It's all about relationships: Jack Davidson and the Trust Company of Vermont

If it's true that everything old becomes new again, it tends to trend earlier in Vermont: think of artisan cheeses, single cups of rich coffee brewed at home, herbal remedies, grass-fed beef and trust companies. Trust companies? Yes. Read on.

As many of us may remember, the Vermont landscape was once dotted with local banks. And many of these banks had trust departments to manage their wealthier clients' money. This was done with investment counseling while the clients were alive and then with their estates after they were gone. Since few subjects are more freighted down with anxiety and concern than money, those trust officers needed to be, well, trusted. Traditionally, they had deep roots in their communities and strong client relationships that could be passed along from one generation to the next. The officers might grow old and be replaced, but the key was that the institutions themselves - the banks - wouldn't change.

Fast-forward to 2010. While there are still a few small-town banks left, most of them have disappeared in a flurry of mergers and acquisitions. When you call your banker now, you may have to hit #1 just to speak in English.

So when I say that the Trust Company of Vermont - the state's first state-chartered independent trust and investment company, and one of the few employee-owned trust companies in the country - is as old-fashioned as it gets, it just means that in Vermont, another old thing is new again.

The Trust Company of Vermont (TCV) story begins inside the now-defunct Vermont National Bank (VNB). First charted in Brattleboro in 1851, VNB remained a small-town bank for multiple decades. It had a trust department that was of VNB and yet apart from it. For many years, that trust department was run by Jack Davidson, 66, who is now the president of TCV.

"We had our own world that was culturally separate from the bank," Davidson said. "They gave us autonomy because they didn't quite understand what we did. Most trust companies are associated with banks. But the two cultures don't mix very well. Trust is service. We managed money, but we didn't sell bank products. That would be a conflict of interest. If I'm your trustee, I have to get you the best deal. If the CD down the street pays better, I can't buy the Vermont National Bank CD. Bankers sell products. In trust, you're buying products for other people. As a result, it was easy to have a separate culture from the bank. Everybody thought you were a banker. But you're not."

The trust department cherished its autonomy; for many years, it ran smoothly and successfully.

"We did our own marketing," Davidson said. "We had our own operations. We outsourced nothing. So we controlled everything in our department."

By 1998, VNB was no longer a small town bank. Vermont Financial Services Corp, its parent company, also owned United Bank in Greenfield, MA, among other companies. It had about $2.1 billion in assets and about 65 offices in Vermont, southern New Hampshire, and western Massachusetts. The trust department had grown from a core group of eight or nine closely-knit people to 45.

In 1999, VNB was merged with Chittenden Corporation - itself once a small-town bank that in 2008 was swallowed up by People's United Bank of Connecticut.

"When Chittenden bought the bank in 1999, we realized that the culture would change and we would lose the autonomy," Davidson said. "That's why we started the Trust Company of Vermont."

Coincidentally, the Legislature had just passed a bill facilitating the formation of independent, state-regulated trust companies - ie, trust companies that were not attached to banks. The Legislature was hoping that a new industry, similar to captive insurance, might grow up here. It had already happened in other parts of the country.

Sensing an opportunity, Davidson - an attorney as well as a trust officer - left Chittenden in 1999.

"I went over to (State) Senator (Robert) Gannett's building on Main Street in Brattleboro and stayed there for three months with the doors closed," he said. "I just typed away. I had to get a trust company charter and I had to do the legal work, and I didn't have much time. The state's banking division was very positive and helped us through the process. We were the first ones being charted."

When Davidson was ready, seven of his longtime VNB colleagues joined him. Bobi Flynn, Nanette Stevens, Steve Singiser, Jane Waysville, John Abel. Angie Freeman and Rich Pearce gave their notice together.

"We felt that once we decided to leave, it should be done as a group, and that's the way we did it," Singiser said. "It was discovered what we were planning a day or two before we actually planned to tell Chittenden, so the word for that was awkward. But it worked out well in the end."

Although it's hard to imagine an entrepreneurial trust department - trust officers by their very nature are supposed to eschew risk - these people didn't feel they were taking too great a chance.

"We all knew what we were doing in terms of our knowledge of being trust officers and investment officers," said Singiser. "It's a personal business and there's a lot of loyalty. Once the clients know you are going to another position, a number of them come along with you. We were very careful not to solicit anybody until we had left Chittenden and were independent of the bank."

