so was spending a tremendous amount of money. We had many, many talks about the spending. Finally it came to a point where... the one thing that I've seen, Stacy I'm sure you can attest to the same thing, is when things go wrong, when that person ends up broke, it's usually the financial advisor's fault. Or at least that's the perspective, is it's the financial advisor's fault. My attitude was, okay, I can only teach you and point you in the right direction. I can't force you what to do. But what I do have the option to be able to do is no longer work with you because I don't want my name attached if you're just going to self destruct. I do my absolute best to try to coach them. I've rarely had that problem because I interview clients from the beginning. I can usually tell who I can help and who I can't right away, but yes, it does happen often. I think that you have to be the no guy.
Octavius Reid, III: (19:28)
One of the things that when I'm going into a new situation with clients, I usually bring that up in advance. I usually in advance say, while everything is good and they're filling out the paperwork to open a new account, that there are going to be times where we are going to disagree. There are going to be times where you are going to want to make some sort of financial decision and I'm going to say it's a bad idea. We may argue about it, but understand this. I'm giving you that from the perspective of someone who started... my first athlete was in 1987. I've been through working with players my entire career, working with artists, working with actors. I've seen this script before. When I'm giving you this advice, just understand whether we agree or disagree that it's purely in your best interest. You can always make a decision to go the other route. But at least understand that I'm not arguing unless I feel that it's in your best interest.
John Darsie: (20:29)
Stacy, I want to jump in with a question for you. We've seen a trend, at least a publicized trend, of some athletes choosing to live off of their endorsement income only and save all the money they earned in terms of their salaries. It seems like there's some enlightenment that's taking place among athletes and entertainers. And more awareness of the fact that they have a short earning span and a long lifespan after their careers are over. What are some other types of habits or guideposts or things like I just mentioned in terms of saving all of your salary income that you offer as tips to athletes and entertainers that you work with?
Stacy Robinson: (21:13)
Again, discovery. Determine what it is that their goals are. It's difficult to think about it when you're that young, but this is the perfect time to try to map out as much as you can. Because like you said John, they've seen the stories of the past athlete or entertainer that had these huge contracts. How could they dispense all that money and have nothing to pay for to it? Having the right advisors around them. Because sometimes, it's because they haven't paid their taxes and they don't have... nowadays, you've got to have even security around understanding that. Having access to those or the resources that can provide the kind of intelligence around their online presence. And things that could diminish or affect their reputational risks. There are so many things that since I started my career need to be addressed today. Because a lot of the athletes and entertainers have become a lot more aware that their resources can disappear, they are taking and receiving recommendations far more thoughtfully than they have maybe in the past where we've seen them, and the resources just replenish quickly.
John Darsie: (22:37)
Ted, do you have any frameworks that you use when you get new clients and they're looking to set some hard and fast habits and rules around how they look at money?
Octavius Reid, III: (22:48)
Part of it is, we start with planning to begin with. As a process with the team, we sit down and talk about, "What are your goals? What are your objectives? What do you plan to do when this is over?" That's the first discussion I always have is, "Okay, when the game is all over, when it's all over, what do you plan to do next? Let's start focusing on that now and creating a budget now." To create that budget, we're going to check in with you every time you go off budget to make sure. It's always about trying to put as much away as you possibly can today so that you're not out there trying to squeeze out another season, or having to take on a tour that you really don't want to take, or take a show that you really don't want to do because you've got to be able to pay the bills.
John Darsie: (23:37)
Right. You've talked about people, you talked earlier on Ted, about this notion that when you become famous, when you get drafted and it's clear that you're going to have a high income at least for several years, there's people that come out of the woodwork. Whether it be distant uncles or your local pastor offering services as a financial advisor. Those horror stories that you see on ESPN 30 for 30 about some of the most egregious cases of people trusting other people with their wealth, and turning around, and all that money being gone the next day. What do you do and how do you counsel people, Ted, on how to control that inner circle and really surround themselves with the right people? Who are those people? A financial advisor obviously is a great step in the right direction. What's the team that you advise these athletes and entertainers to put together? How do you advise them to keep people out that are sort of predatory?
