Hall of Fame - Wendy Lankes

Interviewer: What year did you come into working with ESOPs?

Wendy Lankes: 1985

Interviewer: Where did you start your career after finishing school?

Wendy Lankes: I started my career in ESOPs while I was attending college. I was a student at Cal State, Northridge, and there was an ad in the paper for a part-time office job. That’s when I started working at RK Schaaf Associates, and that's where I was introduced to the world of ESOPs in 1985.

Interviewer: What is your specialization?

Wendy Lankes: Well, now I'm very ESOP focused. I only really focus on ESOP administration and ESOP issues. I do some other retirement planning administration, for clients with 401k plans, but I primarily am focused on ESOP compliance and administration.

Interviewer: So have you ever had a private practice?

Wendy Lankes: Yes, in 1995. So it was 10 years after I had started with RK Schaaf Associates. Rainer — who was the “R” in the RK Schaaf, — he sold his practice to me and two other gals that were working there. From 1995 through 2014 we owned RK Schaaf Associates, and continued using the name RK Schaaf Associates until we sold.

Interviewer: Okay, awesome. Now, as I go through these questions, just tell me if they're not applicable to you. I know enough about ESOPs just to be dangerous.

Wendy Lankes: Okay.

Interviewer: Here, this one, some of the challenges you face developing materials, practices, and presenting them to clients?

Wendy Lankes: We started out in the days of dot matrix printers. We didn't have email, we were using typewriters to fill out 5500s, and the word processors that we used, they had these huge eight-inch floppy discs, and we put them into these gigantic terminals that were only for word processing. So technology has made things a lot easier. We do everything on PCs. We convert files and reports to PDFs that are bookmarked and pretty, with logos and color. We didn't know any different back then. We thought we produced a gorgeous final product, but in hindsight… it's funny. You know, the ’80s and big hair, and what we thought looked really cool back then. Nowadays, looking back… oh my goodness, let’s just say we've come a long way.

Interviewer: Yes, yes. Times have changed haven't they?

Wendy Lankes: They sure have.

Interviewer: What are some of your proud moments in ESOP work?

Wendy Lankes: Some of my proudest moments are doing employee orientations, or introducing the ESOP to a group of employees that are hearing about it for the first time and explaining to them what a privilege it is to now be an owner in their company, and what an exciting opportunity it presents. Some people don't get it, but when you get those people that it really clicks for them, and you see the look on their face and in their eyes, it's very rewarding. So I don't know if that's proud, necessarily, but definitely some of the more special moments for me is seeing the light in their eyes when they realize what a great gift ESOP can be.

Interviewer: So that kind of leads us into the next question then. Do you have any stories about helping a client achieve that light bulb moment of understanding what an ESOP can do for them?

Wendy Lankes: A majority of the time I get involved in a client’s ESOP after the ESOP is already in place and they've already had that “aha moment,” and they decided to implement the ESOP. Then I pick up the ball after that and do all of the compliance testing and the technical stuff. I get to help clients understand some of the technicalities of the administration of their ESOP. Once they finally get it, for example how their distribution policy can affect their cashflow and what an important decision that can be, that’s pretty cool. And I’ve had clients tell me that they've never had anyone explain something so clearly in a way that they can understand it without getting all technical, like some of the lawyers. Not to bash on attorneys here, but sometimes they just don't explain things in a simple, cohesive way that clients really understand. When clients appreciate the level of detail that I get into to make a very complex subject simple for them to understand, that's my “light bulb” moment with them.

Interviewer: What advice would you give to a new advisor that's thinking about specializing in ESOPs?

Wendy Lankes: Read, read, read. Join one of our fabulous associations that we have with either The ESOP Association or the NCEO. Attend sessions and ask questions. And, really, I think the only way to get to know ESOP is to just dive into the deep end and start working with people that know ESOPs. And give yourself time, be gracious with yourself; it takes years. I'm doing this nearly four decades and I still am learning things, so it's a very long process to get to be a really skilled advisor in the ESOP world.

Interviewer: What individuals have most helped or influenced your career?

