Imparting understanding and knowledge through financial balance and family | Business

The aspect of a financial planner comes down to understanding and perspective but also an innate perception of the market, with both its ups and downs. At D.B. McKenna & Co., Inc, founder/certified financial planner Donald B. McKenna along with his two sons: Michael S. McKenna, a financial advisor and Brian D. McKenna, president/certified financial planner, approach their responsibility with care, intent and, above all, an essence of listening to people where they are.

Donald talks about the beginnings of the company back in the early 1980s. “I had been general manager for a corporation called Schmelzer. My background had been in manufacturing management, and I lost that position.” He says it was at a time where his wife was just about ready to deliver his son Brian, “and she had had some issues with the pregnancy.” Donald says at that time he couldn’t really go off and look to take another job someplace else.” He says this type of firm was always something he was interested in doing. “So I started from scratch.” Donald says there was no one in town at the time offering brokerage services other than the banks (and for those, you had to have a trust account). He says, other than that, there was no one in town doing it “because the only way somebody could do individual investments was going through the banks.”

The company began in 1982, Donald says, and slowly grew. His son Michael came back up to work with the firm with him in 1994 after a stint down in Rhode Island for ADP. Michael says he ultimately wanted to come back and work for his father’s firm “but I didn’t want to do it right after college.” He says it got to a point at ADP where he was looking for a change. “And it turned out my dad needed more help here. It just kind of worked out as a natural transition.” Michael’s first career was not finance related at all. When he came back in 1994, he explains, it was the end of a bear market and in a recessionary economy as well.

From 1995 to 2000, he explains, the internet was still being built. “Things really got thriving for our economy [at that point] and I didn’t have any clients yet.” He was building a practice. He decided, after discussing with his wife, who was from Connecticut, that they would try this career for five years. They had met at school at Bryant College. “That’s how we met. And ultimately wanted to try to do this with one income as we started a family. My dad said, ‘Give it five years since that is what it usually takes.’ Sure enough, we stuck with it.” Between his father and himself, they split the market between them

Donald remembers when he first started in 1982. “I saw some steady growth over the first five years. The first year was very, very thin, but it kept moving in the right direction.” Don says back in the early eighties, “it was funny how some of this worked.” Back then, he explains, most people still were getting a pension where they worked. “There was a lot more industry in town and they had a pension. And then, of course, when [the workers] were going to retire, they had social security.” When it got towards the late 1980s, Donald says “that little ‘extra’ kind of disappeared because companies started to offer employee savings plans and 401Ks in addition to the pensions. A lot of the industries then left town and in turn, people cashed out on those.” Some of the industries in the Bennington area at that time included Stanley Tools out in Shaftsbury, Union Carbide and also Globe Union, which was a battery manufacturer that used to be out behind where Home Depot is now.

Brian, for his part, had a different path than his father or his brother. He had worked in London for a couple years in equity sales. He grew up watching his dad start this business from scratch. He remembers his dad coming home for dinner (certainly during tax season) and them playing a round or two of golf on the Nintendo before he had to head back to work. “That’s what I grew up with.” Brian says he went to college [Notre Dame] thinking he was going to go into law and politics. “But I realized that I did not want to do that my sophomore year. I became more self-aware that my interest was in finance.” Brian was in a minor program for public service “but realized that those were not the kind of people that I connected with. They were passionate about that and I wasn’t.” He then had a minute of “What am I going to do now?” He said it was too late to change majors so he started taking as many finance classes as he could for non-business majors. He says that he was fortunate enough to get the job offer in London. After a couple years, he realized that wasn’t the long-term plan for him. “And then I started talking with Dad and with Mike at that point. After a couple of years over there, I came back here in 2006.”

Brian says the whole business has changed, “certainly in the last 18 years I’ve been here, and certainly since Dad started, when it was purely transaction based.” Michael adds to this: “However, even back when Dad first got started, it wasn’t just wealth management, people were looking for some kind of relationship, some kind of ongoing support.”

