Banking boldly through Jewish ethics


Banc of California, one of the fastest-growing banks in the United States, has a rock-solid name that makes it sound like it’s been around for a century or more.

In fact, the brainchild of Chad Brownstein and his business partner, Steven Sugarman, was only formed in 2010, in the midst of the Great Recession. 

“The name Banc of California presented itself as an opportunity. Steve came up with the concept, and it has worked out as being probably the best brand you could have in the region, because everyone says they know Banc of California, whether they knew it or didn’t …” said Brownstein, 42, the company’s co-founder and vice chairman, at the start of an interview with the Journal in his Beverly Hills offices. Sugarman, 39, serves as president and chief executive officer, and joined the interview via conference call.  

In 2008, as the economy spiraled downward, Brownstein was running the Special Situations Funds group at the investment management firm Trust Company of the West (TCW), and Sugarman had recently founded COR Capital, a private investment firm. Both are members of Wilshire Boulevard Temple, and had known each other for years but had not previously worked together. They began discussing the possibility of collaborating on a new venture. At the same time, community banks were beginning to fail across the country. Between 2008 and 2011, more than 400 banks went under, including many in Southern California: California National Bank in Los Angeles, Alliance Bank in Culver City, First Federal Bank of California in Santa Monica and many others. This created a dearth of lending for small businesses in the state.

“The world was imploding,” Brownstein said. “We said, ‘Well, how do we get our heads straight and try to create some value out of everyone being so scared of the market?’ ” 

They decided to try to consolidate some of Southern California’s thrifts and small banks. So in 2010, Sugarman and Brownstein led TCW and a few other investors in a $60 million recapitalization of First PacTrust Bancorp. Sugarman became the CEO in 2012, and in 2013 they re-launched their holdings, which by this time included a few other local community banks, under the banner Banc of California. 

Since 2010, Banc of California’s growth has been staggering. Sugarman has led the team through six acquisitions, pushing their assets from under $1 billion in 2010 to over $6 billion today. They now have 40 full-service branches in Southern California, and more than 100 banking and lending locations across the state. They have about 100,000 account holders, and estimate they will fund more than $7 billion in loans this year, about $5 billion of which will be to homeowners. Banc of California now has nearly 1,500 employees. 

Brownstein admits many analysts question whether Banc of California can sustain such a head-turning growth rate, but he has a clear answer: No. 

“No one can keep growing at the rate we have,” he said. “The bank will continue to be not only opportunistic but, more importantly, focused on operations.” 

From the start, Sugarman said, their goal has been “building California’s bank” — not just in terms of financial assets, but also by taking a leadership role in communities around the state. 

In 2011, Banco Popular, a Puerto Rico-based bank, changed its name in Southern California to Popular Community Bank, part of a larger effort to reach beyond its Latino base. But it continued to struggle, and in early 2014 Banc of California agreed to purchase its network of Southern California branches. However, the California Reinvestment Coalition (CRC) objected, and requested the Office of the Controller of the Currency, the government regulator in charge of this sort of transaction, deny the sale until Banc of California designed a plan to comply with the Community Reinvestment Act, which is intended to encourage banks to serve historically underserved low- and middle-income communities. In particular, the CRC worried Banc of California would not be a fair partner in the minority communities where Banco Popular had its base, and which typically have low levels of trust in financial institutions. 

With the assistance of former Los Angeles Mayor Antonio Villaraigosa, who in July 2013 had become an adviser to Sugarman and the bank’s board of directors, Banc of California worked with the CRC to develop a community benefit plan targeting California’s underserved populations. For example, Banc of California agreed to work toward becoming a Top 10 Small Business Administration (SBA) lender to underserved borrowers in its assessment area, and to increase lending and investments to low- and moderate-income communities, with the goal of making these dealings 20 percent or more of total deposits. As a result, the CRC reversed its position, offering an endorsement of the sale. 

“Banc of California’s Community Benefit Plan sets the standard for the industry and is a testament to Banc’s commitment to serve the needs of … diverse neighborhoods,” CRC Executive Director Paulina Gonzalez said in a September 2014 press release. 

The work they accomplished with the CRC is emblematic of a wider ethos of community respect Brownstein and Sugarman view as essential to their business practice. “We are taking extraordinary steps to be a part of the [Southern California] community,” Brownstein said. 

Brownstein credits Banc of California’s approach to community banking to their Jewish upbringings — Brownstein in Denver and Sugarman in Orange County. “Steven and I have brought the concept of tzedakah to Banc of California,” Brownstein said. “The organization is very active in all different charities, all denominations. … Steven and I — being of Jewish heritage — we understand how important community is.”  

Brownstein especially credits his father, Norman, for instilling in him a sense of societal obligation. Norman Brownstein is one of the founders of the law firm Brownstein Hyatt Farber Schreck. Throughout his career, he has donated time and money to many organizations, Jewish and non-Jewish. In addition to being a prominent Democratic fundraiser, he is currently vice president of the national board of the American Israel Public Affairs Committee. 

Banc of California has provided assistance in the form of money and employee volunteer hours to a long list of local nonprofits and community organizations, including Jewish Vocational Service of Los Angeles, Los Angeles Conservation Corps and Los Angeles Team Mentoring. It focuses efforts largely on Southern California’s at-risk youth, who are often of Latino, African-American or Asian descent.

In mid-2014, Banc of California announced a partnership with USC Athletics to teach financial literacy to kids. What began as a small event, with 100 at-risk children participating in financial literacy classes, reached new heights in November when 7,000 people from across the Southland, including 5,964 at-risk youth, gathered at  USC’s Galen Center for an educational event hosted by Sugarman and Villaraigosa. The event culminated in a speech by former President Bill Clinton. The bank later announced that the event had broken two Guinness World Records: Biggest Ever Financial Literacy Training and Biggest Ever Financial Literacy Training in One Venue.   

In terms of integrating Banc of California into the communities it serves, “We’ve talked it and walked it, and that differentiates us — but it also obligates us. It obligates us to continue to lead,” Brownstein said. “We, as Jews, are very focused on helping the entire community, and we believe that because of our Jewish heritage it is our obligation to do that.”

Mega-millionaire, Age 95, Says, ‘You Can Do It!’


Mega-millionaire Stanley A. Dashew, 95, has some words of wisdom for anyone trying to make it in today’s tough economy: You can do it.

It’s no secret, he says. In fact, it’s the title of the book, “You Can Do It!: Inspiration & Lessons From an Inventor, Entrepreneur, & Sailor,” written with Josef S. Klus.

Filled with anecdotes and distilled wisdom, the book, by a man who played a key role in the creation of the plastic credit-card system, is the culmination of years of writing in between business projects.

“I spent the better part of the last decade trying to capture in the pages of my book the key events of my life in the hope that what I’ve learned in love and work may provide inspirations—and some guideposts—for others to realize that, yes, they can do it!” Dashew, a resident of Westwood, said in an e-mail interview.

One might not expect such optimism from a Harlem, N.Y., native whose father escaped deadly pogroms in Odessa as an infant. His mother settled in New York after her Orthodox father brought the family from Lithuania.

In some ways, the seeds of Dashew’s success were planted when his family moved from the big city to the country, where his father owned a small legal practice and summer resort. It was there in Pomona, N.Y., that Dashew became an inventor from a young age out of necessity.

“I came across serious problems that could not be solved by stock items,” he said. “For example, I had to figure out a way of getting fish out of a swimming pool. I had to figure out how to clean septic tanks attached to the bungalows of my family’s property.”

An aspiring writer, Dashew’s desired career path changed course with the Great Depression. One day, on the way to interview for a sales job that he was sure he’d turn down because he considered it beneath his talents, something changed his mind.

“I was walking in Manhattan toward Fifth Avenue when I heard a loud noise. I looked across the street to the Empire State Building, where I saw the body of a nicely dressed young man—about my age—on the sidewalk,” Dashew said. “He had just jumped from the world’s tallest building. I proceeded to my meeting somewhat numb, but no longer conflicted about the offer. I accepted the job.”