Some clients came; some didn't.

"There were some surprises along the way," Singiser said. "Some we didn't think we were going to keep came with us, and some we expected were hesitant to work with a new firm."

Ten years later, things are going very well for TCV. It's headquartered in Brattleboro with offices in Burlington, Manchester, Rutland, St Albans and Stowe. It has 22 employees and is about 93 percent employee-owned. Recently it helped start - and keeps a financial interest in - another independent trust company, the New Hampshire Trust Company, located in Keene, NH. As of January 2010, it is managing $650 million. And it gained clients during the recent stock market crash.

For a trust company, TCV has some decidedly offbeat features. It is locally owned and locally controlled. It is free from the pressure of a parent bank that wants to sell its own financial products. And it's anti-hierarchical.

"Titles aren't important here," said Waysville, who is in charge of administration. "Everyone's a vice-president. There's a big difference between our company and a big company where you have to do annual salary reviews and that kind of thing. We don't really function in that format. Here it's not lineal. It's not corporate. We all want to do what's right for the client and what's right for all of us. So it really works. It's a unique company. You'll never find another one like it."

Instead of topdown, TCV seems to do its managing in a convivial circle. At the center of the circle is Davidson, an irrepressible storyteller with a shock of white hair and a taste for elegant tweeds. The words people use to describe him are "dapper," "debonair," "charming," "a whirling dervish," "well-spoken" and - most often - "unique."

"Jack is a great person to work for," Waysville says. "He's always looking out for all of us - for the clients, for the company. He really sees the big picture well. Attention to detail may be lacking some of the time, but we all work with him and put the pieces together and come through with the pictures he has developed. It works out really well."

"Jack a very smart man who sometimes covers it up with his sardonic wit," said Paul Millman, president of another employee-owned firm, Chroma Technology in Rockingham. "He's very wise and has a lot of valuable business experience. He understands leadership."

Leadership is an interesting concept when it's applied to Davidson. He seems to manage like a crab - sideways. He's absolutely miserable in the spotlight. To hear him tell it, every step in his distinguished career in trust - 29 years at VNB and 10 at TCV - has been an accident. As an attorney, he says, "I'm serially suspended. Then I go into a makeup period and take the courses." He was the head of VNB's trust department for over 20 years, but he only got the job "out of default." He spearheaded the creation of TCV, but "my plan when I left Chittenden was to get a Master's degree in Internet strategy." He's the president of TCV, but "the title is just for the state. We're a partnership, one vote, one person. I get voted down on tons of stuff." He was president of the board of the Vermont Employee Ownership Center, but he was only "sort of an interim President."

Burlington attorney Steve McGowan, who serves with Davidson on the VEOC board, said that Davidson describes himself as "Vermont's only socialist banker." But when I asked Davidson about that, he winced and launched immediately into a story.

"I don't define myself as the only socialist banker in Vermont," he said. "But we were thinking of hiring somebody from another bank, and the other bank said, 'You don't want to work for them, because Jane and Jack are socialists.' Jane, who grew up in a farm culture, goes on the Internet to read the definition of socialist and comes to me and says, 'My God, I think I'm a socialist.' But this isn't about politics. It's actually like working on a family farm. Everybody chips in, and at the end of the day you share. The minute you label something that is so familiar in Vermont - the way farms operate, or the ways families work together - then everything stops in its tracks."

Cairn Cross of FreshTracks Capital said that Davidson is "one of these guys who's curious about things and asks as many questions as he answers." He credits him with being a pioneer in socially responsible investing while at VNB.

"He's not necessarily well-known for it, but Jack got that concept very early on and helped to develop Vermont National's socially responsible program," Cross said. "It was a very successful program. I think they had no idea they would be so successful so quickly. It was in 1987 or 1988, and there weren't many institutions doing that. VNB was on the forefront and Jack was one of the architects. Jack tends to sense a societal shift quickly."

TCV is simply an extension of Davidson's ability to spot trends, Cross said.

"Most of the people involved in the Trust Company of Vermont were folks who had worked with or for Jack at Vermont National, and they were all very committed to local service and local decision-making and local advice," Cross said. "So the Trust Company of Vermont is a natural extension of Jack's philosophy of life and business."

The TCV founders insist the company is very much the sum of all its parts.

"It's full of individual personalities who all come together and work well together," Waysville said.

