Take Five with Joan Burke: Creating a wealth of wealth

Joan Burke, president of First Business Trust & Investments, and her colleagues recently celebrated a milestone, reaching the $1 billion mark in assets under their administration. The company, which became part of the First Business family of companies as a startup in 2001, managed to reach that milestone in 15 years, despite two recessions that temporarily rocked the stock market. In this Take Five interview with Burke, she explains how First Business Trust & Investments became the state’s fastest-growing bank trust provider, according to Bank Director magazine.

IB: You were spotted nothing when you were named president of this startup back in 2001, two recessions ago. Besides the Fed’s quantitative easing program, which brought the market back, how was the organization able reach $1 billion in assets last year?

Burke: In the first [2001] downturn, we really didn’t have significant assets yet, so it didn’t impact, too much, the dollars that we had under management. And so it was almost a plus for us because we were still getting up and running. But the other side of it is our approach to managing the assets we did have during that time. We really look at protection on the down side. We did many things so that our clients did not participate at the same level as the market went down.

IB: What are those downside protections?

Burke: We did several things. We moved client moneys not just into long stock decisions, but decisions that were both long and short. We moved funds into equity-type investments that actually had inverse product to them, so if the market went down, they would go up. So we really protected on the down side because we felt there was a high risk of downside.

IB: What else was there about your approach to wealth management that served you well?

Burke: In that down period, many people really didn’t have downside protection in their portfolios, either if they were doing it themselves or if they were managed by other entities, so we were able to show them what we actually did for clients during the [2008–09] downturn. That was really helpful in bringing in clients. They felt like there was an entity that was looking at the risks taken in the portfolio, not just the returns.

IB: Are there any limits to how much more your assets can grow? There are a couple of tests forthcoming, with interest rates expected to rise by the end of the year, and various global events like the Greek debt crisis.

Burke: The pool is a very large pool. So just by the size of the assets, or the amount of the assets, and then the demographics of people retiring and the transition of assets, the pool is huge. So if you do a good job, you should continue to get your share of that pool. We feel, with the challenges you’ve mentioned, such as rising rates and geopolitical or macroeconomic issues, if you continue to focus on what your clients hired you for, which is managing the risk in their portfolio to help them meet their goals, we’ll still have all kinds of opportunities for growth.

IB: Looking back, it wasn’t exactly a risk-free move to come here in 2001 from the Johnson family of companies in Racine. Why did this startup concept appeal to you?

Burke: Well, it really was kind of similar to what I was doing at Johnson. Johnson had grown, but they really hadn’t done some things strategically for a while, and my job was really to come in and put together a strategy for their trust, asset management, and brokerage services. It was really very strategic, and so I worked at that for almost five years. When this idea at First Business came up, it really was about using some of the same kind of business-creation ideas to put together the startup. So it was very attractive, and also the companies in Racine were, at that point in time, really working on execution of the strategy. I find the strategy part of it just as interesting as the execution.

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IB: First Business Trust & Investments recent expanded the menu of private banking services for clients. What was behind that decision?

Burke: What we were finding as we worked with clients on their trusts and investments and financial-planning needs was that with the banking side of the business, most specifically deposit and loan services, they were looking for a higher level of service. They were looking for someone who could reach across more of their services and provide them more in-depth services. So that’s how we came to provide some additional services on the private-banking side.

IB: What are some examples of those services?

Burke: We have put together a portfolio loan. We did them before, but clients asked us to make them much more available to anybody who needs funds on a very quick basis, where they don’t want to sell their portfolio assets and take a tax consequence of selling. Instead, they can easily get a loan against their portfolio. It might be for business purposes, but it’s usually a personal loan. It’s usually for transitional, bridge kind of funding and loan size is based on the collateral, which is their portfolio. So it would be limited by the size of the collateral.

IB: Regarding the wealth-management picture, what keeps you up at night? Is it global economic hiccups such as the Greek debt crisis, prospects for higher interest rates in the U.S., or perhaps the need for an economic booster shot for the U.S. economy to get beyond this average growth phase?

Burke: The thing with the popular media is that they really spend time on mostly the global and macroeconomic issues because they are more interesting. They just attract much more attention, but really the things that impact performance domestically aren’t whether or not Greece is going to pay its debt, they’re whether jobs continue to be produced, whether we continue to see growth in our economy. The Fed would only raise rates if those two things were going well, if we had continued economic growth and continued job growth. So we tend to look at the things not so much at the geopolitical or the macro level — we do pay attention to that; everybody has to — because they don’t impact as much as things happening domestically.

Is there real growth in jobs? Are they good jobs? Is there growth in earning capacity and growth in spending capacity for the consumer? The consumer is such a big part of the domestic economy. How does the housing market look? How do manufacturing inventories look? Are they selling through their inventories? Are inventories building up?

IB: What’s your GDP growth forecast for the rest of 2015?

Burke: We’re still thinking that it’s right around 3%, which is kind of in the middle of what everybody’s thinking elsewhere, too. We think there is still continued job growth. We’re not sure that the job growth is really higher-paying, higher-quality job growth, but yet there is decent job growth.

IB: So sort of a Groundhog Day from last year.

Burke: It is. The more things change, the more they stay the same.

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