This month, our CEO, Jay Judas, talks to Matthew E. Schiff, CLU, ChFC, WMCP, Founder, Schiff Executive Benefits. The pair discuss Matt's path to his current role, the three areas of growth in the executive benefits space, succession planning in the life insurance industry and a global answer to our restaurant question. Read on to learn more!
JAY: October marks a busy time for companies when they are considering compensation and retention strategies for employees as well as succession planning for owners and key staff. It makes perfect sense that this month’s Tier One Interview would be with a third-generation executive benefits expert from the life insurance industry who can speak about how our industry is helping companies with these challenges. Matt, let’s get the ball rolling by hearing about your Pennsylvania-based firm, Schiff Executive Benefits, and your role in the organization.
MATT: Jay, thank you for having me. First, I should point out that I often refer to my firm as Schiff Benefits. This is because it is way easier to say than “Schiff Executive Benefits” and it does not sound as strange as “SEB”! I am the founder and, historically, have served as the chief bottle washer and creative mind behind the last 18 years of our company. Going forward though, my role will be more of a manager, delegating client acquisition and service to other team members as we expand our relationships in the changing space of the financial services industry.
JAY: My introduction let our readers know that your family has deep roots in the life insurance industry. In fact, I recall first meeting your father, Bud, more than 25 years ago! Tell me about the “family business”, your upbringing in it and your path to where you are today.
MATT: (chuckling) Do you have a week?! In a nutshell, I learned the insurance, 401K, and deferred compensation market over the dining room table as my parents discussed the clients with whom they were working. So much so that when I was a kid, I recall one year during the holidays that we received a box via UPS from General Foods with Tang and the other items that they were known for. At that time, NASA was having a race to space and Tang was the drink of choice. I was through the roof. I connect this memory with my parents work because they were always extremely busy that time of year making sure all of their clients’ benefit plans were funded by the end of the year.
For me, I started working in the financial services business on the computer systems in the “cold rooms” in my father’s pension firm, Albert J Schiff Associates, entering participant data in my teens. I would go to work with my dad at seven or seven-thirty in the morning, work until around noon and then jump on a Metro North Train to go from my father’s office in Darien to practice racing sailboats in the afternoon in Greenwich.
After a few hours on the water, I would then walk down the street to the movie theater and work selling tickets or serving concessions until closing. I will say, for a kid, it was really good money, and I can tell you about every line from Gremlins, The Natural and Karate Kid -- the original version! My parents instilled a strong work ethic in me, but the experience made me think, “there is no way I am going into financial services when I graduate college.” And I told my father I’d rather go to Wall Street and make the “quick” money or become a doctor.
Low and behold though, after failing the securities exam by one point a year after college, and since I opted out of medical school after completing all of the prerequisites while in college, I found myself sitting in a Mutual of New York Agency in Piedmont Center, Atlanta, GA telling the General Manager, “I know how to run your computers, design cases, and wondering if you and your agents could use my help?”. They hired me on the spot.
Eighteen months later, after learning the hard way how to cold call and “dial for dollars” in a town that I had no natural market, I was recruited to move to Florida and work with a software company called FDP. My job was to help take illustration and financial planning software into the handheld world. Michael Goldberg, a visionary in the late 60’s in pension software, saw the future of handhelds in 1990 and recognized my unique combination of high-end life insurance experience, as well as technical skills that I could “interpret” for the programmers.
That role meant moving to Florida where I met my wife. I stayed with FDP for five years making incredible carrier and producer connections. When we were expecting our first child, we decided that being close to family in the Northeast would be better than living in Florida and raising a child there, so we moved to Philadelphia. There, I worked as the advanced planning specialist for an agent named Ronnie Lorch, as part of Karr Barth Associates.
Ronnie was a “bulldog” of an agent. When he sold someone, at the close, he would then tell them that it was time for that client to purchase the next product he had in mind for them. I learned a lot from him and made Million Dollar Round Table in four months while helping him become the Equitable Agent of the Year. We were a great team for a few years, but I was young, only 29.
My next step was then to rejoin the family as a part of Insurance Alliances Group (IAG), the company that my father started after he stepped down as President of Mutual of New York (MONY) in 1989. My father had previously sold his pension firm to work in the home office.
At IAG, we built the company up, sold it off to Clark Consulting, and ultimately New York Life acquired the company on September 11, 2001, where we became NYLEX Benefits, the executive benefits division of New York Life. I was the Managing Director with four Regional Directors under me and a $10 million single premium BOLI and $2.5 million recurring COLI premium sales goal.
