PROMOTING WEALTH &DIVERSITY
Financial adviser aims to make money management a space where people of all backgrounds can thrive
In recent months, there's been a cacophony of national headlines about the rise and fall of the fantastically wealthy: the spectacular tumble of crypto billionaire Sam Bankman-Fried; Elon Musk's ill-timed $44 billion acquisition of Twitter; the $2.04 billion Powerball jackpot winner who purchased a winning ticket in Altadena, but still has not yet stepped forward to claim the prize.
For William Huston, who founded the Bay Area financial advising firm Bay Street Capital Holdings in 2018, the question always on his mind is how those who manage to amass these massive fortunes can navigate turbulent waters and preserve their wealth for generations.
But Huston is not your typical financial adviser. Huston, who is Black, grew up in a small town in Alabama and went to a historically Black school in Huntsville, Oakwood University. He started his first business while a sophomore as a means of getting reduced in-state tuition. Now, Huston is trying to make wealth management a space where people like him, of all races and backgrounds, can thrive.
Q
Can you talk a little more about the diversity angle to Bay Street Capital Holding's investment philosophy?
A
There's $69 trillion (of wealth) in the U.S., and 98.7% of that is managed by White males. It's not the case that of all the options out there. White male fund managers … are the ones who are persistently performing the best year after year.
So you can imagine two entrepreneurs — one is, you know, a White guy who went to Stanford. The other is a Black guy and went to Oakwood. And then you see their resume. You say, I don't know where Oakwood is and I don't know anyone this guy knows because I've checked on LinkedIn and we don't have any commonalities. Even if you had $100 total, you would
give more than $50 to the White counterpart.
Q
So bias in a way is making (the investor) lose out on all these opportunities.
A
Correct, because you under allocate to them.
Q
It seems like you have a pretty big hospitality investment portfolio. Can you talk a little bit about that?
A
So Black people, they spend $109 billion annually on leisure travel, and of that, less than $1 billion goes to Black-owned properties. A big reason for that, we would argue, is that they don't actually know who owns the properties. And so what we're doing with our portfolio is building a brand of properties that Black people would know is owned by a Black firm. For example, we (Bay Street Capital Holdings) own the only Black hotel in South Lake Tahoe. You might not know that, but a lot of Black people in the Bay would know that because there's such a small community of Black people.
Q
You work with a lot of people who have become suddenly wealthy, like by winning the lottery. Do you think there's a difference between lottery winners and tech billionaires? My mind is on Sam Bankman-Fried or someone like that who comes into a ton of money suddenly.
A
From a risk standpoint, sometimes they can be very similar. Somebody who agrees to risk their money and gamble versus somebody who decides to take a risk to work at a startup. At the time of making that decision, you're trending toward the side of, `I'm going to take a risk and bet on myself.' Whether that's betting on myself and my ability versus betting on myself and how lucky I'll be when I get this lottery ticket. So I think there's some overlap behaviorally.
Q
Let's say I won the $2.04 billion Powerball lottery. What would you advise me to do?
A
The first thing that you would need to do is get your core team of people around you. So before you invest in anything, what you're doing is interviewing
a kind of the core folks. You need your investment adviser. You need your accountants. You need your legal team.
And the spending policy traditionally, if you have an eight- or nine-figure sum of money like you're talking about, is you have a spending policy (amount you budget to spend every year) in place of 4% or less. So if you won $100 million — if you spend $4 million a year — that $100 million will grow over time.
Q
How do people react when they call in to you after just winning the lottery? A Are they, like, excited? I'd say it's the exact opposite. You'd be surprised by how private most people are. Most people won't explicitly say how much money they have, where it came from, or anything like that until potentially the fourth, fifth, or sixth time you've spoken to them. They say, `OK, we've met four or five times. Turns out I got a large inheritance.' I wanted to make sure that I understood your value system and your core beliefs and your core, like, who you are as an individual to see if this matched.