Wealthyist

In this episode of Wealthyist, host Dr. Brian Jacobsen speaks with Tom Berkholtz, Financial Planning Manager about Equity Compensation – what it is, why companies use it, the main types, tax pitfalls, and planning tips.
Tom and Brian discuss why companies offer equity compensation, including its primary goal: to attract, retain, and motivate top talent (especially in tech/AI race – Google, Apple, Nvidia, etc.).

Equity compensation can act as “golden handcuffs” via vesting schedules (e.g., 25% per year over 4 years or a 3-year cliff). The strategy can work for both public and private companies, but private-company equity is riskier (needs a liquidity event like IPO or buyout to have real value.

Tom details the main types of Equity Compensation: Restricted Stock Units (RSUs) – where an employer gives you actual shares (not an option to buy).  IN that strategy, the RSU vests over 3–4 years → treated as ordinary income on vest date (shows up on W-2).  
Tax trap: Employers often withhold only 22% federal tax; high earners (37% bracket) can owe big at tax time + possible underpayment penalty.  
The conventional advice is to “Sell immediately after vesting” (because you already paid tax at the vest price). Tom says not always best — if you believe in the company and it’s not too concentrated, holding some can make sense.

They then discuss Non-Qualified Stock Options (NSOs/NQSOs), which are the right (not obligation) to buy shares at a fixed “strike price” (usually within 10 years).  When you exercise and sell, a NSO, the bargain element (market price − strike price) is taxed as ordinary income.  
Employer gets a tax deduction, which is sometimes why employers prefer NSOs over ISOs.

Incentive Stock Options (ISOs) are less common now.  There's a potential for long-term capital gains treatment if holding-period rules are met.  
Big catch: The bargain element is an AMT (Alternative Minimum Tax) preference item → can trigger AMT and create a huge surprise tax bill.  
2025 may be a sweet spot to exercise ISOs because current AMT exemptions are still high (TCJA rules); exemptions drop in 2026, so more people could get hit.

Performance Share Units (PSUs) are another option. The payout (number of shares) depends on company performance over ~3 years (e.g., stock price, EBITDA targets).  Aligns employee and shareholder incentives perfectly (Elon Musk–style packages are an extreme example).

Key Tax & Planning Takeaways RSUs and exercised NSOs = ordinary income (up to 37% federal + state).  Under-withholding on RSUs is extremely common → fix by increasing paycheck withholding or making quarterly estimated payments.  
High earners: Consider donating appreciated vested shares (RSUs or exercised options) to charity or a Donor-Advised Fund instead of selling → avoid capital gains tax and get a deduction.  
End-of-year must-do’s for equity-comp recipients:  Project upcoming vest/exercise events.  
Strategically exercise NSOs or ISOs to fill lower tax brackets or stay under AMT.  
Harvest gains/losses, diversify concentrated positions (especially when market is at all-time highs).

Bottom line from Tom: Equity compensation is powerful but requires proactive, annual planning — it’s not a “set it and forget it” asset like a 401(k). Work with a financial planner and tax pro who can model the scenarios (especially AMT for ISOs) to avoid nasty surprises.

Core Theme: How a middle-class Wisconsin upbringing, strong family values, and an athlete’s mindset of consistent small improvements shaped Steve Novak’s approach to money, lifestyle, and giving back — and kept him far away from the “broke ex-athlete” stereotype.

Key Takeaways from the Conversation:

