Interview: Gregory Kadet

Passing the torch

As the current generation of wealth advisers reaches retirement age, the next generation is being groomed to take over

Gregory Kadet Managing Director & Market Head Florida Gulf Coast, UBS Global Wealth Management U.S.

What is the state of a¡airs for wealth management firms in the Tampa Bay area? The average age of wealth management advisers nationally is approaching 60 years old. Therefore, recruiting and training the next generation of advisers is paramount to our industry today. Specifically, there are a number of paths to becoming a financial adviser at UBS. One path in particular is our intergenerational program called IGAP, which is dedicated to developing the sons and daughters of our current advisers. It is a three-year program and candidates can start upon college graduation. Throughout the program, our young professionals rotate through different wealth management departments, with the goal of producing well trained and capable advisers. We also have our Wealth Management Development Program (WMDP) based in the local market and open to any candidate. In addition to in-market training, participants attend four development meetings in New York City. Our third program is within our Wealth Advice Centers. This program is dedicated to generally younger professionals with at least three to five years of experience. They are located in either New York City or Charlotte, and work on teams servicing our emerging affluent clientele. After a few years, they can choose to work in any of our offices nationwide

What challenging trends have you identified with regard to working in Tampa Bay? In the last 18 months there has been a marked difference in our transportation flow regionwide. Our company has concerns about future talent retention and possible reduced productivity caused by delays in work mobility. Our wish is for the Tampa Bay community to come together to address connecting our great region for the future. For example, employees and potential new hires in the East Bay (Riverview, Brandon, Valrico,

to name a few) generally will not drive to take on a role in Pinellas County. Even though these areas have employment opportunities, the thought of driving over two hours per day is a nonstarter. Commuting to work is a fact of life for most people; therefore, having multiple transportation options like light rail can bridge both the time and productivity gap.

What are the key factors to keeping Tampa Bay’s growth sustainable? The recent transportation tax will begin to address our region’s mobility issue. We can, as a region, get it together; it is an easy fix just waiting to be done. Updating and expanding our highways and adding light rail, will make a significant improvement to work mobility and productivity.

Terry Igo CEO – Tampa Bay Trust Company

We are very proud that our growth has been 100% organic. We have not acquired any firms, and our business comes through word of mouth from satisfied clients, CPAs, attorneys and other advisers in the wealth management space. So how do we sustain our growth? Growth is twofold: the appreciation of our clients’ assets and growth through obtaining new clients. New clients continue to come to us because we do a good job. Equally important is our responsibility to hire quality professionals by providing opportunities for not only those who are established, but the next generation of employees and leaders of this company. Businesses have no choice - they either move forward and grow or they move backward. We choose to grow the business, but we do so responsibly so we don’t lose the very culture that our clients and colleagues came to trust in the first place. The key is to hire exceptional people from the beginning.

( ) Banks in the region added some $6.1 billion in assets Q1 2019 alone. This is despite a 50% decrease in the total number of banks headquartered in the region over the last five years – clear evidence of the consolidation taking place in the sector as institutions acquire and merge with one another, meaning that a decreasing number of institutions vie for control of the ever-growing pool of assets. Of the 24 banks that are still headquartered in the area, 20 posted yearover-year asset gains between Q1 2018 and Q1 2019, according to FDIC’s latest figures. An astonishing 80% of the increase in actual dollars was raised by Winter Haven-based CenterState Bank and St. Petersburgbased Raymond James Bank.

In addition to their strong performance in terms of assets acquired, area banks also performed well in terms of return on assets. According to FDIC data, Charlotte State Bank & Trust, with $368.6 million in assets through March 31 2019, and Englewood Bank & Trust, with $307.4 million, are midsized banks relative to others operating in the Gulf Coast, yet both generated an ROA above 2% in the first quarter – a very strong showing for banks of their size. “Growth runs in cycles, but with the in-migration in Florida it is on a healthy trajectory. The tax reform act that went into effect increased this level of in-migration because it made it so much more attractive to live in Florida. We were recently up north talking to some banking professionals and they were commenting about how much housing prices had declined and how so many people are wanting to get out of that part of the country due to high expenses. Many of these people want to move to places like Florida where the environment is more capitalistic,” John Thompson, president and CEO of Central Bank, told Invest:.

Another sign of healthy sector performance is the desire of major financial industry players to break into the Tampa Bay market. For example, Fifth Third Bancorp, the 10th-biggest U.S.-based consumer bank in the country, has plans to expand into several Southeast markets with branch openings, including some in the Tampa Bay area. There are good reasons for being in the region, according to Matt Crum, executive vice president of FrankCrum: “Being in the Clearwater/Tampa Bay region has been a huge benefit to our business. It is a fantastic market as the cost of living is pretty low, there is easy access to the No. 1 beach in the country, there are major market sports teams and the region really has everything that any other major market in the country has. The friendly tax environment for individuals and companies makes it easier to compete on a national level, especially when we are competing against the companies based in more expensive, higher tax environments. This location also helps in recruiting people who live in those environments. The idea of paying less in taxes and living in a great area is attractive to them.”

There is also no shortage of investment opportunities, according to James Darnell, managing

partner at KLH Capital. “There are tons of great businesses in Tampa Bay to invest in. For us to invest in a business it is really a function of the right team and the right business for which we think we would be the best fit. The money involved in these transactions is truly a commodity because most businesses like ours are happy to give capital if it is the right business. The key is finding business owners who have a vision, goals and values that align with your objectives as an investor.” And the opportunities are making investors stand up and take notice. “I talk to entrepreneurs every day, and they’re really impressed when they look at this area. Florida has cost-efficiency associated with setting up shop here. Some entrepreneurs may go to places like California for their funding but they come back here to set up shop and commit long term to the area,” said Pat Schneider, vice president of Florida Venture Forum. Further solidifying the attractiveness of the Florida banking market is the arrival of new entrants, said Jack Barrett, president and CEO of First Citrus Bank. “We are now seeing some new financial institutions entering the region and others expanding their footprint. That trend has been dormant since the Great Recession started. We are staying on top of that trend, especially at a time when unemployment is below 3% in Tampa Bay, which often drives hyper competition and a war for talent.”

Market leaders There were many developments in the Bay Area’s banking and finance sector in 2019 involving regional

A plethora of M&A activity is reshaping the boardrooms of many banks and financial institutions.

Danny Jackson Office Managing Principal – RSM US, LLP

Especially with the news of GSS (Gregory, Sharer & Stuart) in St. Petersburg joining RSM and becoming our newest o©ce, I am optimistic about the future. When we opened RSM in Tampa in 2014, we knew we were going to be investing in Tampa Bay. Tampa is always going to be a place where people want to come because it is such a neat area. Eventually the growth will plateau, but I don’t think that is going to happen soon. Going into 2020, our Tampa and St. Petersburg o©ces are going to be primed and positioned for new recruits. We are working to create a look and feel that is completely di™erent from our competitors. This may cause some short-term discomfort, but we know it is worth the long-term gain.