But with any home office acquisition, you either fit the culture and become a “lifer”, or you trailblaze as an entrepreneur. My numbers were terrific and with my father’s blessing, I left NYLEX in 2006 to create what is now Schiff Executive Benefits.
In the last 18 years, we have been part of NFP, Valmark, Mass Mutual, and now are truly independent after being an owner in Lion Street and processing our specialty business with AgencyOne.
JAY: You know that I got my start in the life insurance industry marketing executive benefit solutions, so this subject is close to my heart as I know it is to yours. We will discuss specific strategies in a moment but, first, when you engage with clients, what problems are they asking you to solve?
MATT: Thanks to my family’s long history in executive benefits, I can tell you that the problems clients are asking to be solved haven’t really changed since my grandfather was in the business.
First, it’s usually the business owner who is talking with you and that business owner is trying to find ways for him or her to get more from the business in a tax-efficient manner.
Next, they are worried about losing a key employee. Third, they always say that cash flow is an issue and want to see how they can do the most with the least outlay.
Finally, they all want to be protected from life’s “What if’s”. Often, they don’t know how easy and inexpensively they can do that for themselves, their executives and their families in a tax-efficient manner.
JAY: It is comforting to know that with all the changes in our industry that the ability for life insurance to support executive benefit solutions is as robust as ever. When we spoke recently, Matt, I asked you where you see the growth in this market segment. You did not hesitate and said there were three that you were running into constantly. What are they and what strategies are Schiff Executive Benefits deploying to address them?
MATT: In the traditional executive benefits space, there are three distinct opportunities today. The first is the true “deferred compensation” market. It is robust today and we see growing need with C Corporations, or larger S Corporations without participation of the majority owner, where the focus is on executives wanting to save money above the 401K limitations of $23,000 a year. Matching contributions, flexible vesting schedules and discretionary “profit sharing” bonuses to those plans are great incentives in companies focused on growth in the next three to seven years.
The second opportunity involves the generational shift in the workplace, with the baby boomers retiring and Gen X needing compensation and retirement planning. We are seeing companies implement Supplemental Income Plans, that are Defined Benefit, or a Targeted Benefit, based upon the assets held in the plan, and paid out as income over five to ten years in retirement.
The third opportunity is where clients are asking if they can implement a “restricted stock” plan, knowing the features that they want, but not exactly how they need to implement it. As a result, Restricted Stock Units (RSU’s), Phantom Stock (ownership without ownership), and other Incentive Stock Options are being designed as a future promise that trigger in case of certain events.
In companies that have older participants, a company-sponsored long-term care benefit with limited underwriting that is a deductible benefit has also been something we have been involved in steadily over the past two decades. It is still critical, but not as widely implemented due to the changes in the industry over that time.
JAY: Our loyal Tier One Interview readers know I like to hammer away on two major problems in the life insurance industry: the lack of women and minorities in client-facing sales and marketing roles, and the lack of succession planning. Fortunately, the executive benefits segment is where we first saw a lot of the major sales roles being filled by women, going back to the 1990s. We have featured a number of these superstars in this interview series, including Kathy Bolton, Kristi Barens and Jennifer Ortale.
The business succession issue, though, is still a huge matter, but I was delighted to hear you are meeting this challenge head-on. In fact, the way you described your approach of considering commission modes, investment in people and technology and your own exit timing was refreshing. First, what prompted you to dive into your own succession planning and, second, can you provide more detail to what I said about your plan?
MATT: First off, that is an impressive list of women, all of whom I have had the pleasure of considering as friends and colleagues over the years. I don’t know if you know, my mother Jayne Schiff, CLU, ChFC, MSFS was a trailblazer in the 1970s and one of the first women of MDRT. She was even the Exhibits Chair.
The reason that I started focusing on succession planning was really because of my study group. So many of my peers are worried about their exit strategy. Is there one? Is it a person or a buyer? Who will that be? For me, I have been part of a succession plan twice and received nothing.
Now, with the increasing success of my own company, this topic is important because, someday, I will want to lessen my workload, take extended vacations, and enjoy a work/life balance like you and I have spoken about. To do that, I need to delegate, and that is not easy for many producers to do.
And if I want to monetize the business in the future, while protecting my successors, we need to grow to produce the necessary revenue and resulting firm value and we need to accomplish this in a planned and systematic way.
Today, as a true independent executive benefits firm, our alliances have been primarily with other BGAs who do not have our experience and are looking for ways to bring our expertise into long-term affiliated insurance firms. The goal is to be the main executive benefit firm within a network of firms that creates synergy for all the firms.
