Why Manhattan West Uses Only Proprietary Investment Strategies

Lorenzo Esparza admires Bernstein’s model. “We’re going to manage all the money in all these asset classes and if we don’t perform, you can go elsewhere.”


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Manhattan West is largely the story of CEO and founding principal Lorenzo Esparza and his vision to create a service-focused, forward-looking investment firm. The steady rise of the Los Angeles-based company reflects the career evolution of Esparza himself. In a discussion with RIA Intel, Esparza talks about how he got his start, his background and how it informs his vision for his firm, and what differentiates Manhattan West from competitors. The interview has been edited for length and clarity,

RIA Intel: You’re the son of Mexican immigrant parents. How did that shape you and contribute to your success?

Lorenzo Esparza: My dad took me to literally go pick strawberries on the weekends with the farm workers. He was a construction worker, my mom was a bank teller, and we grew up pretty modestly, and that’s probably being polite. But that really taught me a work ethic. I remember when I was 12, he was looking at me like, “Are you getting a job?”

When I joined Bernstein and they said, “You have to have 15 meetings a week.” I said, “I’ll have 20 and I’m going to get in at 6:00 AM and be the first guy in and I’m going to leave after everybody else leaves.” In today’s day and age where people say, “Well, I want to work from home,” or “Oh, I got to get out of here,” I’m a guy that came from a different school.

You have a law degree from Loyola Marymount University. How did you go from law to being an RIA?

My parents wanted my brother and I to be a doctor or lawyer. That was their vision of wealth and getting to the next level, and so that was the mentality I was raised with. And for a moment in time, I was going to be the doctor, my brother was going to be a lawyer. I couldn’t handle the sight of blood and he didn’t like the social sciences, so we flipped.

But I don’t think I’d actually met a lawyer by the time I went law school. I tell the story being in my first class, civil procedure, and I’m like, “Oh my god, what did I get myself into?” But it was a great experience.

I knew right away in law school that was probably not going to be my path and I was really focused on the capital markets. I liked the idea of a global economy and what it meant to participate in that. And, when you grow up poor, you think about money all the time or the lack thereof, so I wanted a career that would create a living and build wealth.

Tell us about your stop in the entertainment industry.

I interned at Paramount Pictures right after my first year of law school. I was in business and legal affairs. I showed up early, left late, wore a suit, took it seriously, and when I got done with law school, I had offers to join law firms and I literally went to the leadership at Paramount and said, ‘I really don’t want to go and do this. I’d like to stay here.” And they said, “We hire lawyers that have been at Gibson Dunn for 10 years or Skadden for 10 years, but we like your work ethic. We’ll give you a job that’s more a business affairs, business orientation.”

I did well, but really found Bernstein and found the financial service industry through some friends that I met in the entertainment business. I talk about Bernstein a lot because they hire folks that come from outside the industry that have an advanced degree and then have a track record of being successful doing something. I was fortunate that I checked those boxes and that’s when I made the transition into financial services.

You joined Bernstein Private Wealth Management, but then moved on quickly. Tell me about that.

I spent a couple of years at Bernstein and then the financial crisis hit, which is really what caused me to leave. This is 2009, the world’s falling apart. I had offers from multiple firms and one of them was RBC Wealth Management in Beverly Hills. My thought was Morgan Stanley had just bought Smith Barney, Merrill Lynch had just gone bankrupt, JPMorgan had just bought Bear Stearns, and Barclays had just bought Lehman Brothers. Those were firms that I was talking to and was getting offers from. A boring Canadian bank, which survived the financial crisis in a very meaningful way, seemed like a good idea. So, I went to RBC for about a year or so. It wasn’t the best fit for me.

How did you end up at J.P. Morgan Securities?

When I was at Bernstein, I had developed a relationship with a great guy who was now at JP Morgan, and that was really the place I wanted to be. So, I left RBC and went to J.P. Morgan and took all our clients for the most part. I quadrupled the size of the business from the time I started to the time I left.

RI: You were successful. Why did you leave?

I didn’t leave because I was unhappy. I left because I really had a vision for where I thought the wealth management industry was moving and I wanted to be part of that. I had offers to go to other big firms. You get recruited and you get these large recruiting packages. My wife said, “Well, that sounds like a pretty good idea,” and I said, “No, honey. I’m going to take zero. I’m going to start my own thing.” So, you can imagine, thankfully, my wife of 22 years is a lovely woman and patient and trusting, but that was the bet I was making on myself and what I thought we could create here.

What was the vision?

The big idea was to develop this private client ecosystem where we create these alternatives, and that we really lean into those proprietary strategies, not unlike what Bernstein did. So, at Bernstein, you only invest in Bernstein strategies, and my reflection of Bernstein doing it their way and really owning it was impactful to me.

The other thing is being at JPMorgan, we had access to the best managers, but the best managers don’t always perform. And so, I like the idea of saying to someone, “We’re going to manage all the money in all these asset classes and if we don’t perform, you can go elsewhere. But if we do, I think you’re going to be happy with what we do.” And I just think that is much more aligned with what clients need and what they like versus the alternative, where I say, “I’m going to take your money and I’m going to put it with this guy and this person and this person and this person. And then if any of them don’t perform, we’ll fire them and find somebody else.”

We like that idea of being fully responsible for what is happening to the outcome of these accounts. That was really where it all started.

You now work with a lot of athletes and celebrities. That must be fairly competitive, especially in L.A.

It is competitive. It’s not necessarily the biggest part of our business but I think we tend to win when there’s a beauty contest with different firms. I have the utmost respect for a Morgan Stanley, but we’re very different than Morgan Stanley or UBS. I think when people hear our story, it’s a compelling narrative of how we work with clients. I like our chances. We’ve competed against the biggest and best and we’ve won.

Manhattan West won this RIA Intel award, but you’ve said you don’t consider yourself an RIA. Why not?

I was wondering if that would come up. I’m grateful to have won this award. I simply talk about the idea that we’re not just an RIA. We’re doing so much more. I think people think of an RIA as, “Oh, it’s just an independent firm and they either custody with Schwab or Fidelity or both and then they manage money for you,” and that’s just one aspect of our business. We’re an investment manager, we’re business managers, we’re tax professionals, we’re advisors, we’re planners. There’s just a lot going on when someone hires the firm and the intellectual capital that we have here. I think just that plain vanilla description, an industry standard, is just not fully encompassing what we offer.

Given your background, how do you approach diversity in hriing?

We’re not intentionally going out and trying to find diverse candidates. The fact that I’m Latino, my parents were from Mexico, just happened to be who I am. But when we go out to hire people, we’re looking for exceptional candidates. Folks tend to say, “the ideal candidate looks like me and he’s a white guy that looks similar to me.” And in all candor, at JP Morgan Securities, at that time, I was probably the only Latino. There were no African Americans and there were very few women. It was mostly white guys. We have several African Americans that work here in positions of responsibility, several women that have positions of responsibility, advisors that are diverse. You have folks that are LGBT. We, again, never really think about it. We just hire great people and diversity came from just having a really open mind about who we’re looking for and that’s been a wonderful thing.

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