This sales job with Addressograph-Multigraph Corp., which produced machines that could address envelopes, magazines and more, turned out to be a perfect match. Soon, by adapting the company’s machines to new uses, he was its top salesman and poised for even greater success.

“The knowledge and contacts from my experience there became the foundation for my own company and my first fortune,” Dashew said.

That would come after he and his family—including his 7-year-old son and 3-month-old daughter—pursued the adventure of a lifetime. In 1949, they hopped onto a 76-foot schooner and sailed from Chicago, through the Great Lakes, down the East Coast, through the Panama Canal, and around to Los Angeles.

This would be his home as he created Dashew Business Machines. Its revolutionary imprinters and embossers could handle more than one character at a time and laid the groundwork for the first bank credit card system.

“We could emboss 2,000 plates an hour,” Dashew said. “This gave birth to the plastic credit-card industry.”

The machines, he continued, “enabled Bank of America to mass produce and distribute the BankAmericard, and they enabled merchants to imprint the card when customers made a purchase.”

Other enterprises followed, including work in the offshore oil industry. Over the years, Dashew has received 14 U.S. patents for his contributions to banking, shipping, mining, transportation, water purification and other areas.

This isn’t to say that it was easy. Before it could reach its greatest success, Dashew Business Machines nearly succumbed to financial collapse in the 1950s, and it cost Dashew his first marriage and his beloved boat.

Aside from telling his personal story, “You Can Do It!” includes dozens of tips to help readers overcome life’s modern—yet timeless—challenges. A few examples include:

  • Focus on just one or two ideas at a time. Otherwise, none of your ideas that could be great will get off the ground.
  • Don’t quit just because you don’t have all the skills or resources to implement an idea. Team up with someone who has what you lack.
  • Innovation means not just creating new products or services, but also finding new ways to utilize them.

A spiritual person and cultural Jew, Dashew said he contributes locally to Jewish Vocational Service and is a strong supporter of Israel. Outside the Jewish community, he and his second wife, Rita, who died in 1994, are well known for their involvement in the UCLA Dashew Center for International Students and Scholars, which aims to foster cross-cultural understanding through intellectual exchange.

Today, Dashew remains as busy as ever, developing ideas for new products and services despite the challenges of Parkinson’s disease. And while he calls a 4,000-square-foot penthouse home, he continues to be just as comfortable at sea on his eighth boat, a 72-foot cutter named Deerfoot II. To him, sailing is more than just a passion.

“I tend to see the people, places and events in my life—and the world—through the lens of the boats that I have owned and sailed through the years,” he said.  “My love of boats started when I was 10 years old with a canoe that I would use in the swimming pool of the summer camp that my family owned and managed. … Today, I’m still adventuring.”

Shul Business


No one taught Rabbi Ahud Sela how to read a budget when he was in the seminary. Talmud and pastoral counseling took precedence over the basics of planned giving.

So when the Conservative movement’s Rabbinical Assembly teamed up with American Jewish University (AJU) to create the Rabbinic Management Institute—a certificate program in nonprofit management offering business skills, management training and more—he jumped at the opportunity.

“Every part of the synagogue has to function well, including the business side, and it’s important for the rabbi to understand that,” said Sela, 35, of Temple Ramat Zion in Northridge.

“I needed help in everything,” he continued. “I needed to learn how to read a budget sheet. I didn’t know what it meant to lay out a strategic plan. I didn’t know the different kinds of fundraising that can be done. I didn’t know the latest trends in board management.”

For years there has been a growing need for rabbis to be able to run their institutions, or at least understand how they operate, said Rabbi Cheryl Peretz, director of the institute and associate dean of AJU’s Ziegler School of Rabbinic Studies, which is a partner in the program with the university’s Graduate School of Nonprofit Management.

“While rabbinical school might offer a little bit of that training, that’s not really how they spend their time,” Peretz said.

Rabbi Julie Schonfeld, executive vice president of the Rabbinical Assembly, the membership organization for Conservative rabbis, said in a statement that the program equips rabbis with important skills to address the myriad challenges facing religious institutions with creativity and foresight.

“In today’s economy, it is more important than ever for rabbis to learn effective business models and management skills, ones guided by the deepest values of Judaism,” she said.

An initial cohort of 14 Conservative rabbis graduated last month following a year of activities and coursework. Participants came from across the country—as far away as Maine and Florida—for two in-person seminars. The rest of the curriculum was completed through videotaped lectures, paired-learning exercises and individual conversations with faculty.

Topics included leadership, supervision, board development, accounting, marketing, conflict management, budgeting, and development. These skills are needed now more than ever, Peretz said.

“In today’s world, organizations are having a rough time financially. There was a great need to gain an understanding of how to look at the financial picture and brainstorm ideas,” she said.

Ditto for issues of nonprofit management and helping clergy create healthy relationships with lay leaders, boards and volunteers.

Richard Siegel, director of Hebrew Union College-Jewish Institute of Religion’s School of Jewish Nonprofit Management in Los Angeles, said the importance of all of these issues becomes magnified as rabbis take on more responsibility in their congregations.

“In recognition of this, increasingly we’re encouraging rabbinical students to either take management courses with us or take the full graduate certificate [in Jewish nonprofit management],” he said. “We have found that those rabbis in the field who have participated in our program have found it incredibly valuable. It’s clear that this is something that will be even more relevant in the years ahead.”

Siegel said that creating a program similar to the one at AJU for rabbis who already have been ordained is on his agenda.

A number of changes already are in the works for the certificate, Peretz said. First, it will be opened up to rabbis of all denominations, not just Conservative ones.

“The truth is the issues are the same when we’re talking organizational management,” she said.

Web-conferencing technology will supplant the videotapes and allow for interactive lectures, and individual mentoring will be significantly increased. Additionally, the next cohort will begin in the fall instead of February, and the price will drop from $2,200 to $1,800.

Rabbi Mark Bisman, a veteran clergy member preparing to retire in May, signed up for the program more out of curiosity than necessity. He had been learning about similar topics in Scottsdale, Ariz., where he is rabbi at Har Zion Congregation, and it sounded like an opportunity to explore them in more detail.

What he ultimately got was insight into his synagogue that paid dividends quickly.

“I learned how to look at the books in a different way and that makes all the difference,” he said. “It certainly has been helpful to me in terms of understanding how we can put our house in order to [prepare] for the next rabbi. I’m much more secure in some of these matters than I would have been.”

It has proven particularly helpful in dealing with the challenges of a 220-family congregation that has seen its membership decline, the rabbi added.

“We’re reorganizing … and finding donors and lenders to help us. We have a plan laid out, and it’s going to work,” he said. “Certainly the education that I got through this program helped me be a better articulator of what the situations are and how to move them along.”

For Sela, being part of the program has empowered him to make a number of changes to a 315-family congregation with no executive director that has seen its membership and revenue decline in recent years.

“I wanted to be able to help the synagogue with some of the administrative functions, and I didn’t have the capacity [before],” he said.

Now he’s helped create a five-year programmatic plan and revamped the temple’s fundraising strategy. Instead of simply distributing envelopes and hoping they come back filled with checks, everyone receives a phone call or personal conversation from a member of the fundraising committee as part of the annual appeal. Already the change is showing results.

“We’ve raised more money this year than in past years even though we have a smaller membership,” he said.

Sela brought in the dean of AJU’s Graduate School of Nonprofit Management to work with Temple Ramat Zion’s board, reduce its size and discuss its responsibilities. And from a marketing perspective, the rabbi learned to expand the synagogue’s offerings outside of its physical structure.

“You have to bring it to the people,” he said.

That realization has led him to hold classes periodically at local coffee shops. That way, congregants who work in the area can drop by during lunch to study Talmud or other topics.

Who knows how many more changes may be on the way for Sela and his congregation, but the rabbi said it’s a great beginning thanks to the new certificate program.

“I recommend it to all of my colleagues, especially ones working in smaller congregations,” he said. “It was all new information that has helped me tremendously.”

