Advisor spotlight: A trailblazer at Morgan Stanley, Mag Black-Scott has a new RIA and an ambitious plan

Name: Mag Black-Scott, president and CEO of Beverly Hills Wealth Management

Location: Beverly Hills, Calif.

Years in business: 30

Years as an RIA: 1

AUM: $100 million

Mag Black-Scott is not a breakaway broker, but like many of them, her brokerage career led to a second act as an RIA. In her case, the transition came after a trailblazing 30-year career with Morgan Stanley, in which she advanced to the rank of vice chairman of global wealth management. Black-Scott’s critique of the industry that made her career is, understandably, muted. But in starting an RIA firm last spring, Black-Scott has clearly embraced the client-care ethos that has drawn thousands of advisors into the field. She has an ambitious plan for her RIA firm, which has already added five advisors, all of whom, she says, have an ownership stake in the business or will have one.

An interesting side note: Black-Scott five years ago married David Scott, commander of the Apollo 15 mission and the seventh person to walk on the Moon.

How did you get started in the business?

I started as an options trader for a small firm in Newport Beach. When I moved to Florida with my late husband, I moved to a larger firm: I became a very, very successful broker at Dean Witter, which was bought by Morgan Stanley. I was a Chairman’s Club producer at Dean Witter, meaning I was one of the top 150 advisors in the firm.

Because I’m very opinionated, I got into the management track. And I had a lot of fun building that career. I retired at the end of 2008. There comes a time when you’ve just had enough, and that’s how I felt. I’d spent a 30-year career there, and that seemed like good marker point.

How did you see the brokerage industry change over your 30-year tenure there?

When I began in the business, there were hundreds of small brokerage firms. With consolidation over the years, you saw a changing atmosphere, as you always do when one company is merged with another. Larger companies moved toward the financial supermarket; a lot more products were added including banking products and the like. A few clients embraced the all-in-one approach, and a lot of them still liked having different segments.

I think there are a lot of people who are doing the right thing for their clients. And I’m glad to see fiduciary moving to be formalized. I think if you were to ask most clients, they’d assume their brokers are fiduciaries.

After a career in the wirehouse world, you un-retired to form an RIA. Why?

I saw at Morgan, and when I took a year off, that an awful lot of clients suddenly felt they were one of millions, that they were not important to either the adviser or the firm that was holding their assets. I saw clients and advisers leaving.

You’re seeing a flood of people saying, “There has be a different way of doing business. It’s my job to take care of my clients.”

Ours is a trust-based business. We want trust and transparency, and our business model is to recruit advisers of a like mind. They must feel passionately about their clients, and provide the right kind of service.

We offer advisors an institutional approach, open architecture and the opportunity for ownership of the business. We think that gives them a better quality of life.

We started in April, and now have five advisors. We expect over the next 12 months to move to other cities, in Florida, Arizona, Northern California, Illinois, places where the highest-net-worth households are.

What’s your vision for the firm’s growth?

Within five years, we want to have revenues in the $80 million- to $100-million range. We’d be in about 20 to 30 locations in a half-dozen states.

(The RIA industry) is the growth area in money management over the next 10 years, in my opinion. There’s further consolidation to come among RIAs … for reasons of planning, business continuity, and resource distribution, among others.

Who are your target clients?

We have a $500,000 minimum account size, and all of our accounts are in seven figures currently. We’re just not geared up for tiny accounts. As an old broker, you never like to turn any business down, but you have decide where your sweet spot is.

As a boutique, we are able to tailor offerings to clients that you frequently can’t get in larger institutions. For example, if someone wants to invest in a hedge fund, we can access any of them. If there’s a $10 million minimum, we can get investors in through a different portal. We can also find and hire any separately managed account manager for them.

You’ve said you want a “return to simplicity” for clients and advisors alike. What do you mean by that?

Through the last meltdown a lot of clients would say, “I never understood what I owned.” There were some very complex investment strategies. The customer should understand what they’re buying—I think that’s vital. If you understand how your investment works, you have a comfort level with it. If a complex ETF or hedging strategy goes kerplunk, you’re upset because you lost money. But you’re furious because you never really understood what it was. And then you turn around and blame the advisor.

We want to do what is appropriate and right for that client.

Has running your own business been a big adjustment?

The adjustment has probably been to the downside! After my responsibilities at Morgan Stanley, this business is sort of a pipsqueak. But you’re right: It’s thinking about the business holistically rather than in a focused, narrower area. Now I have to look in the mirror and say, “Get this done.”

So at what age, may I ask, did you begin this second act of your career?

Twenty five (laughs). That’s my story and I’m sticking to it.

Editor’s note: Due to an editor’s mistake, an earlier version of this story incorrectly spelled Black-Scott’s name. RIABiz regrets the error.