For example, Singiser, 72, specializes in investments and runs the Rutland office. He came to Vermont with his young family after 13 years in a high-level job guiding investments for clients of the Chemical Bank in New York. Then he did odd jobs for the next 10 years.

"I did some real estate," Singiser said. "I had a broker's license. I was making wooden lamps. I bought some rental properties. My wife worked. Basically, I learned how to survive on a limited income - which can be done. It was a lot less than I was used to making, but somehow the standard of living didn't get hurt that much."

Then, in 1984, he heard there was an opening in the trust department at VNB. He interviewed and Davidson hired him.

"I was truly ready to go back to work," Singiser said. "I don't regret the 10 years, because I did things with my children that most fathers don't get a chance to do. But I was ready for a structured working life."

Given his age, Singiser knows that he would be retired now if he had worked anywhere else.

"If I'd stayed at Chittenden, I was looking at a situation where I would have been retiring at age 65," Singiser said. "I don't know if they had mandatory retirement, but I was 62. They had a more structured environment."

Singiser said he is very fortunate to be with TCV.

"I think all of us feel that way," Singiser said. "You have your bad days, but most days are pretty good. I can't think of anyone I have as a client who I wouldn't invite into my home. They're all nice people. I probably have about 150 accounts, but that might be 100 different relationships because within a family there might be multiple accounts. At Vermont National we all seemed to have 200 or more. I don't feel quite as hectic as I did back then. I think we're giving better service because we have fewer clients."

Another cofounder, Nanette Stevens, 48, is a portfolio manager and relationship manager in Burlington. She graduated from the University of Vermont with a major in finance and worked in the trust division of Chittenden Bank for a few years before moving to Merrill Lynch. Then she came to VNB. According to Davidson, she is the "star" of TCV.

"She is the reason why the top estate planners want to do business with us," Davidson said. "Her values, her work ethic and her honest projection of wanting to be connected to her clients embody what many of us want to get to - if we can."

Stevens said that relationships are the key to her success.

"In the trust industry, we're providing investment management advice, financial management advice, estate planning - we're helping with all of a family's financial needs," she said. "This company gave us the ability to continue to handle our relationships in a fashion we felt we'd like. What sets us apart is that we are employee-owned. Our goal is to maintain the organization as a locally owned, locally controlled company. We are making the decisions right here. That eliminates us from any other types of corporate pressures. We have always made decisions on what's best for our customers, long term."

It's the long-term aspect that pleases Stevens the most.

"We are trying to maintain that old-fashioned trust relationship - families working with us for multiple generations. Long term, they'll be dealing with the same people and the same institution. That's really changed in other parts of the country. Most of the smaller banks are now Bank of America or Wells Fargo. They might have started as a small-town bank, but now you're dealing with Bank of America. People who are setting up trusts and naming us as trustee know that 40 years from now they'll be dealing with the same institution with the same goals."

Cofounder and portfolio manager John Abel, 65, said he believes that the old film "It's a Wonderful Life" had a bit of an influence on the people who founded TCV.

"We're a family," Abel said. "We go way back. That's the real challenge today - finding people with the same morals and philosophy of investing who are willing to stay around for a while. It's not a part-time job. It's a 24/7 job. I think about retiring. But I'm hoping I can get at least five years more, minimum. I'm having too much fun here. I enjoy working with people and it's satisfying. Especially when the market's going up."

Davidson has a simple word for his company; that word is "old-fashioned."

"We all agreed to that in the beginning," Davidson said. "We were going to create something that used to be. Something really old-fashioned. We've done nothing but create a trust department the way they were 30 or 40 years ago. We've done nothing new, but we look new because we've gone back in time."

An Accidental Life

Davidson is one of the five children of schoolteachers Loretta Delaney and A. Barrett Davidson - that makes him part Scotch, part Irish, and may explain his storytelling proclivities. He grew up in Roslyn, Long Island, graduated from St. Michael's College in Colchester, and then returned to New York to take a law degree at Fordham University.

"I could afford to go," Davidson said. "I left with a degree after three years with only $4,000 worth of loans. Now you wonder whether its a smart economic decision to even go to law school."

In law school Davidson described himself as "a conservative playboy."

"I figured out that if I got a good part-time job in the summer, I could pay for law school and play on the East Side of New York," he said. "And I did that for three years. I just wanted to play."

Davidson must have played hard. One of his summer jobs was at a camp for institutionalized children. In his off time, he hung out with another counselor, one who was studying art at Pratt Institute.