Ice cream entrepreneur taps into the ‘spiritual aspect’ of business


After Ben Cohen and business partner Jerry Greenfield completed a course on ice cream making, they established their first ice cream shop in 1978 and went on to build Ben & Jerry’s Ice Cream ­—a $300 million empire and one of the largest ice cream businesses in America. 

Choosing ice cream over bagels as their vehicle to prosperity, they initially lacked location. “We figured if it was going to be ice cream, it should be a warm, rural college town,” Cohen noted. But their analysis revealed that competition had already beaten them to the hot spots. “So we decided to throw out the criteria of warm and ended up in Burlington, Vt.,” where cold and snowy winters are legendary. Cohen still calls Burlington home.

Cohen, preferring social activism to the daily business grind— a throwback to his hippie youth— resigned as CEO in 1995 but continued to serve as board chair and then on the advisory board because he believes strongly that business has a “spiritual aspect” that should be recognized by the business world. “There is a spiritual aspect to business just as there is to the lives of individuals. As you give, you receive. As you help others, you’re helped in return,” Cohen asserted. He didn’t come to this conclusion overnight. Cohen’s business philosophy evolved as the company grew.

Ben & Jerry’s faced many early challenges. Banks were wary about financing those who lacked business experience, collateral and credit histories. To get a bank loan, they needed a business plan. Without knowing how to prepare one, they used a template for a pizza parlor that sold pizza by the slice, simply plugging in “ice cream cone” wherever “pizza slice” was mentioned, and got their initial seed money.

They broke even in their first year, but two years later, things started changing. According to Cohen, “We were at the very end of our rope and losing money … and finally, in a last-ditch effort to survive, we decided to pack our ice cream in pint containers,” which revolutionized their business in the 1980s.

Entering Boston, their first major U.S. market, nearly brought their business to an end. Häagen-Dazs, owned by Pillsbury, was fierce competition, and Ben & Jerry’s’ distributor wanted to drop the Vermont-based company as a client. Ben & Jerry’s quickly printed banners and flew them around major Boston sport stadiums, and rented signs on Boston transit buses that featured two pudgy hands squeezing a pint of Ben & Jerry’s ice cream, saying, “Don’t let Pillsbury’s dollars strangle Ben & Jerry’s ice cream. What’s the Doughboy afraid of?” 

This proved a successful act of chutzpah. “Pillsbury was getting such a black eye from their tactics of trying to keep us out of distribution that they relented and allowed us to continue distributing our ice cream,” Cohen said.  

Annual sales rose into the millions, and the two spent most of their time hiring, firing and meeting financial advisers. “We felt like we were becoming just another part of the economic machine that tends to oppress a lot of people,” Cohen lamented.

Then a friend told Cohen, “If there’s something you don’t like about business, why don’t you just change the way you do it?” For Cohen, this was genius. Venture capitalists wanted desperately to invest. “We decided to use this need for cash as an opportunity to make the community the owners of our business,” he recalled.

In an unusual move, they held the first in-state Vermont public stock offering, which made many Vermont residents part owners of the company. A national public stock offering followed, with the formal creation of the Ben & Jerry’s Foundation. The offering prospectus stated that the Foundation would be getting 7.5 percent of pre-tax profits, the highest amount of any publicly held company that gives to charity.

So many requests for help came in that only 5 percent of the applications could be funded, a common problem for foundations throughout the world.

How did Cohen react? He and Greenfield developed a new definition of business from “an entity that produces a product or provides a service” to “the combination of organized human energy, plus money, which equals power.” For Cohen, business was the strongest force in society, but unlike religion and government, whose purpose was to improve quality of life, “Business has never had that as part of its brief.”

Cohen believed that only if spiritual concerns are integrated with business, which possessed the resources to actually make a difference, could positive change happen.

He felt the very definition of success was an obstacle because it is measured “by profit, how much money is left over at the end of the month or at the end of the year.” Instead, Ben & Jerry’s decided to change the way success is measured by measuring success through a “two-part bottom line”—by how much the company has helped to improve quality of life in the community and how much money it has made. However, their managers had bad news: When company energy was devoted to improving the quality of life in the community, it took away from improving profits.

Cohen and Greenfield were astonished. They recognized that money is a means, not an end, but values combined with social purpose should be their focus, integrating social concerns with an eye on profits.

The company bought coffee from a Mexican cooperative, improving Mexican coffee farmers’ quality of life by purchasing their beans. It bought blueberries from a Native American tribe, which helped benefit them. It purchases $3 million worth of brownies annually from Greyston Bakery, which provides employment opportunities for those in need. Ben & Jerry’s recently committed to making all of its ingredients Fair Trade certified by the end of 2013.

According to Cohen, “Our actions are based on deeply held values, that it’s an integrated and holistic effort to meet another set of our customers’ needs—the need to solve the social problems of our day—and that it provides added value. It’s a unique selling proposition. It motivates our employees. It helps with recruiting, and it builds tremendous consumer loyalty that’s based on shared values.”

Cohen believes business should take responsibility for the common good rather than focus on self-interest. He believes that business, as a powerful social force, can integrate social concerns throughout its activities, while supporting service organizations in order to help people.

According to Cohen, “As your business supports the community, the community supports your business. We are all interconnected, and as we help others, we cannot avoid helping ourselves.”


Arthur Wolak is a Vancouver-based freelance writer.

Young entrepreneurs earn gelt for the community good


“We call these tchotchkes,” Keith Wasserman says, examining a snow globe. The 27-year-old founder and president of Gelt Inc. talks into a video camera as he walks around the furnished unit in a Bakersfield apartment complex, which the company purchased in 2009.

The video is featured on Gelt Inc.‘s YouTube channel, Gelt TV. In addition to videos, the company uses blogging to raise its profile and fulfill its commitment of transparency to its investors and clients.

“I’ve always been very entrepreneurial,” Wasserman said in an interview.

Gelt Inc., named for the Chanukah chocolate coins, wears its Judaism proudly and has made charitable giving an important part of its mission. In addition to Jewish charities, such as the Jewish Home, The Jewish Federation of Greater Los Angeles and Jewish Family Service of Los Angeles, Gelt Inc. also supports charities that aid the communities it invests in, including Boys and Girls Clubs of Kern County and Court Appointed Special Advocates of Kern County.

The business plan for Wasserman’s San Fernando Valley-based company consists primarily of investing in 75-  to 500-unit distressed apartment complexes in California and Arizona and renovating them to add value before renting the units out to individuals and families. Founded in 2008 during the height of the recession, Gelt Inc. now owns 15 buildings, representing nearly 1,000 multifamily units.

Wasserman’s partners include Damian Langere, the company’s 31-year-old co-founder and Wasserman’s cousin, and Evan Rock, 26, its vice president. The three young professionals don’t have the purchasing power or the experience to pay for the buildings and run the business completely on their own; Gelt Inc. has investors. Wasserman and his partners take advantage of current low interest rates by borrowing from banks, and they brought aboard two “gray hairs,” Wasserman said, referring to Steve Wasserman, his father, a successful transactional attorney in Tarzana, and Adrian Goldstein, a 50-something commercial real estate maven.

“We have a good combination of youth and energy and new ideas, and we have Adrian and my dad, who bring the experience and wisdom,” said Wasserman, who grew up attending L.A. Jewish day schools.

Goldstein said that the members of the team complement each other, and he values the core members’ tech savvy.

“A lot of new technology for the business, new ways of communicating with our investors and with our consumers—whether it’s social media or new applications that help us keep track of our contractors, our bids, schedules—we have a seamless platform that is made all that much better by young people who grew up in the technology age,” Goldstein said.

Wasserman speaks excitedly about the way everyone works together. Rock is “more of our numbers guy—he oversees the new acquisitions, prices the deals, deals with the financing, the refinancing. … Damian, my cousin, he’s more on the ground, deals with the contractors, oversees the rehabs. … I’m more of the marketing, the networking and investor relations. Adrian oversees all of us, and he’s our mentor … and my dad just knows a lot of people.”

In April 2011, Gelt Inc. bought its largest building yet, a 415-unit, 257,000-square-foot apartment complex in Phoenix for $16 million. With the next acquisition, Gelt Inc. hopes to reach its milestone of owning more than 1,000 apartment units.

