Cannon Connect - Guest Tom Sprague

Business ownership is often the biggest driver of generational wealth, yet most financial institutions treat it as an afterthought.

On this episode of Cannon Connect, Phil talks with Trust Administration Officer Tom Sprague about why advisors must bridge the gap between commercial banking and personal wealth, how fiduciary responsibility changes everything, and why exit planning is most powerful when it starts years in advance. They also explore leadership, community service, and the idea of “choosing your hard” in both work and life.

Resources:

Phil Buchanan on LinkedIn

Tom Sprague on LinkedIn

Transcript

Phil: Well, welcome to another Cannon Connect. I'm Phil Buchanan. Today I'm joined by Trust Administration Officer with First Source Bank, Tom Sprague. Tom, welcome to Cannon Connect.

Tom: Phil. I'm excited to be here. I enjoy Cannon Connect and happy to be on an episode with you. Thank you.

Phil: Well, it is, uh, it is good to have you here.

You've got, uh, more than 15 years experience in this world we call financial services. Enlighten our listeners. What brought you into this industry initially?

Tom: Yeah I gotta give some of that credit to my dad. So my dad was a financial advisor, so it kind of runs in the family. His dad was a financial advisor of sorts, and you know, I was probably 12 when we were having mutual fund conversations.

So it was a, it was a great segue then for me, once, uh, I finished college to move into financial services and almost all of that time has been with a bank of some sort. So, it's been a, it's been a fun career. Lots of different, uh, ways that I've touched clients.

Phil: I gotcha. Well, you know, it, it is interesting I hear one of two responses to that.

One is I had no idea what financial services wealth management trust investment management was, and I got introduced to somebody or. Uh, you know, somebody posted a job and it looked interesting or we'll hear the story of it's really in the family blood, it's in the family history. And so, you had, uh, certainly a unique developmental experience right there.

Let me ask this question. You've got a, a pretty, pretty broad background. You've done, uh, commercial, you've done private, you've done personal wealth, et cetera. How have those different experiences shaped your thought process particularly around, uh, the role that you have today working with, uh, individuals and families on generational wealth?

Tom: Great question, Phil. So I think that one of the things that I, I learned pretty quickly in my career working with kind of the affluent or high net worth clients was that a lot of these folks had gotten to this place by being business owners. So you mentioned I've had a few different avenues within my financial services career starting off in, in the high net worth management to moving into commercial lending and commercial banking.

So I really started to put a correlation together that I was dealing with a lot of folks who had grown assets. Um, and most of those folks had grown their assets by having a business. And it's actually there's two clear. Tracks to generational wealth. Um, and it's one of the things that I teach when I'm trying to do financial education is that one of those.

Clear paths is either home ownership and or business ownership. So owning a business is a, a excellent way to build generational wealth. So I said I need to understand a little bit better about what these business owners are doing and how it is that they make their business work for themselves, their families, and then ultimately all their stakeholders, all their employees.

'cause these people are having a big impact in the community by employing a lot of different people. Uh, so one of the things that I realized, Phil, was that a lot of advisors were not looking at these folks, uh, holistically. And when I say holistically, I mean they weren't saying, okay, we've got this asset over here, which is the business that's generating a large amount of this client's wealth.

And at some point in the future when either they go to move on to the next generation, or there's a liquidation event where they're gonna be selling to you know, another buyer, a key employee, or maybe selling to the employees, what are they, what have they done to really understand the value of their business and to, uh.

Put those things together on, on a full plan. So I, I like to think that I married together a really big idea of, of what we call the global balance sheet and understanding the client's global needs and how it's gonna impact not only them and their families, but also then all their employees and stakeholders in the business.

Phil: What you're talking about right there is something that regrettably most financial institutions fail miserably at doing for their business owner clients. Business owners, they, they've got an idea, they've got a concept. They, they launch that concept, it becomes successful. They need working capital.

