This month, our CEO, Jay C. Judas, sits down with Deborah Stavis, CFP®, Founder & CEO of Stavis Wealth Transfer Solutions. The pair discuss Deborah's path through the industry, incorporating life insurance in estate planning, the pending sunset of the estate tax exemption, and working with majority women teams. Read it all below!
JAY: Deb, to start, I want to disclose how I came to know you. Your Houston-based firm, Stavis Wealth Transfer Solutions is a First Financial Resources (FFR) member firm and a client of our LISG Creative business unit. As Pete has carried out work for your firm, I was in the background paying attention and said to him, “Deb is so interesting and, after a career of financial planning and wealth management, has come to embrace life insurance. I have to interview her!”
Well, I asked, and you said, “Yes”, and I am very happy to include you in the Tier One Interview Series. Tell me more about your firm and your role there.
DEBORAH: Thank you so much for the invitation, Jay. The “embracing insurance” phrase is more of an irony than you may know! My first position was a pilot operation with a Fortune 500 company. My boss, Ed Berube, explained that we would begin every client engagement with a financial planning contract, invest for them, and would be providing life insurance solutions. I accepted on the condition that I would never have to sell life insurance.
My younger self might be surprised to learn that every year I’ve been in business, since the early 80s, life insurance revenue has consistently been 18 to 20% of the total revenue of my firms across the three sources of revenue: planning fees, revenue from assets under management and life insurance placement.
I guess what brings me back to insurance is that I’ve spent the last 40-plus years as an RIA managing assets and a fiduciary, primarily helping people invest and accumulate wealth. Baby boomers were saving, and in many cases our clients not only met their retirement income needs but exceeded their financial goals by a wide margin.
The successful business owners, entrepreneurs, and C-suite executives that I have worked with have focused almost exclusively on accumulating wealth. Our mission now is to help these families dedicate an equal amount of attention to wealth transfer and preservation.
At Stavis Wealth we focus intensely on complex estate planning for families with taxable estates. We help clients transition wealth both during life and at death.
JAY: When I learned you had attended Wayne State University, I imagined you would tell me you made a pit-stop in Detroit for school. That certainly was not the case! Talk about where you grew up, your upbringing and your career path that brought you to the top tier of the life insurance industry.
DEBORAH: You are right, it was not a pit-stop in - I grew up in the Motor City. My dad was a second-generation construction business owner who lived large. My parents divorced when I was five. Dad convinced my mom to use the same divorce attorney so that they could save money. The outcome was my father received custody of all six kids, the primary residence, the business and all the assets. My dad kept the boys, who were conveniently great assets for the construction business! He farmed out the two girls, my sister and I, at ages 12 and 6, as we were not adept at grading basements and laying pipe.
We moved to the small town of Grand Haven, Michigan in 1954. I watched my mom struggle moving from one apartment to the next smaller apartment without a car, and rarely enough to make ends meet. Although she worked two jobs at half the wages of her male counterparts, by age 5 I decided “never again.” At an early age, I was destined to find a financial career, even though I didn’t know it yet!
Among the best years of my life were my college years at Wayne State University. I craved logic and order. Fortune smiled on me as I found a coach who truly believed in me. I was fortunate to represent our team at the National Debate Tournament in the first years where women were allowed to take center stage as a debater, rather than be relegated to research only in the backroom. I had the opportunity to visit university campuses around the country and fell in love with research, the debate, and the win. Finally, a chance to claim a trophy!
I met my husband shortly after college, and given his specialty in pediatric ophthalmology, he chose Houston as our home. It’s been an extraordinary place to grow professionally and personally. Many may not know that Houston has been recognized as the most diverse city in the nation. Arts, parks, restaurants, and museums have flourished here.
I was able to build two successful RIAs that I sold to large public companies. Stavis Wealth Transfer, my third company, is the most exciting and is the only business I have ever started with a ready-made succession plan. My succession team includes a senior advisor that has worked with me for over a decade, our chief business development officer, who is the best networker I’ve ever met, and my daughter, who came to us with an investment banking background and oversees our tech stack and operations.
JAY: Having owned much smaller businesses than what you have started, the fact that you sold two to public companies in two different countries is impressive! I want to focus on how you position life insurance with your clients. Is it usually a part of other planning? How do you overcome the negative connotations many folks have about the topic?
DEBORAH: First, we engage every client family with a financial and estate planning contract. We never know if insurance is indicated or if our client is insurable. Because our clients understand how important it is to integrate estate tax payments with estate tax planning, many of the traditional negative connotations regarding life insurance don’t emerge. I know there is room for improvement in terms of the industry, and we are committed to raising the bar like our other colleagues at First Financial Resources, the producer group where Stavis is a member firm.
As far back as the 1980s, I always introduced life insurance as an alternative investment with opportunity and arbitrage, totally uncorrelated with the other investments that we were putting to work in their investment portfolio. We position insurance as the tax-free, “family bank”. When properly structured, this liquidity buys time for families to determine which assets to keep or sell, avoid forced sales, and ultimately just pay taxes more cheaply.
When discussing life insurance with RIAs, we discuss the fact that estate taxes, given the great wealth transfer over the next couple of decades, are likely to be a major threat to the wealth management industry.
Finally, life insurance serves as a hedge against finicky Congressional decisions that, unfortunately, may disrupt some of the estate planning techniques we recommend.
