St. Louis Business Journal Table of Experts
Financial Wellness in 2023
|Feeling the Pinch||Top Business Rituals|
|Defining "Financial Wellness"||Planning is Key|
|New Year, New Rituals|
While news programs and articles continue to report doom and gloom about the U.S. economy, it is not news to people who have been feeling the pinch in their wallets and households for months.
Financial professionals from Midland Wealth Management, Midland Trust Company and Midland Commercial Services Division recently shared advice to help quell fears for people struggling to make sense of their finances and plan ahead for 2023.
Serving on the Midland virtual panel were Matt Estel, Director of Sales for Wealth Management; Jeffrey Schmidt, Director of Trust Services; Steve Kernahan, Financial Advisor; and Tim Schlichting, Senior Commercial Services Relationship Manager.
Robert Bobroff, publisher of the St. Louis Business Journal, moderated the event. “We know there is anxiety out there about the recession and corporate finances, so this is really timely information,” he said.
With the topic of our discussion today, how do you define ‘financial wellness?’
Estel: Most of our clients are wondering if they are going to make it and do they have any blind spots? Our goal in general is helping people go through life with confidence and dignity. It's aligning wealth with purpose through the development of a financial plan where you understand the impact of your behaviors and decisions in real-time.
It's 2022 and people want to partner with their financial advisor and use digital tools to engage on their own. And then they want to take all that information and come back and ask the questions that are most important to them.
Our job is to be a guide, a coach and an accountability partner through somebody's life journey to give them that safety and security that they're looking for.
"Most of our clients are wondering if they are going to make it and do they have any blind spots?"
- Matt Estel, MBA
For someone seeking financial wellness in the new year, what is the top ritual you might recommend?
Estel: The last three years have just been crazy. We've had a national pandemic, the markets have been up and down and there's been a lot of changes. I think people have a lot of anxiety from that.
When you're thinking about financial wellness, I often tell prospects that even if it's not me, find the person that you trust, who has done planning for you, has your best interest at heart and that you can consolidate with.
You really only need a head coach and partnership with one person. Most of our clients are probably getting advice from two to four different people, but my recommendation is to find that one person that you like and trust and is coming to market with the care and concerns for you and your family.
People may be concerned that they would be putting all their eggs in one basket this way, but it's really not. What it's doing is making sure that your fees are lower, that the attention you're getting from your financial advisor is higher, that you're not taking on too much risk and you're not buying the same stuff in different wrappers and different vehicles.
It's never too early to start planning, regardless of age. The number of people in their 40s, 30s and 20s is growing. We’re in a different world than it was 20-30 years ago, and there's not a safety net like there used to be. That's why those conversations are so important. Have a plan with someone you trust and then make sure you understand the plan.
Schmidt: When I heard that question, I immediately thought of managing required minimum distributions (RMDs) since we're all looking at the end of the year here. Clients may be trying to figure out what to do with the RMD from their IRA. If I'm in that category of age, there are a few things to think about that an advisor might recommend, such as a Roth conversion or ways to help eliminate or reduce taxes with a foreshadowing of a higher tax rate in the future.
The defined benefit plan or corporate pension programs seem to have gone out of vogue unless you work for a government entity, but they've been replaced largely by 401(k) or personal investing for the younger generations.
Kernahan: I echo both of Matt and Jeff’s sentiments about this being the time of year when I look at these needs and opportunities with my clients. We want the most tax-efficient space we can find and decide if we need to make more contributions to an IRA, make more donations and max out contributions for the year.
There are a lot of things that can be done before year-end to help prepare you better for 2023. If you're a small business owner, have you had a run-up on some of your investments where you can offset any gains with losses? Can they be more efficient and bring home more than they thought, working closely with other people in their network, such as their tax attorney or business partner, just to make sure that everything is running smoothly?
For business owners seeking financial wellness in the new year, what is the top ritual you might recommend?
Schlichting: From a business perspective, we're in a volatile time relative to interest rates. As we see lending rates increase and the cost of borrowing money gets more expensive, deposit rates are rising, as well. So many of our business owners are looking for opportunities from a deposit side to look at ways to invest excess cash in the short-term.
