Staying open to opportunity.

Wilshire Associates' Dennis Tito updates concept of Renaissance man

Those who know him say Dennis Tito defies stereotyping of any kind. That has certainly been true of his professional life.

The one-time rocket scientist has transformed himself into a Wall Street name -- as president, co-founder and majority shareholder of Santa Monica-based Wilshire Associates Inc., a major institutional investment management and consulting firm.

The 160-worker firm directly manages about $9 billion in pension fund assets, with total independence as to how those assets are invested.

And more recently, Tito has been venturing into big city politics by serving as president of the Los Angeles Board of Water and Power Commissioners.

He has eluded being pigeon-holed personally as well. Connie Rice, who serves with Tito on the city's Board of Water and Power Commissioners, says they have gotten along famously since their introduction despite their very different backgrounds. Tito is a prominent Republican Party supporter; she is a civil rights litigator for the NAACP.

Rice says she was immediately surprised by Tito's open-mindedness and curiosity about those with differing opinions and backgrounds.

"He asked for my help in understanding racial dynamics," says Rice, adding that she was equally surprised to find out he has read feminist literature to understand the difficulties women face.

"He is very cognizant of other people's reality," says Rice. "Dennis does not hold himself as the standard."

For his part, Tito says he simply enjoys learning about unfamiliar things. Perhaps it is that craving for new ideas and new understandings that has guided his life and career through its divergent paths.

He initially came to California from New York about 30 years ago as an aerospace engineer to work at the Jet Propulsion Laboratory in Pasadena. Now, however, it would be hard to guess that Tito was ever a rocket scientist at all. He looks comfortable in the prototypical dark suit and white shirt of the Wall Street world in which he now works. Yet, he says, it was his experience as an engineer that led him to finance and has influenced his professional views.

Reflecting on his years at JPL, Tito says working with a team of "talented individuals who were passionate about their profession was very important in forming my views as a professional." Also important was the understanding that there was no room for error in calculating his assumptions.

The six-year experience also led to a more personal discovery: Though the JPL job was "a lot of fun," its economic rewards were limiting. "The pay was not too great," he recalls, "and I had to think about supporting a family."

So, disillusioned with life as a rocket scientist, Tito began to broker securities transactions for James H. Oliphant & Co. He also enrolled in UCLA's MBA program, thinking it would give him the tools to get into management.

An introduction to quantitative finance waylaid those plans by giving him the basis to prove what he had long suspected: that there might be a structured approach to running an investment portfolio.

Up until that time, Tito's knowledge of the market had come from popular guidebooks. "There was really no scientific basis for any of the ideas that people were presenting as a means of beating the market," he asserts.

In 1972, with $150,000, Tito and three other associates from the Oliphant securities brokerage founded Wilshire Associates.

Wilshire Associates' initial goal was to help investors choose an investment strategy and the right portfolio manager to successfully implement that strategy. To accomplish this, Tito says, the firm created the first asset-liability model for pension funds and built up databases "unparalleled in scope."

These databases, he claims, now hold 20 years' worth of daily stock price information, data on economic fundamentals and "the best" available data on international securities. And in addition to being used in-house, the data has been channeled into tools adopted by the rest of the market.

Financial success in hand, Tito is now expanding his life experience to include politics. He joined the Los Angeles Board of Water and Power Commissioners last year and, on July 19 of this year, was appointed board president. Tito says he has enjoyed the work he has done there so far.

"I'm trying to make (the DWP) less like a government bureaucracy and more like a business, which we will have to be to remain competitive in a deregulated electric utility market," Tito says. "I'm trying to create a more competitive attitude on the part of management, where attention has not traditionally been directed toward minimizing costs."

Tito downplayed the significance of one highly publicized incident in which DWP managers were criticized for ordering an expensive luncheon during a labor strike earlier this year.

"I'll be the first to criticize spending too much money, but that (lunch bill) is really small potatoes compared with what a $3 billion (annual revenues) company must deal with," he says.

"The main thing that I have learned about politics is that it is much harder than I thought it would be," he confesses. Like many outsiders, he thought he would be able to step in and turn the department around in record time. But "things just don't work that way in the public sector."

His commitment to the DWP reflects a commitment to the city he refers to as "the greatest city in the world."

As an ex-New Yorker, however, Tito does not simply embrace California as a home. He admits to having acquired a true California lifestyle and attitude.

The view from his office at Wilshire Associates peeks out over tall palm trees onto the Pacific Ocean. The interior of the firm's offices are Japanese-inspired with warm-colored woods and shoji blinds separating the offices. And Tito's corner office opens onto a sun deck strewn with white patio furniture.

"It's a very modern design," he points out. "I didn't want the offices to have the traditional Wall Street look with wood paneling on the walls and dark-colored furniture."

Tito swears he does not sneak out to the beach during the work week, but on weekends he spends a lot of time in the waters off the California coast. He takes his wife and three children sailing in his boat.

About six years ago, Tito took up a second water sport, and has been wind-surfing with his youngest son ever since. He added that, although he started out on a long board, he has since moved to using a small, performance wind-surf board.

His latest educational adventure has taken him away from the beaches and into downtown L.A. -- to the Los Angeles Music Center. He is just starting to learn about music and says he is so taken with opera and classical music that he has donated his home as a site for fund-raising for the Music Center.

Snapshot

Dennis A. Tito

Resident of: Pacific Palisades Native of: New York City Age: 54 Education: Master of Engineering Science, Rensselaer Polytechnic Institute, Troy, N.Y.