CNY Executive Q and A: A conversation with Pinnacle’s Gregg Kidd

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Editor’s Note: CNY Executive Q&A is a feature appearing regularly in The Central New York Business Journal, authored by guest writer Jeff Knauss, who is president of his own digital-marketing firm. In each edition, Jeff chats with a different executive at a Central New York business or nonprofit, with the interview transcript appearing in a conversational […]

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Editor’s Note: CNY Executive Q&A is a feature appearing regularly in The Central New York Business Journal, authored by guest writer Jeff Knauss, who is president of his own digital-marketing firm. In each edition, Jeff chats with a different executive at a Central New York business or nonprofit, with the interview transcript appearing in a conversational Q&A format.

In this issue, I speak with Gregg Kidd, founder of Pinnacle Investments and CEO and board chairman of Pinnacle Holding Company, LLC in Syracuse.

KNAUSS: Tell me a little about your background, where you grew up, an your career path.

KIDD: I grew up in Fulton. I went to Fulton High School and played sports — football, basketball, and baseball. I went to Ithaca College and graduated in 1984. After college, I had a couple different jobs before I got into the financial-services industry. I spent 10 years as a VP at Smith Barney. I left in September 1995 and started Pinnacle Investments with Dan Raite and one other assistant. Pinnacle has grown to five companies with 65 employees.

KNAUSS: When you first started, what was your vision for what you wanted Pinnacle to be?

KIDD: From the beginning, I wanted to create a business where anybody that worked with us would have a voice to offer ideas for the business to consider. I also wanted to create a business where people that were important to us would become equity owners in the firm so that they have skin in the game. That ownership builds loyalty.

KNAUSS: What qualities do you look for when you’re hiring people?

KIDD: A very positive attitude and people that want to win. I go back to my background growing up in sports. I think business is the ultimate sport. It’s all about winning because if you don’t win, you lose. I think people that want to win and want to be part of a team become successful.

KNAUSS: Give me a quick elevator pitch for all five companies that are under the Pinnacle family. Tell me a little bit about why you’ve branched out into some of these other business lines.

KIDD: The common denominator is that they are all service-oriented businesses with financial services. We started as a broker-dealer, which is your typical brokerage firm. We ended up with an asset management company managing portfolios for high-net-worth individuals and companies through relationships that I brought the company. I knew a gentleman that worked for an insurance company, Joe Masella, and we ended up through that relationship starting an asset-management company, and then we acquired an insurance business. We’ve got a 403(b) [retirement planning] business, [called Pinnacle Confidential Planning] that is for school districts. That came from that acquisition of the insurance company where we saw another opportunity and created a 403(b) business. We recently just launched Pinnacle Employee Services, which allows clients to manage human resources, payroll, employee benefits, etc. That was more of an opportunity that came to us. Some of these opportunities aren’t planned. They just happen, and we have to take advantage of them. We are very entrepreneurial minded here, and we are constantly looking for opportunities that we believe can be good for our clients, for our company, and for our shareholders.

KNAUSS: Were you attracted to leadership roles from a young age?

KIDD:Yes, in sports I was a natural leader. I was a quarterback on the football team, a pitcher and left fielder in baseball, and a point guard in basketball. I was comfortable leading people and not afraid to try to direct people, to take criticism, get booed, and be told you stink. I believe all those things helped me for the future in business. Being thick-skinned is very helpful in the business world. I would say being able to transfer the skill sets that I’ve learned, and the criticism I’ve faced have helped shape me into the entrepreneur I am today.

KNAUSS:What do you feel differentiates Pinnacle from some of your competitors on a local, regional, or national level?

KIDD: Well, I’m not sure there are any firms that are running the way we do as far as the way we offer ownership in the firm to people that work for us. The competitors tend to be owned by one or two people, or are the larger companies that are headquartered in New York City and have a million shareholders. For a small firm, I think we’ve got an interesting business model that is successful, which involves people buying into the story and also getting rewarded with ownership in the company. I believe that is the biggest differentiator between other businesses and ours. Also, we’re taking risks that nobody in this community is taking. We have the only equity hedge fund in Central New York. We have a mutual fund that is our proprietary fund. We’re looking to start a private-equity, venture-capital fund. These are not things that businesses in Central New York typically do. Again, we’re looking to create a company in Central New York that is unique, that is a place where ideally kids who graduated from college would want to work at instead of going to a place like New York City or Silicon Valley to find a career.

KNAUSS: What is your outlook on Central New York?