1. Grounded Upbringing as the Anchor
   • Grew up in Brown Deer, WI (middle/lower-middle class); dad was a teacher/coach, mom a nurse. 
   • Saw bigger houses and nicer cars as a kid → early motivation that real wealth required success without debt. 
   • Even after making NBA money, never felt the need for a mansion. Bought a normal house in Whitefish Bay (“looks like all the other houses”) and still lives a relatively modest lifestyle.
2. Financial Philosophy = Athletic Mindset
   • Translated his shooting training mantra (“get 0.1% better every day”) into investing. 
   • Very conservative investor: prioritizes steady compounding over home-run bets or crypto. 
   • Learned the hard way with a few bad private deals/restaurants → “losing money felt worse than winning felt good.” 
   • Focus: never move backward; small, consistent forward progress compounds over a 50+ year post-basketball timeline.
3. Lifestyle Choices
   • Played on 9 teams, lived in Houston, LA, NY, Toronto, etc. → realized Milwaukee/SE Wisconsin is one of the most underrated places to live and raise a family. 
   • Chose walkable, community-oriented neighborhoods (Whitefish Bay) over sprawling estates. 
   • Family now owns two homes in Wisconsin (North Shore + Lake Country) instead of the typical athlete Florida/Arizona second home — “Wisconsin summers are the best in the world.”
4. Giving Back & Full-Circle Moment
   • Dad coached generations of kids → Steve now runs shooting clinics all over SE Wisconsin, passing on the “aha” moments he had after thousands of hours in the gym. 
   • Wants the next generation to say, “Steve taught me footwork and motivated me.”
5. NBA Financial Realities & Lessons
   • Rookie paycheck shock, royalty checks with no withholding, surprise tax bills when income jumps, jock taxes, escrow, etc. 
   • NBA’s unusually generous 401(k) match (up to 150%) and bridge annuities show the league/NBPA actively try to protect players. 
   • Mandatory financial-literacy meetings ($10k fine if you skip) — education is there, but players still have to act on it.
6. Current Life
   • Just hired as Walt “Clyde” Frazier’s backup Knicks broadcaster (full-circle: New York was where he played his best ball). 
   • Still lives in Milwaukee; kids cheer for both the Bucks and Knicks.

Bottom Line (in Steve’s words):
“Don’t try to hit home runs. Just keep the money you worked hard for moving 0.1% in the right direction every day, make it last a long time, and don’t end up on a ‘broke’ documentary.”

A refreshingly grounded, Midwestern take on wealth from someone who’s seen both the NBA flash and the long-term reality — and consciously chose the latter.

In this episode of Wealthyist, host Brian Lamborne (Senior Wealth Strategist at Wealth Management) welcomes Nick Kozik, Director and Shareholder at TKO Miller, a Milwaukee-based boutique investment banking firm specializing in sell-side transactions for family-owned businesses (typically $15M–$250M enterprise value). The discussion dives into the current M&A landscape, strategies for business owners eyeing an exit, and pitfalls to avoid when selling.

Key Highlights

1. TKO Miller's Focus and Nick's Role
   • TKO Miller helps family-founder businesses navigate sales, emphasizing education and "bedside manner" for first-time sellers. 
   • Nick leads transaction teams (4–5 people per deal) in sectors like industrial/infrastructure services, plastics/packaging, consumer goods, food & beverage, and tech-enabled services. 
   • The firm marks its 10th anniversary in 2026.
2. Current M&A Market Dynamics
   • Bifurcated Landscape: High demand for recession-resistant service businesses (e.g., HVAC, healthcare, recurring maintenance), trading at peak valuations (10–12x EBITDA) due to abundant private equity capital chasing limited deals. 
   • Challenges: Tariff-exposed manufacturing/distribution or consumer-discretionary sectors face lower interest and multiples, though deals still close. 
   • Advice: Sell now if in a hot sector; wait if trade-impacted. Personal timelines (e.g., health, retirement) often trump market conditions—consult experts for tailored assessments.
3. Buyer Types Explained
   • Private Equity (PE): Pools of capital for majority buyouts (leveraged, using debt); focused on growth, not just cost-cutting. They prioritize services over risky sectors, paying premiums for "safe" deals. 
   • Strategic Buyers: Operating companies seeking synergies (e.g., one chemical firm buying another); more cautious in uncertain times. 
   • Quasi-Strategics: PE-backed portfolio companies doing add-ons for operational alignment. 
   • ESOPs (Employee Stock Ownership Plans): Ideal for owners prioritizing employee ownership and business continuity; involves seller financing and tax perks, but yields lower upfront proceeds than PE/strategic sales.
4. Planning for a Successful Sale
   • Timeline: Start 1–5 years out for max value—focus on management succession (e.g., 18–24 month transition team) and data readiness (accurate reporting to handle buyer requests). 
   • Define Goals: Clarify priorities like max proceeds, growth partnership, or legacy preservation to shape the process. 
   • Build Your Team:
     Role
     Why Essential
     Timing
     Internal Management | Runs the business post-sale; needs ops leader, finance expert, and sales rep. | Ongoing
     Transaction Attorney | Handles deal terms to avoid clawbacks. | 6–12 months pre-sale
     Accountant/Quality of Earnings | Tax planning, financial audits tailored for transactions. | 1–2 years pre-sale
     Wealth Manager | Post-sale lifestyle/investment strategy. | 1–2 years pre-sale
     Investment Banker | Runs competitive process for $10M+ deals to maximize value/options. | 1+ year pre-sale
5. Valuation Insights
   • Private businesses are hard to value without market testing—multiples vary wildly by sector (e.g., HVAC at 10–12x vs. metal fabrication at 5x). 
   • Free initial assessments from firms like TKO Miller reveal true worth via broad auctions, avoiding guesses that skew net worth planning.
6. Common Mistakes to Avoid
   • Selling to the first buyer without alternatives (erodes leverage, invites "chipping away" on terms). 
   • Fire sales due to unpreparedness (no team/data = higher risk, lower price). 
   • Dropping performance during the 7–9 month process (e.g., growth stalls = deal death).