Wasserman said that the 2009 purchase of Vernon Vista, a 78-unit complex in Bakersfield, was the turning point for the company, which, for some time, had mainly acquired and renovated four-plexes, as opposed to larger complexes with dozens of units.

“It became more professional, more of a real business. We took it to the next level, going from $150,000 deals to $4 million deals,” Wasserman said.

The company’s rapid growth makes Wasserman hungry for more, and he’s thinking ahead—way ­ahead. Ten years from now, he would like to see the company running 10,000 units, with properties in Los Angeles as well as more in Phoenix.

Wasserman, who got his start running a successful eBay store out of his college apartment at USC, is serious about his commitment to his faith and using the business to serve the larger Jewish community.

“Going to a Jewish school since fifth grade”—he attended Stephen S. Wise Temple and Milken Community High School—“has really instilled in me a sense of pride about being Jewish. A lot of the organizations we support are Jewish organizations,” he said.

This love for the Jewish community also translates into support for pro-Israel organizations, including AIPAC, StandWithUs and the Israel Leadership Council.

Wasserman says he has heard complaints about the company name. His critics believe it feeds the stereotype of Jews “being money-hungry.”

He insists, however, that the name reinforces the company’s positive intentions.

“We want to have a platform of making money for the good,” he said.

Is an annuity right for you?


Grandpa’s fixed pension, that sweet and steady stream of income that started on the day he retired, is nearing extinction. Most Americans today will retire not on company checks, but on personal savings and Social Security. With interest rates low, the stock market jumpy and Congress pinching pennies, it is no surprise that 87 percent of Americans, according to one recent survey, worry about running out of money. 

That concern explains the popularity of annuities—financial products designed to generate steady cash flow, sort of like Grandpa enjoyed. But today’s annuities are different from yesterday’s pensions, says Christopher Jones, CFP, president of Las Vegas-based Sparrow Wealth Management. “Commercial annuities can certainly help some meet their retirement income needs, but these products can also be very expensive and complicated,” he said. “They certainly are not for everyone, and choosing the right one is crucial.”

Whether an annuity is right for you, and if so, what kind of annuity, can in itself be a complicated matter. Here are few guidelines to help you decide:

You are probably a good candidate for an annuity if you’ve determined that to pay your basic expenses in retirement—food, shelter—you’re going to need more money than you’ll get from Social Security, and more than you can take comfortably from savings. Say you crunched the numbers and calculated that you’ll need to tap $1,000 every month from personal savings, but that’s a bit more than your savings can handle.

“To ensure that your basic needs are covered, the annuity may be a good option,” Jones said. When you fork your money over to an annuity company, you guarantee yourself a steady cash flow. Bonds can do that, too. But you’ll get more cash from the annuity. That’s in part because of something called the ‘mortality premium,’ which is a polite way of saying that annuity providers will pay you more today because when you die, they, not your heirs, will grab your principal. The mortality premium gets larger for every candle on your birthday cake. The very best candidates for an annuity are 65 and older, and have expectations of living a long life. 

You are probably a bad candidate for an annuity if you have a good-size nest egg, are in little danger of running out of money and can stomach a bit of market risk.

“The return you’ll get on a diversified portfolio will very likely be much greater than what you’ll get on an annuity,” Jones said.

In addition, your heirs, not the annuity company, will get your money when you pass. The very worst candidates for an annuity are those who have lots of money, but suffer from health conditions that may lead to an early death. 

What kind of annuity to choose?

The fixed-income annuity is, by annuity standards, a fairly simple contract. You fork over a certain sum to an annuity company, and the company then agrees to give you X dollars a month for the rest of your life. For a guaranteed $1,000 a month, a fixed annuity today would cost a 65-year-old man roughly $165,000 (about $175,000 for a woman, because women usually live longer). You may choose to purchase various perks, such as a “joint-and-survivor” benefit, which allows your spouse to continue collecting if you die. Those perks reduce the cash flow.

The other kind of annuity is called a variable annuity. The variable annuity, unlike the fixed annuity, ties your cash payments to some underlying investments. It promises you both security and performance. But Jones warns that variable annuities, often pushed by aggressive salespeople, can be incredibly complex and expensive, and often don’t deliver as they promise. If you are considering a variable annuity, use “non-qualified,” rather than “qualified” money. In other words, use money you have in your taxable account to take advantage of the tax-deferral benefits of the annuity; don’t use money from an already tax-advantaged account, such as an IRA. 

How to annuity-shop wisely

Kerry Pechter, publisher of the online newsletter Retirement Income Journal, and author of “Annuities for Dummies” (Wiley, 2008), offers the following tips for buying any annuity:

  • Buy only from a strong company
  • You may be around for another several decades; you want a company that will be around, too. Choose only companies with the very highest credit ratings. The online shopping sources in the sidebar list company ratings. You can also find them on Web sites of the providers.

     

  • Comparison shop
  • Immediate annuity issuers change their prices frequently, and during any given month, the best deal might shift from one carrier to another.

    If you are worried about inflation (and you should be), don’t put all of your money into an annuity. Leave enough for a side fund to invest in stocks. Or buy an annuity with inflation protection. Or both.

    Since annuities pay you based on current interest rates, and interest rates are now very low, you might want to buy into your annuities over time. Put some money into an annuity today and consider another in a few more years. 

    You can start shopping annuities by looking on the Web. If you feel a bit lost, get an unbiased expert to help. Consider a fee-only financial planner. You can find one at napfa.org.


    Russell Wild, MBA, is a NAPFA-registered financial advisor who has written nearly two dozen books on finance, including “Index Investing for Dummies.”

    Did you transact your business honestly?


    “When a person is led in for judgment [in the next world], God asks: ‘Did you transact your business honestly? Did you fix times for the study of the Torah? Did you fulfill your duty to establish a family?’ ”
    —Rava (Babylonian Talmud, Shabbat 31a)

    The very first question that God asks each one of us after death, according to this passage in the Talmud, is whether we handled our monetary affairs honestly. The Talmud does not say what you might expect—Did you murder anyone? Injure anyone?—presumably because it assumes that most Jews do not do those things. What we are tempted to do, though, is to cheat in monetary affairs. Thus the way one handles one’s money is a sensitive barometer of the moral mettle of a person and hence the very first question we are asked.

    Fundamental Jewish Perspectives on Money

    American Jews are confronted by two very different perspectives about money in the American and Jewish traditions. The Protestant ethic at the core of much of America’s attitude toward money values not only work, but the resources it produces, including money. All too often in modern America, money in this approach is taken to an extreme, such that money becomes the measure of a man – and now, increasingly, of a woman, too. We speak of a person’s “net worth,” referring to how much money or other financial resources he or she has, as if that really defines the worth of a person.

    Another source of American perspectives on money is the Enlightenment. In the Declaration of Independence, Thomas Jefferson says that it is a “self-evident truth” that all people are “endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty, and the pursuit of Happiness.” John Locke, from whom Jefferson copied that sentence, ended it, however, with “life, liberty and property.” In Locke’s theory, we give up some of our rights in order to gain the benefits of civil society. Among these are our rights to all the monetary resources we have produced, for every government taxes away some portion of those resources. The burden of proof, however, rests with the government to show that it needs that money and that it is using it wisely and fairly. That I get to keep a significant part of what I earn is at the root of capitalism, for that motivates me to work to earn at least as much as I need and maybe much, much more.

    In sharp contrast, classical Jewish sources assert that by creating the world, God owns it all. As Moses says to the Israelites, “Mark, the heavens to their uttermost reaches belong to the Lord your God, the earth and all that is on it” (Deuteronomy 10:14). Thus when I own something, I own it only vis-a-vis other human beings. Jewish law definitely does presume private ownership; although communities may own property, individuals legally can own property as well. That ownership gives me the right to use my property in any way I please except as restricted by law. Furthermore, my legal right to my property means that I can sue others in court if they damage my property or try to take it from me by force, and there the rule will be, “The one who wants to take something from his fellow bears the burden of proof [that it is rightfully his]” (Mishnah, Bava Kamma 3:11; Bava Batra 9:6; etc.). All of this, though, applies only to my standing vis-a-vis other people, not vis-a-vis God.