KIDD: I believe that Central New York needs to become more of a risk-oriented community. It’s a low risk, low return environment here, and I think somehow we have to change the thinking of this community that views risk as a bad thing. We have great universities around here. We’ve got students graduating that are extremely talented and most of them leave once they graduate. We have to create a new environment with risk capital and people with a mindset that risk is a good thing; it’s not evil. There’s an embedded mindset in this community that risk is a bad thing and people tend to want to do today exactly what they did yesterday because it’s safe. It’s pervasive in our community. Somebody needs to come in with a sledgehammer and just blast that mindset and create a whole new mindset in this community. ν

About the author: Jeff Knauss is managing partner & president of a digital-marketing firm, DigitalHyve.com, and has always been interested in hearing successful executive’s stories. He lives in Camillus with his wife Heta and son Max. For more, check out his blog at www.CnyCeo.org

M&T Bank operating profit rises in Q4

Insurance & Financial Services, Law, Accounting & Taxes, Subscriber Only

M&T Bank Corp. (NYSE: MTB), Central New York’s largest bank ranked by deposit market share, recently reported that its fourth-quarter profit rose, excluding one-time expenses related to its long-delayed acquisition of Hudson City Bancorp, Inc. (NASDAQ: HCBK). Net operating income at M&T rose 20 percent to $338 million, or $2.09 a share, in the latest

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Net operating income at M&T rose 20 percent to $338 million, or $2.09 a share, in the latest quarter, from $282 million, or $1.95, in the fourth quarter of 2014. That beat analysts’ expectations of $1.96 a share.

The operating results exclude the effect of the Hudson City deal, which took effect Nov. 1, and other items, the banking company said in its earnings report issued Jan. 19.

M&T made a cash payment of $2.1 billion and issued nearly 26 million common shares to complete the acquisition. Assets acquired in the transaction totaled about $34.6 billion, including $19 billion of loans and $7.9 billion of investment securities, while liabilities assumed totaled $31.5 billion, including $17.9 billion of deposits and $13.2 billion of borrowings, the banking company said.

Merger-related expenses incurred during the fourth quarter of 2015 totaled $61 million after-tax, or 40 cents a share.

With those costs included, M&T generated net income of $271 million, or $1.65, in the latest quarter, down from $278 million, or $1.92, in the fourth quarter of 2014.

“M&T posted strong financial performance in the fourth quarter, reflecting our recent merger, growth in revenues, controlled expenses and continued solid credit quality… On November 1, we welcomed our Hudson City colleagues and valued customers into the M&T family. The full integration of Hudson City’s operations will be completed in February after the conversion of the deposit system and branch network. The merger with Hudson City brings exceptional opportunities for M&T, and we are excited to offer our broad array of products and services to both existing and new customers,” René F. Jones, vice chairman and chief financial officer at M&T Bank, said in the earnings report.

M&T had total assets of nearly $123 billion at the end of 2015, up 27 percent from almost $97 billion a year earlier. It reported total deposits of $92 billion at year-end, up 25 percent from nearly $74 billion a year prior.

M&T Bank, headquartered in Buffalo, operates banking offices in New York, Maryland, New Jersey, Pennsylvania, Delaware, Connecticut, Virginia, West Virginia, and the District of Columbia. Trust-related services are provided by M&T’s Wilmington Trust-affiliated companies and by M&T Bank.

Sweeping Changes to Claiming Social Security Benefits

Business Mentors, Subscriber Only

The budget bill signed on Nov. 2, 2015 by President Obama included sweeping changes in the claiming of Social Security benefits. The changes ended two major Social Security claiming strategies for married couples. No more file and suspend or restricted application. If you have not filed for Social Security benefits within 180 days of the

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No more file and suspend or restricted application.

If you have not filed for Social Security benefits within 180 days of the bill’s passage on Nov. 2, you will no longer be able to use the program’s “file and suspend” rule. This claiming strategy has permitted one member of a married couple to file for Social Security, thereby enabling a husband or wife to file for a spousal benefit. The spouse, meanwhile, could suspend his or her own retirement benefit, which then could grow due to delayed retirement credits by 8 percent a year.

In other words, the typical file and suspend strategy in which spouse A files for retirement benefits and immediately suspends, to allow spouse B to file for spousal benefits while Spouse A’s retirement benefit continues growing is eliminated.

The changes also will end the ability of anyone not having attained the age of 62 by the end of 2015 to file what is called a restricted application and collect only a spousal benefit while letting his/her own retirement benefits rise by 8 percent a year for up to four years, until age 70. Instead, filing for spousal benefits will be deemed by Social Security to also trigger a person’s own retirement benefit. The agency will pay only an amount that is roughly equal to the greater of the two benefits. Right now, deeming only applies to benefits claimed before age 66. But the new law will eventually extend it to older filers as well.