Donald says the approach begins with finding out what somebody’s investment knowledge and experience is. When Donald began in the 1980s, there were those people that had been around doing their investments for a lot longer than he had been in business. “They knew what they wanted to do and you were helping them execute their ideas.” He says then there were other people that didn’t have the experience “and needed you to guide them and try to establish what their goals were.”

When asked about a client that perhaps helped with that transition along the way, Brian speaks of a client whom he started working with in 2008/2009. ”I was still really cutting my teeth on all of this, and [this woman and her husband] had individual equities…she’s 86 now. They’d been doing this for forever.” Brian says he learned so much from them over his first three years at the firm in terms of long-term perspective. “She was retired at the time,” Brian continues. “Her husband unfortunately passed away.” Brian says this lady is as close to a grandmother that he ever had. “I was just over visiting her last week. She’s getting older and doesn’t move around as well, but I learned so much from her that I’ve carried through in my investment management to this day.” Some of the best advice she ever gave him was to not be chasing returns. “It was to really build that portfolio that you can hold onto through the ups and the downs.” He says really learned a lot with them during the Great Recession in 2007/2008.

Bennington itself has had different growth spurts that have been reflected in the market. Mike says there was a surge of growth after 9/11 because people wanted to get out of the city. “We had an easy zip code, one in Vermont and we’re close to Albany and Massachusetts.” In recent times, with the real estate boom, some more growth has occurred. Real estate tends to drive everything else usually. Mike says another aspect that has changed, is the independent model where it is a family business. “The independent model has really grown big time and people are looking for that as opposed to going into a big office. They want that relationship. “

Brian then explains that D.B. McKenna is two companies…but they’re both independent companies. “They’re independent of each other. We’re not part of Merrill Lynch. We’re an independent broker dealer. We report directly to the SEC and FINRA. So it’s not like there’s some other corporate office where we fall under their umbrella.” He says they do hire Raymond James and maintain a relationship with them “where they hold our assets for us and we use their trade desk. But that independent model, so to Mike’s point, allows us to continue to serve everybody, but also we can serve everybody where they are.” At D.B. McKenna, he says, there is not a specific set of products that they have to use. They can do what is best for their clients.

Mike adds that they all know they could be making more money down in the city. “But if I was in the city, I wouldn’t be coaching soccer or going golfing on Fridays or skiing. Here, I can walk to work after dinner and then come back to get something that I forgot.” There is able to be a work/life balance which all three embrace.

All three live in the area whether it be Don on the border near Shaftbury and Mike and Brian in North Bennington. Don says that kind of focus and commitment to the area fosters a certain pride. “I’ve said, if you always take the approach to do what’s right for people, you’ll grow a business on a long-term basis. I never wanted to be in a situation where I’d see somebody walking down the street and think, ‘Oh, lemme duck into this store’”

The conversation turns their beautiful and iconic office building/house at 207 Main on the corner of Main and Depot which is always recognizable in town. Donald explains, “I had started out down where the law firm Moss/Sternberg is now. At that time, it was an optometrist right next to Ramunto’s. Then he retired and sold the building, and I moved [in] next door…there used to be storefronts where the library is now facing Main Street. So I was in there for a little bit. Then they did their renovation and kicked me out.”

Donald says he ended up right around that time playing golf with a fellow who on the committee for the Sacred Heart church. “And this [building] was the rectory for the church.” Donald was told the church was considering selling it. “To me, it was important to appear to be stable and be in this spot for a long time. So I came [over] and talked to the priest. I couldn’t swing it on my own. So I partnered on the building with a local attorney, Tom Jacobs, who is since deceased. We bought the building together [in the late 1980s].” Donald adds that the building started out as a private residence in the 1800s. “And there was a mill across the street. The owner could just sit out on the porch and watch everybody. The church bought it I think around 1910. So it was free of kids and damage.“

Brian says it was pretty cool ultimately as well as it was a Holy Cross parish. Brian had gone to school at Notre Dame which was a Holy Cross school. “And Southern Vermont College used to have a division, which had was a retreat for priests. I mentioned to some of the priests [when I was at Notre Dame] where I was from, and they would immediately be like, ‘Oh, we spent our summer there!’ They talked that they all had dinner in here (the room we are sitting in). And I was like, “Yah, it’s my dad’s building now.” Brian says they joke that their marketing budget is keeping the place up. Michael adds: “People kind of know the building. It’s us.”