    God’s ownership of the world, though, means that I must abide by God’s rules in doing business. Based on quite a number of specific rules governing business in the Torah itself, the rabbis of the Talmud and later times amplified them in spelling out what the rabbis understood to be God’s demands of us.

    Unlike other systems of thought, in Judaism the human being is neither inherently sinful (“Original Sin”) nor inherently virtuous. Rather, we are born with an inclination to preserve ourselves and an inclination to serve others. The first of these is evident from the moment of our birth, and it takes 13 years for the altruistic instinct to be in full force (Avot D’Rabbi Natan 16), but from then on people must balance both instincts. The self-serving instinct is called the yetzer hara, “the evil instinct,” because caring only for ourselves usually leads us to do bad things to others. Even so, the rabbis recognized that without that instinct, “a man would not build a house, marry a wife, beget children, or conduct business affairs” (Genesis Rabbah 9:7). Conversely, the rabbis also recognized that the altruistic instinct could be taken to an extreme such that a person neglects oneself and one’s family (B. Ta’anit 24a; B. Ketubbot 50a). The proper path is, therefore, to balance both instincts. In the famous maxim of Hillel: “If I am not for myself, who will be for me? If I am for myself alone, what am I? And if not now, when?” (M. Avot 1:14).

    Because God ultimately owns the whole earth, God imposes limits on my ownership. So, for example, according to Deuteronomy 22:8, I must put a parapet on my house’s roof if it is flat and intended for people to use so that they do not fall off. Similarly, the Torah asserts that if I own land that I farm, I must leave the edges of the field and the crops that fall to the ground during harvest to the poor (Leviticus 19:9).

    Furthermore, the community has both the moral right and the legal power in Jewish law to impose taxes, to require that individuals contribute to the communal fund and soup kitchen for the poor, and to regulate individuals’ use of their property through such regulations as zoning rules. Ultimately, the communal court has the right to expropriate an individual’s property because “property that the court declares ownerless is ownerless (hefker bet din hefker)” (Tosefta, Shekalim 1:1; Babylonian Talmud, Yevamot 89b; Gittin 36b). 

    Applying Tradition to Modern Problems

    Jewish sources substantiate what most readers of this essay probably assume—namely, that Jewish tradition has much to say about how we use and conceive of money in the first place. As with everything else, however, some contemporary realities require that we apply Jewish concepts and values about money in new ways. For example, our ancestors could never have imagined the global economy with instantaneous transactions by computer, and they certainly did not deal with the new moral issues of honesty and privacy that it raises. Furthermore, they knew nothing about corporations. Indeed, contemporary corporate international issues are vastly more complicated than the ones raised by the agrarian and mercantile contexts, respectively, that the Torah and later the rabbis of the Mishnah and Talmud assume. Rabbis responding to these issues must therefore identify the relevant values and perspectives of the tradition and then apply them, rather than specific precedents, to the situation at hand. They must practice “depth theology” rather than simply apply a clear and relevant precedent.

    Many of the moral issues modern Jews face with money today, however, are identical or at least very similar to the ones Jews have confronted for generations, and so a relatively direct application of the tradition will suffice. For example, the Torah already knows about the temptation to use dishonest weights and measures and prohibits us from giving in to that temptation (Leviticus 19:35-36; Deuteronomy 25:12-16); that precedent could easily be applied to new kinds of fraud. Similarly, the Torah is well aware of the fact that people will need loans, and it demands that we respond to that need in a way that does not make the debtors slaves for life (Exodus 22:24-26; Leviticus 25:25-55; Deuteronomy 24:10-13). Although we no longer press debtors who cannot pay their debts into slavery, we can learn from the values articulated in these passages that the way we handle loans should be realistic and humane so that people do not lose their livelihoods and their self-respect in taking out a loan. The Torah also knows that some people will be too poor to take out a loan, and it demands that we give food and money to the poor (Leviticus 19:9-10; 25:35-38; Deuteronomy 14:28-29; 15:7-11). The Torah also warns of the haughtiness, and indeed, the idolatry, involved in presuming that I deserve full credit for everything I have, that “My own power and the might of my own hand have won this wealth for me” (Deuteronomy 8:17). Instead, we should have the humility to recognize the role others have played in affording us what we have, especially God: “Remember that it is the Lord your God who gives you the power to get wealth” (ibid., v. 18). In these general ways, and in some very specific ways that are spelled out by rabbinic rulings (teshuvot) from the Middle Ages to our own times, much of what Jewish tradition has to say about moral issues in business rings true and offers us wise counsel still today.


    Rabbi Elliot N. Dorff, rector and distinguished professor of philosophy at American Jewish University, is co-editor, with Louis Newman, of “Jewish Choices, Jewish Voices: Money” and “Jewish Choices, Jewish Voices: Power,” which served as the basis for this year’s Gittleson Seminar on Jewish business ethics at AJU.

    Deciding one’s legacy


    Whether reading about yet another contested celebrity will or comforting a friend caught in a family estate squabble, many of us have stumbled upon the conflictual residue of estate planning gone sour. To be sure, some grantors would be just as happy to learn of these post-mortem dramas; however, this is the exception. Most often, the difference between a grantor’s wishes for his/her estate and the actual legacy that results in family discord, is the unintended and tragically avoidable result of inadequate planning.

    Much of the time, especially with young, healthy people, lack of planning can be a simple matter of administrative oversight or putting off something that seems abstract and nonpressing. It’s as easy to deny the importance of estate preparation as it is to deny one’s own mortality; focusing on estate matters forces us to confront death. Additionally, many parents, especially in affluent families, do not wish to discuss their estates with beneficiaries out of fear of how their heirs would respond emotionally and financially to knowledge of their inheritance.

    Nor are people typically eager to look beyond finance and taxes to face some tough decisions. Such conundrums include how to treat in-laws, remarriage or children with special needs, mental illness or addiction. If adult children have varying family sizes, do you distribute equally among family branches (resulting in some grandchildren having less than others), or do you divide equally among grandchildren (risking potential resentments and conflict among siblings who feel unfairly treated)? If there is a family business, how should shares be divided if some children work in the business and some don’t? How much should be given to charity? How much is enough? Who should be the executor? The questions can get complex indeed. No wonder many wish to refrain from deciding or discussing these issues altogether or fear confronting heirs with their estate decisions. What many don’t consider, however, is the impact of avoiding this process.

    Even in the best of circumstances, money can become a powerful emotional metaphor representing ideas about fairness, or the feeling of being loved, cared for or special. In grief this can become even more pronounced. If the decedent’s wishes are left to chance and/or not made explicit before death, a vacuum is created that can only magnify the situation, and survivors can react in unpredictable ways.

    “The biggest issue is grantors not sharing decisions and explaining why they are made” said Rebecca Maggard, a tax accountant and wealth coach who advises clients navigating the technical and emotional complexities of family estates. Even in the best of circumstances, where family dynamics run smoothly before death, things can go terribly wrong if not properly spelled out.

    “You never know what to expect,” said Maggard, who advises her clients to clearly articulate their wishes in writing and to their heirs to avoid post-mortem confusion and squabbles.

    Even if the discussions are difficult, there is still the opportunity to work things out while everyone is still alive.

    Ways to organize such discussions can range from informal conversations to more formal family meetings organized by outside trusted advisers versed in the complexities and dynamics of family estate planning. Such advisers can include financial, legal and tax advisers who look beyond finance and taxation, or family enterprise consultants who take a more holistic family-systems approach, working with the family to organize around decisions and to facilitate difficult conversations.

