EP13 - Third Party Administration for ESOPs - with Tom Roback at Blue Ridge

As the podcast discussed at the beginning of the new season- we wanted to give a strong overview of the Third-Party Administrators (TPAs) role in the ESOP. On this episode, the podcast interviews Tom Roback with Blue Ridge. The episode looks at the trends in the ESOP community and the consolidation of TPA companies.  We look to answer what challenges with TPA firms are currently being experienced and how TPAs (particularly Blue Ridge) are looking to overcome those to provide a strong partnership with their clients. Tom does an excellent job walking through a a various list of topics - this should be a helpful podcast episode along your journey to an ESOP.

Transcript

[0:13] Hey everyone this is the journey to an ESOP and Beyond podcast where we talk about Employee Stock ownership plans from all kinds of Vantage points and today we get to talk about third-party administrators the role that they play the very critical role that they play with Employee Stock ownership plans um and to do that we're going to interview Tom roback Tom is the cro which is the chief re uh Chief Revenue officer for Blue Ridge. Uh Blue Ridge is a a very strong third-party administrator in the ESOP space you might have heard of them already they may even be you doing your your TPA work um but with that I always find it's helpful to. Help in you know interview people that are experts in in these areas just to kind of see you know what their thoughts are um so to do that Tom thank you for joining our podcast today.

[1:00] Thanks Philcool so. So I introduced you as the chief Revenue officer um before we get into kind of your background and how you got into esops tell us kind of what's your favorite movie and why.

[1:19] Uh I would say it's Silver Linings Playbook especially my favorite scene in a movie is that 1 scene after the football game the Eagles Giants game that doesn't go well with Jennifer Lawrence my favorite scene in a movie. Nice yeah I would say Silver Linings awesome awesome um. Yeah yeah and then then but the first was show me the money Jerry Maguire but now it's that right so which is a great answer because honestly people are like I don't even know what my favorite movie is so to be honest we all have a lot of favorite movies and it's just 1 of those. That comes right off the headso um okay so your cro with Blue Ridge how long have you been with Blue Ridge21 years. So yeah it's been a good run I thought we were really good back then but we are stronger more depth better technology um still personal attention is our Focus that's number 1 forever. And it's been it's been a good ride we're doing well. Cool yeah so how how did you get to esops in the first place like what in your career like from a obviously 20 years goes by fast too so what what did you do before that and how did you get into this yeah yeah. So I was in counting major out of college I did work at Lake Mason my first my first introduction to employee ownership.

[2:37] In the in the later 90s was we were capped at broker for Whole Foods on their Equity comp we would do the, stock option trades restricted stock trades and I you know started giving people advice on you know the tax advantages of if they have an incentive stock option. I did run the stock plans at an investment Bank Fremont buildings Ramsey FBR. Experience the calm and you know it was great that was when I first learned about esops we pitched on some 1042s. Not successfully but I learned about esops there and really really uhso I kind of came and came in through the equity comp but during that time with with sarbane Oxley and Enron and other things I started reading you know I was in the Washington office taking a train down to Washington most days about esops and I was like this is cool I kind of like working with privately held companies better there's less red tape and uh it I just I so I I really uh I helped.

[3:42] Helped uh facilitate a an executive Roundtable for employee owned companies at seic.

[3:51] With the ber Institute and thenthat's when you know blidge which was an ESOP company that period of time um. 1 of 1 of the owners Marie mitten.

[4:05] Was involved in that and she asked me hey you want to come work for Blue Ridge and so that was 2004 and I was like yeah you know I could work. You know satellite 5 days a week and you know little kids and commuting down to Washington wasn't always fun so it's been a it's been a great rise the best thing best decision I ever made and and uh. Things are going very well that's awesome I do find a lot of people that work in the ESOP world, they they tend to stay there forever right it just becomes the they gravitate to it and then eventually they just like this is really what I want to do and I'm I'm thinking maybe from I mean for myself as well as for those is like it's just a great, community of people right and and it's people that want.

