Spotlight on: William Burns, Tax Office Managing Partner, BDO

By Yolanda Rivas

2 min read JULY 2019 — Accountants and financial professionals play an important role in the global economy and business model, taking on an array of roles within organizations in all industries. According to the Bureau of Labor Statistics the employment of accountants and auditors is projected to grow 10 percent from 2016 to 2026, faster than the average for all occupations. 

Accountants can bring a significant perspective of the economy and industries growth. Our ‘Spotlight on’ for this week brings a perspective of what are the industries looking for in regards to advisory and how the local accounting companies impact the labor pool.

BDO offers a wide range of services including advisory, audit/assurance and tax services. Which are most in demand in Philadelphia?  

The core services that we provide in Philadelphia are audit and tax, which is where we are seeing the most demand. Our recent acquisition of AC Lordi will allow us to bolster what we can do regarding advisory and scale us up to the next level. We have seen an increase in demand for our services from healthcare, life sciences, and manufacturing and distribution. In addition, we have seen an influx of people reaching out for advice regarding maximizing the benefits of tax reform. We expect to see an increased demand for advisory services related to tax reform, especially surrounding Opportunity Zones.

What are BDO’s efforts to recruit talent from the local pool?

Six years ago, BDO merged a select group of geographically close practices, retiring a number of partners and ushering in a new class. We now find ourselves in a position where we can grow exponentially in one of the largest markets in the country. Our focus on targeted growth means we are constantly adding talent as we look to expanding our tax specialties.

There is always a hunt for qualified talent. To combat that, we try to over-hire at the entry level. Turnover in our industry is relatively high and by attracting more students at the front end we have more opportunity to offer them higher positions when people decide to leave. We have partnerships with local universities and we recruit on a regional and national level. We also have a program to identify and attract students to the region from all over the nation.

What Impact does technology have on the accounting and financial sectors?

Technology has a huge impact on how we operate, since most of what we do is software driven. Data analytics is making us more efficient and many firms are using it as a tool within their audit and tax practices. Those firms that aren’t focused on using and developing technology are going to lag behind.

To learn more about our interviewee, visit:

https://www.bdo.com/about/us-locations/philadelphia-office 

Miami Banks Leading Tech Charge

By Yolanda Rivas

July 2019

2 min read  — Advances in technology are having a dramatic influence in the banking sector across the globe. Innovations are impacting the delivery of products and services, making the banking process faster, easier and more reliable. Customer satisfaction and increased competition are driving the tech push, and there is more on the horizon.

“We are changing our core banking system and investing more than $25 million to make that change. It’s an important step for us because we know technology will be the driving force to our growth in the future,” Fernando Beyruti, CEO of Itau Private Bank, told Invest:. 

An article from Bank Innovation explains that banks are spending more than $100 million to replace their aging core systems. Advances in blockchain technology, IoT, fintech, online banking and robotics have helped many financial institutions improve efficiency and accessibility. 

The investment isn’t just to make banking easier now, it is also part of the future. Technology is an integral part of City National Bank’s five-year plan. “We will invest over $15 million in digital transformation for the organization. This will ensure that we continue to be innovative as well as impactful through improving our client experience,” President and CEO Jorge Gonzalez told Invest:.  

Many financial institutions are also partnering with financial technology (fintech) groups to improve their offerings. According to a 2017 report from multinational professional services network PwC, 82% of financial leaders expect to increase fintech partnerships in the next three to five years. 

Cybersecurity and fraud detection are other areas where technology is playing a key role. “When we invest in technology we are also investing in strengthening our cybersecurity,” Gonzalez stated. The investment is not just in the technology, but also in bringing in the right people who have the experience and talent to be able to instill their knowledge throughout the organization,” he said. 

In that regard, First American Bank recently created a senior-level position — information security officer — whose role is to train employees and allocate resources in preparation for possible cyberattacks. “Security threats are on the rise, forcing us to be mindful that our information can be compromised at any time. Through back-room investments and increased training, we are taking the necessary precautions to reduce risk by educating our employees as well as our customers,” Brian Hagan, Florida Market President for First American Bank, told Invest:. 