    One of the tools Maggard uses to help clarify and transfer family values is an ethical will, the ancient Jewish custom of documenting the values that a person wishes to pass on in addition to financial wealth. Written ethical wills date back to medieval times, with an oral tradition as old as the Bible itself, in which Jacob expresses in Genesis 49 his wishes for his sons and for his burial. Clarifying values in such a way can also help resolve some of the thorny questions needed to shape legal documents and are a way to pass on to subsequent generations the family’s legacy of lessons learned, stories, advice, guidance and values important to them such as family, hard work, education and the family’s role in the community.

    However it occurs, in order to create consistency between intentions and execution of the estate plan, decisions have to be made, written down and clearly articulated to the beneficiaries. While the task may be challenging for some, engaging in this process can be about more than just the financial component of wealth; it’s also an opportunity to decide the legacy of values you wish to transfer and to have that legacy carried on.

    Ilene Weingarten is an associate with Relative Solutions LLC, a family enterprise consulting firm that works with multigenerational families who share assets. Weingarten also maintains a private counseling practice in Santa Monica, specializing in the particular concerns of affluent families.

    Options for Family Philanthropy


    Baruch S. Littman is vice president of development for the Jewish Community Foundation of Los Angeles, which manages total charitable assets exceeding $700 million.

    With the wealth creation of the past 25 years, a generation of recently minted millionaires is now contemplating the philanthropic options that are a fortunate byproduct of success.

    For many, the prestige of establishing a private family foundation (PFF) to dispense charitable gifts to favored causes is alluring — a dream come true. But is it really? As the old adage goes, be careful what you wish for.

    Along with the hope of becoming a philanthropist in the vein of Rockefeller, Gates or Buffett, the creators of PFFs assume considerable burdens, as well, in the form of administrative and investment-management obligations, reporting requirements, minimum gifting of assets as required under the tax code and a loss of privacy. The unfortunate reality is that the expense ratios of private foundations holding assets of less than $10 million often make them woefully inefficient as philanthropic vehicles.

    According to a 2001 study (the most recent year for which data is available) by the Foundation Management Series on the administrative expenses of private foundations, the mean expense ratios of operating PFFs rose sharply as net charitable assets declined. Specifically, the study showed that the expense ratio of undistributed assets was 2.79 percent for those PFFs with assets of $5 million to $9.9 million, with some paying in excess of 40 percent of assets. For PFFs with assets below $5 million, the expense ratio averaged 1.1 percent but ran as high as almost 13 percent. While this survey is now several years old, it is a fair assumption that those expense ratios have only increased over time.

    So given this philanthropist’s conundrum, what are the viable alternatives?

    One of those solutions comes in the form of donor-advised funds (DAF), the charitable-gifting instruments that can be established at most community foundations, charitable-fund host organizations and many commercial investment-management firms with as little as $10,000 to $20,000. For that comparatively small amount, the charitable-minded individual or family can have the personal equivalent of a PFF with complete privacy and no back-office headaches. There are no tax returns to be completed, no annual meetings to conduct. In short, the philanthropist leaves the administration to the host organization and is able to experience the pleasure of distributing charity to needy causes through the DAF. The donor receives an immediate tax deduction on assets used to establish the DAF and can continue to add to the fund over time and realize further deductions on those contributions.

    Of course, there are a lot of zeros between $10,000 and $10 million, and the obvious question is whether a DAF makes sense for someone with significant charitable assets and who is considering establishing or folding up a PFF. The short answer is a resounding yes, and, in many instances, it actually makes the most sense.

    Case-in-point: At the Jewish Community Foundation of Los Angeles, the largest DAF account has a balance in excess of $50 million. Certainly, this philanthropist could create his own PFF or family support organization (FSO), the actual community foundation equivalent of a private family foundation. He has already fulfilled funding of his children’s DAFs, FSOs and PFFs for them as they wished. With his vast remaining charitable dollars, our donor’s own DAF represents the easiest option. Each year, he contributes additional funds to his DAF with either low-basis marketable securities or fractional interests in real estate, which, unlike PFFs, community foundations can accept and offer a fair-market-value tax deduction (more about this to follow).

    There are, as well, a significant number of other reasons and advantages why an individual or family should consider establishing a DAF or FSO as an alternative to creating or folding up a PFF. Among them:

    • Lower costs for management of charitable assets. In general, the management fee for a DAF with assets of $1 million to $10 million will never be more than 1.5 percent. Even better, a comparably sized FSO will have all-inclusive management fees of approximately 80 basis points, or 0.8 percent. Consider these fees in contrast to the aforementioned study of private foundations. In that same data, expenses as a percentage of the annual payout were outsized: PFFs with assets of $5 million to $9.9 million had a mean expense ratio of a whopping 16.3 percent. Those PFFs with less than $5 million still had mean expenses in relation to payout of 7.2 percent.
    • Contribution of C-corp stock or low-basis real estate. PFFs are prohibited under the tax code from receiving contributions of C-corp stock, which is regarded by the IRS as self-dealing. With respect to both low-basis and fractional real estate donations to a PFF, as referenced above, the donor’s deductibility is limited to the tax-adjusted basis (i.e., the depreciated value). As such, a fully depreciated piece of real estate can be contributed to a PFF, but would not qualify for a deduction. By contrast, a DAF can accept both of these asset classes and offer your clients a fair-market-value tax deduction, avoidance of all capital-gains taxes on the donated interests and, in the case of real estate, eliminate the recapture of previously claimed depreciation.
    • Undistributed assets as part of the required 5 percent minimum asset distribution. Commonly known is that a PFF must make charitable gifts of 5 percent of its total assets annually to maintain tax-exempt status. Less known, however, is that DAFs are an ideal repository for these undistributed assets. In the eyes of the IRS, once transferred to a DAF, the assets from the PFF have been given away for proper charitable purpose. Once in the DAF, your client can then take as long as he or she likes to determine how and where to distribute.
    • Second generation (G-2) family issues. Establishing and maintaining a PFF can be a lonely venture. Where to turn for resources? How to engage your children — the second generation — in a shared philanthropic vision? While counsel can be obtained for PFFs, consulting fees can be considerable and add to the above-referenced and onerous operating expenses that cut into available funds for good works. By contrast, community foundations and other host organizations offer a substantial array of resources designed to assist donors: programs on issues in charitable giving, intergenerational planning and assistance in tapping philanthropic passions, for example.

    Before a client accelerates full speed into establishing a private family foundation with less than $10 million in assets, financial advisers would do well to flash the yellow caution light, encourage the philanthropist-to-be to yield, and consider the full range of giving options available before opening the charitable throttle. Doing so are critical first steps in becoming a committed, informed philanthropist.

    When good deals go bad


    So your good deal has gone bad. Perhaps your house is underwater. Maybe that great job, with the promise of valuable stock options, not only has not produced options “in the money,” but has itself disappeared. It could be that your business, once lucrative and full of promise, has gone south, and now you are not sure how to extricate yourself from it, particularly since your partners are your parents. It’s possible you are regretting withdrawing retirement savings to invest in the next sure bet, as “guaranteed” by your (perhaps now former) best friend. What do you do now?

    Before you (re)act (i.e., go legal), you should first be introspective and evaluate what role, if any, you played in your current predicament. Ask yourself: “Did I really have a ‘good’ deal to begin with, or did I have a ‘bad’ deal all along?” Too often, “good” means a deal whose desired outcome exceeds any reasonable expectation, and “bad” means a deal whose actual outcome does not or cannot meet unrealistically high expectations.

    How do you know whether you ever had a good deal (“good” being a deal reasonably likely to meet or exceed reasonable expectations)? One measure is to ask whether a deal is ethical.

    Rabbi David Golinkin, president and rector of the Schechter Institute of Jewish Studies in Jerusalem, discusses six basic principles of Jewish business ethics in a 2003 article for USCJ Review, three of which are summarized as follows:

    • ona’at mamon – no monetary deception (strive for a fair and reasonable profit, but no more);
    • ona’at devarim – no verbal deception (communicate honestly);
    • no “putting a stumbling block before the blind” (do not knowingly take advantage of another).

    California law contains similar requirements: a prohibition on “unfair competition,” a requirement that every contract contain an implied covenant of good faith and fair dealing, and a rule against “unconscionable” contract provisions, just to name three.