Closing Thoughts
Lambourne and Kozik emphasize proactive planning over reactive exits, noting that even in a volatile market, the right process unlocks life-changing value. Kozik offers free consultations for owners curious about their business's worth. 

In this empowering episode of Wealthyist—the podcast exploring the lifestyles, choices, and strategies of the affluent—host Deanne Phillips (a CFP and bodybuilding enthusiast) interviews Dr. Tes Jordens. Dr. Jordens, founder of 1988 Wellness (named for the year U.S. women gained independent access to small business loans), shares insights on midlife women's health, debunking myths around menopause, hormone replacement therapy (HRT), and obesity. The conversation ties into "wealthyist" trends, emphasizing proactive, private-pay investments in vitality as foundational to financial success and confidence.

Key Discussion Themes

1. Menopause Realities and Patient Journeys  
   • Menopause symptoms (fatigue, weight gain, sleep disruption, hot flashes) often start in the 30s-40s but peak in the 40s-50s, exacerbated by estrogen decline, which spikes cardiovascular risk ~10 years later than in men.  
   • Typical patients: Frustrated women dismissed by primary care as "anxious" or "normal," seeking holistic answers. Host shares her thyroid struggles and early menopause at 46, leading to 45-pound gain and life crisis.  
   • Shift from "disease care" to prevention: Women increasingly seek to "capture that 30s-40s feeling" before decline, rejecting it as a "rite of passage."
2. HRT Myths, Benefits, and Options  
   • Debunks 2002 Women's Health Initiative (WHI) fallout: Media sensationalism linked HRT to cancer/strokes, but flaws (e.g., average participant age 63, not perimenopausal) caused mass hysteria. Science now shows HRT (estradiol, progesterone, testosterone) is safe and protective when started within 10 years of menopause or before 60.  
   • Benefits: Reduces dementia/osteoporosis risk (only proven preventive for bones), supports heart health, boosts energy for workouts/career. Can continue indefinitely unless major contraindications (e.g., active breast/endometrial cancer, recent stroke).  
   • Delivery methods: Tailored to needs—pills (liver-processed for brain protection), patches/gels/sprays, pellets (host switched due to glute workouts displacing them), vaginal creams for UTIs/frequency in 70s-80s.  
   • Advice: Persist beyond dismissive docs; seek certified specialists. No "magic pill," but HRT sparks virtuous cycles (e.g., energy for strength training).
3. Obesity and "Menopause Belly" Strategies  
   • Visceral fat (around organs) drives inflammation, insulin resistance, diabetes/heart risks—not just aesthetic.  
   • Tools: GLP-1 meds (e.g., Ozempic) as aids, not cures; combine with protein/fiber-rich nutrition, movement. Focus on building strength for 70s-80s independence, not restriction/diet culture.  
   • Trifecta approach: HRT + meds + habits (e.g., trainers, dietitians) for sustainable results. Host credits HRT for reigniting her bodybuilding passion at 60.
4. Wealthyist Trends in Self-Pay Health  
   • Affluent women prioritize out-of-pocket empowerment: Comprehensive blood panels (e.g., ferritin, CRP for inflammation/hemochromatosis), DEXA scans (~$100-300, gold standard for bone/muscle/fat composition—insurance covers only post-65, too late).  
   • Lifestyle shifts: Strength training (future-proofing against frailty), creatine (debunking "gym bro" stigma; aids muscle, cognition), peptides/collagen for skin/energy.  
   • Mindset: Health as wealth foundation—invest like education/wardrobes. Bucket finances for "personal care" (HRT ~$50-200/month) to sustain vitality post-retirement. Women unafraid to hire experts, rejecting "suffer silently."