Although technology adoption can be a challenge for some financial institutions, especially smaller banks that do not have the financial capacity to keep up with the latest innovations, ultimately it can provide a cost-savings. “I think all of us as a banking community in Miami are saddled with compliance concerns. But I think that, with technology, those kinds of costs can be reduced gradually while still maintaining the kind of vigilance that we have to have. There’s a good opportunity for our industry here,” G. Frederick Reinhardt, Chairman and CEO of Brickell Bank, stated in an Interview with Invest:. 

To learn more about our interviewees, visit their websites:

Itau Private Bank: http://www.itauprivatebank.com/

City National Bank: https://www.citynationalcm.com/home/home 

First American Bank: https://www.firstambank.com/personalbanking/ 

Brickell Bank: https://brickellbankmiami.com/ 

PwC: https://www.pwc.com/ 

Bank Innovation: https://bankinnovation.net/ 

Baby boomer retirees keeping accountants, advisers busy

By staff writer

June 2019 — As the baby boomer generation retires from the workforce, the need for business succession planning continues to grow. This is keeping at least one group busy: accountants and advisers.

 

“Over the past few years, we’ve seen significant growth in the need for succession and exit planning services due to the concentration of businesses that are owned by baby boomers who are retiring on a daily basis,” Christopher Meshginpoosh, managing director of Kreischer Miller, told Invest:. “Many of the owners of our clients are trying to fill their bench of future leaders or determine which exit options make sense for them in light of their long-term goals,” he said.

Although boomers are staying longer in the workforce and they continue to drive the U.S. labor market, business owners who were born between 1946 and 1964 are having a hard time transitioning their companies to the next generation of owners. According to Deutsche Bank Research an estimated 10,000 people turn 65 each day, which is the standard age for retirement. The Census Bureau estimates that by 2030, all baby boomers will be older than age 65.

“There is potential for a talent void as baby boomers leave the workplace. This represents a tremendous opportunity for younger professionals as they are presented with more career opportunities,” James Bartolomei, Principal at HBK CPAs & Consultants, told Invest:.

The increased number of boomers retiring each day presents several challenges for employers, including the need to provide the right tools for every party involved in the transition process. “Companies need to make sure they have mentoring and training programs in place to allow a smooth and effective transition from one generation to another,” Bartolomei said.

Some accounting and advisory firms, such as Kreischer Miller, have seen a great deal of interest in the formation of employee stock ownership plans (ESOPs), which has driven them to develop a deep expertise in that area.

“In the right situations, ESOPs provide a tax-efficient method for owners to gradually transition ownership to their employees, allowing the business to continue to thrive as an independent organization,” Meshginpoosh said.

According to Generational Equity, there were some 12 million baby boomers who owned a business in 2015, and 70 percent will be retiring over the next couple decades.

Although the exit of the boomers from the workforce presents numerous challenges for the economy overall, it translates into opportunities for the youngest generations. Many Philadelphia accounting experts are positive about the market.

“The fundamentals that our clients are showing us are great. Earnings are good, the businesses are solid and they’re growing organically as well as through acquisitions. Overall, the Philadelphia economy is expanding and we’ll continue to see a lot of private equity pumped into the Philly market,” Christopher Bruner, managing partner of EY, told Invest:.

For more information about our interviewees visit:

Kreischer Miller: https://www.kmco.com/

HBK CPAs & Consultants: https://www.hbkcpa.com/

EY: https://www.ey.com/en_gl

 

American Heritage Keeps Growing, Giving Back

By staff writer

May 2019

American Heritage Credit Union has made the news many times lately — and the pace of breaking developments is only going to speed up as the esteemed Philadelphia institution continues growing at a rapid clip. Yet the financial institution’s focus will never change a key aspect of its operations, according to CEO and President Bruce K. Foulke.