Octavius Reid, III: (24:30)
I think it's the old saying, "It takes a village." It does require having the right team around you. In the really successful situations I've seen, there's the agent, the lawyer, the accountant or business manager, the financial advisor, they all tend to work together. We will tend to have quarterly meetings with the player. Sometimes the player may even have his family there. If you can have all of those people having discussions around each other, it could be a short half hour, hour call. But just to kind of review, this is what our plan is. This is what we're trying to do. It makes it a lot easier for that player. Yes, like you said, people are going to come out of the woodwork. They're going to come out of the woodwork all the time. You can't say yes to everybody.
Octavius Reid, III: (25:26)
One of the analogies I look at, I used to always say just because of the market that I'm in, every time somebody is part of a charity they call me. "Hey, can you call to get an autograph?" Or, "Can you call to get this signed for me or that signed?" Or, "Can you contribute to this salary, I mean to this charity? It's a great cause." Needless to say, if I were to write a check to every charity that called me, I'd probably be broke. Not that I don't support these things, but imagine a ball player or an artist who has got a million followers on Instagram.
Octavius Reid, III: (25:58)
Well, if you send everyone a dollar, after taxes that's almost... you're really running almost $2 million of your net income. Most people can't afford to do that. You've got to make a decision of, okay, what's important? Who do I want to support? What do I want to support? But you can't do everybody. That's the thing you've got to tell them when people call is, "Look, I've got family. I've got close people that I have to take care of. I just am not able to afford to be able to do that right now."
John Darsie: (26:26)
Yeah. One thing, we have some clients, we can't divulge their names, that are athletes and entertainers. It's almost like somebody who has addiction problems. If they go out to the bar, have something ready to say to people who come to you asking for things. Be prepared for that conversation and say, "You know what? I have to take care of so and so. I just can't be giving money to everyone around me." It's very important for them to have that, be armed with that catchphrase or that talking point that they need to fend off people looking for money. Stacy, what's your experience in terms of what an optimal team looks like around you and how you control that team?
Stacy Robinson: (27:05)
Yeah. Beyond the obvious professionals, it's the CPA or the estate and tax attorney or insurance providers, and of course what Ted and I do. Because there are so many discussions now, like you said, now athletes and entertainers are recognizing are recognizing that their likeness and their becoming influencers and content creators, I've got to have a Rolodex. I think maybe I just aged myself. I have a list of contacts that also includes people that do valuation work and could possibly tell you why you should not be involved in this. Whether it be financial or because of reputational risk, because that's just as important as finance today. Reputational risk can ruin a career pretty soon, early as well. Maybe having a business manager. Instead of you telling people, now you can say, "Bring all my requests to this person." They'll be your no person.
Stacy Robinson: (28:10)
Having a central trusted advisor who brings everybody under the tent, like Ted was talking about, when they are having family meetings where you can understand and discuss what the financial situation looks like in that top line that contract was written to. Everybody understands that there's a whole lot more between that line and you getting those resources. When people are all understanding and under that tent working together, then we are all working in concert and not in separate silence.
John Darsie: (28:42)
Yeah. Going back to some of these challenges and the pitfalls that the athletes and entertainers specifically fall into, Ted, what are some of the traps? We've talked about some of them, but what are the most common traps that you see? Maybe not with your clients because of course, you're keeping them from falling into those traps and experiencing a lot of those pitfalls. What are ones you see from the outside when you see cases of some of these athletes or entertainers who really get themselves in trouble?
Octavius Reid, III: (29:08)
Many times, I would say for artists, it's forgetting about paying taxes.
John Darsie: (29:19)
That's a pesky detail.
Octavius Reid, III: (29:21)
Yeah. It's thinking that $1 million is a lot of money, so I can go out and spend what I need. As we say, which over time, if you look at that over a lifetime, it's not. It's, like we said before, the friends and family that come out of the woodwork. It's not viewing it as a business. This is a business, and everybody else looks at you as a business. You should look at yourself as a business. Take the time, I know a lot of times, many creatives go, "Well, I don't understand finance. It's not my thing." Okay, well that's what I'm here for. It's something that I want you to learn. Somebody, if you're hiring a financial person, they should be able to explain it to you in plain English.