Wendy Lankes: Oh Mr. Schaaf — Rainer Schaaf — by a long shot. When he sold the company to me and the two other gals in 1995, he saw something in me that I didn't know existed, and his faith in me really demonstrated a lot to me. I learned a lot from him and working with the other gals in the office at that time. So I would say that Mr. Schaaf has been most influential for me sticking with ESOP as a career.

Interviewer: Okay. You talked a little bit about The ESOP Association and NCEO, have you played any role in either of those organizations?

Wendy Lankes: Oh, yes. When I was in California I was on the California chapter of The ESOP Association, on their steering committee, for, I think, 12 or 15 years. Then, when I moved out to Texas I immediately contacted the secretary for the Southwest chapter of The ESOP Association and was immediately accepted into their steering committee. I participate regularly in ESOP Association events. In fact, I just got back from speaking at an ESOP conference yesterday near Dallas. So I still continue to participate to this day, volunteering my time, helping to create program content, and being of service to ESOP companies. I'm very active in The ESOP Association. On the NCEO, I'm a member, but I'm not involved to the same level with NCEO as I am with The ESOP association.

Interviewer: Okay. The earliest ESOP transactions is more some of those old school guys. What would you like folks to know about your employment history?

Wendy Lankes: I'm a lifer. I basically have had the same desk, if you will, since 1985 where it all started with RK Schaaf. Then, when we sold our firm to SES Advisors in 2014, I had the same role, function, everything was the same. And then SES Advisors sold to Ascensus, which is where I am now. And again, I had the same desk, the same role, the same clients, I do the same thing. I've done the same thing since 1985. A different company is on my paycheck, my employers have transitioned, but I've remained constant.

Interviewer: Sure. And I imagine that's great for continuity, and for building trust with clients, and all those good things.

Wendy Lankes: Absolutely. I've worked one of my clients since '89. That client wouldn't dream of going anywhere else, so that speaks volumes. And that's nice to have that continuity, like you said.

Interviewer: What makes a successful ESOP?

Wendy Lankes: Well, overcoming the challenges is probably what makes an ESOP company successful, or makes a successful ESOP. It's really communicating to the employees, who are now owners, and getting the buy-in and educating them. It’s important that they really, truly understand what a powerful tool the ESOP can be in their retirement planning, because it is, at the end of the day, a retirement plan. But it's unique in that the employees get to drive the value based on how successful they help the company be in its operations, in its products, its services, whatever it is that the company does. It's also having management that has a good heart about it. And the sellers… what was the motivation behind creating the ESOP? Was it just merely an exit strategy and they just wanted to walk away, or was it an exit strategy and they wanted to continue to see their legacy live on? And were they fully invested in creating an ESOP culture, getting people educated, sending folks to conferences, and creating an environment where that camaraderie and that culture could really be cultivated? I think that's what makes a successful ESOP.

Interviewer: Okay. Have any of your ESOPs been unique or different? I suppose every ESOP is unique and different, isn't it?

Wendy Lankes: Yes, exactly. One of the consultants I spoke with yesterday, he said — it was a funny little tagline — he said, “if you've seen one ESOP, you've seen one ESOP.” You know, like how the common saying is, “if you've seen one thing, you've seen them all?” No, no, not with an ESOP. If you've seen one, you've only seen one, they're all unique and different. Some of the neat features about ESOP is using it in combination with your 401k plan. The match can be used to purchase the ESOPs shares. There are neat things that you can do in combining the K and the ESOP together.

Interviewer: All right. This next question. Do you have any thoughts on, if ESOPs hadn't come about, how much worse off we would be depending on redistribution?

Wendy Lankes: I think our society would be a lot different. We don't have a lot of opportunity for just a regular assembly line kind of worker to create wealth. I've seen millionaires come from ESOP, and all they did was show up every day for 40 years to their electrician job, or working in a hardware store, or whatever they did. They're retiring as millionaires, and they never would've been able to do that without ESOP. The wealth that is created with ESOP is astonishing and fabulous. The world would be very different if ESOP was not part of it, especially for those folks that wouldn't have been able to do the saving on their own, even through a 401k. So I'm happy ESOPs are here.