“All our efforts are driven to directly benefit our members and give back to the communities where our members and employees live and work,” said Foulke, who has seen American Heritage’s assets grow from $4 million to more than $2.5 billion during his 40-year tenure. “That’s the heart of American Heritage.”

Last year, the $2.5 billion, member-owned financial cooperative with locations across Philadelphia, Bucks, Montgomery, Delaware and Camden counties was named the top credit union in Pennsylvania by Forbes and the market research firm Statista. Recently, it was named “Best Place to Work” in the extra-large companies category by the Philadelphia Business Journal.

It’s on many national top-50 and top-100 credit union lists, too. “We began as a small credit union in Philadelphia 70 years ago,” said Foulke. “We were the only financial institution in a two-mile radius in our part of Philadelphia when we started. Today, we have more than 38 locations in the Philadelphia area.”

But that doesn’t mean that American Heritage has become like the other financial powerhouses in the state, he added. “Credit unions offer a special experience compared to a traditional banking institution. We’re a non-profit organization, and our members are also our owners. So we don’t have shareholders we need to satisfy. Whether it’s in the form of lower fees, better technology, or better rates, we’re focused on solutions that make our members’ lives better.”

Indeed, American Heritage is making big investments in delivering best-in-class convenience. The credit union continues growing its branch network throughout the Philadelphia and South Jersey region with more and more locations — all with surcharge-free ATM access to the public.  Additionally, it gives free ATM access to members at more than 30,000 locations.

American Heritage has also made significant investments in innovative, transformational technologies. It was the first financial institution in the tri-state area to introduce video tellers, for example. Its technology offers “personalized service and extends our hours, which allows our members to make transactions on a schedule that meets their needs,” said Foulke, who added that American Heritage’s Personal Automated Tellers are being implemented throughout the credit union’s network in branches, workplaces and in drive-thru locations.

A key benefit that comes with the implementation of new technologies, he said, is the increased connectivity with experts and personnel in different locations, as well as later hours. “We’re also adding video conferencing to all our offices so that members can have that personal interaction with our financial experts right at their fingertips, no matter where their branch of choice is located,” Foulke said.

Both the video conferencing and the Personal Automated Tellers are helping American Heritage become less transactional and more consultative — which in turn improves its personalized service. That type of attention and community focus will remain American Heritage’s priority despite technological advancements, Foulke said.

“The Philadelphia area is a region of unique neighborhoods, and although in recent years we have enjoyed significant growth in our technology, membership base, workplace partner relationships and expansion into the suburbs and New Jersey, we don’t forget our roots and the communities from which we were built.”

Indeed, American Heritage invests heavily in local neighborhoods through donations, volunteer hours and lending programs. In fact, American Heritage was the first credit union in the country to start its own Foundation, Kids-N-Hope, which has contributed more than $2 million since its inception to underwrite health programs, schools, child programs, parks and recreational activities throughout Philadelphia and its suburbs.

In addition, “our lending programs have helped businesses grow, creating jobs and revitalizing badly needed parts of our city,” Foulke said. “Through our lending efforts to families, businesses and non-profits, we’ve been able to provide true economic development opportunities.”

“Despite all the success and growth that American Heritage has enjoyed, our members can still contact me directly through our website or by calling me.  I still welcome the personal interaction with our members. Ultimately, the impact that our credit union, its members and employees have had on the community is my greatest source of pride.”

For more information about our interviewees, visit their website:

American Heritage Federal Credit Union: https://www.americanheritagecu.org/

 

 

The Bank of Millennials

By staff writer

January 2019

For the last few years millennials have been accused of “killing” products and industries — everything from Applebee’s to starter homes. Of course, millennials are not the sole cause of the downward trend in purchasing homes and breakfast cereals; rather, they are simply spending their money differently than their parents and grandparents did before them.

With this in mind, our team at Invest: Philadelphia sat down with local industry leaders to look into what effect millennials have had on the city’s, and the country’s, banking and finance industry. Here’s what they had to say:

The world has changed so much for individual investors. People are living much longer than ever before, and the cost of basicneeds like education and healthcare are at an all-time high. We have also seen a shift in financial planning responsibility from institutions to individuals. More and more people, especially younger generations, are looking for ways to secure their futures financially, and we are helping them do that by accessing alternative forms of investments.”