Exceptions/opportunities.
Depending on your age, you may have a window of opportunity. If you are at least age 66, you can continue to file and suspend until April 29, 2016. By doing so, your spouse may be eligible to receive benefits after the law becomes effective. Plus you can continue to receive delayed retirement credits for up to four years.

Second, if you are 62 or older as of the end of this year, you are grandfathered in and will not be subject to the expanded deeming rules. This means that if you filed (or filed and suspended) for your own retirement benefits (or do so in the next six months), your spouse can still file a restricted application for just spousal benefits. But to qualify for this exception, your spouse will need to be at least 62 by the end of 2015.

Survivor strategies do not change. Widows and widowers can still file a restricted application for survivor benefits while their own benefit builds delayed credits.

Ami S. Longstreet is a partner at the Syracuse–based law firm Mackenzie Hughes. This article is drawn from the firm’s Plain Talk blog. Longstreet works with businesses and individuals to help them understand estate and trust planning and administration as well as elder law, including asset protection and Medicaid planning, and planning for individuals with disabilities. Contact her at alongstreet@mackenziehughes.com

Reduce Fiduciary Risk with an Effective Investment Policy

Business Mentors, Insurance & Financial Services, Law, Accounting & Taxes, Subscriber Only

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Human-resource officers and managers are often asked to chair or sit on a retirement-plan committee responsible for administrative tasks. In this role, a committee member takes on fiduciary responsibilities to plan participants and beneficiaries, and can be held personally liable for fiduciary breaches under federal law. As legal counsel, we endeavor to manage this risk for our clients through guidance on good governance, indemnification protection, and the adoption of effective policies. Effective management of employee-benefit plans will meet this fiduciary duty to participants while at the same time improving results for employees and minimizing potential liability exposure of plan managers.

We are sometimes asked to review a proposed investment policy statement (IPS) related to a 401(k) or 403(b) retirement plan. Although these plans are not required to have an IPS, we recommend having one as a guide for prudent plan administration. Most plan service providers and record keepers will have a standard form or model available for use by the employer adopting the plan. Models can be useful, but any model should not be adopted without discussion and agreement with its terms. Because an IPS is a policy of the employer in its role as plan administrator, and not one of the outside record-keeper or financial consultant, it’s important for a plan committee to discuss and “own” its policies. Furthermore, a carefully designed policy will not create additional responsibilities for a plan committee or officer beyond those imposed by law.

An effective IPS will describe the roles and duties of a plan committee, other responsible officers, or plan service providers. It provides a framework and process for investment decisions as well as indemnification for employees who are charged with fiduciary duties. In many cases, there may be a financial advisor or consultant who is engaged to carry out the policy in some capacity. Once a policy has been discussed and adopted, it helps in running efficient committee meetings and in working effectively with outside service providers. Adopting a well-crafted IPS is an important element of prudent plan administration.

An IPS should not dictate how many investment choices will be available for participants or the asset categories to be covered by plan options. Using factors described in the policy, a plan committee can handle the tasks of monitoring current options, assessing their potential for future performance, and making changes in a plan’s fund options. By creating and following a disciplined investment policy, a plan committee greatly reduces its risk of fiduciary liability when investment markets become volatile.

There is a downside in adopting an IPS and then ignoring it. Our experience has been, however, that once discussed and adopted, an IPS brings better focus and engagement by committee members, more efficient meetings, and a higher level of fiduciary performance on behalf of plan participants.

Daniel R. Sharpe and Michele O. Heffernan are attorneys in the Buffalo office of the Syracuse–based law firm Bond Schoeneck & King PLLC. Contact Sharpe at dsharpe@bsk.com. Contact Heffernan at mheffernan@bsk.com. This viewpoint article is drawn from the firm’s “New York Labor & Employment Law Report” blog.

Why Your Partnership Needs a Formal Agreement

Business Mentors, Insurance & Financial Services, Law, Accounting & Taxes, Subscriber Only

If you are in business with a partner or partners, you need a formal agreement for the following reasons: Your business may already be a partnershipUnlike other types of business entities, such as a corporation or a limited-liability company, a partnership can be formed without any written agreement or filing with the government. New York

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If you are in business with a partner or partners, you need a formal agreement for the following reasons:

Your business may already be a partnership
Unlike other types of business entities, such as a corporation or a limited-liability company, a partnership can be formed without any written agreement or filing with the government. New York law defines a partnership as an association of two or more people formed to carry out business for profit as co-owners. Courts have looked to the conduct, intentions, and relationship between parties in determining whether a partnership existed. As this determination depends highly on the individual facts and circumstances of a relationship, it is a frequent source of litigation.