Interviewer: Have you been involved in any lobbying for ESOP legislation?

Wendy Lankes: I haven't lately, but back in the early ’90s I was really very proactive with The ESOP Association. I did the Capitol Hill visits, I did meet with senators, and that was interesting, but I haven't been lately.

Interviewer: Okay. And what legislation were you lobbying for at that time?

Wendy Lankes: Let's see, back then I think it was just convincing our politicians to keep ESOPs around. In the early ’90s, it was very tumultuous for ESOPs. A lot of politicians didn't understand them, didn't think they provided any value. They were always looking to write ESOPs out of the tax code, so the continual challenge was convincing them that it was a good thing. And then come late '98 was when S-Corps could then sponsor ESOPs. I think that's when a real shift happened toward good, when they allowed S-Corps to sponsor ESOPs. But it's always a fight. There are always new politicians coming in, wanting to leave their mark on something, and we just have to make sure that they don't get rid of something that's so beneficial to both companies and employees like an ESOP is.

Interviewer: For sure. Do you have any thoughts to share as to how the ESOP world has changed over the years?

Wendy Lankes: Everything moves a lot faster now. I know we talked about technology, but just getting data in, getting valuations done more quickly, turning around ESOP statements and being able to get the value in the hands of participants sooner. The speed at which information moves now has changed the ESOP landscape. I think more, and more, as ESOPs spread around the country, the more people know about ESOP than they did maybe two decades, three decades ago… I think that's a very good thing.

Interviewer: Oh, for sure. What awards and honors have you received as a result of your work over the years?

Wendy Lankes: I haven't received any awards and honors, other than I have a great group of clients. And I've had the same job for nearly 40 years now, so I think that's pretty rewarding.

Interviewer: That is rewarding, there's no doubt about that. Yeah, going to a dinner and having someone hand you a plaque isn't all it's cracked up to be. Do you have any thoughts concerning the future of ESOPs? Where you think things are going or should be going?

Wendy Lankes: Through associations like The ESOP Association and NCEO I think we're in very capable hands, and I think ESOPs will be here for at least until I'm ready to retire in the next 15, 20 years. I think ESOPs are here to stay, quite honestly.

Interviewer: How would you describe the TPA market changes from 1985 and today?

Wendy Lankes: There were lots of little boutique-type firms. In fact, RK Schaaf probably could have been considered more of a boutique firm, we didn't have hundreds, and hundreds and hundreds of clients. We had a few hundred, but now it seems like a lot of those smaller TPA boutique-type firms have been purchased, similar to what our purchase was. Now larger TPA firms are really the norm, with several hundreds to thousands of ESOP clients all under one administrative roof instead of a couple hundred here, fifty there. I think a lot of it's been consolidated with the larger companies.

Interviewer: Okay. And does that play into our next question here of how the world of ESOPs has changed over the last 15 years, or changes you've seen in ESOPs over the past 15 years?

Wendy Lankes: Yes. I think ESOP companies have great options available to them in selecting an administrative firm or a TPA firm that fits them. There are different philosophies about client communications and things like that among the different TPA firms, so from that perspective, that's changed for ESOP companies.

Interviewer: Who are the people you'd like to acknowledge for helping you out over the years? We talked about one gentleman, were there any others that you'd like to mention?

Wendy Lankes: Well, first I would like to acknowledge the gals that I owned the business with for a while, Leslie Kearns and Deanna Peters, they have been great to work with, and I’m lucky I still get to work with them today. Mostly I would like to acknowledge Susan Ledingham. She is my rock, my sounding board. I've known Sue since the beginning in 1985, but she went elsewhere not long after I got started in ‘85, so it wasn't until probably around 2009 when she came back to work for us at Schaaf that my relationship with her grew. I fully appreciate her ear, and her mind, and her thoughts, and her always being available for me to talk through challenging ESOP issues. I cannot imagine my life without Sue in it. She is a well-respected colleague, I’m privileged to call her my friend, and I’m blessed that I still get to work with her to this day.