Steve DeAngelis, President, FS Investment Solutions

“Digital connectivity is important right now. With more millennials in the market than ever before who are used to seamless digital experiences, offerings need to be simple, and it needs to be easy to open an account. We have found success customizing our products for the different demographics we serve, like the student loan refinancing program. We provide a number of services online, like wealth management.”

Dan Fitzpatrick, President, Citizens Bank, Mid-Atlantic Region Head of National Industry Verticals, Citizens Bank

“We build long-term relationships with clients through high-touch and high-tech solutions that help establish life plans and stay on track. While the perception is that millennials and the younger populations are savvy with digital products, we think that is true of the more mature generations, too. It is our aim to offer banking how, where and when our clients want it.”

James Dever, Philadelphia Market President, Bank of America

For more information on our interviewees, visit their websites:

FS Investment Solutions: https://www.fsinvestments.com/support/articles/FS-Investment-Solutions

Citizens Bank: https://www.citizensbank.com/HomePage.aspx

Bank of America: https://www.bankofamerica.com/

P20: Driving Change

Focus: Atlanta partners with the P20 Conference to help drive change in the payment industry

By staff writer
October 2018 – 2 min. read

Focus: Atlanta is proud to be a media partner for the P20 Conference, a two-day global payment initiative set to take place in the heart of Atlanta on October 9, 2018. P20 is a direct response to the great need for collaborative innovation, cybersecurity and, simply put, clarity in the payment industry. The initiative alternates annually between London, the world’s financial capital (where the inaugural conference was held in 2017), and Atlanta, which has recently come to be known as “Transaction Alley” for being the hub of the future of payment processing. Currently, 70 percent of all North American payments are processed in the Atlanta area.

The event cannot come at a more opportune moment, with the future of fintech and cybersecurity being of paramount importance among America’s financial institutions and the general public. The majority of financial transactions — from paychecks to groceries — now happen electronically, which means the slightest glitch in our tenuous payment-processing infrastructure could throw the entire country out of whack. As a nonprofit organization formed last year, P20 promotes the development of the global payment industry and fosters thought leadership in four key areas: cybersecurity, regulation, innovation and financial inclusion.

SHUTTERSTOCK/JOHN D. WHITE

“Right now in Europe, there is one regulator. In the U.S., there are 19 regulators, and the penalties for violating the regulations are severe,” Allen Maines, managing partner at Holland & Knight, told Focus: when he sat down with our team earlier this year. “Holland & Knight is the leader in the electronic payments and transaction industry, both in regards to government relations and in trying to moderate the multiple, overlapping regulations that apply to the industry.”

Maines explained that the world follows the example set by the UK and the U.S., thus the reason for the coalition of P20. “We’re so passionate about this,” he said. “We try to help our clients innovate and engage in best practices for cybersecurity and best practices for inclusiveness.”

Atlanta has a long history of supporting startups and fintech startups in particular, going back to the late 1990s and early 2000s.

“There is just a tremendous amount of talent around the financial services space here,” Bruce Lowthers, chief operating officer at FIS, told Focus:. “It’s a great place from the perspective of available talent, innovation and real estate and as a commercial hub through Hartsfield-Jackson. There are a lot of positives about the city.”

The P20 conference is about driving home the idea that the regulatory officials and business people all need to be in the same room, Lowthers explains. “We wanted people in the room who could make the decision to change and have an impact,” he said. “Until we did that last year, there was never an event in the payments world where this had been accomplished. Our initial thought when organizing the P20 was to get two countries that get along: the UK and America. We first tried this idea with DAVOS, but when you are dealing with regulatory issues with 100-plus countries, the differences were far too vast to make changes appropriately. However, the UK — and ultimately Atlanta because of the amount of transactions going through here — made the most sense. We wanted to demonstrate that it could work, and then the followers would come. We have seen a tremendous amount of attention and momentum since our first conference, which is exciting.”