But, as we both know, there are three or four major private equity-backed aggregators that are buying up the little guys. Instead of being part of a group of executive benefit firms, we want to be the principal firm where Schiff Executive Benefits can add value over a long period to other affiliated firms.
No, I am not retiring anytime soon. I am only 57 and know of some peers who are walking away. Right now, I think I have 12 to 15 of full-time working years in front of me and am working on training new staff members, educating clients, and helping build out the next great executive benefits firm for years to come. But for now, we are being careful about the firms that we work with as they could be our future.
JAY: As much as you enjoy providing executive benefit solutions, I know that you have no problem filling your free time outside of work. You are recently married and absolutely love being out on the water. How are you spending your leisure time?
MATT: Jay, you are right. I am enjoying life! When I was in my early 20’s I had a dream about my life. Ironically, most of what was in that dream has come to fruition. This included raising fantastic children, even after a divorce, and then striking out on my own professionally to create a highly reputable company. In Yiddish, they’d say it is Bashert.
It is no secret I have always been a passionate sailor. In fact, my father used to take me on his boat when I was three years old, and I would fall asleep because I was so comfortable. I learned to race the boat with my father, but in high school I asked my parents if I could go to prep school at Tabor Academy to sail on their team.
Our team was a nationally ranked championship team every year I was there, and, with my coach’s help, I won the Long Island Sound Singlehanded Junior Championships in a Laser Olympic-class boat when I was 17. My participation in sailing was undoubtedly the deciding factor in me being accepted by Tulane where I sailed and earned an economics degree.
When we relocated to Philly, though, I played more golf and stayed off the water for almost 24 years. With Nancy, my new bride, I have finally returned to my “happy place” on the water. And after COVID-19, I have been able to create a mobile office on the water.
Nancy and I are most proud of my stepson making his high school golf team and, with his help, I am back to a 12 handicap. I still have not figured out how to hit a golf ball from the boat to the fairway and finish out the putt while sailing, but maybe someday. I’m sure my stepson could probably do it!
Other than that, my old man soccer league gets together every Thursday and, fortunately, most of us have avoided major injury over the last 14 years. All of us have played most of our lives, but now it has actually become fun and focuses on friendship instead of winning at all costs.
JAY: Matt, this has been great, and Pete and I are thrilled you could participate in the Tier One Interview. You have reached our famous restaurant question and, initially, this was a bit of a problem for you as when I first told you about it, you named a couple of steakhouses and steaks. A big no-no! Without naming a steakhouse or a steak dish – hamburgers count – give me some recommendations of where I should eat and what I should order when I am there.
MATT: Since I cannot use a steakhouse, how about some of the most “unique” restaurants that you will ever go to?
Let’s start with Atlantic in Edgartown, Mass. This is a gem of a fish and, yes, steak place on Martha’s Vineyard that does not take reservations. Those coming in on a dinghy from their boats get dressed up for dinner. Their steaks are incredible, but the Black Truffle Lobster Mac and Cheese, OMG! Pair it with their Dover Sole and a glass of white wine - just wow!
Next, heading over the Atlantic to Florence, Italy, I recommend visiting La Giostra. It is a one-of-a-kind, world-renowned restaurant, that is known for their Tuscan Flavors and the owner that is a true character. If you can, try all of these:
Carpaccio di Zucchine e Melanzane con Pecorino di fossa (Zucchini and Eggplant Carpaccio)
Bucatini Cacio e Pepe con Lardo di Colonnata (light pasta with Cheese and Peppers), and the
Wiener Schnitzel (it’s the size of the plate)
Back in the U.S., do not miss having dinner at The Pelican Club in New Orleans. The restaurant is hidden in an alley in the French Quarter and has come of the best Creole food in the country. Order the Shrimpy Chicken and Andouille Gumbo, the Club’s Banked Oysters and the half-roasted duck. I know you and Pete are looking forward to going with me to The Pelican Club in November.
Finally, rounding out my list, is The Place in Guilford, Connecticut. This is an outdoor barbecue lobster establishment where you bring your own wine and beer and sit on stumps. Bring cash or you can use their ATM since the restaurant does not take credit cards. When you go, order the Seasoned Steamers, the 1 ½ to 2-pound barbecued lobster and the grilled corn on the cob.
Since its inception, Life Insurance Strategies Group has solely focused on the individual high net worth life insurance market. We do not sell products. This allows us to offer unbiased, pragmatic advice. Visit us at www.lifeinsurancestrategiesgroup.com.
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