They need lines of credit. They go to a business banker, they go to a commercial banker. They fulfill that need. Only when that person gets even more successful in that business does. Perhaps, and I say perhaps because it doesn't always happen, perhaps that person gets introduced to a quote unquote partner in investment management or wealth management.

And regrettably, again, far too often that conversation is around capital markets and not around accelerating, uh, the opportunities that exist within that business. Why do you think most banks, and, and candidly, most people in your position. Why do they take such a fragmented approach? Why? Why do they miss this opportunity?

Tom: Phil, that's a great idea. I think we, we get so myopic and in our lanes, right? So I think we, we see, okay, I'm the financial advisor. I'm focusing on this individual's personal wealth, and you've got the commercial lender who's focusing, or the commercial banker who's focusing on. The financial health of that company, and we oftentimes don't marry the two.

What's nice is I think that this is something that I learned by being a commercial lender, commercial banker, private banker, and then a an advisor as well, is that those two things they have the left hand has to know what the right hand's doing. So I've got a great relationship with my commercial lenders commercial bankers, because if I'm not getting those introductions to those clients, we're we as an institution could be.

Considerably leaving out a big part of this client's picture that's not helping them plan for that future. So I think that the answer to your question is we really just get stuck in our lanes and we're really focused on what it is that we do day in, day out. That, um, we're not making room for that additional learning that can come from working with those business owners, working with our commercial partners.

And they, their language is a little different than ours on the personal financial side you know, they're talking about uh, debt service coverage as opposed to debt to income, right? So we have to understand that the banks, banks calculate those two numbers wildly differently. Uh, when we're talking about commercial lending versus personal lending, um, and I think just being able to speak that language with the, uh, commercial lenders and also the commercial business owners, it really has a significant impact on, on everybody involved, including the financial institution.

It

Phil: really does. This business of language, this business of culture, uh, is, is really paramount to capturing that opportunity. I have, uh, I have made the statement to, uh, to many bank CEOs. In, uh, really over the last 24 months that if you were designing a financial institution from scratch today, you would, you would never do it the way most banking organizations are set up.

They've got their c and i, they've got their retail consumer. Then, you know, they've got, they've got wealth and. Those three entities, unfortunately, the, the, the most common denominator, uh, among those three entities is the president or the CEO of the organization. There's not a, there's not a, a cultural focus in most institutions.

There, there are exceptions to this, but in most institutions, there's not that cultural focus on what does the business owner see and experience when they deal with the banking institution. And unfortunately, they. They, the business owner are forced to navigate between a, the commercial and, and business making side and the, the private wealth side.

And all too often it gets fragmented because the bank, or excuse me, the, uh, the business owner winds up selecting outside parties for some of these other roles and it causes banks to miss just a huge opportunity to be more impactful. You have been very impactful in doing this. Uh, are you, uh, are, are, are you a unicorn or are you rogue with regard to that?

Or is this, is this the onset of a more collegial environment that, uh, we should expect to see in banking institutions going forward?

Tom: I think I'm gonna go with option three there. Phil, because Yeah, I think that you know, some institutions really are starting to think about mergers and acquisitions, right?

It doesn't, you don't have to be the biggest bank out there to have an m and a advisory or, or, or some sort of investment banking part, right? We can be doing it, uh, in small middle market banking. It doesn't have to be large institutional where we're working on these things. So I think that, um, one and one of the things that I love about me being a, a trust officer is that I can act as in fiduciary capacity for my clients.

And there's a lot of, again, work with, uh, work with your legal advisors on this, but there's lots of great trust tools out there that can help clients with a transition on their business, uh, to help them really lock in that. Value of the business before, uh, it then goes to sell. You know, again, not giving advice just in general here, but, but having somebody with that knowledge, someone with the certified trust and fiduciary advisor, uh, designation, maybe somebody with a certified exit planning advisory designation, uh, really comes together.