The default rules may not be what you expect
If your partnership lacks a formal agreement, the New York Partnership Law provides for many of the key provisions that are typically included in such an agreement. However, much of this law represents an attempt by the state legislature in 1919 to create a set of rules for every partnership, whether it had two members or 100. Many of these 100-year-old, one-size-fits-all provisions may not be desirable for your particular business.

Unless modified by a partnership agreement, the Partnership Law provides that:
– the partnership automatically enters dissolution upon the death or personal bankruptcy of a partner

– the partnership can be dissolved by any partner

– every partner has an equal right in the management of the business

– each partner shares in the profits and losses equally

Benefits of a written partnership agreement
In addition to modifying the default rules set by the Partnership Law, a written partnership agreement can help prevent a falling out with your business partners by clearly outlining individual partners’ rights and obligations. If your partnership does face litigation from a displeased partner or former partner, a written agreement can help bring closure to any action more quickly and at less cost than if there was no such agreement. Additionally, as many disputes arise after the death or disability of a partner, a written agreement can be critical to ensure a fair and equitable resolution for all parties.

Partners can have unlimited liability
Unlike other types of business entities, an ordinary partnership does not provide for limited liability. The Partnership Law provides that the individual partners potentially can be personally and entirely liable for the wrongful acts of another partner that were performed in the ordinary course of business or for another partner’s misappropriation of a third party’s money or property. Additionally, partners can also face liability for the ordinary debts and obligations of the partnership.

Options to limit liability
The Partnership Law allows partnerships to limit individual partners’ liability through the formation of either a limited partnership or a limited-liability partnership. Other options include organizing your business under a different entity such as a business corporation or a limited-liability company. However, in order to take advantage of these limited-liability entities, your business must comply with strict procedural requirements, including making a written filing with either the county clerk or the Secretary of State’s office among other actions.

John J. Sierotnik is an attorney with Mackenzie Hughes LLP in Syracuse. His practice areas include business, intellectual property and technology, litigation, and mergers and acquisitions. This viewpoint article was drawn from the Mackenzie Hughes blog, called “Plan Talk.” Contact him at (315) 233-8210 or email: jsierotnik@mackenziehughes.com

Governor’s “College For Cons” Program is Out of Touch

Opinion, Subscriber Only

It was during the early part of 2014 when Gov. Andrew Cuomo first announced his “college for cons” scheme. He wanted to reinstate a defunct program, that was abolished more than 20 years ago, which used public funds to pay college tuition for incarcerated criminals. Here we are, two years later, and the governor names

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Here we are, two years later, and the governor names his college-for-cons scheme as one of his “Right Priorities” for the year. Considering the pressures faced by the hard-working families of this state and our local communities, it is utterly disheartening that the governor’s priorities contradict theirs. Families are worried about their children’s education and how they will pay for college tuition.

Let’s look at the governor’s priorities a little more closely. In his state budget proposal, he would allow State University of New York (SUNY) tuition to be increased, he does not restore the Gap Elimination Adjustment (GEA) funds this year that were taken from our public schools, and he wants to provide free college tuition for convicts and illegal aliens. The governor fails to support New York’s hard-working families who pay for the costly programs and projects he so flagrantly and wastefully imposes on taxpayers.

The governor would like the public to think that this time around his college-for-cons plan is different because it uses case-settlement money, rather than “taxpayer” money. What a line he is trying to feed the people. The case-settlement money belongs to taxpayers in the first place. That’s $7.5 billion that should be used to support the lives of law-abiding citizens and residents.

This governor would rather treat law-abiding citizens like criminals with his Second Amendment-violating gun laws. This governor would like to use taxpayer dollars to fund political campaigns. This governor has, time and time again, passed the buck on things that matter most to the New York taxpayer, only to use his energies to reward those who do not deserve it and use public dollars to benefit his agenda, which is entirely out-of-step with the people.

I pledge to tell the governor what New Yorkers’ priorities are, and I will stop any efforts that fly in the face of what is right for the hard-working people of our state.

Marc W. Butler (R,C,I–Newport) is a New York State Assemblyman for the 118th District, which encompasses parts of Oneida, Herkimer, and St. Lawrence counties, as well as all of Hamilton and Fulton counties. Contact him at butlerm@assembly.state.ny.us

What It Will Take to Finally Address Income Inequality

Opinion, Subscriber Only

When the history of this year’s presidential campaign is written, one of its more remarkable features will be that candidates of both parties felt it necessary to talk about income inequality. Surely that makes this a watershed moment. The issue is hardly new. As historian and writer Jill Lepore pointed out last year, income inequality

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The issue is hardly new. As historian and writer Jill Lepore pointed out last year, income inequality in this nation has been rising since the late 1960s. As she put it, “The evidence that income inequality in the United States has been growing for decades and is greater than in any other developed democracy is not much disputed.”