"A few years later, I picked up Vanity Fair and there he is, Robert Maplethorpe," Davidson said. "He and I used to go on my motorcycle to pick up girls. He wrecked my motorcycle. He wore a cape. I was missing all that. I still had a crew cut. So I had a chance of moving out of my tight little culture, but I didn't."

By the end of law school, Davidson had met his future wife, Judy, a psychotherapist. They married and he took a job at Prentice Hall as a tax editor summarizing long tax decisions.

"They would hire anybody," he said. "And just around the time Judy told me she was pregnant, I got my draft notice. And I was going to enlist, because I was very conservative then. I'm not any more, because I'm married to Judy. Or maybe it was enlightenment. But I panicked. I've got to be at Fort Dix in two weeks and my wife's pregnant. How much money can you make as a soldier?"

At the last moment, childhood asthma saved Davidson from joining the military. But he understood, for the first time in his life, that he had to seriously think about a career. His brother-in-law worked at what was then Chase Manhattan Bank, so Davidson took a job in the trust department.

"Then they started having reservations about hiring lawyers," Davidson said. "Lawyers would get training and go into private practice, so after that they stopped hiring lawyers."

The young couple had an apartment on the Upper East Side of Manhattan, but a robbery made them feel vulnerable. So when they visited Judy's parents in Sunapee, NH, Davidson started to look at living in Vermont. It helped that a friend sent him a help-wanted advertisement he had cut out of the Wall Street Journal. A job, it seems, had opened up in the trust department of Vermont National Bank. Davidson says that his mother-in-law "forced" him to take the interview. To get even with her, he took Judy along.

"She did the selling," Davidson said. "I kept my mouth shut, and I got hired."

From the beginning, Davidson felt that he didn't fit the culture of the bank.

"Genetically, if I mess up, it becomes a story," he said. "So I tell the story. And I think, 'These people should be laughing.' But you didn't laugh at the bank. So even though I thought I was very conservative, I didn't quite see the world the same way they did."

Still, he must have fit in somehow, because he became the manager of the department. Often, according to his stories, he was a thorn in the side of the top management. For example, when Windham College in Putney went bankrupt, Davidson's department was acting as the federal government's trustee for the buildings. Their goal was to sell the college as a whole - if they could find a buyer.

"Meanwhile, the bank has loaned money to Windham," Davidson said. "They took personal property as collateral. Desks, furniture, things like that. And I, as a trustee, had title to the buildings. For the government's benefit, we don't want the bank to auction off the personal property. We want the college intact. But the bank wants its money back. So I go to another bank to borrow money to pay the college president's salary. He says, 'I want to get an injunction against Vermont National to stop the auction, because I want to sell the college intact.' I said, 'OK.' So I sued my employer. I sued Vermont National Bank."

The suit didn't hold up in court and the bank set up an auction date.

"The way bankers work, once they begin the process of selling personal property, they don't stop when they've made back their loan," Davidson said. "And I didn't want them to sell very much. We negotiated. The deal was that when they had made enough money to pay themselves back, they would stop the auction. So Jane (Waysville) kept track. They got into the fine arts building with the pianos and things, and bingo! They've got it. Jane makes the sign. Vermont National says, 'We have to stop the auction.' Everybody is ripped. When John Irving worked at the college, the school had spent $2,500 buying him a wrestling mat. The first day he had it, one of the wrestlers broke somebody's arm and they canceled the program. But they were going to auction off the mat. John was in the audience to bid on it. And we stopped the auction."

In retrospect it was a bad move, Davidson said.

"We shouldn't have stopped the auction, because it turned out that we couldn't sell the college. And when we finally did sell the other stuff, we didn't get the price we should have gotten. But that day, it was a Sunday, I'm sitting in the conference room, and the president of the bank walks by. And he says, 'Well, Jack, where are you working on Monday?' So I didn't make it easy for myself in that culture, but the benefit was that our group stayed together in our own culture and nobody bothered us." 

Trust

Trust companies have their roots in English common law. In Davidson's telling of the story, everything traces back to lords and serfs.

"The king owns the land," Davidson said. "He gives a piece of it to lord. So the lord has title. But the lord needs someone to farm it and provide soldiers to the king. So the core of feudalism is the serf. Courts of law grew up around that. Some of the lords didn't honor that bargain. So they created the courts of equity - not just to determine which lord owned which piece of property, but so they could order the lord to comply with the agreement he had with the serf, who didn't own anything. They had to protect the serf's rights or the whole system would fail. So they gave the judge the ability to order the lord. That reinforced the process. That's the foundation - the concept of trust."