I think we're starting to see a lot of financial institutions of the size of First Source Bank start to focus on that. One of the things we invested in, uh, a few years ago was having a specific advisor within our team who just makes plans. And one of the big parts of that, and they do focus on it, is that exit planning strategy.

Uh, so what's nice about that is it allows me to be out in the markets focusing on meeting those business owners who are five plus years out from an exit. 'Cause we really ought to be talking about these things five at a minimum of five years out uh, before that potential exit or liquidation of the business.

So I think that, um, you know, having that relationship. Maybe I'm a bit of a unicorn. I, I, I like thinking that, but I think that it's, it's option three. A lot of banks are starting to see the value in it. I think we see the value of it here at First Source Bank. You know, the previous institution that I was at actually, uh, one of the things they did was they bought a CPA advisory firm that, um, did valuations, that did, um, uh, a little bit of, uh, transaction, work as well. So I think that it's, we're starting to see an uptick in it in this uh, regional, large, regional bank set up. And I'm, I'm excited for that because we're gonna really be serving our clients much better, especially our clients that are business owners. I.

Phil: You know, that's both an offensive and a defensive play, right?

It's offensive because you can be more impactful and, uh, the more impactful that you are with your clients, the greater the wealth opportunity for them. And hopefully that, uh, that creates, you know, wealth management and generational legacy planning for these institutions. Uh, it's also a defensive play because.

The business owner is going to have this work done whether you do it or not. And, uh, you, you really want to be that, uh, that, that universal source of, uh, of counsel and advice. I love that. Tell me this. It's a random, tuesday in June, and uh, you get home and, uh, you got the kids and wife and, Hey honey, how was your day?

And you look at her and you say, it was fantastic. What is it about this work? What is it about your professional life that you find most rewarding?

Tom: Oh wow, Phil. Honestly, it's helping people realize their dreams. And I know that's might sound cliche or that might sound canned, but ultimately, I mean, you know, at the core of what we do is we help people build wealth and realize their dreams here.

And when you've come together, you've wrapped your arms around somebody, you've got a relationship with them. And, and that's how I work my business. I, I. We are friends first, right? They, they do business with me. They have to like, know and trust me and to know that I'm gonna act in a fiduciary capacity for them, their family, their employees, and when we see clients realize their dreams.

Uh, so a random Tuesday in June, I believe it was what it was yeah. As I have a client who's put their. Put their plan into action, something that we help them build. Maybe they've had that transaction. And you mentioned it there, it's an offensive and a defensive play because also hopefully we, um, help them find a buyer.

And then we are doing the commercial, maybe the commercial lending on the commercial loan side for the purchase of a business that we already banked. And I mean, what, what better way of saying, Hey, we know and understand this business from the commercial side. 'cause they're already with us. Uh, to acquire that le loan product to acquire the, the the asset advisory of the, of the of the exit.

Um, and then also for the generations to come from that family. I think it's very valuable, very important.

Phil: That's awesome. That's awesome. In addition to your, active professional role. You, uh, you also are very involved in, uh, in your community. Is that cultural, is that part of that family upbringing?

Is that, uh, something that you've, uh, you've always had as part of your repertoire? Or is it something that you found later in life?

Tom: It was something I found later in life. I had a mentor. The mentor came to me, this was about 2018, and asked me if I was involved in any non-profits. And I said, well, I volunteered here and there, you know, done a little bit of, you know, junior achievement biz spark type, kind of, uh, work, a little bit of Ronald McDonald House serving here and there.

And he said, Tom, I think you've got the ability to add some real knowledge to an organization. Have you ever looked at board leadership? And I said, I, I don't know that I understand what that means exactly. And he said, here, lemme just exactly, let me introduce you to a non-for-profit that, uh, really aligns with, with some of your upbringing.

Right. So my parents were foster parents. Um, they adopted, uh, two children. I'm biological to my parents. They adopted two. So I got connected with. The local court appointed special advocate and guardian ad litem provider for Marion County, which is in. And um, it was really an excellent opportunity for me to just jump in to the deep end, uh, to a large non-for-profit at the board level.