[4:48] At the end of the day they're they're I believe we're doing we're all doing good in the sense of trying to help you know work through the process which can be somewhat complicated but at the same time enriching because we do you do see some some benefits their transition to employees of course and that's and that's really part of it successfully building the legacy of businesses going on the long term so all of those things plus you just everybody's pretty friendly you know in the ESOP space and you know. Um so and I know you and I have talked you know we've known each other for years now and and so I'm just happy to get you on the the podcast today and um, I think the biggest thing is just starting with what for some people that don't really have really gotten into esops yet um how would you define the role of a third-party administrator. You know regarding like we have all these different roles of like trustee and evaluators and then sell side advisors how would you define that role for people that are brand new to esops sure.

[5:45] So we also do a 401k Administration it's a little different but um. You know we make sure you're operating for the plan document we're there for questions we are usually the first phone call from our clients we don't feel like a law firm or anything we want we would like to be proactive with our clients and helpful and available you know without just throwing out code sections and things but we're we will doreally gather the census like in Pre privacy 341 k plan they share with your provider there scrub that down because that's really the building blocks of the allocation so we make sure that's perfect probably usually have some questions for our clients there.

[6:25] Let me do the trust accounting which is really a financial statement so the of the ESOP trust and been you know normal years.

[6:35] You know usually the last piece of information is that valuation and we'll do all the math you know we'll try. Create the amortization schedule for the leverage dsop and we'll do all that math of the allocation all the compliance testing. Pertinent to the to combined with a 401k plan and just specific to the ESOP. And then 45500 and all related schedules we do distribution processing we can also do, Reapers obligation forecasting and um we have a new a new kind of product that's some ESOP Communications committees like it's kind of a.

[7:10] What's called the ESOP Blue Ribbon and it hasyou know it's kind of an easy button with content that you can customize that's cost efficient. Yes informational um so so let's take a little bit of a step back into the like when you look at the the purpose of the TPA and the value that they bring, um and I think I probably would first off describe it as somebody some company needs to account for the participants shares of stock in the plan. Yes yeah and and so looking at that of course we're starting with the census that you just mentioned right so the payroll sends it.

[7:47] Um and then of course that helps to then build out you know the normal allocation process which is we're going to release shares to employees based on typically based on the the percentage of pay right so you look at that making sure that those that allocation was received uh was was contributed and then released out and then of course, accounted for and as as in those participant statements as well as looking at the like you said trust accounting which is what is this what's in here what's in the plan right to to then do the 5500 and all those kind of steps I think are very similar to 401ks but I think that the next question here is just how would you describe the differences between a 401k you guys do those and also the ESOP you know in terms of the the 2 different you know the differences between the 2. Yeah it's quite different you know esops allow leverage number 1 primarily invest in the companies stock you know there's a little bit of leniency there over time or certain certain period of time um it's a it's a what we call a balance forward plan as opposed to a daily 401K plan it typically doesn't change but once a year so it's an annual that we do a tailor timeline for all of our clients because we get them their valuations in different time periods and. Um so there's really no off-the-shelf software for ESOP Administration so.

[9:09] Think we were smart to build our own web-based system a long time ago and it just helps our people deliver more time on an accurate work and and uh so it is something that. I've run into 1 new ESOP it was probably about 10 years ago they actually did a pretty a government contractor in Huntsville they did their own.

[9:27] Uh 49p testing that our own Administration the first year but then and he did a good job but. It means like this doesn't make sense like I mean let's Outsource this so I would be willing to say without exception pretty much 100% of all new esops do Outsource their ESOP Administration. Yeah I mean I I agree with that he's probably what an engineer not to pick on the engine what is this smart guy he's yeah he was he was good I enjoyed like to know and understand things but yeah it's more than just a spreadsheet I know it's it's just a lot of and then things happen like every year you know you do have the once a year allocation but you also have things that are happening with you know obviously testing for an imp making sure you're on top of that a 404 changes all those things can be um difficult and so there's definitely some 1 of the things I see is that is just normally people are like well. My 401k administrator. You know can they do my ESOP Administration if they don't do ESOP Administration right so so the answer to that question would be.