I ask business owners facing challenges relative to interest rates, how are they factoring this into their 2023 business projections? That includes their financial wellness and succession planning. They may decide to sell the business or try to pass the business on to another heir or family member. We often see that our business owners are so focused on growth, but should be reminded about their biggest asset, their people. Are they protecting them? The people help grow the business. Are they providing retirement plan options or benefits?
"...a big part of what we do is to help people prepare for that so they can take care of the things that are most important in their hearts and minds – their family."
- Jeffrey Schmidt, JD
Schmidt: Succession planning is huge, so those of us on the wealth side focus on individual wealth planning and succession. These days, a typical buy/sell agreement for a small business can be the cornerstone of the business owner’s personal estate plan, and it's important to make sure that both sides of the equation dovetail with each other so nothing is overlooked.
There are questions about how to handle a child that's not engaged in the business. What if you have three kids, and you want to pass the business on to the two that are in the business? Your goal as a parent is to treat them all equally. That's a common concern.
Maybe an insurance trust is something we would suggest, but business owners today sometimes don't think that far ahead because they're so busy with what they're doing every day – building, managing and maintaining their business.
Sometimes they get a bit of immortality complex, and we've got to bring them back down to earth. We all have this one common end, and a big part of what we do is to help people prepare for that so they can take care of the things that are most important in their hearts and minds – their family.
That’s why we do estate planning in the first place; it's for that peace of mind and knowing that we have taken care of the people that matter to us most. We’ll know that when we're no longer here, things will be managed in a way consistent with our desires.
Schlichting: Agreed. And then from my experience, we see business owners hyper-focused on growth, especially if they built the business from the ground up. I've worked with a lot of business owners who have started the business at a table, grew it exponentially and now they're at a point 30 years later where they don't have a clear projection on succession planning.
I've also read articles that indicate 75% of small business owners don’t have a succession plan in place, so that’s often one of the first things we discuss. Maybe they don't feel like their children are the right fit at the moment, so where do they go at that point? Do they look outside the business? Do they start focusing on an alternative path, such as promoting someone within the company who was there from the beginning?
Often when business owners are growth focused, they can lose touch of the day-to-day operational components. Are they meeting with their CFO or controller on a regular basis to provide checkups? How are things going from a wellness perspective? Are they on track? Those questions help guide projections for 2023 and how they're moving the company forward. Another question they may need to ask is whether they have the right protocols in place to protect them from fraud. What could they be at risk of losing if they don't have fraud prevention products in place to protect them? They may want to seek treasury management solutions, such as fraud prevention tools like positive pay and/or blocks and filters to protect their account from potential exposure.
Schmidt: And on the personal side, asset protection planning is huge for medical practices, doctors, lawyers or any business owner who could be susceptible to a lawsuit. And I think it's safe to say most would not want to expose their personal assets or at least as little as possible.
"There are a lot of things that can be done before year-end to help prepare you better for 2023."
- Steve Kernahan
Planning seems key when it comes to financial wellness. What are other rituals that might guide someone in the new year?
Schmidt: I think everyone should create an estate plan, draft a will and trust, but get a competent attorney to do that. Don't just go to the internet. People might say they don't have enough money to have a trust, but it's not really about how much money you have. A trust is the most common estate planning tool, and they've been around for thousands of years, believe it or not.
With a trust, you establish an entity that holds your assets and then you provide through written document what you want to happen to those things upon your death or your incapacity. You remain the beneficiary of that trust as long as you're alive, but when you're no longer able to do so, a successor trustee like a bank is named to take over.
Estel: To me, it comes back to making sure that we understand the needs of that family, right where they are. And for a business owner, it’s important to help them protect their biggest asset, which is their people. Working with them to establish financial wellness for everyone in the company is a good goal.
Schlichting: And that helps businesses retain their best customer – their employees. If you have a competitive retirement plan, an employee benefits package, and a business investment plan, you’ll help set your business up for success and wellness.
"We often see that our business owners are so focused on growth, but should be reminded about their biggest asset, their people. Are they protecting them?"
- Tim Schlichting
We’ve touched on high-level planning needs as it relates to financial wellness. What are a few quick tips you might recommend to someone so they can get started?