People who are familiar with trust departments are people whose families have money to manage. The first way to deal with money is by managing it yourself. Another way is to use a broker who gets commissions from both buying and selling. Or you can hire an investment manager, who charges based on the size of the assets.

A trust company does something similar, but does it for the long haul. At TCV, fees are charged based on the market value of the accounts "held for the benefit of related family members." For example, the annual fee for $1 million is 1 percent.

There is, and is not, a buy-in number; it is somewhere around $500,000.

"We don't ordinarily tell people what our suggested account guideline is," Davidson said. "And since we are employee-owned, the employees can accept much smaller accounts. But they will have to administer them themselves. In some cases, it is sort of pro bono, and in others it's simply because we don't want to disappoint. In others it is because we recognize what a fringe benefit it is when someone really appreciates what we do. You know, like a good caffeine drink, the jolt negates a down market and goes a long way. That said, the reason I tend to stay away from smaller accounts is that what we have to offer is bond and stock management. Stocks are inherently risky. Smaller accounts simply should not take the risk of the stock market. On the bond side, we prefer safety. To be safe, most people can find other options where they don't have to pay us a fee."

Trusts are designed to manage estates.

"People started using trusts to provide for the next generations," Davidson said. "So the money goes from investment to trust. They set up an investment management account that, upon their death, turns into a trust. The trust takes care of their surviving spouse and children. Sometimes it can go multiple generations. To be a professional trustee, you have to have a lot of accounts. An individual can be the trustee for a few accounts, But if you have more than one or two, you have to be regulated by the state. That's why we decided to be regulated by the state. Technically, as a trustee, you have legal ownership of the property. But you hold it for somebody else's benefit. It has significant responsibilities."

Trusts can be set up in many ways and can run for many years. A trust can maintain principal while doling out interest; it can hold an estate until the beneficiary reaches a certain level of education, age or responsibility.

"Trusts are a way of taking care of family members and saving on taxes," Davidson said. "For the spouses it's to save taxes or the fear of a second marriage. With some of our trusts, the child can withdraw a third at age 25, half the balance at age 30 and the balance at age 35. It's to delay distribution until they're old enough. If you'd given me money at 21, I wouldn't have any left by 22. By 32, maybe the same. By 42, I would have learned a little better."

A trust can make charitable donations to other institutions. There are even ghost, or "orphan" trusts.

"For example, there was a Vermont lady who set up a trust in a New York City bank," Davidson said. "She appointed a friend and the trust company as trustees. The trust was supposed to distribute money to Episcopal churches, presumably the Springfield Episcopal Church in Vermont. And for many years, that's what it did. But the individual friend died, and the trust is now Chase Morgan. And the Springfield Episcopal Church is only getting small amounts of money. Where is the money going? It's going to St. John the Divine in New York. Why? It's about cultivating business. It happens all the time. Once the individual trustees die, and the bank takes over, they're orphan trusts. These things happen."

Trust Company Of Vermont

When VNB merged with Chittenden, the trust department consisted of 45 people. But most of the cofounders came from the core staff that worked together at VNB in the 1980's. They used their own money as capital to start TCV.

"We took our 401K money and rolled it over into IRAs," Davidson said. "We put the money into the company, which you can do if you do it right. We risked our retirements."

The fledgling company took on a few outside investors.

"That was less of necessity and more wanting to have some independent outside shareholders and directors," Singiser said. "We did form a board with the employees being our directors and with three or four outside directors."

In a way, it was a sad time, Waysville said.

"We were very fond of Vermont National Bank," she said. "It was sad to think it wasn't going to be part of our lives anymore. But it was a new corporate entity. We were with Chittenden for a while as a transition, working in transitions teams, and we had done this before when VNB bought Green Mountain Bank and we went through another conversion. We knew how to go about this. We started making suggestions, and we could tell from Chittenden's reaction that they had their own plans. Not bad or good, but different. We weren't going to be so much in control of our daily work flow. It was a much bigger corporation. It was going to be more regimented. It was very easy to leave and go with the boss and the colleagues that you've known before."

Once TCV was set up, the founders were pleasantly surprised by the client flow.