[10:31] You you you should ask them but most of the time no most it's very specialized our systems like you know you don't want somebody spreadsheet to get and our space used to be a lot more fractured when I came into the business was. A lot of different tpas would have 5 or 10 esops hey we're going to spreadsheet that. But now it's less it's kind of rare when I run into 1 of those and most the time the TPA. Admit they're kind of glad or feel like oh take this you know maybe maybe worried like I'm manually doing some of these things that uh like diversification we've seen some that where they missed the diversification because their spreadsheet, so so you know it's definitely kind of collapsed the providers in the ESOP Administration space there's not that many anymore. There really isn't that's part of part of where we're going to go is like the trends towards, you know what's happening and I think part of that foundationally is like they're just it is complex work and I wouldn't want to do it if and we don't do it but I wouldn't want to do it if I felt like I was messing up someone's retirement plan. Right you know forget the Department of Labor and and compliance and everything I'm the and the penalties that but just messing up people's retirement plan would be a nightmare I'd feel guilty and bad right so absolutely, you know you don't want to be rolling the dice on this is the is the bottom line divisional waiver yeah so you know so when you guys um.

[11:59] Look at that and they have a 401k administrator and they set up we set up a brand new ESOP um and I kind of already know the question or know the answer but I'm just curious from your perspective how often is it to where you're going to have set 2 separate tpas that would be kind of like a basic question a lot of people ask. Where you're at that we'll keep our phone for our own team Minister but we'll bring in like a Blueridge to do the ESOP. Yeah most of the time it's too much change at once to swipe to push them out but we do see people that stagger they're like ah no this this new ESOP I've got a lot going on like I'm not going to even be able to have time to hassle with switching tpos on 41k. But maybe you know the next year or the year after in the future sometimes it it is it can be beneficial.

[12:45] 1 census not getting the same census question from 2 different parties so that can be. It could be irritating getting that you know that that way so it the coordination is key there and you know we're available with that but it's not a problem if if they don't, you know we're not pushing that area yeah I I think for what I see is that most most of the time they keep their 401K administrator. And then they'll bring in like a separate a specialized ESOP TPA right and then then that's kind of what. Obviously what you just because it is a lot of change um and every once in a while they'll they'll consolidate it it kind of it does depend but that's an option um yeah. So in in some of the things that you guys and I know part of the part of the the changes that you just alluded to earlier where like hey we we used to have a lot of. Small TPA is doing ESOP work. Now as time has gone on let's just call it 5 years 10 years you know we're seeing fewer and fewer players as. Professional experience tpas that do esops so what and what what really from your perspective what is the uh the reason for that is it just. Consolidation made sense um.

[13:59] These guys were ready to sell or what you know what what really is spurring that like concentration now of fewer fewer tpas.

[14:09] Yeah good question Phil I'm not sure exactly I I do know you know obviously last year there was a big principle at a big. Big acquisition um I took it as I I was like this is kind of positive because you know this is a big public return insurance company that recognizes.

[14:26] The silver tsunami and the eshopps that that this is valued and then this is a good space to be in I know the total addressable Market of esops is not huge but I it is growing and I think there's a lot a lot more potential there um and then kind of like I said before a lot of these tpas that just had a few or a handful of a vaupes they just it just didn't make sense for them and they were kind of glad usually when they they want to be able to know that 41k business but the ESOP um.