Closing Takeaways
Dr. Jordens urges midlife women: Don't quit seeking help; it's not "just aging." For parents in their 70s-80s, consider vaginal estrogen for UTI prevention. Host, prepping for a 60-year-old bodybuilding comp, embodies the episode's vibe: Midlife is for thriving, not surviving. Reach Dr. Jordens at 1988wellness.com or @drtesjordens on socials.  

This ~45-minute chat blends vulnerability, science, and aspiration—perfect for wealthy women redefining aging as an asset. Tune in for motivation to audit your health plan today!

Estate planning is uncomfortable (addresses incapacity and death) but essential; integrate it naturally into life/financial discussions for comprehensive planning.

Key Checklist of Must-Have Documents & Designations

1. Powers of Attorney (POA):
   • Financial & Healthcare POAs: Needed at age 18 (even for adult children, e.g., college prep). Parents lose decision rights post-18 without them.
2. Will:
   • Names executor; directs asset distribution at death.
   • Critical for parents: Only place to name guardians for minor children.
   • Works with trusts; "pour-over" will funnels forgotten assets into trust.
3. Revocable Trust:
   • Manages assets during life & at death; avoids probate.
   • Becomes irrevocable at death (can't change).
   • Complements (not replaces) a will.
4. Irrevocable Trusts (Lifetime):
   • For gifting assets (to spouse/kids) to reduce estate taxes.
   • Removes assets + future appreciation from estate.
   • Estate Tax Context: 2026 exemption rises to ~$15M/person ($30M/couple). Plan flexibly for future law changes; project asset growth vs. inflation/spending.
5. Other Documents (state-specific):
   • Living will/advance directive (end-of-life wishes).
   • Funeral arrangements.
6. Beneficiary Designations:
   • Override wills/trusts (e.g., IRAs, 401(k)s, life insurance).
   • Common Mistake: Outdated designations (e.g., ex-spouse or parent instead of kids) cause assets to go wrong.

Review & Update Best Practices

• Frequency: Every 3–5 years; or trigger by:
  • Life events (marriage, divorce, birth, death).
  • Law changes (e.g., recent tax bills).
• Pet Peeves/Common Errors:
  • Mismatched beneficiaries vs. will/trust.
  • Outdated successors (e.g., naming parents/siblings when kids are now adults; shift to children as agents/trustees).

Communication, Storage & Execution

• Sharing with Family: Family-specific; no one-size-fits-all.
  • Some share full details/drafts (à la Warren Buffett) for transparency.
  • Others share structure only (flow of assets, roles, advisors) without dollar amounts.
  • Ensure heirs know document locations, attorney, advisors.
• Successor Roles: Choose capable people; consider corporate trustee (fees apply, but justified for complex dynamics).
• Advisor Support: Professionals guide grieving families; nobody navigates alone.

Probate: Not as Bad as Feared

• Process: File will with court; appoint executor; notify creditors; resolve claims.
• Pros: Structured (good for family disputes/disharmony); time-bound creditor claims.
• Cons: Time/cost, but avoidable via revocable trusts.
• Goal: Avoid if possible, but not catastrophic.

Closing: Estate planning ensures control, minimizes regrets/taxes, and eases transitions. Review regularly; coordinate with financial plans.

In this episode of the "Wealthyist" podcast, hosted by Anthony Mlachnik, senior wealth manager for Annex Private Client, the focus is on private investments and their role in a diversified portfolio. Mlachnik is joined by Brian Jacobsen, Annex’s chief economic strategist, to discuss the nuances of private markets and their relevance for high-net-worth individuals.

The episode begins by defining private markets in contrast to public markets. Private markets include investments like private equity, private credit, private real estate, and private infrastructure, which are not publicly traded and thus don’t appear on stock tickers. Jacobsen addresses misconceptions about private markets being inherently riskier or opaque, emphasizing that Annex focuses on aligning investments with clients’ goals through thorough due diligence and understanding the client’s financial objectives.

The discussion highlights the importance of a macro-level investment policy statement, especially for clients experiencing liquidity events, such as business sales or sudden wealth accumulation. Private markets are presented as a tool for diversification, particularly for accredited investors or qualified purchasers who meet specific net worth or sophistication requirements. Jacobsen notes that while public markets offer around 4,000–4,500 companies, private markets provide access to a much larger pool of 40,000–45,000 companies, including innovative firms that may not need public funding due to technological advancements.