    In short, when evaluating the relative goodness of a deal, ask yourself whether you were modest (not greedy), honest, reasonable and fair in your own approach to the deal. Only if you have conducted your own business affairs appropriately should you look for redress elsewhere.

    Now, getting back to your “bad” deals. If you are being totally honest with yourself, is your house underwater because of fraud or deception, or is it underwater because you took out a nothing-down, interest-only, no-doc loan during your third refinancing, pulling out equity along the way? Did you deal modestly, honestly and reasonably with the bank? Were you honest with yourself?

    Regarding your dream job, did your employer actually lie to you, or were you deceiving yourself as to the job’s potential? Or, notwithstanding everyone’s best efforts, did the job simply not pan out as you and everyone else had hoped? Are you culpable for your loss? Is anyone?

    Undoubtedly, there are times when by any objective measure you have been wronged, through no fault of your own. In such cases, you should seek the benefit of your bargain, or otherwise seek compensation for your reasonable injuries. But not every wrong has a readily available remedy. And sometimes, because of your own acts and/or omissions, you should look only to yourself for a solution.

    In light of bad outcomes, regardless of cause, people are often hurt, angry, frustrated and disillusioned. Good behavior and civil discourse often succumb to raw and coarse words and deeds. But we should never forget that Jewish law prohibits both lashon harah (evil speech — “truth” communicated for an improper/negative purpose) and motzi shem ra (“spreading a bad name,” the equivalent of defamation). What we communicate and how we communicate it matters. To seek legitimate redress of legitimate claims is fine. To trash or defame someone, regardless of what he did or you believe he did, is not.

    More difficult is when the bad deal involves a family member, friend or longtime business associate. As if losing a business or investments were not enough, often you may be at risk of losing a familial tie or a personal bond that may not be easily replaceable. Under these circumstances, the stakes are much higher. Are you still willing to “honor” your parents, notwithstanding your economic losses? When you are most frustrated, remind yourself that we are all created b’tzelem Elohim (in the image of God). Can we, or should we, allow economic adversity to interfere with such important relationships? And are we ever entirely innocent, or so innocent that we can say truthfully that we are the only “victim”?

    Money is important, but it can be replaced. Relationships are precious, and once broken or lost, often cannot be repaired or rediscovered. Whenever you are faced with a “bad” deal, look first to yourself and assess your own accountability, and then evaluate carefully that which is most important to you.

    Stuart Leviton, founder of Leviton Law Group, is a frequent lecturer in business law and business ethics at American Jewish University.

    Stanley Black: Businessman, philanthropist, collector


    Moses may have brought the Ten Commandments down from Mount Sinai, but he only gave the Israelites one copy — and those stone tablets weren’t easy to lug around.

    Real estate businessman and philanthropist Stanley Black, on the other hand, has probably distributed hundreds of copies of the Ten Commandments over his 50 years in the real estate business — and he gives them out in convenient, pocket-size booklets labeled “Thoughts to Live By.”

    It’s a tradition that Black’s father, Jack Black, started when he was working in the garment industry. “It was his hope that these ‘thoughts of the day’ would capture one’s conscience and pave the way to a better life,” Black writes of his father in the introduction to the fifth volume of his own booklet.

    Black is an omnivorous collector. Over the past 30 years, Black assembled his most profitable collection, a portfolio of investment real estate properties that stretches across 35 states and includes more than 18 million square feet of space. The occupants of Black’s buildings include familiar names: Wendy’s, Burger King and Office Depot, among many others.

    The 80 or so pithy sayings that appear alongside the Ten Commandments in the most recent booklet say a lot about how Black considers business and life. “It’s the empty can that makes the most noise,” reads one. “The best exercise is reaching down and lifting people up,” goes another.

    By that criterion, Black keeps himself in good shape. Sitting in the Black Equities offices in Beverly Hills, the 78-year-old talked about the ways he has tried, as a philanthropist, to help people get a leg up in the world.

    Black is a longtime supporter of Jewish Vocational Services (JVS), which offers training and counseling to help job-seekers in Southern California. “He’s been involved as a donor for years,” JVS’ chief executive officer, Vivian Seigel, said. Black regularly refers people who are out of work to JVS for assistance, and when the organization honored him at a luncheon in 2006, Seigel said that “Stanley publicly doubled his gift, knowing how big the influence is, and how important it is to help people get back on their feet.”

    Black is also on the board of Los Angeles ORT College (LAORT), the local branch of the 130-year-old worldwide education and training organization. Since opening in 1990, LAORT has educated or trained more than 25,000 students at its two locations. The LAORT building on Wilshire Boulevard, located next door to The Jewish Federation’s headquarters, is named for Black and his wife, Joyce.

    Black helped the nonprofit acquire the building in 1995. “They were asking $3 million. I offered, I think, $2 million,” Black said. He was traveling abroad at the time of the negotiation. “Then I see that they bombed the Jewish Federation building in Argentina,” Black recalled. The sellers had seen the news as well. “An hour later, I got a fax: ‘We accept your offer.’ ”

    The real estate business has changed in the past five decades. “When I started, it was easier. I would buy a property with $5,000 down,” Black said. Still, he likes it, and his son and 24-year-old grandson both now work at Black Equities Group. “There’s opportunity out there,” Black said.

    Jack Black, President Barack Obama and Stanley Black. Photo courtesy Stanley Black

    It’s just a matter of recognizing it — and knowing when to hold out for a better offer. For years, Black and his son Jack have been photographed with prominent local and national politicians. The photo collection includes pictures of the Blacks with Mikhail Gorbachev, Robert F. Kennedy and many others — including the last five U.S. presidents.

    Like many real estate developers, Black often supports multiple candidates in a single election. He supported both President Barack Obama and Sen. John McCain in 2008. He wanted a photograph with Obama, but during the 2008 campaign he was told that it would require a $35,000 donation to the Democratic National Committee.

    Black balked. “$35,000 is too much money. I’d rather give it to a charity,” he said.

    Last year, Obama came out to San Francisco to campaign for Sen. Barbara Boxer. The price for a photograph with Obama had gone down to $5,000. Even with the cost of the plane ticket from LAX to SFO, Black is pretty sure he got a good deal.

    In addition to the pictures, his buildings and his “Thoughts to Live By,” Black has collected countless objects, and nearly every available space in his Beverly Hills office is covered with paintings, sculptures and assorted tchotckes. A sign with Black’s name written in Chinese is affixed to his office door. A soccer ball signed by Bob Bradley, coach for the U.S. men’s national team,  sits on a table in the entryway. Opposite the receptionist’s desk hangs a string of rosary beads in a frame that was presented to Black by L.A. Cardinal Roger Mahony.

    The office is also overrun with monkeys. In an homage to the “See No Evil, Hear No Evil, Speak No Evil” monkeys that sat on his father’s desk many years ago, Black has accumulated dozens of sculptures and paintings of the primate trio.

    The father and son were also photographed with California Gov. Jerry Brown — twice. The first photo of Brown with the Blacks was taken during the governor’s first term in the 1970s; the more recent photo was taken just last year. “I told him not to run,” Black said of his advice to Brown during his last successful campaign.

    The 2010 photo shows how the Blacks and Brown have aged — but one look at Black’s “Thoughts to Live By” suggests that he’s probably not too bothered about getting older.

    “Sometimes,” one of Black’s thoughts reads, “it is better to be 80 years young than 40 years old.”

    Smith Barney doesn’t manage this portfolio. My heart does.


    A conservative, long-term investor, I’ll still admit to my sometimes ridiculous attraction to the highs and lows of risk.
    Question is: How much can
    I — or anyone — really handle?
     

    At 22, I’d fearlessly seek the beta — or risk factor — in anticipation of the alpha — or excess — returns. I’d diversify my portfolio, but often follow a hot dot, whose value would quickly double, drop, then creep back up. When the market tanked? I reveled in my seemingly endless time horizon.

     
    My strategy began to shift after some market volatility, which, combined with maturity lent a better understanding of my own assets and risk tolerance. I became more moderate, investing in diverse, well-researched stocks for a longer-term gain.