[14:56] Not so much so I do think it's interesting because you know essos I know I was putting the code like Labor Day of 74. I believe 4 on KS were more maybe 4 years after that that they started getting popularity. We definitely do see the 401K only tpas there is a lot of. Selling owners or owners interested in selling they're getting grayer hair and they're you know they they've had this business since maybe the early 80s and they're starting they're definitely looking for options so there's been a lot of consolidation in that space too. Just as it applies you know the silver tsunami what we're referring to is this idea that you have a lot of people that are hitting that certain age where they're ready to exit and that's why a lot of companies go ESOP because they're ready to transition the business and same thing with probably these smaller TPA firms is that they're yeah, they're ready to get out um there's probably I'm guessing and like I know you guys have acquired a few um there's efficiencies in that as well to. Um you kind of build more uh market share and then at the same time. You know leverage some of the tools and and be a little bit more uh proactive in building a a big a bigger ship right so I know it's not easy but kind of from your perspective I know you're in the management group with Blue Ridge how has that gone for you guys I mean that's it's all it's always a good strategy for growth but at the same time it's not easy and sometimes painfulyeah so.

[16:25] We've gotten really good at it and we haven't done you know we're not going to do a ton of a ton of Acquisitions but we have done Coastal pension who you know Pam Walker used his or her old office was in my wife's little law firms office I've known her forever she helped us when we were getting in to daily 41k Administration long time ago that was you know that's like you know right here in Baltimore um certainly California benefit planners in California they're phenomenal out there in Pasadena we have an awesome Pasadena uh we also have um we've done a couple of other smaller ones with some ESOP combinations but TSC was a big opposition last year up in Minnesota and then more recently close close just the the uh end of March was qrps and rolly um the thing I like about these is is we.

[17:22] We willlike I did for Pam you know kind of a case study for you know webcast for their clients just to know what ones up is and some of these you know clients you know might be interested in that you know I'd like to do another 1 for qrps and and TSC just to let them know about I bet they have a lot of clients that are looking to sell and maybe we'll spur more new esops we haven't seen a ton of that yet because it's still kind of early on these but but it is something that uh. You know kind of spreading the word or the awareness of an ESOP you know they okay so now you're acquired by by blue or G SOB like, okay what's an ESOP they might look into it even if they don't contact us but but uh I do think it might Maybe. Create some a little more awareness for some of their clients andno that's a I didn't actually think about that part yeah that makes sense because that's part of the reason the podcast exists is just a create awareness like what what is the whole thing about right and and it starts with that typically people are like all right well tell me more about it what that looks like, um do you feel like they come you know to you guys and ask that question routinely or I know you guys have positioned your sales reps in different geographic regions right that that kind of manage a lot of.

[18:39] The new opportunities but do you feel like you're getting those kind of calls from peoplenot routinely um to be honest with you feel maybe people kind of know what we do now I feel like it was maybe more before but they realize we don't do feasibility analysis we don't do deals you know we're not an investment bank or something like that or or you're you know we do we're totally complimentary with you so it's very few I mean and it seems like when people do it's a smaller situation and you know it may not make sense anyway but, occasionally occasionally we'll get some people uh.

[19:15] That will come in a will call in and just have wanting to have a general conversation about the future like that. Yeah makes sense it makes sense I mean you're gonna you're gonna interact with them and especially like even talking at conferences or whatever you know going through those places. So um so with all those Trends looking at um the the the trends in the in the experience that companies have and we're just specifically talking to ESOP companies right so they get we'll walk through the process like they get through their first round maybe it's a first stage transaction or maybe they've sold a 100% um you guys come in in my experience typically once the closing is done and then everything's kind of like now here's your plan document here's your trust document. Um it's time to kind of think about the timeline of the of the year right for for purposes of compliance right um and speaking into that you're going to have typically a company that is going to have a an HR representative or their controller or their CFO or you know somebody's responsible on their side to. Um make sure that they do all the things they're supposed to do right so with with all of that.

[20:28] Um how do you guys I guess the first part of the question is is like how do you guys approach that. Um just from a pure process standpoint like logistically who's doing what and when you know if somebody was a brand new ESOP what should they expect their TPA to do right after the closing. Yeah so we we do a T Taylor timeline for all of our clients again it's hard to know exactly the day the valuation is going to come in but you know you do your best and, main thing is getting the census early as early as we can so we can do everything and be ready for that valuation there um.

[21:04] You know we have a professional assigned um new esops who.