To understand the sharing of my time, talent, treasure, and testimony for what I can do. Coming up now, I've got I rolled off of that board. I am now the immediate past president of the Johnson County Community Foundation, which operates just under $80 million in assets under management for Johnson County, which is the county just south of Indianapolis.

I'm also very passionate about food insecurity in my community. I think it's a very, uh, significant upstream preventer of a lot of other potential problems that could come up in your community. Food insecurity is very important. So I'm, uh, I'm a board member of the food pantry. Um, serve on the board of, uh, my church and then also i'm a past president of my rotary club as well, and, uh, immediate past president and, uh, that was a great experience. That actually was probably of those things that was the most time consuming one. But I love being a part of Rotary. I'm also, uh, an active Elk as well, member of the Benevolent Protective Order of Elks.

And, um, I live just three blocks away from my Elks Lodge, so anytime I can be there and take the whole family there, it's a great experience and it's really just a way to. Give back to get connected into my community, uh, to know what's going on, to be really listening to the needs of what's going on.

Because frankly, every, uh, one of these organizations that I'm in, the Rotary Club helps fund the inner church food pantry. It helps. Fund the Good Cheer Fund of Johnson County, which does special Christmas food delivery baskets. 'Cause we do a big, uh, fundraiser. We do this big hog roast. I love it.

It's the Thursday. If you're ever in, uh, Johnson County, Indiana on the Thursday after Thanksgiving, I highly encourage you to come to the Jim Rhodes Memorial Hog Roast, where we raise about $75,000. For food insecurity in our county. It's just, it's such a great thing. It's all these things touch each other.

Right. The community foundation, uh, helps support all these organizations as well. It's, it's fantastic and, uh, I love being a part of that. I love helping these problems become not problems within my community.

Phil: Well, you know, you're doing good by doing good. Uh, no question about that.

Busy professionals and you certainly fall in that category. I wanna, I wanna unpack that just a second, but, um, busy professionals sometimes say do I really have the time to be able to, to give to that? And I think what very often some of us fail to realize is that by being involved in these.

Outside activities philanthropic and otherwise, some of those relationships that you develop there become not just personal relationships, but you find other ways to be impactful and to, to help some of those individuals. Maybe it's. Again, maybe it's the food bank. Maybe it's, uh, you, you're taking your intellectual knowledge and experience and applying that business acumen to a, a challenge that group faces.

It really can make an impact and create, uh, as a friend of mine recently said, a ripple effect across, uh, an entire region. Have you found that to be the case for yourself?

Tom: Absolutely Phil. In fact, uh, uh, a friend of mine gave me a book a long time ago. The title of the book I found to be really off-putting.

I'm not here to be a critic of the title of the book, but I learned a lot from it. The book's called Go Givers Sell More. And I was like we don't give, when I read the title, it kind of made me feel kind of gross, a little bit of ick factor to it. When you read a book, you realize that that what it's really explaining here is that when you come to everything, even when you come to your clients, right, when you come with the thought that I'm here to give you something of value, that's actually a, it goes back to the Greek phrase of sell or sell to give somebody something about right when you're selling or giving somebody something.

So when you're doing this with a non-for-profit, when you're doing it with a club, when you're doing it just by volunteering in your community or being picking up trash, right? Just taking a moment. You're on your walk, walking the dog in the morning, you pick up trash in your community, uh, throw it in the trash can.

That's 10 feet away, right? You're having an impact on your community and when you give. When you give, you really do bring more. And it sometimes it's just to your heart. Sometimes it's uh, uh, somebody says, you know, Tom, I've, I've seen the way you work. I like the way you work. I want to work with you.

And sometimes you get business out of it. And that's very rewarding in itself. 'cause that. People just see you work. You didn't have to make the ask, you just gave freely of your time, talent, treasure and testimony, and then people come to you. It's a, it's really amazing and it's a great book. Uh, if you can get over the title of the book, go Givers, sell Some More.