As recently as 2021, estate planning attorneys had stopped establishing family limited partnerships for fear of Congress discontinuing them. Permissible planning techniques are narrowing, and this includes the sunset of the current generous federal estate and gift tax exemption. Increasingly, life insurance provides the opportunity to meet increasing lifetime liabilities, especially in ever-changing economic and legislative times.
JAY: When you and I were preparing for this interview, you mentioned a statistic about just how much wealth is held in illiquid private assets. What is that statistic and what ramifications does it have for estate and wealth transfer planning?
DEBORAH: According to KKP, high net worth families have roughly 31% of their investable assets in public equities. Private equity is in second place at 27%. Tack on personally owned real estate in primary and secondary residences and typically as much as 60% plus of a HNW estate is likely illiquid. Estate taxes are due nine months from date of death. When selecting assets to liquidate to pay the estate tax, most next generation family members are unlikely to sell the family farm or the family ski lodge in Aspen, because these are sentimental legacy assets.
Increased allocations to private equity create the unfortunate possibility that the private equity may need to be sold off in the secondary markets. We’ve noted that some progressive investment management firms, such as Alliance Bernstein, only offer access to private equity for their clients through the secondary market. Because the supply of secondary issues is increasing, the prices are discounted.
JAY: I am glad you mentioned the sunset earlier. You are one of the few life insurance producers I know that both recognizes there are just 21 months left until the sunset of the federal estate and gift tax exemption and have been ringing the alarm with clients. Why are you focused on this and how are you speaking with clients about it?
DEBORAH: The sunset is coming! The sunset is coming! If you knew that a hurricane was happening, you would prepare, right? Is the sunset an economic hurricane?
The fact that there is a finite window between now and January 2026 when the sunset automatically cuts the exemption in half should be a call to action. However, there are two things that individual taxpayers seem to underestimate:
First, the shortage of highly talented certified probate and estate attorneys, some of whom have already declined new business because they want to be available to their existing client base. I know that your firm has been shouting from the treetops about this potential logjam in the estate planning process.
Second, developing a strategy with your RIA and estate planner takes time. Once you’ve decided on a strategy, it needs to be implemented which includes retitling of assets among banks, brokerage houses, private equity holdings given the new entities that are established for tax and creditor protection. The time to begin is now to optimize tax benefits and preserve the estate for heirs.
The adage that it doesn’t matter how much you make, it’s what you keep, is fitting.
Thoughtful planning preserves millions of dollars from being unnecessarily taxed away.
JAY: Stavis Wealth Transfer Solutions has been fortunate in hiring women and having them be successful. You feel that while having more women in the industry is needed, a bigger challenge is to attract more advisors overall. Is there something you have done at your firm that could be applied more broadly in the life insurance industry to solve this problem?
DEBORAH: Coincidentally, 5 of 6 of our team at Stavis Wealth are women. We do hire women but, to be clear, we don’t hire them just because they’re women. They also happen to be the best at what they do. No criticism guys! However, in all three firms I have owned and operated, women have constituted over 60% of my team.
I don’t know for sure how this has come about, but I believe advisors are attracted to, and stay with me, because we have a culture that is deeply entrenched in holistic, financial and estate planning. We avoid a silo culture because it encourages people to be secretive about success. We share our victories and defeats.
We are making decisions every day about how we can change the business model to be the most consumer-centric model that exists. We mentor, but there is a core element of reverse mentoring, because our millennials know how to use technology in an innovative way. It’s especially fun in a new company because everyone has a seat at the table.
Importantly, while equity has traditionally been extended to salespeople only, realizing it takes a village, historically most of my professional team has received equity in my two prior firms. In the last firm that I owned and operated, seven out of twenty received an equity stake.
Really, I think of our office as a café culture where we come to learn something new every day. Although our workforce is predominantly women, we are all intellectually curious, have very different backgrounds, experience, education, and cognitive skills. I realize this may sound Pollyannish, but even amidst challenging days, work is truly a lot of fun!
JAY: You do indeed work quite a bit so I will admit I did not think you would have much to report about your leisure time outside of the office. I was wrong. Please share some details about the activities you and your family are involved in when you are not working.
DEBORAH: I hasten to add here that I don’t buy into the notion of the traditional work-life balance struggle narrative. It always seems to pit work and lifestyle against each other. I am more focused on a full life. I enjoy working at Stavis Wealth, but I also enjoy working with my kids in their businesses which are in film production and music recording. Sometimes we work a whole weekend without knowing it!
One exciting development is that our family really appreciates the serenity of being on the water, so we decided to purchase a Prestige 55 boat, which we named SEA – SUITE. We worked tirelessly to get our captains’ licenses. Rope tying and nautical exams took their toll on all of us. We all work hard, but it’s a good, full life! I love spending time with our team at work and at our home during the holidays.
JAY: You certainly did not disappoint me with this interview, Deb. Thank you for participating. When we last spoke, you immediately wanted to talk about your answers to our restaurant question, so I know you are prepared. Without naming a steak restaurant or a steak dish tell me about some of your favorite places to eat and what you recommend to order.
DEBORAH: Hands-down, Pappasitto’s is my favorite Tex-Mex restaurant in Houston, and I rarely order anything other than their classic fajitas. It’s not fancy, but it’s my number-one jam!
Since its inception, Life Insurance Strategies Group has solely focused on the individual high net worth life insurance market. We do not sell products. This allows us to offer unbiased, pragmatic advice. Visit us at www.lifeinsurancestrategiesgroup.com.