[21:10] Is responsible for their work also an analyst who is under them a little bit invisible except if we're doing distribution processing and things scrubbing the census doing the trust accounting for their review but you know they're available for any phone calls we if they're on vacation or something we do have a senior person that reviews the plan is sign knows your plan that particular plan Phil's plan and. You know can answer any questions you have to wait for the professional to come back from vacation something like that so it works really well it's it's just personal personal, you know attention does help and uh. Yeah so let me let me throw out some quick a quick a question that I have so I so I close an ESOP deal like we're a sales site advisor we closed a deal. Um our attorney that's working with us will put a legal Binding Together right so in that legal binder we're going to have a plan document a trust document um will typically send that over do you guys have like your you guys read through that plan document or how how do you take that documentation and get prepared right because clearly there's some specifics in there that are going to be pretty important to what you're going to.

[22:19] Yeah we do and you know esops can be like snowflakes although some commonality we do Corp we create core plan Provisions you know that helps us you know with blue magic our system to to do all the ESOP Administration really so it's something that yes we read those documents and it's yeah a lot yeah they're like they are lengthy um and but yeah we that's part of the deal we want to make you know we make sure that you're operating for that plan document. Right and you know going into that like so I'll get into like some of the things you mentioned but I want to make sure we put a little Clarity on it the the.

[23:00] Technology and they maybe the tools that you guys use to help somebody let's just use them an example like an HR person branded ESOP, they don't know anything about ASAP right, you guys get engaged to be the TPA you read through the plan document so so how do you what tools do you use to help that person go through that first that first year is really the learning curve is what I would say right they don't know what they're doing and I know there's things that we'll do to try to help them but what do you how do you get them up to speed on on what they need to do. Okay um questions are good we we love getting questions we want to be proactive with our clients and helpful to they can kind of understand things because yeah it's it's it's different and you know we do have ESOP connection it's optional but a much for clients to have ESOP connection it's just for the participants it's more cost-effective 24/7 Communications there and everything's at the fingertips of our Point person they have information for for all of you know all the particulars of somebody was to call and we have a distribution shadowing feature there's a lot of little bells and whistles that will help.

[24:08] Take some of the burden off of them and um but yeah there is a little bit of a a learning curve there because sometimes you know the sellers there sometimes are are a contact and ends up being somebody who really wasn't involved in the process of doing the transaction and that's true yeah you know that that happens sometimes too but we we want to do handholding is good and it's something that that um we. We pride ourselves on. The connection is so what you have is a website based tool is that what that's what connection yeah it's a mobile ready tool it's on 30 different devices and we've had it for a long time it's gotten better and better and. There's a lot of customization functionality even.

[24:53] You know I guess the stock price contest for employees at you know for the employees they can we can run that through subconnection or they can go online and make a distribution election the statement is going to be there, frequently asked questions there's video capability if they want to put a video on there if they need help with the video we can help. Customizable polished video and you know so it's just a good information tool to kind of keep it going keep the momentum going.

[25:22] It with with that so let's just say you have a company that has 200 people you know do do you guys provide a Services where the employee can say hey I have a question on my plan and they can call you or is it have to go through the HR person.

[25:38] Mo we do have a call center um it's mostly for our bigger clients but we do have we it's you know it's a domestic call center you know most people in Virginia and and it. Yeah we get high marks on there and you know we. We but we do most of our clients they do run through you know if it's self eligibility questions really if it's any question. It it runs through the contact at the company and then they reached out to us and we helped them assist and then they can't point it on that's that's included in free and invested it that way but we do have a call center, and have a lot of volume and, and they do a good job I missed the questions are you know how do I get my money you know it's just the right direction that's yeah yeah they're leaving the company or whatever how do I get my money yeah exactly exactly exactly. What's so what big things do you see for like to describe the question as the pitfalls that you see that happen with companies um we're we're kind of thinking about brand either brand new esops, or pitfalls for brand like companies that have been esops for a while like where do you see as issues that they run into that maybe could be avoidable and maybe kind of help helping them to kind of think about um. Just being ready for it right so it's like getting ready coming right it's kind of having that. You have the baby now what do you do right it's um exactly baby ESOP and yeah.