The conversation explores why many companies choose to remain private, citing reduced regulatory burdens (e.g., post-Sarbanes-Oxley) and the ease of raising capital through private channels, facilitated by technologies like DocuSign. Private markets offer opportunities to invest in early-stage, disruptive companies—potentially the “next Google or Facebook”—before they go public. However, Jacobsen stresses the importance of due diligence, understanding the investment’s philosophy, process, partners, pricing, and structure, especially when investing through funds managed by general partners.

Mlachnik and Jacobsen also discuss the behavioral challenges of private investments, such as the temptation to overcommit to opportunities presented by friends or networks. A disciplined framework helps investors say “no” when an investment doesn’t align with their strategy. They touch on the concept of the illiquidity premium, where private investments, being less liquid than public securities, often trade at lower valuations to compensate for the inability to sell quickly. This illiquidity can act as a “pre-commitment device,” preventing impulsive decisions during market volatility, akin to Odysseus tying himself to the mast to resist the sirens’ call.

The episode briefly addresses private infrastructure, particularly relevant in Wisconsin due to the rise of data centers. Jacobsen explains that private infrastructure investments (e.g., ports, airports, energy distribution) blend growth potential with income generation, distinguishing them from private real estate, which focuses on physical assets like buildings.

The episode concludes with a reminder to approach private investments with a clear plan and a trusted fiduciary advisor to ensure decisions align with long-term financial goals, rather than chasing trendy opportunities. The discussion underscores the importance of strategic planning, due diligence, and a disciplined process in navigating the complexities of private markets.

The podcast "Wealthyist," hosted by Austin Grandinetti with guest Dr. Brian Jacobson from Annex Wealth Management, discusses a Forbes article highlighting shifts in the investment priorities of high net worth individuals. Key points include:

1. Shift to Income Generation: 82% of affluent investors now prioritize generating income over growth, a change observed over the past two years. This shift follows strong market returns in 2023, prompting investors to focus on locking in gains and securing income, possibly through fixed income or realizing capital gains for tax efficiency.
2. High Net Worth Mindset: The focus on income is more prevalent among high net worth and institutional investors, who act as trendsetters, compared to retail investors who tend to chase trends.
3. Happiness Through Giving: High net worth individuals increasingly prioritize creating happiness for others, often through charitable giving or legacy planning. Strategies include bunching charitable donations, using donor-advised funds, private foundations, or gifting appreciated stock to optimize tax benefits, especially under the "One Big Beautiful Bill" tax provisions.
4. Expert Guidance and Emerging Tech: 71% of affluent investors work with financial advisors, valuing expert guidance. Annex Wealth Management emphasizes a client-centric approach, defining problems, designing solutions, and delivering comprehensive plans that integrate tax, estate, charitable, and investment strategies.
5. Status Symbols and Travel: Affluent individuals prioritize status symbols like travel (up 20% from 2024), luxury vehicles, watches, and designer clothes. Travel is particularly valued for the experiences, stories, and personal connections it fosters, seen as a status symbol post-Covid.

The podcast underscores the importance of tailored financial planning for high net worth individuals, balancing income generation, tax efficiency, charitable goals, and lifestyle aspirations like travel.

Recently Dr. Brian Jacobsen and Brian Lamborne discussed implications of the OBBBA on Business Owners. In this episode of Wealthyist, hosted by Brian Jacobsen, Chief Economist at Annex Wealth Management, and featuring Brian Lamborne, Senior Wealth Strategist, the discussion focuses on the implications of the "one big beautiful bill" (likely referring to the Tax Cuts and Jobs Act or a similar tax legislation) for business owners across the lifecycle of a business: starting, running, and selling or winding up. Here's a summary of the key points:

1. Starting a Business

• Choosing the Business Structure: The decision between forming a pass-through entity (e.g., S corporation, LLC) or a C corporation depends on long-term goals. S corporations offer pass-through taxation, avoiding double taxation, and allow deductions like the Qualified Business Income (QBI) deduction, which isn't available for C corporations. C corporations, however, offer benefits like Qualified Small Business Stock (QSBS) exclusions for capital gains upon sale, but face double taxation (corporate tax at 21% plus dividend tax).
• Course Correction: Business owners can change their entity structure (e.g., from LLC to S or C corporation) based on evolving goals, though some changes, like qualifying for QSBS, have strict requirements (e.g., the business must be a C corporation for at least 80% of its life).
• QSBS Considerations: QSBS allows exclusion of capital gains (up to $15 million) if the business is a C corporation from inception, held for at least five years, and meets specific criteria (e.g., under $75 million in assets, not in excluded industries like hospitality or professional services). The bill introduced tiered exclusions: 50% for three years, 75% for four years, and 100% for five years.
• Planning Ahead: Many business owners start without proper tax planning, often defaulting to a C corporation or sole proprietorship. Engaging tax professionals early can optimize tax outcomes.