More notable is that it has become a defining issue of our day, with Republican candidates seizing on it just as avidly as Democrats — though with different views of its causes and solutions. Some reformist Republicans have argued for some time now for the right mix of public policies to give poor and middle-income Americans more opportunity without shifting power to the federal government. On the Democratic side, as expected, both Bernie Sanders and Hillary Clinton press for a firmer public stance to redress the problem. No one suggests there are easy solutions.

To be sure, there are politicians, especially on the right, who believe there’s not much room for public action. Market forces will sort it all out, they argue. In this telling, inequality has come about because of globalization and technological changes that are unstoppable and that on the whole have raised living standards. Eventually, they believe, the gap between the highest earners and the rest of us will diminish. Instead of fighting inequality, we should be protecting and expanding the rewards for skill, leadership, and entrepreneurship.

This argument assumes that the very wealthy won’t act to tilt the field even more in their favor. Yet as the New York Times noted recently, they are doing just that. “With inequality at its highest levels in nearly a century,” the newspaper wrote, “the very richest Americans have financed a sophisticated and astonishingly effective apparatus for shielding their fortunes…. Operating largely out of public view… the wealthy have used their influence to steadily whittle away at the government’s ability to tax them.”

Yet some reform-minded conservatives agree with Democrats on at least one point, which is that government needs to act to achieve greater fairness and opportunity in the economy. The stresses we see in our political system today — free-floating public anger and distrust of government and large institutions — stem at least in part from the widespread perception that economic insecurity has become entrenched in our system and there’s very little that ordinary people can do about it. If inequality continues to grow, the stress on the system will ratchet ever tighter.

No one is arguing for a straight-ahead equalization of economic resources, which would not just require extreme restrictions on personal freedom, but would almost certainly hamstring economic growth. Nor, however, should government make the problem worse — which is what some politicians’ call for further tax reductions on the richest would do.

There are some broad directions we should be moving toward, to ensure a degree of fairness. Current trends are not inevitable if citizens are determined to reduce the influence and power of money on the system. We need to shift resources to education and workforce training, though that will take time to produce change. Encouraging technological change that boosts unskilled employment — rather than stripping it away — will matter. So will protecting the progressivity of the income tax, encouraging the well-to-do to follow the excellent examples of their peers who are sharing their wealth, focusing on trade deals that favor workers and not just the business community, and providing incentives for people of ordinary means to save and invest.

We need to promote policies that help all children advance, and discourage efforts to further concentrate wealth. These are incremental changes requiring limited government action.

A reduction in inequality is an essential ingredient in a healthy democracy. To let the gap between rich and ordinary Americans grow larger will allow political pressures to build in our economic and political systems. We should aim for a country where opportunities are more equal and the distribution of wealth and income is fairer.

Lee Hamilton is director of the Center on Congress (www.centeroncongress.org) at Indiana University (IU), distinguished scholar at the IU School of Global and International Studies, and professor of practice at the IU School of Public and Environmental Affairs. Hamilton, a Democrat, was a member of the U.S. House of Representatives for 34 years, representing a district in south central Indiana.

The Bonadio Group

People on the Move, Subscriber Only

The Bonadio Group recently announced the following new employees have joined its Syracuse office: CHRISTOPHER PAWLIKOWSKI, a graduate of Utica College, experienced assistant on the Small Business Advisory team. JESSE SCHOOLEY, a graduate of the University of Buffalo, assistant on the Government Compliance and Labor team. JOSHUA LEWIS, a graduate of Rochester Institute of Technology

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James S. Flynn

People on the Move, Subscriber Only

Firley, Moran, Freer & Eassa, CPA, P.C. has promoted JAMES S. FLYNN to principal. He has more than 20 years of extensive public-accounting experience. Flynn is a CPA and a graduate of Clarkson University.

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DiMarco, Abiusi & Pascarella, Certified Public Accountants, P.C.

People on the Move, Subscriber Only

DiMarco, Abiusi & Pascarella, Certified Public Accountants, P.C. announced that MARIA H. SNYDER, DAVID J. TURAN, and THOMAS D. JENKINS have been admitted as shareholders. Snyder is a CPA and a graduate of SUNY Oswego. Turan is a CPA and a graduate of SUNY Empire State College. Jenkins is a CPA and a graduate of

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