[27:03] Um you know I think there are some Communications things that are allowed and just let them know you know hey if it's a going to be a 123125 plan you're in. You know you're not going to get your statements for a while letting him know the roll out you know this to take a while be like dominoes it's different to your 41k plan. Um you know a lot of times paying off the loan too quickly is not a good idea. You know maybe better better sticking with the amiza schedule as is uh I think.

[27:35] You know I think there is a lot of value in a first-time repurchase study obviously we do that but whoever you're with I think you know maybe. Year 2 or 3 to get a second opinion looking at your bet current benefit level maybe you want to get somewhere else we'll give you advice to get there. And so I think a repurchase study sooner rather than later you know again there's a lot of esops that wait.

[28:01] Almost to the first diversification to do that which I don't recommend I think it's you know getting advice is always good.

[28:09] Um so let me let me jump in a couple things so um.

[28:13] On the loan this is again people don't really when we say pay off the loan what we're referring to is the inside loan um that is the releasing of shares and what you're saying really is if you pay it off too quickly you're basically releasing a lot of shares into the employees hands too quickly even though you might be able to with IRS code section 404 you might have the payroll and available at the 25% maximum limit to do that but it may and and and I see it happen because there's there's for partials for instance there's there's more deduction that you get on the tax side. Um I also see it in my world when I see like an investment banking firm design a plan.

[28:57] Because what they do a lot of times they move people to corpse. And so s to see they have to be a c for 5 years and what they're trying to do is Max out the deduction every year to make the numbers work. So they're what I'm seeing happen and that and I've taken over some some of this work so I mean I'm seeing it directly. Is they're they're trying to justify a higher forecast a higher valuation at the same time they're trying to get the cash flow to work and so this if I took 25% every year Max deduction I'm going to create massive repurchase liability. Um so what's important about and you guys don't really get into the design as much like you said you're not doing the feasibility um but that's pretty dangerous because oh over time when we're describing we purchase liability is.

[29:42] Couple things are going on we just put a bunch of debt on the company's balance sheet because of the of the leveraged buyout that debt gets created with bank financing seller financing on top of it there's probably some warrants that are going to be owed. And even some SARS so those are all going to be they're going to be liabilities the company's going to have to have. Cash for right Meanwhile we're also creating this repurchase liability which will describe as hey my employees are leaving someday, as they leave the company's gonna owe them money so it's like The Perfect Storm, um that can be really destructive to the company's ability to manage their business um and so planning that out so as we talk about the inside note. Um we want to see that typically make sense from a couple different levels we want to see the benefit percentages be in the right the right ballpark I usually look like at 12% something like that um we want to see that long that long-term node and because you can always pay it early right and that way we can manage some rep purchase liability upfront but um I think that's a good point what so what do you see on the repurchase studies themselves like if somebody um starts a brand new ESOP when do you think. They should get the their the repurchase liability study you know from you guys like what year should they get that.

[31:01] I think year 2 or 3 you know 2 might be too early for some you're still getting used to it and it's that's you know. Obviously if you see that those average account balances growing you know yeah it's good to get another opinion should be on the right path and you know you definitely don't you know you don't want to create a Haves and Have Nots you're going to have future employees coming in to the company probably you want to save some for them and, and uh you know so I generally and I'd say maybe on average about every 3 years or so ESOP companies will do a repurchase study a reap we have a lot of repeat. Customers in that area and keep an eye on the ball department wants that may not be may be way off you were in the forecast but the fact that you've gone through the process to do it right it hasn't been like. I guess amsted Industries a long long time ago you know an acquisition the fact that they did a repurchase study saved them a lot on litigation and and stuff you know they they who knew that this public company they bought was going to go south and people are going to leave suddenly but.