2. Running a Business

• Deductions and Incentives: The bill expanded key deductions, including:
  • Bonus Depreciation: Allows 100% expensing of certain assets (e.g., equipment, cars) in the year of purchase, incentivizing business investment. However, it applies to entire asset categories, and some businesses may prefer standard depreciation to manage taxable income over time, especially for banking covenants.
  • Research and Experimentation (R&D) Credits/Deductions: These apply broadly to problem-solving activities, not just traditional lab work. Examples include designing custom machinery or solving technical manufacturing challenges. Many businesses are unaware they qualify.
  • QBI Deduction: Offers up to a 20% deduction on business income for pass-through entities. The bill expanded the income threshold from $100,000 to $150,000, benefiting more professional service businesses (e.g., doctors, lawyers), though high earners in these fields may still be excluded unless they lower their adjusted gross income (AGI) via strategies like retirement plan contributions.
• Tax Planning vs. Preparation: Most accountants focus on tax preparation, not proactive planning. Business owners often miss opportunities to optimize deductions due to reluctance to pay for planning services, which are themselves tax-deductible.

3. Selling or Winding Up a Business

• Stock vs. Asset Sales:
  • Sellers Prefer Stock Sales: Selling stock (especially in a C corporation) can qualify for QSBS exclusions, offering capital gains tax relief, and transfers liabilities to the buyer.
  • Buyers Prefer Asset Sales: Buyers favor purchasing assets to pick and choose what they want, gain depreciation benefits, and avoid inheriting liabilities. However, asset sales in C corporations lead to double taxation (21% corporate tax plus dividend tax), potentially approaching a 50% effective tax rate.
  • Negotiation Tension: This creates a "tug of war" between buyers and sellers, requiring careful negotiation and legal structuring to balance tax implications and price.
• QSBS Stacking: QSBS exclusions apply per individual (up to $15 million each). Owners can gift stock to family members or trusts (e.g., spouse, children) to maximize exclusions, especially in non-community property states. In community property states like Wisconsin, a married couple can exclude up to $30 million. Planning must occur well before the sale to maximize benefits.
• Course Correction Post-Sale: Some owners discover QSBS eligibility after a sale and can amend returns, but late planning limits optimization (e.g., missing the chance to gift stock for stacking).

Key Takeaways

• The "one big beautiful bill" introduced or expanded tax provisions like bonus depreciation, R&D credits, QBI deductions, and QSBS rules, significantly impacting business planning.
• Strategic tax planning is critical at all stages of a business. Many owners fail to plan early, missing deductions or optimal structures.
• Engaging professionals like those at Annex Wealth Management can help navigate complex decisions, from entity selection to sale structuring, to minimize tax liabilities and maximize benefits.
• The episode emphasizes the importance of long-term planning, understanding buyer-seller dynamics, and leveraging tax code provisions like QSBS and R&D credits to enhance business outcomes.

The discussion highlights the complexity of tax decisions and the need for proactive, professional guidance to avoid costly oversights.

In this republished episode of "Wealthyist" podcast Episode 24, host Brandon Lehman interviews Dale Kooyenga, president of the Metro Milwaukee Association of Commerce, about economic development in the Milwaukee region, specifically the Milwaukee Seven (M7), which represents seven counties in southeast Wisconsin: Milwaukee, Kenosha, Ozaukee, Racine, Walworth, Waukesha, and Washington. The M7 focuses on regional economic development to attract large companies like Microsoft, Eli Lilly, and Hasbro by leveraging the area’s strengths.