"We got assets in much more rapidly than we thought," Davidson said. "The company that holds our securities is the Bank of New York. And in the beginning, we had nothing to hold. The woman from the Bank of New York who was training us saw three offices, eight people and no assets. She said, 'I went back to New York and I prayed for you.' The next month I saw more assets coming in than I've ever seen from any startup. And we were shocked that it was coming in so fast."

The company was profitable by the end of the second year.

"Every time I saw a profitability lurking in the wings, I did something to make it unprofitable," Davidson said. "What did I do? I hired people. Two years out, we were starting to see some profitability and we hadn't used up our startup capital. So we had two friends in St Johnsbury and we got them in. Then we waited a bit and hired Chris Chapman and David DeBellis out of the St. Albans and Burlington area to do investment management."

Recently the company added a three-person office in Manchester, plus the one in Keene.

Stock Market Crash

The stock market bottomed out on March 5, 2009. Many people saw their retirement funds disappear as if in a puff of smoke. It was an especially hard time for everyone in the investment and money management fields.

"First, 2008 was a bad year," Singiser said. "The market drifted down the first part and really went down the fourth quarter. The first quarter of '09 was a disaster - the market just took another big dive. We're fee- based, so we charge according to market value. If the market goes down 20 percent, our fees go down 20 percent. We're not a high margin business, so that hurts. At some point, we voted voluntarily to take a modest salary cut to preserve our cash. We kept track of what we didn't get paid, and when we could, we paid ourselves back."

Telling people they've lost their money is the hard part of the job, Singiser said.

"It's not a comfortable feeling," Singiser said. "You don't know what you're going to do, or how they're reacting to it. The best thing you can do is write them, e-mail them, call them and do everything but hide from them. Talk to them as individuals. They'll be very patient, most of them, and will go along. At some point, under certain circumstances, somebody will say, 'I can't take it any more. Get me out of the market.' Or 'I have to move my account or put it all in a savings bank.' But that happened in very few instances. Mostly, we were able to try and reassure them that we were doing what we could to minimize the impact. Surely, they had not escaped the pain of the market decline. But perhaps it was less for them than in more speculative forms of investing. We tend to be fairly conservative - going to good quality stocks and good quality bonds. That doesn't protect you, but it does act as a shock absorber when you have a bad year like we had in '08. So we didn't lose much business."

In fact, TCV was gaining clients.

"Others who were going through a similar situation, particularly at some of the larger, more remote institutions, were aware of us," Singiser said. "They said, 'I'd rather be working with somebody locally who will meet me fact to face, who will talk to me when I have a question, and who is not at the end of an 800 number.' Personal service just comes into play, and it's huge in this business. That's why, when we left Chittenden, there was a lot of customer loyalty. You get involved in people's lives. You can meet with them when they're worried and reassure them that the world's not coming to an end - even when you're not sure that it isn't. That was a scary time. I don't want to go through that again, although we may have to. But our size, our being local, and that we are in the community has been very good for us in terms of our competition and our ability to attract new business."

The Future

TCV recently moved its headquarters from Main Street to a beautifully restored 1920s Mediterranean-style former home; it has wood paneling and lots of room. The company also recently bought another beautifully restored old building in Burlington. The company moved because it needed room to grow. But growth will be limited, Davidson said.

"The challenge we have coming up is to limit our size," Davidson said. "We just don't want to keep growing and growing. Some of our clients are worried about that, too."

Aware of their advancing years, the cofounders are giving a lot of thought to the next generation. That's how they found Chris Cassidy, 26, a trust investment officer who has been a full-time employee for four years.

Cassidy interned with TCV when he was at UVM.

"I just finished my sophomore year in college with a double major in economics and business, but I didn't have any real world experience," Cassidy said. "I walked into the office on Main Street in Brattleboro and asked to meet with Jack Davidson. I said, 'I'm looking for experience and I'll work for free.' He said, 'Let me get this straight. You want to work here and we don't have to pay you? Fine!'"

The next summer Cassidy was hired back as a paid intern. However, he started interviewing for jobs in Boston and New York when it came time to graduate.

"I was about a week away from taking a position in Boston when Jack called me out of the blue and said, 'We just bought a building in Burlington and we'd like to hire you when you get out of college,'" Cassidy said. "Burlington is one of the fastest growing markets for us in Vermont, which is why they purchased a building."

Cassidy jumped at the chance.