[32:09] But the fact that you're you know keeping your eye on that ball uh is a good good thing yeah um so let me ask you this from, service standpoint so when you guys do a repurchase study um let me just say it's a brand new company they've they've been an ESOP for that number of years do you I mean when you get 1 you're like and these people don't really they haven't done this before right how do you walk them through that do you guys have a person that just says hey this is what it means. You know because it can be. We always talk about complex things right and we all kind of I would just say sometimes with gravity you know we talked about it like it's it's nothing right but for brand new people and get complicated there's a lot of levers could be pulled so Kevin Rush who leads our ree upper Rising team he really built our software with programmer here um and Ashton do a great job of really you know kickoff call there to kind of walk through things and you know so we have you know maybe I'll have General discussion with a company before about things but they really can, go through that and and you know if we're engaged for for a project like that it's there's it's a pretty extensive call or 2 that we have with them to go through those assumptions because especially if it's a new release up there don't really know what what assumptions so we really do this scenarios for them. And then if they especially mature esops if they want to run unlimited scenarios and additional costs they can do that for a period of time after a paid study but.

[33:37] It's I think it's a good approach that that you know Kevin Kevin did this in a previous life to you know so he has very experienced in that area and is seen just about everything and and uh.

[33:50] Well I think it's hugely valuable so yeah just be able to do it in best practices is routinely doing it as time goes on so that you're you're they're aware of it and they're ready to go so they don't have a big hiccup on on everything yeah uh the the other Trend I'm seeing and I and you you and I talked about this a little bit earlier but is just.

[34:10] I think that there's a like overall tpas and experience for the esops um there's a lot I get a lot of feedback from people in is that there's just there's some frustration on the tpa's you know and I think it has to do with they maybe it's the knowledge base the people that are working with and um some things like that so and know we talked a little about the consolidation part of the industry, um so what what's really attributing to that and I think kind of how are you guys addressing that issue across the board for Blue Ridge. Yeah it's definitely on our mind Phil I mean certainly it's not super new um but I think we we've come to the realization even though we've hired some really experiences to institutional level people over time most of the time that works out great butwe need to really. Grow our farm team you know in our in Charlottesville or in Columbus or Chicago or elsewhere. And you know the young people were very reluctant to give them give them a case load you know right out of college and things they need to go through at least 1 cycle I'm more a fan of 1 cycle for most people but depends on the person 2 Cycles they they're ready to take on cases and and really work with clients be the be the client contact but it takes a little bit of time there so we we I think we have a talented group but we're always looking for more talent and and it is something that uh.

[35:38] You know you're hiring a lot of people right out of college right so just what what major do they take to become a TPA um it'd be really varies you know some of our best could be I mean we have a lot of math Majors we have some CPAs but we chemistry Majors um it doesn't it could be liberal arts and you know they're smart people we have like a little test and things like that and you know a lot of it it's you know there's there's a people you know people like working with people and like making sure that they're happy and things like that but we've had a lot of good success with people that are not their traditionalum accounting Majors um.

[36:18] That's pretty cool yeah uh it's a I didn't expect that answer but that's interesting um you know I think for I mean this is not like to point the finger at the TPA I think every industry is suffering a bit on how do you get Talent how do you keep Talent how do you um train people on board them and and we're we're all dealing with a lot of different changes over the last 5 to ten years it's not you know and it's not to complain about it it's just we all have to be realistic about like that's what's happening right and um what can in your opinion if a client is really dealing with that type of struggle or frustration what can they doon their side to make it better. I mean feedback tell us you know open feedback sometimes there'll be a personality difference or what have you um we we you know everyone not just us or competitors tell us let us let us Rectify it the best we can. And talk about it and it's ultimately it's their choice it's another personal you know it does happen for everybody you know there could be. A situation you know where it just doesn't match with that person and then we can switch them to another person that person's not going anywhere they'll still you know be available maybe as a backup but um you know we just feedbacks always good and you know we want to hear from people if.