Above all, the goal of P20 is to drive change, and everyone here at Focus: Atlanta is excited to see what the future holds for the payment-processing industry in Atlanta and beyond.

To register for the 2018 P20 Conference, click here.

To pre-order Focus: Atlanta 2019, click here.

For more information on our interviewees, visit their websites:
Holland & Knight, https://www.hklaw.com/offices/atlanta/
FIS,
https://www.fisglobal.com/

 

Miami Is a Hub for International Banking

 

 

May 2018 — Miami is a city filled with rich culture and a diverse business community. In 2016, the GaWC Research Network designated it an “Alpha World City,” meaning that it is recognized as a “very important world city that links major economic regions and states into the world economy.”

Miami has always had a strong international influence in sectors such as trade, tourism and the arts. In the area of trade, specifically, Latin America composes nearly 25 percent of total U.S. trade, and Miami has long been considered the capital of Latin America. It is an interdependent business relationship: Miami relies on Latin America for certain goods and services, while Latin America relies on Miami for other specific goods and services.

Recently, another industry in Miami has started to see an increasing international presence: banking. A stagnant economy in Latin America coupled with less stringent banking regulations in the United States has proven advantageous for the Magic City’s banking sector. Miami’s already strong connections with Latin America have been further bolstered by unstable conditions in the region. Many wealthy individuals in Latin America benefit from investing their money in the more stable Miami market, which has led to increasing clientele for South Florida’s financial institutions.

Invest: Miami spoke with a number of leaders in the city’s banking industry to gain insights on how Miami banks plan to continue to attract and service international clients. Here’s what they said:

Guillermo Castillo, Managing Director & South Florida Region Manager, JPMorgan Chase

“Miami is an important international gateway, and our international banking teams have a base here. Providing solutions to international clients is a strategic advantage for us; the smallest companies nowadays have some sort of international operation, even to the extent of operating offices in other countries. Those are important client opportunities that we are uniquely qualified to service. We see a lot of foreign-owned entities with foreign parent companies. There is a good deal of this business here because of the connections with doing business in Latin America.”

Carlos Constantini, CEO, Itaú USA International Private Bank

“Because more investors are diversifying, there will be more players coming into the Miami market and more competition. At the same time, the entire industry is going to grow. We will see company growth and more activity for two reasons: 1) South Florida has a strong connection with Latin America and a lot of South Americans have family or second homes here, and 2) from a logistical standpoint, this is the best place you can be. It’s easier to cover Latin America out of Miami than from Latin America. A flight from São Paulo to Peru can be a nightmare, but from Miami it’s a very simple trip.”

Maurici Lladó, Managing Director, Banco Sabadell Miami Branch

“For our international clients who are looking at the U.S. as an investment destination, the tax overhaul improves their situation. The impact will not be seen until next year as investment decisions are not made quickly. Investors need time to find a project and secure capital, but abroad, experts are are analyzing and seeing more activity in the U.S.”

J.C. de Ona, Market President, Centennial Bank

“There’s a lot of money in Miami. There’s old money. There’s new money. There’s international money. There’s more money than people sometimes realize. It creates constant opportunities for business and wealth management.”

To find out more about our interviewees above, visit their websites at:

JP Morgan Chase: https://www.jpmorganchase.com/
Itaú USA International Private Bank: http://www.itauprivatebank.com/
Banco Sabadell Miami Branch: https://www.bancosabadellmiami.com/cs/Satellite/BSMiami/
Centennial Bank: https://www.my100bank.com/locations/florida/southeast-florida/coral-gables

Demystifying the Tax Overhaul

Invest: Miami partners up with local experts to make sense of the new tax legislation

“The hardest thing in the world to understand is the income tax.”–Albert Einstein

 

March 2018 — In December 2017, Congress passed the biggest tax reform legislation in more than three decades. The bill will affect most taxpayers, but the biggest question for many is: How? The Tax Cut and Jobs Act represents one of the largest reductions in corporate tax rates in U.S. history, dropping from 35 percent down to 21 percent. The bill also lowers individual tax rates for most Americans, as well as small business owners, but there’s a lot more than that going on in this major tax overhaul.