Octavius Reid, III: (30:18)
That's one of the biggest problems, is that you come in, people come in, a lot of times especially in the artistic community, people tend to make decisions with their heart. It's, "Well, this is a nice person. Seems like a good person, so I'm going to trust them with my money." It's the old saying, "Trust, but verify." One of the things that I try to do is show them, how do you do your due diligence? What type of questions should you be asking? How can you go online and look this person up before you hand over money to that person and then find out, oh okay, they've been stealing all along? Are they even a real financial advisor? One of the things I direct everybody to is finra.org so that you can go and check out their record, because there's a lot of folks that will hold that title out there.
John Darsie: (31:08)
Right.
Octavius Reid, III: (31:08)
Who have no experience in the investment world. I see people get burned that way.
John Darsie: (31:15)
How about you, Stacy?
Stacy Robinson: (31:19)
I will echo this. You met one of the personalities I deal with, who is kind of larger than life. I find that even though he's larger than life, I will bring him information for him to be able to make supported decisions around. He's thoughtful using that. Now, it may be that I work with more seasoned people in the sports and entertainment industry. They have seen the course of making educated decisions in their careers. But it doesn't change for whomever it is, whether they're just getting into the industry. Making sure that I am providing them as much information and resources to make educated decisions about what their tomorrows will look like after their career ends.
John Darsie: (32:18)
You talked earlier, Ted, about the process of educating even the children of athletes and entertainers that you worked with. And how important that is to set up the next generation to understand the same principles, and maybe even understand them better than their parents did as they entered their careers. What as a society, starting through secondary education up through college, can we do to help prepare these young men and women? Better financial education, better financial literacy. It seems to me college sports, for example, it sets kids up for failure by not offering some level of mediatory financial education. Stacy, I'll start with you on this one. What would you like to see done at an education level up through adulthood in terms of educating people more on financial literacy? Besides everyone tuning into SALT Talk and watching all of our conversations.
Stacy Robinson: (33:12)
Something that was discussed around my dinner table, budgeting and understanding the amount of money that you have, and paying yourself first. Paying everybody else that needs to be paid, including those taxes Ted talks about, but paying yourself first. Because that means that if you put away a nest egg for yourself, then you have the opportunity, the potential, to have something for you when this career ends. What I think they could do better in school is teach people about the compounding of interest, what it means when you invest. Robinhood and what they're doing right now is hopefully making it more democratized in investing. You've got to understand why you should not put your money on margin when you're buying a stock.
John Darsie: (34:04)
You shouldn't buy GameStop on margin when it's like $350 a share?
Stacy Robinson: (34:06)
Yeah, no. I think what schools are missing is just plain education. Even when I was there, I got a degree in economics. It still was theoretical. There was no applicable tools that you really had.
John Darsie: (34:22)
Right.
Stacy Robinson: (34:22)
When I got into the industry, that's when I started learning about why it was important to put away. Although my parents did give me the understanding that savings was important. But sometimes you need to have the application of what that means. Because when it's just out there in the ether, when you're young, it just doesn't make sense to you. Balancing a checkbook, although we don't use checkbooks anymore. Balancing a checkbook, you understand what I'm talking about.
John Darsie: (34:47)
Yeah, exactly. The digital checkbook now, Stacy.
Stacy Robinson: (34:49)
Yeah, the digital kind of checkbook.
John Darsie: (34:49)
We don't think you still use a physical checkbook.
Stacy Robinson: (34:53)
No.
John Darsie: (34:54)
How about you, Ted? What type of resources do you direct people towards, and how can we do a better job societally preparing these young men and women for just understanding basic economics for their household?