[37:44] You know not getting timely work or that kind of thing yeah totally makes sense um your so as you guys look at the future I guess I'm kind of. As we've kind of fine-tuned or finalized what we're talking about when you look at the future of esops some people ask me like what what do we see happening going forward we we we all agree there's like a. I would say it's weird because it's a small number of companies that are ESOP in the country I then the numbers always kind of drift around like 500 maybe 7,000 but you know out of the entire country the United States like that's not very many companies right um what's your opinion on the future of esops for the United States just in general. I'm still bullish I mean we've been waiting on this pin up demand for most of my career but you know obviously the Baby Boomers you know we all know um a lot of them are still kind of holding on tight to their business and they're so hard-working and they still want to come in and work and that's um but you a lot of times it does it's a very good fit or again the awareness of it you know is great but I do think we are you know seeing, some of these business strategy I think I saw a stat that.

[38:53] Of Gen X business owners over the next 5 years almost 40% of them want to exit over the next 5 years so I think that's a way that. Um you know you know they're gonna leave before the Baby Boomers yeah they may I mean they may you know they mayyeah I know it's it's I did 1 for a company that the guy was 91 so talk I mean talk about holding on that's a long time um. I I also I think for me to I'm bullish to I think that the people the more people know about esops in I mean I get the privilege of getting to talk to a lot of people at the front end and the more they really start to understand it.

[39:31] Um something some things happened too the misconceptions start to get kind of re like corrected right and that's part of the purpose of this is. Somebody might think it's that's not going to work for us and then they realize oh wow I didn't know that actually could work for us um that's definitely a trend and then for me too it's the. Different types of strategies with esops that that are created that's not just contemplating an exit it's it's how do we get some chips off the table how do I how do I really you know and so even the millennial generation that is are running companies now at this point are thinking a lot more community based as far as we're all together right and this is a perfect way to bring your community together and your and your companies. Umyou know and meanwhile. You know you're not I think 1 weird thing in business is always like you're all your net worth for 30 years is tied up in your company right and so 907% of what you're worth is there at risk of whatever can happen right doesn't it make sense to take off a little bit off the table over time as opposed to waiting to the end and then waiting for a big you know a big note payment or whatever so anyway I think those are those are fun things about but.

[40:42] Um and are you involved on um you know. Political political stuff with esops or is that kind of kazeno Tia does a lot of stuff like that or are you doing any of those kind kind of support. I'll be here at advocacy day next week um I'm an officer in Midland East Midland Carolina is this Association and and um they do a great good job with the officers they bring them in in January I think it's a great idea I give Jim Bob a lot of credit because. There's hardly anyone there and then next week it'll be crowded with all these lobbyists but we really met you know Mark Mark Warner and Angela also Brooks and all these people that you can never. I probably won't meet next week but but yeah I believe again that's good for all of us spraying the word it's something that is positive for both sides of the aisle that they can agree maybe for different reasons is a good thing and so I I enjoy doing that.

[41:34] Cool yeah I mean I think from your perspective it it's a positive experience and people have a positive, at that legislative level write a positive outlook on this type of strategy for you know the future so because it's a legislative instrument I mean it's an IRS yeah Department of Labor esops are literally just a creation of of what what the government has put together so and I think that's always on people's minds is that going to continue to be there and I think in my opinion has always been yeah because it does it is bipartisan it is you know it is 1 of the things we can actually all agree on in this country that. You know as as crazy as we are right it is something that makes us less crazy so exactly.

[42:16] But and here's to that being less crazy so yeah. Well cool well thanks Tom for for your time it was it's very informative on that front and um you know I I guess I would just do at the end here a shout out if anybody wants to get a hold of you what how would they get a hold of of Blue Ridge like what would you recommend just go to the website or, yeah it's uh 1 blue ridge.com or my email is tac1 blidge throw that out there you're gonna get 15 million okay, he doesn't mind um cool well again thank you I appreciate it and for everybody on today listening uh thank you for joining um check out our website at journey to an ESOP calm it's always very informative. Um it's always a way for you to get access to us and with that we'll um look forward to our next step on this journey to an ESO.