Brian said that kind of stability and trust reinforces a business like theirs. “In a broader sense, as far as the community’s concerned. I think we’ve been a pretty trusted partner in the community now for 40 some odd years. And we’ve just built that trust and continue to. We’ve become big part of the community as a consequence of that.”

Returning to the older lady that helped him when he first came to the firm, Brian says she is a great example of the progression of the business. He explains that, over the years, as financial planners, they interact with people at different points in their life. Each of the three play a different role for their different clients. “So, for me, in the beginning it was more about just retirement [planning] with her. But there has also been significant estate planning over the years. Now it’s a lot of charitable giving that we’re working on. So you try meet [your clients] where they are when they’re there.”

Brian says that the relationship they create with their clients can be a delicate balance. “It is a remarkable sense of vulnerability from their standpoint because they’re coming in and oftentimes giving us their life savings and asking us to take care of it. It is a huge responsibility.”

Donald remembers one time in particular when a client came in, “and after a half hour or something, they were just going to turn everything over. And I’m like, ‘Well, wait a minute now…you don’t know enough about me or what we do yet.’” He says they were just looking for somebody to take the responsibility away. He says that when he started, as Brian pointed out, the business was primarily transaction related. He says though that it hit a point where people started asking him for things that he wasn’t fully trained on.

At that point in 1996, he went and took the training become a certified financial planner. He says it took about four years. “I’m sure Brian can remember me coming home from work and [studying], even over Christmas or what have you [because] I’d be down at the bottom of the stairs, grabbing my tie and pulling myself up.” Donald however was the first one in Bennington County to become a certified financial planner. “And that’s really helped, because it has carried on over in this whole approach that we have now. We have truly become a family member for many of our clients like Brian is saying, with going over to this lady’s house. A lot of the stuff that we do is non-financial related.” Donald says before our interview he wrote down: “We’ve become counselors on a lot of personal issues for people over family matters.” He says that it is very rewarding in that respect.

Brian says it is about seeing the situation and listening. “I think between the three of us, we have so many years now [of experience] now. The toolbox has become so full of different things.” He says everybody’s situation is different, but it becomes rare that there isn’t some aspect that they haven’t experienced in the past. While people’s lives haven’t really become more complex, there are certainly a lot more options available.

Brian adds that, as an American society, “we are also in the throes of the first generation that is fully responsible for their own retirement. That is now a number of years old, but it used to be social security was 25% of your income that you were going to need if you were lucky to retire.” This however was because of the expected pension someone was going to get. That no longer exists.

The question becomes is there a sense of apprehension or fear in the case of the younger generation in terms of how they should approach their financial future? Mike says that right now he is seeing millennials who have now grown up with technology and sense of independence. “They buy into it and they’re better savers than Gen X, which is really interesting.” Brian continues: “That’s the difference because they’re part of the first generation who truly have to do it. They’re watching it and growing up with it as just being a part of their life.”

Brian says the conversation now isn’t as much about “why you should save but how you should save.” He says 18 years ago, he was just trying to make people understand why they needed to save. “I don’t think we need to make that argument much anymore.”

Brian, speaking for himself, says that, overall, he tries to keep it pretty straightforward with his clients. “We try not to overcomplicate it.” He says to his clients: “It’s easy when the markets are going up to do this, but I need everybody to have a base understanding [of the market] so at least we’re on the same page with where we’re going with this. Because when the volatility comes, if we’re not on the same page, that’s going to lead to frustration and stress and all that. So we all try really hard to keep it pretty simple with folks.”

