Targeted Strategies for Tough Times

While many financial service providers nationwide have faltered because of the economy, these local organizations continue to thrive

A Holistic Approach

Mike Rampey, vice president of private banking and wealth management at Johnson Bank, has seen a major change in consumers’ outlook on debt in recent years. “Individuals have gone from thinking some debt is acceptable to being more strategic about how to live with less debt and strive toward being debt-free,” he says.Mike Rampey

“A few years ago people used their homes and investments as a fallback rather than having an emergency fund,” he says. “After 2008, we saw people adjust this approach because their assets’ value was abating and they didn’t have emergency funds. Now they’re actively paying down debts likehigh-rate credit cards and starting to save.”

Rampey and his team are meeting with clients more frequently. “They want to make sure their overall financial picture is as it should be,” he explains. “We’re assessing their retirement funds, investments, insurance, long-term care and disability needs. We’re looking at these areas to provide peace of mind were something unexpected to happen, as well as to establish a foundation to build on for their futures.”

Five years ago, many people were accustomed to paying down debt with extra income from their investment portfolios. “That was when returns were over ten percent, but now it’s completely different,” Rampey says. “Now with returns much lower, debt payment has to happen differently.”
If clients had planned to use their investment portfolios to pay for retirement or their children’s educations, they’re now concerned that lower returns or even losses might make it impossible. “They’re asking how they can manage their portfolios differently and still accomplish those goals,” says Rampey.

Since they can’t rely on large appreciation in their portfolios, many clients have scaled back their investments to protect principal. “They’re reassessing their risk profiles to make sure they can meet their needs, and moving into FDIC-insured accounts like money market or savings accounts.”

Johnson Bank is a privately held, family-owned company that takes a holistic approach to clients and their financial lives. “We measure success by generations rather than quarterly profits,” says Rampey. “We take a relationship-oriented approach to each client and build the relationship over time. Every client has different needs and aspirations.”

Consistent Underwriting Practices

First Business Bank predominately serves small businesses, and Mark Meloy, president and CEO, is seeing the effects of uncertainty in the marketplace. “Entrepreneurs are unsure how their costs of doing business, their tax burdens, the regulatory environment, and federal and state budget deficits will evolve,” he says.Mike Meloy

“So not as many businesses are focused on expansion or acquisition of fixed assets,” Meloy continues. “We have to bring some certainty and stability about expectations for the future. I really believe that’s what’s behind the Fed saying in an unprecedented way that they expect to keep interest rates low for the next several years.”

His bank offers a full range of loan and deposit services. “We’re unique because we’ve segmented the business banking market, targeting mostly companies that do business-to-business sales,” he says.

These include manufacturers, wholesalers, distributers and some service companies. “We do have some businesses that sell to consumers; we have great clients in that category as well,” Meloy qualifies.

He says small businesses’ demand for loans has fallen because of the uncertain environment and because many have seen significant revenue decreases. Some have suffered harm to their creditworthiness. And increased regulatory scrutiny has led some banks to tighten underwriting criteria.

But First Business Bank has been consistent in its underwriting practices over the years. “That’s been very important to our success,” says Meloy. “In boom times, lenders, investors and businesspeople tend to be more aggressive. It’s hard to make a mistake in boom times, but with the issues the challenging economy pose, certain banks are taking a more conservative approach to lending.”

The deposit side is strong as well at First Business Bank. “Depositors look for three things: the highest possible yield, accessibility, and safety and soundness,” says Meloy.

The nature of risk and reward in economics means depositors can have two of these three important factors, but not all three. “If they want high yields, they have to make long-term deposits and won’t have accessibility,” Meloy explains. “If they want safety and soundness, they’ll go for a money market or a checking account with lower yields. It’s part of the time value of money.”

The FDIC now insures deposits up to $250,000, and depositors can title their accounts so as to maximize coverage. “For example, a couple could have two accounts, one under each name, with two different Social Security numbers, and they can get $500,000 of coverage,” says Meloy. “Or they could each have an additional account in our Milwaukee bank—which has a different charter—and have those deposits covered up to $250,000 each.”

A friendly, Small-Town Mentality

Andy Burish, managing director at UBS Financial Services Inc., is also seeing more risk aversion in clients. “People are still in shock from the financial crisis three years ago and are very sensitive to risk,” he says. “In the last decade we went through two major bear markets; it was the worst decade for equity markets since 1861.”

Andy BurishMost people aren’t abandoning the stock market, but they’re more conservative. “Today, roughly fifty percent of Americans have some stake in the market, but they want more predictable cash flow and less volatility, which gives you lower returns,” says Burish. “People used to expect double-digit returns, but they’ve lowered their expectations; they’re happy with five percent or six percent.”

His organization, the Burish Group, helps individuals and businesses manage their wealth based on developing custom financial strategies to reflect their needs. “We explore areas including: What are their goals? Have they accumulated enough wealth to meet them? Are they still accumulating enough? When can they retire?” Burish says.

“We have almost thirty years of experience and we’ve been through five bear and bull market cycles,” says Burish. “We’ve been investing internationally for twenty years, and our parent company has hundreds of offices globally. We’re truly global investors.”

Almost everybody in the Burish Group comes from small towns. “I came from Wausau. We have that small-town, friendly mentality,” Burish says. “It gives us a little different perspective on how we treat people.”

He and his family are very active in the community, which also helps Burish and his wife Anna, a strategic advisor for the group, stay in touch with the needs of consumers and businesses. Both Burishes are the first in their families to graduate from college. They’ve endowed a scholarship at UW– Whitewater for first-generation students who want to become teachers and will teach in urban schools, as well as a scholarship at UW–Eau Claire for first-generation students studying nursing. 

— Judy Dahl

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