Amid the market turmoil, Todd Morgan remains unfazed as he manages enormous sums of money for his clients some of L.A.’s wealthiest residents

While most investors’ goal is to become wealthy, Todd M. Morgan’s aim is somewhat different. He manages the fortunes of many of L.A.’s wealthiest people, the likes of Marvin Davis and Barbra Streisand, so he focuses on maintaining and building wealth, not attaining it.

As the head of Bel Air Investment Advisors in Century City, Morgan has seen his client portfolio swell along with the general economy and stock market.

When he and two associates left Goldman Sachs & Co. in late 1997, they brought about $1 billion in customer assets with them. Now his boutique firm has about $3.6 billion under management for about 165 families. And the speed at which wealth is being created today astonishes even him.

To invest with Bel Air requires a minimum net worth of $10 million, and several of its clients are worth well over $200 million. Keeping such people soothed during the kind of turmoil that the markets have experienced recently can’t be easy, which is one reason Bel Air’s outlook is long-term and conservative.

And while his money managing duties have become more demanding, he has also expanded his charitable activities. In December, Morgan became chairman of the Jewish Federation of Los Angeles, the largest such Jewish charity in the world, which he says is vital as an educational base and a tool to fight anti-Semitism.

Question: How has the recent turmoil on Wall Street changed your advice to your clients?

Answer: I’ve had the same mantra: Buy world-class companies, buy companies that have been around for awhile, and that will be around for several generations. So we’ve avoided a lot of the new supercharged Internet companies. We missed the ride up, and we missed the recent ride down.

Q: Haven’t clients pressed you to invest in these speculative, high-growth companies, even if you don’t think it’s wise?

A: It’s not easy, quite frankly. I tell people, take an amount of money that you could, financially and psychologically, handle at least a 50 percent loss. And if it’s $2 million, and you could lose a million and not lose any sleep, fine, that’s a number. But if you lose sleep, pick a number you could live with. A wise man once told me that one of the most important things you can do when investing is don’t kid yourself.

Q: But aren’t investors today expecting meteoric returns?

A: We advise people with a different caliber of wealth. We’re not only in the money management business, we’re in the wealth management business. My job isn’t to make people wealthy, it’s to keep people wealthy.

There’s been a technology revolution, the first revolution I’ve seen in my lifetime, because I missed the industrial revolution. (It’s) been extremely exciting and intoxicating for many investors. And people see tremendous volatility and tremendous returns in new companies. But my job is to stay the course, and not take the risk.

Q: So what’s your assessment of the public equity markets at this juncture?

A: I think it’s healthy that the recent bubble has been broken. Not that I like to see people lose money. It’s that I think it takes away unrealistic expectations and some of the speculative activity in the market. The market will do whatever it has to do to prove the most people wrong. And there have been too many people making too much money too easily. It turns into casino investing, and then something bad usually happens.

I don’t know if it’s over yet, but that was a good pop in the bubble, and it’s created some real value in some of the great companies I mean the companies with real earnings that are selling at more of a decent multiple. So I think what’s happened over the last month is healthy for the overall market.

Q: Do you stay away from technology stocks altogether?

A: No. We own technology it’s the biggest component of our portfolio. We own an equal weighting of about 30 percent technology in our portfolio. And I love the stocks we’ve bought in technology because they’re the engine that runs many of the new technology and communications. Some of the ones we own or have owned in the past are Microsoft, Intel and Cisco.

Q: Has the explosion of wealth over the past few years expanded your client base?

A: Absolutely, it’s unprecedented. In my 30 years in the business I’ve never seen more wealth created and more money directed toward wealth managers like myself. I’ve never seen more money made from a younger generation than I have today.

Most of my clients in the past have gone through a change in circumstance, primarily by selling their business. You sell it when you’re 60 or 70 years old and you get a whole pile of cash and you come to (Bel Air) to invest because of our reputation and our conservative nature. Well, today, there’s been an enormous amount of money created by people (between the ages of) 25 and 45. They have a little different mindset, but these people still want to take a large portion of the money they’ve harvested and invest it conservatively.

Q: But such people are more likely to be willing to take some of that and risk it.

A: Yes, but not as much as you might think. These people might want to take 10 or 20 percent (for risky investments), but I haven’t met many people who come in and say, “I’m going to invest 50 percent conservatively and I’m going to roll the dice on the other 50.” And the reason is that people know how hard it is to create that kind of wealth.

Q: Recently, a number of Hollywood celebrities were allegedly fleeced out of millions by a would-be money manager. Are stars more vulnerable to such schemes, especially the recently wealthy ones?

A: You know, I’m surprised that this happened. About 25 percent of our business is entertainment related, and we’ve got some terrific entertainment clients. To get that group of clients takes a lot of trust and confidence by them and their managers and their lawyers.

I’m surprised because entertainers as a group are more conservative, because you don’t know when their next great movie or next great album is going to happen. I find that group more risk-averse, more loss-averse, than your traditional wealthy client.

Q: You were recently named chairman of the Jewish Federation of Los Angeles. What are your goals for the organization?

A: There are a half a million Jews in Los Angeles. It’s the second largest Jewish community in the world. And we are the Jewish headquarters for the Jewish people in our community. They were looking for someone of a younger generation than the past chairman. The major reason to do this is, it adds meaning to my life. Our primary goal is to help people in need. It’s the largest Jewish institution in the world.

Q: How is fund raising these days, given the healthy economy?

A: It’s growing, but not at the rate you would think it would. I think there are more fund-raising organizations than there have ever been. I also think people are so busy today, they’re not taking the time to learn where they can give money away. So it’s our job to better educate people. I think people are looking to give away more money and add more meaning to their lives; we just need to take the time and have that discussion.

Q: So you are balancing managing money for the very rich and raising money for the less fortunate.

A: It’s interesting. There probably hasn’t been, on a relative basis, more wealth created in the past century as in the past 10 years. I think it’s very appropriate. There’s so much money around, it’s time for people to give away their excess need. My wife and I thoroughly love giving money away to charity. It’s a real kick. I try to convince people they should give money away while they’re alive. If you made the money, you should have the joy of giving the money away. The more you do it, the more you enjoy it.