For that reason, Invest: Miami 2018 is dedicating an entire chapter to tax reform. With the help of our expert partners, we are deciphering the legislation and laying out for our readers what it means for South Florida residents, business owners and investors. Until the book is released, here is a bit of what you can expect from this year’s newest edition.

We recently spoke with J. Michael Custer, who leads the tax practice at CPA and advisory firm Kaufman Rossin. The firm just published a series of blog posts on how the Tax Cuts and Jobs Act will affect the specific industries most active in South Florida.

Here’s a sneak peek at what Mike had to say about the tax bill:

 

Mike Custer of Kaufman Rossin.

How have your clients reacted so far to the new tax legislation?
There was a certain amount of anxiety about the unknown after the new legislation was passed. Whenever the rules change, it takes time for people to figure out what’s going to happen moving forward. There are certain parts of the legislation where we know specifically how they’re going to change our clients’ behavior. On the other hand, there are a whole host of items presented in the bill that have no direction yet. Tax law is never black and white; it is still evolving. That’s why we’re here. We understand the policy and the policy issues, but we make a living by reading the rules, the guidance and even the lack of guidance. That’s where paid professionals really earn their value – interpreting these policies for particular industries and specific clients.

Will this legislation affect population growth in Miami and Florida in general?
Tax policy is a funny thing: it is designed to change human behavior. The fact that there is no individual income tax here in the state of Florida has always been a big draw. Is someone who was going to come into Florida before this tax change going to change her mind? I don’t think so. Are individuals going pick up the pace of moving into Florida? It’s a possibility. It comes back to travel times, housing supply and good schools.

Are businesses seeing the tax decreases they were expecting from the legislation?
Pass-through entities (like S corps and LLCs) got a 20 percent deduction. Many were thinking that since they paid 40 percent already, their rate would drop to 20 percent.  That’s not the case. It’s a 20 percent deduction. So if you make $1 million, you get a 20 percent deduction, bringing your taxable income down to $800,000, and then that’s subject to your top rate of 37 percent. So the effective rate went from 37 percent to around 30 percent, not from 40 percent down to 20 percent. A lot of people were not interpreting it that way initially.

 

For more from Mike Custer and other experts on how the tax legislation will affect you and your business, look for the tax chapter in this year’s edition of Invest: Miami.

For more information about Kaufman Rossin click here.
To pre-order your copy of Invest: Miami 2018 with the new tax chapter, click here.

Invest: Miami speaks with Calixto Garcia-Velez, Regional Executive & Executive Vice President, FirstBank

 

The development slowdown will most drastically affect luxury high-rise residential condominium buildings, which we are not in the space of financing. The high-rise condo market is extremely cyclical, while other property sectors are more stable and allow us to better manage risk. We have had a record year in residential mortgage. As for regulatory burdens, we are optimistic because all banks have to deal with them. It gets in the way of our agility, responsiveness and costs, which unfortunately get passed on to the consumer. There is a happy medium that is good for everyone, but the pendulum swung to another extreme after the most recent financial crisis. First and foremost, when dealing with a bank our size or smaller, it is with real people that know you. When taking a closer look at what happened during the crisis, the syndicated loan market and the decoupling of the individual with the financial institution, the stripping of residential mortgages on Wall Street and all of the complex structures are what caused the crisis. At the end of the day, if a client ever has a problem, they know they can call us, and we’ll figure it out together. On the positive side, factors propelling the strength of the real estate market – particularly commercial and industrial – have contributed to opportunities for the growth of FirstBank. Foreign capital continues to pour into Miami, and the bank’s expanding portfolio is a reflection of what is available. As the economy continues to do well, our job is to target the right sectors and to deliver on what we promise.