Octavius Reid, III: (35:08)
I'll start out by saying we've got to do a better job of teaching financial literacy in schools. I was fortunate. I grew up in Wellingborough, New Jersey, which was a working class area. I had a teacher in eighth grade that brought a game into our classroom called Stocks and Bonds that 3M put out that taught us about the stock market. That's how I ended up getting into this career. That's what made me want to be in the stock market, wanting to invest. That later became I think the stock market game a lot of schools played. I don't think it's in every school. I think it needs to be taught. Financial literacy needs to be taught in every schools. Players, I think that leagues have done a better job now. My firm that I work for created a sports and entertainment division a number of years ago. We go out to universities, to colleges and universities, and teach financial literacy to the athletes.
Octavius Reid, III: (36:06)
I actually used to do it for one of the major leagues. I would go out and talk to players. The thing is, sometimes you'll have these programs where they may two or three times a year talk about financial literacy. It's like this. It's like when you were a little kid, your parents told you to look both ways when you cross the road several times. You can't just have one or two classes and it's over. I think it needs to be consistent.
Stacy Robinson: (36:39)
Yeah, I think consistency is key.
Anthony Scaramucci: (36:43)
Let me chime in for one second because I'm just curious as to how you guys feel about this. This is an age old question. I always get this question asked, and that is financial independence. Do you reverse inquiry your clients? Meaning, do you sit down and say, "Okay, someday your earnings is going to be different. Maybe it'll be better." Certain athletes transition into broadcasting like Tony Romo, and it turns out he has a very lucrative career. But do you do the reverse inquiry in the beginning or the reverse engineering and say, "Okay, this is the number that it'll take for you to live this sort of lifestyle that you want, and this is the targeted way we're going to get there?" Do you guys sit down and do that in the beginning?
Stacy Robinson: (37:33)
Certainly. Yeah, you have to do it early on, like Ted was saying, and often and with consistency. I try to build mine around what's ideal and acceptable. Ideally, this is what we'd like to have. But acceptably, this is a comfortable life that wouldn't diminish what it is that you've created throughout your career. We have to make adjustments along the way. Does it mean that you have to not have exactly what you want ideally? Maybe there's a combination of both ideal and acceptable to get you to a point where this is going to be a source of income that you don't have to necessarily watch deplete over time.
Anthony Scaramucci: (38:24)
I love that. I try to do that with clients. I try to do that with my children. Ted, let me ask you this. Do you have something you know today, through all of your years of experience as a financial advisor, you didn't know it in the beginning of your career but you know it today. For me, what is that? It is to trust the process of compounding. Not to have happy feet in investing. For me, I'm embarrassed to tell you guys that I have owned Amazon. I have owned Google. I have owned Microsoft in mine and my family's accounts over the years. Had I just left things alone, I would've probably done way better than the friction that I created in my own life. That's me, that's my learning observation among many over 33 years. What about you? What is something you wish you knew about your career or your industry day one?
Octavius Reid, III: (39:32)
It's actually kind of what you just said. I just had this conversation just the other day. When I started in the business, we were stock brokers. It was much different. It was about sitting up late at night and analyzing balance sheets and income statements, trying to come up with a hot idea so we could sell as many people to that idea as possible. Today, it's about building wealth for people. What I realized is, and I think about this a lot when I see the current environment, the current news and these stocks that are doubling and tripling in value that have no real valuation over time. In the long run, you buy good quality businesses and hold on to them, and you let the managers do what they do best.
Octavius Reid, III: (40:19)
Back in '89, I shifted a lot of my business over to asset managers as opposed to me sitting there trying to pick, what is the hot idea? I go back to things that we all learned as a kid. A couple things that we learned as a kid was, one, don't put all your eggs in one basket. That was one of the most important things that you learned. You also learned the story of the hare and the tortoise. They don't make up these stories overnight. If you just look at... I've been fortunate that after 10 months I got hired was the crash in '87. Then we had the mini crash, and the collapse in the FSLIC. The jump on scandal, Operation Desert Shield, Desert Storm, 9/11. There was bad news almost every year I've been in this business.
Anthony Scaramucci: (41:06)
You left out David Askin, Ted. Remember Davis Askin? He blew up the goddamn bond market in '94. Remember that?