Schmidt: Pick your team. Find people that are able to help you with questions that you might not even know. Good advisors can really help you navigate your way through this stuff, which is pretty complicated. We're giving you the tip of the iceberg here, but there are so many other ideas, thoughts and tools we can use as professionals to help a business owner or an individual secure their wealth, make sure that their business runs smoothly and accurately, take care of their beneficiaries or family members, but also take care of their work family. To do that in an organized and deliberate way, you need the advice of professionals.
Estel: Our clients range from CEOs and business owners to retired people or working parents, and most of them don't track everything that's coming in and going out. Some easy things to do for your financial peace of mind would be to create a budget for the new year, maximize your 401(k) savings, make sure you've got the right type of insurance and coverage and that you’re protecting your family and assets.
I think most people hear the words financial planning and it sounds daunting, tedious, time-consuming and something that they will have to work at. It's not going to be any fun, right? But that’s why I keep going back to that heartled, trusting and emotional component being part of it. Our job is to never tell somebody what to do and how to do it. Our job is to come along beside you and be that advocate, coach and accountability partner. If you have things that keep you up at night, what does it cost you? Is it costing you your relationships, your health, or threatening your business, which may not be firing on all cylinders because you did not address some of these issues? Give yourself that gift this holiday season – take the time to sit down and plan ahead. When you have control over your finances, it reduces stress, prepares you for the unexpected, and helps build wealth and wellness for years to come.
- Bonita Tillman
Meet our experts.
Matt Estel, MBA
Director of Sales - Wealth Management
Matt serves as Director of Sales for Wealth Management and is responsible for leading all field sales, financial planning, service experience, coaching, and talent development aspects of the Wealth and Financial Advisory businesses. With the goal to deliver holistic solutions to our clients, he develops strategies to identify consumer and business investor needs, effectively onboard new clients and advisors, and elevate client engagement practices.
Matt is an award-winning financial services executive with a progressive career in business development strategies, advisor recruiting, sales leadership, executive coaching, comprehensive financial planning, driving innovation and building advisory firms through differentiated client experiences. He held previous roles as VP Market Leader for U.S. Bancorp Investments in Minnesota for 100+ branches and 40 advisors, Executive Director for JP Morgan Chase Private Client in Texas, and Waddell & Reed as Executive Director of Practice Management and Consulting in the Midwest including experience in St. Louis. Matt graduated from University of St. Thomas.
Jeffrey Schmidt, JD
Director of Trust Services
Jeff serves as Director of Trust Services for Midland Wealth Management and Midland Trust Company. He leads Trust Services managers, Senior Trust Officers and Trust Administration teams who specialize in the administration of trusts, estates, and guardianships across multiple locations. Jeff has provided leadership and expertise as a corporate fiduciary for over 25 years, starting his professional career at a large Chicago law firm as an associate attorney where he concentrated his practice in trust and estate. Prior to joining Midland, he served as the Director of Fiduciary Solutions for a super regional bank.
Jeff obtained his Juris Doctor from Chicago-Kent College of Law – Illinois Institute of Technology and his Bachelor of Arts degree from University of Illinois. He serves on the Board of Directors for the Illinois Chapter of the Alzheimer’s Association.
Steve serves as Financial Advisor for Midland Wealth Management covering the Missouri region, and works out of our Ladue office in St. Louis. He believes all client relationships are built on a foundation of a financial plan. Steve brings over 25 years’ experience in financial services across varying roles including Financial Advisor, wholesaler, regional and branch manager. His strengths and skillsets include financial planning, relationship management, training, sales, service and business development. He has extensive sales experience with securities (fee-based portfolios, annuities, retirement plans, mutual funds, separately managed accounts, alternative investments, thirdparty managed platforms and insurance products) in the retail and institutional marketplaces on independent, bank, insurance and advisor channels. Steve obtained his master’s degree in business management.
Senior Commercial Services Relationship Manager
Tim serves as Senior Commercial Relationship Manager and is responsible for managing client relationships and business development for Midland’s Treasury Management division. His specialties include providing solutions for maximizing client cash flow and providing efficiencies in account receivable, payment processing, shortterm investments and merchant services. A few of the industries he works with include large corporate, middle market, non-profit and public funds entities.
Tim’s career and experience in Treasury Management spans over 24 years and has complemented his knowledge in building long-term banking relationships. Tim is a graduate of Lindenwood University with a bachelor’s degree in Business Administration.