     
    Still, my rate of return seemed nominal.

     
    At times, I’d considered leaving the market altogether, but trusty advisers would encourage me to stay the course.

     
    Investment decisions are best executed without emotion, they’d say.
    Yeah, right, say I.

     
    See, Smith Barney doesn’t manage this portfolio. My heart does.
    Disturbingly analogous to the omnipotent stock market, in dating, the alpha of a long-term relationship drives us to invest even more: our hearts, minds, bodies and souls.

     
    We’ll work diligently to review and build our personal assets (be it career, hobbies, looks, personality or all of the above); establish our search criteria (determine characteristics of a partner); and perform severe — if often frustrating — due diligence (dating the gamut to find that sometimes elusive, but impassioned and fabled, soul mate).

     
    As our investment pool in this feverish search shifts, so do our emotions and risk tolerance — often dramatically. And sometimes unexpectedly.

     
    High-risk (newbie) investors might trade short-term losses (“just hanging out”) for long-term gains (dating for crazy love). Moderates (more mature) might accept some risk (getting back out there post-burn) for higher ultimate returns (falling in love … again). Lowest risk takers (seasoned cynics) may seek the safest route (maybe even … gulp … settling).

     
    At 22 and for a while thereafter, the process was thrilling. Working to build my own assets, I was myself an actual beta — figuring my way and learning fancy investment terms while marathoning my lifestyle.

     
    My diversified portfolio included mostly my peers: the drummer, the elevator crush who made me blush, the student, the party-guy who might actually call, the tree-hugging college friend, and even the swamped getting-established professional. My relationships gave me butterflies and stomachaches, but I withstood the volatility, hoping for high returns.

     
    The alpha on these short-term buys sometimes seemed negligible, but experience built my assets for the long term. It also lowered my risk tolerance — a dangerous bout in my maturing stage, wherein people have paired off, leaving bounds of skeptics.

     
    What was “edge” seemed like attitude; opinions became stubbornness. “Stability” translated to boredom; “Fun” often meant noncommittal. And as I became more selective, my investment pool downsized.

     
    Uh oh.

     
    Determined still, I went moderate-to-low with lower-betas who seemed ready to commit: the great guy my age, the goal-oriented (too busy) professional and the creative guy who knew how to channel it.

     
    Ratings seemed positive, but earnings ultimately disappointed. Our stock split, and hearts got broken.

     
    Perhaps my search criteria was askew; I considered old standbys, friends; I diversified madly to mitigate losses, but my risk skyrocketed with my diminishing tolerance and time horizon.

     
    Should I seek growth or the undervalued stock? Hedge? Strattle? Bail out? Or, shoot endlessly for off-the-chart heart-jumps that put me in the red, then black within a matter of days?

     
    Not quite ready to index, I sought value with potential growth. I still sought the beta.

     
    After a market slump, and bordering the defeatist pull-out, a tip off to a charming, intelligent (younger) option surfaced. I’d stay the course for long-term growth, I thought.

     
    First, it was blissful and fun; carefree and light; we’d stay up late and dance around who liked whom. He called me “hot” instead of pretty, bought me chocolates and wrote me sweet cards. He called too late.

     
    And the best part: he believed in “the one.” The one!

     
    Things were swell until liabilities in my beta’s limited repertoire emerged. He struggled to fully identify with me. My skin felt comfortable; his was still filling out. He wasn’t cynical, which, to me, meant he didn’t reflect…. Or maybe, at 25, hadn’t yet lived.

     
    Despite my short-term disappointment, I’d already learned to sell out sooner in lieu of a more “appropriate” investment.

     
    See, while he was still diversifying, I was — apparently — ready to focus my assets.

     
    General rule says: the greater the risk, the greater the return. And in today’s rough relationship market, determining risk tolerance may indeed help assuage some long-term “damage.” Problem is: it may also risk a lower alpha.

     
    And that’s no fun.

     
    Maybe — ultimately — we’re all just betas making our way; our yields to maturity are just different.

     

    Dara Lehon, a freelance writer living in New York City, can be reached at dlehon@yahoo.com.

    Don’t Stress About Your Stock Portfolio


    Back in the go-go years of the stock market, when it seemed that everyone was getting rich, a certain recently retired rabbi started buying shares in a handful of high-flying Internet stocks. The shares skyrocketed. The man bought more. Within no time, he became a millionaire many times over. Well, we don’t have to tell you what happened next. The bear market came, and stock selling for hundreds of dollars a share began selling for pennies.

    “I had lost it all,” the rabbi said. “I went into depression. I even wondered if my life was worth living.”

    Today, Rabbi Benjamin Blech, author of “Taking Stock: A Spiritual Guide to Rising Above Life’s Financial Ups and Downs” (AMACOM, 2003), wonders mostly how he ever got so frenzied about money — both its gain, and its loss. Of course, he is not alone. Perhaps you didn’t sink your nest egg into dot-com stocks, but chances are very good that money — or lack of it — sometimes throws you off kilter.

    “Money is, without question, one of the biggest causes of anxiety and stress in our society,” said Dr. Robert Jaffe, a psychotherapist in Encino. “Fortunately, there are tools we can use to conquer that anxiety.”

    Start with: What does money mean to you?

    “Stress, of whatever kind, comes from fear. Stress over money is no exception. To deal effectively with that stress, you must know what it is you are truly afraid of,” Jaffe said. “For some of us, money represents security, so losing it would mean a loss of security. But for others, money may symbolize happiness, freedom or power.”

    Question your core beliefs.

    After you’ve made the connection between say, money and security, or money and happiness, ask yourself where that notion comes from.

    “Many of our beliefs about money come from our parents,” Jaffe said. “Others come from the constant bombardment of advertising which says that our lives are somehow deficient, and that only by buying ‘stuff’ will we be fulfilled. But ‘stuff’ won’t ever fulfill you.”

    In fact, a number of studies show that the rich — even those who own mansions, private jets and polo ponies — are, at best, only slightly happier than the rest of us.

    “And many people with a lot of money are very unhappy,” Jaffe said.

    Imagine the worst-case scenario.

    Money can often tap into our fear of survival. But for most of us, even a sudden loss of most of our wealth — ouch! — would not jeopardize our survival.

    “Try to picture a worst-case financial scenario, and be honest with yourself,” Jaffe said. “Say, for example, you were to lose your house. Could you still rent an apartment? OK, visualize yourself in that apartment. It’s not the end of the world. You’ll have less space, but you’ll also have less cleaning and straightening, and no lawn to mow, and no trash cans to blow away.”

    Pinpoint the anxiety.

    Brent Kessel, president of Abacus Wealth Partners, a fee-only financial planning firm in Pacific Palisades, is also an avid yoga practitioner. To combat money stress, Kessel suggests an exercise often used by yogis: “Sit quietly and ask yourself where in the body you are feeling the stress. Is it in your shoulders? Your gut? Is it a weighty kind of pain or a stabbing pain? Is it static or moving? There’s no answer in the observation,” Kessel said. “The answer is in the observation itself.” That may sound odd, he admits, but pinpointing the anxiety can often help control it.

    Set the alarm clock.

    “The very worst time to make a financial decision is when you are under financial stress,” Kessel said. “You may make a bad decision, which will then inevitably lead to more stress.”

    He suggests that if you are feeling anxiety-ridden about money, put off all big decision making until tomorrow. If the decision can’t wait until then, at least wait five minutes. Set an alarm clock. Use the time to roll through the exercises above.

    Value yourself for what you are.

    “One day, back when my portfolio was a crazy obsession, my wife asked me why I was calling my broker so often. I told her that I wanted to know what I was worth. Right there, I had a revelation,” said Blech, the former dot-com millionaire. “I repeated those words to myself: ‘to know what I was worth.’ Ridiculous! I’m a rabbi, a parent, a teacher, a mate and lots of other things. I’m worth much more than my portfolio, regardless of its size…. And that’s true for every one of us.”

    Russell Wild is both a financial journalist and a fee-only investment adviser based in Allentown, Pa.

     

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