Don says it is much different market than when he started, even as far as regulatory elements. “When I started, it was almost the handshake kind of an approach. But what we have to have to go through now [is a much difference process] from a regulatory standpoint.” He says the evolution too of people calling him and saying, ‘Buy me this!” has changed. People before might trust their broker and even tell them to use to their best judgment in investing. “Well, then you had to get a discretionary authority. You had to have it in writing in order to do that. That’s now been outlawed. Because it’s a conflict of interest. [The regulatory elements] are trying to eliminate any possible conflict of interest for people. So we operate on a fiduciary basis inside the Bennington Financial Planning [company]. Now somebody calls up in the DB McKenna broker dealer side and says, ‘I want you to do this.’ You do it even if you might not think that’s in their best interest.” He says that’s part of that evolution has gone on over the years. “It is a very different business now than it was back then. “

Brian says they still do discretionary asset management, “but the government has gotten it all the way down to [the microcosm of] ‘Here’s the business in which you can do that. So we do that for a lot of folks.” The evolution, he says, is that this has become such a big part, if not the lion’s share, of their business. “But where before somebody could say, ‘I just want you to do it,’ and you can do it. Now the government is very prescriptive about how we approach it.”

A bulk of their business at D.B. McKenna is in the asset management side. “So that’s the difference,” Brian explains. “So D.B. McKenna is our broker dealer, and that’s what Dad started in 1981. And then Bennington Financial Planning Group is our registered investment advisory firm that was started in 1995.” Brian says what is pretty wild about it is that all this evolved from where his dad started from the fee-based transaction side of it. He says now they’re more integrated with folks throughout their whole life “where we get involved with the asset management and the estate planning, all that.” He says that’s probably well north of 80% of their business now. “When I came back here in 2006…we were talking about it today at lunch…it probably wasn’t even 5%. So the whole industry has changed, and certainly we’ve experienced that here.”

One of the great aspects is that these three men are all together in this room, working together, but also are still a family. Michael adds that he gets to watch his children grow and be part of their life as opposed to working 60 hours a week in the city, “and that really works for me.“

Donald says that he has enjoyed his work over the years. “Unfortunately, I guess the responsibility that goes along with it is part of what keeps me here.” He says he is not working because he need the funds, “but it is feeling I still have that responsibility for those folks that I’ve worked with over the years that are now, like Brian said, up in their eighties or nineties, and have depended upon me.” Donald says that this is “probably selfish on my part because my wife thinks I work all the time. And these kids think I don’t work at all.” (laughing) Donald does say that there is a sense that this profession doesn’t have an end to it. “There’s always another piece that you can read to be more informed about. And so from that standpoint, it has a grip on you.” Michael adds, smiling, that his dad does get to work with two of his boys.

Brian reflects his brother’s sentiment as well: “I have to put in the hours, but I have that flexibility to duck out, to go coach, to walk the kids to school, to pick somebody up from school if need be or what have you. And so there’s a lot to be said for that. We’re very, very fortunate to have the latitude to be really involved with our kids and the community and that we’re able to give our time to various boards. And again, that might take us out of the office, but we have that latitude with our schedules to work around that.”

Stress, of course, is an inevitable part of the proceedings as it does deal with finances. Donald says with most clients it is just trying to get a sense of their risk tolerance but it is, almost, undeniably about being a good listener. Brian echoes this saying being good listeners is a big part of their success. “Good listeners, and then also meeting [the clients] where they’re at and making sure that you’re with them on their level, wherever that is.”

Donald concludes that understanding people and being that kind of counselor and trusted advisor is key. “Sometimes I think that’s the biggest thing. And we give people [that] peace of mind.”

To learn more about D.B. McKenna & Co, Inc., visit dbmckenna.com.