Octavius Reid, III: (41:12)
Yes, yes, absolutely. There's been so much bad news that would scare anybody, but the bottom line is over time, companies are in business to make money. If you've got a fully diversified portfolio of quality businesses, over time you're going to build wealth. Stop trying to time the market. Stop trying to pick what that hot idea is out there. Just have a purely diversified basket. Now, you might make changes from time to time, but I think that makes a lot more sense than when I first started and all I wanted to do was trade and try to make a quick buck.
Anthony Scaramucci: (41:51)
There's no holy grail. Anybody that's telling you they have a perfect strategy, then you know you've got to run for the woods.
Stacy Robinson: (41:57)
Yeah.
Anthony Scaramucci: (41:57)
That perfect strategy is usually going to lead to that person being in jail at some point.
Stacy Robinson: (42:01)
Right.
Octavius Reid, III: (42:01)
Yes, absolutely.
Anthony Scaramucci: (42:03)
What about you, Stacy? What about you? What is something you wish you had learned and was crystal clear when you first got started?
Stacy Robinson: (42:10)
First got started. Being at a firm that, like Ted is saying, when you got to work, you listened to the [inaudible 00:42:22] and tried to pick the stocks for that day. You heard the analyst pounding the table. That was excitement for me, and that's why I got into the industry. If I could just make sure that my clients had the right stock in their portfolio, and if I don't make the right decision, what am I going to do to this person? As you get time in business, like you say, time in the market, you start to realize it's more about planning and letting either the asset manager make the portfolio changes that are necessary, or in my case, I like using passive investing through indexing and just making sure that there's proper asset allocation for my clients. I include risk as part of their goal.
Stacy Robinson: (43:12)
Most people say they can take a lot of risk, and the moment they hit that risk they're like, "What has happened?" They're like, "We understood that risk was going to happen." I don't want to put them right up against the most amount of risk that they say they're willing to take. There's somewhere in between. The market is going to do what it does, but what we've seen since, as Ted said, he was in the business, the market has gone up. It might have taken some pullbacks in market cycles, but we have seen the market goes up. As long as we have cash available for those short term needs and understand what longterm goals mean, I think we will do the best with whatever the client brings to us and the best in their interest.
Anthony Scaramucci: (43:54)
Quaker Oats, Stacy. Quaker Oats. That was the first stock that I sold to a client. I got on the phone. I said, "The analyst just recommended Quaker Oats." He bought 500 shares from me. I thought I was a kind for the day. I thought I was Bud Fox for the day, Quaker Oats.
Octavius Reid, III: (44:13)
It was Union Carbide for me.
Anthony Scaramucci: (44:15)
Union Carbide. See that?
Octavius Reid, III: (44:17)
Union Carbide and Trans America.
Anthony Scaramucci: (44:19)
See that? Do you remember the first stock that you sold to somebody, Stace? Stacy, sorry.
Stacy Robinson: (44:24)
It might have been GE.
Anthony Scaramucci: (44:28)
GE.
Stacy Robinson: (44:28)
Just because it was a stall word [crosstalk 00:44:31]
Anthony Scaramucci: (44:30)
See that? You're more sophisticated than Ted and I. I was selling oatmeal.
John Darsie: (44:38)
Well, now 60 years after you've made that first recommendation when you were in your 20s Anthony.
Anthony Scaramucci: (44:43)
60.
John Darsie: (44:43)
I eat Quaker Oats still every morning for breakfast. I have my bowl of oatmeal.
Anthony Scaramucci: (44:47)
60 years. Do you see him? 60 years. Next time you see Darsie and he's walking with a limp, you'll know why. That'll be the [crosstalk 00:44:59]
John Darsie: (44:59)
You called our IT department and had them disconnect my internet there so you could get back into the conversation that I was taking over there.
Stacy Robinson: (45:03)
Is that what happened?
Anthony Scaramucci: (45:03)
You noticed that, yeah.
Octavius Reid, III: (45:06)
Is that what happened? I thought you fell asleep.