Key Points:

• Attracting Companies: Companies choose Milwaukee over other regions like Chicago or Atlanta due to factors like access to water, a reliable energy grid, and a strong talent pool, particularly in advanced manufacturing and food and beverage industries. The region’s livability, with amenities like professional sports, golf courses, and a vibrant downtown, also appeals to companies recruiting talent.
• Cost of Living and Housing: Milwaukee offers relatively affordable housing compared to other metros of its size, though housing costs are rising due to high labor, material costs, and interest rates. The region’s high per capita income and affordability make it attractive, but property taxes are approaching those of Chicago’s suburbs, raising concerns about competitiveness.
• Lifestyle and Amenities: Milwaukee’s appeal includes its lively downtown, proximity to Lake Michigan, professional sports teams (Bucks and Brewers), and short commutes (20 minutes vs. 1-1.5 hours in larger cities), allowing for a balance of family and professional life. The Wall Street Journal recently highlighted Milwaukee as the nation’s hottest housing market.
• Water and Energy: Access to abundant water from Lake Michigan is a major draw for industries like data centers and manufacturing, which require significant water and energy resources. Wisconsin’s reliable energy grid and leadership in nuclear technology (e.g., micro nuclear) position it well for future growth.
• Economic Shifts: Milwaukee’s economy is transitioning from traditional blue-collar manufacturing to high-tech and financial services, with a strong presence of mid-tier manufacturers and private equity firms. Manufacturing output is up despite fewer jobs, reflecting productivity gains.
• Challenges and Opportunities: Kooyenga highlights three priorities for Milwaukee’s growth: (1) establishing a top-tier R1 research university, (2) adopting advanced nuclear technology for sustainable energy, and (3) attracting more immigrants, who are more likely to start businesses and drive economic growth. Milwaukee’s population growth is strong in the Midwest but lags due to lower immigration compared to cities like Chicago.
• Policy Concerns: High income taxes (e.g., 7.65% vs. Illinois’ 5% flat tax) and rising property taxes are barriers to attracting executives and talent. Kooyenga suggests a flatter, lower tax rate (3-4%) to boost competitiveness, warning that overturning reforms like Act 10 could worsen property tax burdens.
• Vision for M7: The ultimate goal is to enhance Milwaukee’s appeal as a top destination by integrating it more closely with Madison (a one-hour commute) to create a powerhouse region combining Milwaukee’s amenities with Madison’s capital and university assets. Reducing the psychological and logistical divide between the two cities could make the region globally competitive.

The podcast emphasizes Milwaukee’s strengths, ongoing challenges, and strategies to elevate its economic and lifestyle appeal, with a focus on attracting businesses, talent, and wealth to the region.

In this week's episode of the "Wealthyist" podcast, hosted by Dr. Brian Jacobsen, Chief Economist at Annex Wealth Management, with guest Brian Lamborne, Senior Wealth Strategist at Annex Private Client, discussion focused on Qualified Small Business Stock (QSBS) and comparisons to the Qualified Business Income Deduction (QBID) from their previous episode. 

Here's a summary: QSBS applies to stock in a C corporation that has spent most of its life as a C corporation. Unlike QBID, which is a deduction for pass-through entities (e.g., partnerships, S corporations), QSBS offers an exclusion of capital gains when selling the stock of a qualifying C corporation.
Key Differences:QBID: Provides a deduction (up to 20%) on income from pass-through entities, beneficial for businesses generating ongoing cash flow.
QSBS: Offers a capital gains exclusion (up to 100% depending on holding period) when selling C corporation stock, ideal for businesses planning a sale.

QSBS Rules:The business must be a C corporation at issuance and for most of its life, though it can temporarily elect S corporation status.
The company’s gross assets cannot exceed $50 million (increased to $75 million under new rules) at the time of stock issuance.
Certain businesses (e.g., hospitality, professional services like doctors or lawyers, or investment companies) do not qualify.
Stock must be acquired directly from the company (e.g., through capital infusion or stock options), not purchased from another shareholder.

Holding Period Changes: The "One Big Beautiful Bill" modified QSBS rules, reducing the holding period for exclusions:Old rule: 5 years for 100% capital gains exclusion.
New rule: 4 years for 75% exclusion, 3 years for 50% exclusion, providing more flexibility.
The exclusion cap increased from $10 million to $15 million in gains.

Strategic Considerations:Switching between C and S corporation status to game the system is risky and could lead to losing QSBS benefits, as the IRS enforces rules to prevent abuse.
Businesses can start as partnerships or sole proprietorships and later convert to C corporations, but tax implications must be carefully planned.
Planning early is critical, as choices made at incorporation (e.g., C vs. S corporation) can limit future options.

Takeaway: QSBS and QBID serve different purposes depending on whether a business owner prioritizes income deductions or capital gains exclusions. Due to the complexity, consulting with wealth strategists early is essential to maximize benefits.