There's the Go Giver Leader, which I really enjoy as a book. And then there's just the Go-Giver, which is kind of the, the, the real idea of the series is just operating by giving.

Phil: I, um, I love that and I'm, I'm mindful of the fact that, you know, somebody is always watching. I, um, I hired a person to do a, um, a, a small remodel project at, uh, at my house because I watched him in the, uh, low's home improvement parking lot.

Roll a cart to his truck, unload that. And then I watched him walk the cart back to the drop off point for the carts. He didn't just leave it parked, you know, right beside his truck. He didn't just get in and drive off. And, uh, when he was walking back to his truck, I stopped him. And, uh, I said, do you always return carts to, uh, to, to that place?

He said. I'm paraphrasing right here, but he said, uh, every implement has its place and you always leave it better than you found it. And I said, I need your business card. I, I, I need to talk to you about a project. And, uh, literally that, that's how we got started. You know, to your point, somebody's watching and when they.

See you doing it the right way. Whether it's in business, whether it's in community, whether it's it's social that has an impact. It may not be immediate, but uh, it does come back to you. So I'm, I'm thinking about this. You, uh, you, you've got a wife, you've got three young kids. You've got a, more than full-time job.

You're actively involved in the community. The two and a half hours that you sleep at night, do you dream when you sleep those two and a half hours? Uh, you get a lot done in a week it sounds like.

Tom: Absolutely. Phil. You know, it's, uh. I think that's the value of maintaining a calendar. Time blocking things for, for whatever it is you need to do. Including sometimes taking a walk at four o'clock when the kids get off the bus. You take that time, you block it on your calendar, your potential with that, I think that's very important, and you don't have to be going a million miles an hour to do that.

Phil: No, you don't. You don't. One, one favorite phrase I love the phrase choose your heart. You, you use that I think that's one of the principles that, uh, that you live by. I, um, I originally was, was introduced to this and a couple other concept concepts by, uh, listening and reading some of the, uh.

Some of the talks and, uh, and writings of Nick Saban, the former, uh, university of Alabama head coach. He's like, you'll, you'll either know the pain of discipline or you'll know the pain of failure. And, uh, he loves the phrase, choose your heart. Tell us a little bit about that philosophy and how you use that in your life.

Tom: You hit the nail on the head. You stole the words outta my mouth there, Phil. That's exactly where it comes from. You know, you can choose. I always, you know, I try to get up to go to the gym at 5:00 AM right? That's my time to go and exercise. And I always think I can have, I can go exercise for an hour, that's hard.

Or I could let my body disintegrate and, and not be healthy. That's also hard. To have to deal with the impacts of it, of not being healthy. I think it's the same when it comes to, if you're not managing your clients well, you know, then you're going, you either manage them well, you put in the hard work every single day to show up for your clients, to show up for your family every single day.

I think that's going to you big time. When you then deal with it, when there's a fire, you've not been handling your client's need, or you've not been taking care of what needs to be taken care of at home, right? You've got a, you've got a leaky window, you wait until the entire window and window frame is rotted out, or do you go ahead and replace the little thing right now, cau put some caulking on it to get it fixed today?

Yeah, it's hard today. I don't wanna do it today, but I gotta do it today to prevent damage in the future.

Phil: Those are great words to live by, and great examples. Tom you demonstrate a, a fantastic example of uh, what an involved, a passionate and a thoughtful leader and advisor does. I wanna thank you for being part of the County Connect.

Tom: Thank you, Phil. I appreciate the time.

Phil: Tom Sprague Trust administration officer with First Source Bank. A fantastic insight into doing the present and the hard to reap the results over the long term. Cannon Connect is a production of Cannon Financial Institute. Executive producer of Cannon Connect is Sarah Jones.

Editing and mixing is done by Danny Brunner. On behalf of Tom Sprague and all of us here at Cannon, we wish you well and we'll talk to you next time.