"I was thrilled at the idea of being able to stay in Vermont," Cassidy said. "I love this state. I started at TCV one week after graduation and I've been here ever since. I'm also currently in the MBA program at UVM. I love this company. Everybody has an open door policy. There's a lot of cooperation and collaboration. People are very happy to help you out and teach you things. And everybody has a tremendous amount of experience in the trust business. So it's a good place to learn about trusts and the business world."

Cassidy likes the idea of being with a company that develops long-term relationships with individuals.

"We have some institutional clients, but for the most part we service individuals," Cassidy said. "Which is great, because you really get to work closely with families. Another thing, this is a business that's set up for long-term employment. In our industry, there's been a tremendous amount of acquisitions and mergers. It's hard to find stability right now in the investment business, which is why a lot of people are attracted to us. We haven't changed. The key to working here - because it's an employee-owned company, and it's not as hierarchical as some of the larger banks - is the ability to work with others and be self-motivated. It's not structured to where you have someone hanging over your shoulders all day."

Cassidy thinks TCV will have no difficulty attracting other young people.

"Being at UVM, a lot of people were like I was, either from Vermont or currently going to school in Vermont," Cassidy said. "They really love what this state has to offer - the quality of life here - but they have trouble finding long-term employment in their field. I feel our firm will be an attractive place for these people. They don't have to go to Boston or New York.

Mentoring will be the way new people will be integrated into the firm, Davidson said.

"We're trying to make sure the older people won't retire unless they want to," Davidson said. "The system is designed to allow them to go part-time. Say Steve decides to go part-time. We'll bring someone in to work with him. Steve stays, new person comes in. So we will have some growth that will come from adding a new person to assist part-time. We don't know what it will be like to attract smart younger kids who share our values. We don't have a sense that we'll have any difficulty."

The board is now working on defining the company's values and, for the first time, writing some job descriptions.

"We're in the process of doing our next five-year plan," Davidson said. "We need to put down on a paper what we do. We've worked together all these years. We knew what our jobs were from the beginning. We didn't have to define them. We don't have one personnel record. We have 22 people and we don't have personnel files except for their W2s. That worked for us. But we're working on how we're going to be governed n the future."

Give the reasons the company was founded, it stands to reason that the founders want to prevent their beloved company from getting swallowed up by merger or acquisition. Employee ownership was their solution. The company by-laws were written by Davidson.

"I told anyone who invested in it, don't expect to get your money back," Davidson said. "You'll get a decent dividend, but you won't get your money back. Give the shares to your kids. If you're an employee, you get 10 votes per share. But I wrote it so that the minute your kids get it -- they only get one. So Judy and my son, if they get my shares, they get one tenth the voting power I do. Why would I do that to them? Because I don't want anybody tempted to sell out."

As much as everyone loves "It's a Wonderful Life," being a community-based trust company might be an anachronism. The very definition of community is changing, warns Cairn Cross of FreshTracks Capital.

"The business of investment management is a global business of scale," Cross said. "TCV's competitors can emerge over time from all different arenas, particularly in a virtual world of connections. What they're doing is old-fashioned in that it's very community-based. They can look people in the eye and get to know them. Are the relationships of the future built the same way? Can you have a virtual collection of people you feel is your community, like you do on Facebook? All companies are grappling with this: what is the community they serve and how are they attracting customers? How will TCV evolve over time? In this new and different world, what does local mean? It's hard to know."

Davidson sees the future clearly.

"The foundation, the key thing, is that we take care of families," Davidson said. "We decided to stay in Vermont. We decided to structure it so we can't get bought out. The people who work here have relationships that go back a long time. That's how it used to be in small towns. If you ensure that both parties, the person you work with and the person who comes to you, are going to stay for a long time, then you have the core of this business. You get to know the children. You think differently. You think long term. Short term, quarter to quarter - that's not a great focus. It's more pleasant to think that what I do today has an impact on next year and the year after. It fits how we invest. Most of us simply want to live in these small towns and stay here for the rest of our lives. Nobody here is talking about retiring and moving to Florida. Managing for generations. Not getting sold out. Nothing complicated about it. I love doing business in Vermont. I think being in Vermont is perfect."
Joyce Marcel is a freelance writer and author from Dummerston. Her new book, a collection of her columns called, "A Thousand Words or Less," is now available. Learn more about her and how to order the book at her Web site: www.joycemarcel.com.