Anthony Scaramucci: (45:09)
You're a clever Millennial. You figured how to reboot [crosstalk 00:45:14]
John Darsie: (45:13)
Yeah, now I'm tethered to my phone's hotspot. I had to get creative. I think the jackhammer above my head might've had something to do with it. It's suspicious, Anthony, but I'll let this one slide. Thank you, Stacy and Ted, so much for joining us here on SALT Talks. We love bringing these conversations to our audience and allowing people to learn using free resources like SALT Talks. I think there are a lot of free resources out there today that didn't exist five, 10, 20 years ago because of the advent of the internet and just the proliferation of media that's out there today. If people are willing to learn, they have the resources to learn. They just need the right people guiding them like you, Stacy, and Ted do for the clients that you work with, which is why they're so loyal to you. Thank you so much for joining us.
Stacy Robinson: (46:00)
Listen, I want to say thank you as well. I'm in an industry, we're in an industry, that there's not too many people that look like I do that are women and a black woman. I'm acutely aware of that and what it means. We've seen what representation means. It shapes many discussions that we're having up to today. Representation is important. Anthony, I appreciate you recognizing that and using your platform to broaden the brushstroke. I'm [crosstalk 00:46:33] guest, Anthony. This has been a great opportunity. I thank you for welcoming a different voice.
Anthony Scaramucci: (46:38)
I appreciate it. I hope you'll come back. We're always trying to do that, and I'm very grateful for you for the pioneering that you've done frankly, Stacy. You've been a great role model for so many people.
Stacy Robinson: (46:50)
Thank you.
Octavius Reid, III: (46:51)
Stacy, I don't think I could have set it any better. I appreciate you, Anthony and John, for giving us this platform.
Anthony Scaramucci: (46:58)
Ted, I like you a great deal, but you're not getting out of here without a hair joke. I just want to let you know that. You thought you were getting out of the SALT Talk without a hair joke, but I'm just letting you know all those trials and tribulations in the market, I kept my hair, okay?
Octavius Reid, III: (47:14)
Thank you.
Anthony Scaramucci: (47:14)
Just letting you know.
Octavius Reid, III: (47:15)
Well, I had hair until I went and got the vaccine last week.
Anthony Scaramucci: (47:19)
See that? All right, well I'm going to be struggling with COVID-19. You know what I'm saying?
Octavius Reid, III: (47:27)
No, no. Seriously, please everybody get the vaccine, absolutely.
John Darsie: (47:31)
Anthony makes sure to control the camera angle so it doesn't come in from the top. That's all I'm saying.
Stacy Robinson: (47:35)
Oh, so there's the...
Anthony Scaramucci: (47:35)
There's a little bit of an alien landing strip in the back down there. I'm pulling it over. It's fine.
Octavius Reid, III: (47:41)
Did you think for a second that the hair is real?
Anthony Scaramucci: (47:43)
It's fine, okay? This is real hair, but [crosstalk 00:47:46]
John Darsie: (47:45)
The hair is real, but that's not what the real color looks like.
Anthony Scaramucci: (47:48)
In fact, if I needed stat replacement, I'd be going in for it tonight.
Stacy Robinson: (47:52)
Listen, my dad used to say, let's see, "Grass doesn't grow on a busy street."
Anthony Scaramucci: (48:00)
Amen, or on a perfect head.
Stacy Robinson: (48:00)
Or on a perfect head.
John Darsie: (48:03)
Thank you again, everybody, for joining today's SALT Talk with Stacy Robinson, Wells Fargo Advisor, and Ted Reid from Morgan Stanley. We're hoping you were able to glean some important lessons on intergenerational wealth planning, specifically as it pertains to athletes and entertainers. I think a lot of what we talked about today is applicable for a wide variety of individuals who are looking to do longterm wealth planning. Just a reminder, if you've missed any of this talk or any of our previous SALT Talks, you can access them all for free on our website. It's SALT.org/talks. You can access them all on our YouTube channel, which is titled SALTtube. We post all of our episodes there and we livestream them there as well. Please follow us on social media. We're on LinkedIn, Instagram, Twitter is where we're most active. Also, we're on Facebook.
John Darsie: (48:47)
Please tell your friends about SALT Talks. We love growing our community and exposing more and more people to the education that we strive to provide here on these SALT Talks. On behalf of the entire SALT team, this is John Darsie signing off for today. We'll see you back here again soon on SALT Talks.