I've hesitated to write this column for fear it might come across as self-serving. I'm a financial advisor at a local firm, so I have some skin in this game. But I’ve decided the importance of the message outweighs my personal apprehension.
Most people in the Berkshires understand the virtues of buying local. We don't think twice about shopping at the farmers market or running to the local hardware store. That's true for people who have lived here their whole lives, and it seems just as true for people who moved here from somewhere else.
But I've recently encountered several people who moved here from New York or Boston and, understandably, kept their old professional relationships: the accountant, the lawyer, the bank, the investment firm. Those relationships took years to build, and nobody wants to start over. Still, I submit that buying professional services locally is just as valuable to ourselves and our collective community as shopping at our farmers markets and independent shops.
The case for buying local usually starts with the idea that money spent at locally owned businesses stays in the area and “multiplies” as opposed to being sent off to a business’s headquarters halfway across the country. While that may seem obvious, there is an economic counterargument worth taking seriously. Economists point out that places get richer by specializing in what they do best and trading for the rest. Buy local purely on principle, and you may end up paying more or settling for less.
Nevertheless, the benefits of keeping money local are easy to see in everyday life. Here are just a few, personal examples. When I need beer or wine, I could easily grab it while I'm at the supermarket. Instead, I go down the road to my favorite family-owned liquor store. I get the personal touch from the owners whom I’ve gotten to know, but more importantly, they're quick to give back. They seem to show up for every local charity that asks.
Hardware is another easy example. I could order from Home Depot online, but I'd rather support one of our smaller locally owned hardware stores. I like the personal service, and I know they're employing local people and supporting local causes.
None of that is a tough sell. But many of us who happily buy our tomatoes at the farmers market still keep our checking accounts at a national bank, our investments with a Wall Street firm, and our taxes with a CPA in the city.
With professional services, however, the usual, initial economic trade-off to buying local often runs the other way. A Berkshire accountant or attorney typically isn't billing at Manhattan rates, and what’s more, local professionals are often experts at understanding local rules. A CPA who prepares Massachusetts returns all day knows the state's 4 percent surtax on high incomes. An estate planning attorney here not only knows that Massachusetts taxes estates far below the federal threshold but also routinely deals with this issue. That’s not to even mention the valuable trust you can build and community connections you can make by sitting across the table from your advisors rather than relying solely on email and zoom.
We have highly capable professional service firms right here that can serve you, and supporting them can also mean supporting our local economy.
Banking may be the clearest case. A community bank takes local deposits and lends them back out as mortgages for our neighbors and loans for our small businesses. An FDIC study found that community banks held about 42 percent of the industry's small business loans despite holding only about 13 percent of its assets. If your money is still at a big national bank, it's worth a look at one of the many local banks and credit unions that give so much back.
That giving back is easy to see. For example, recently I happened to be looking at the list of sponsors for a local PTO and then also a county-wide non-profit fundraising event I attended. In both cases, I noticed that local banks, accounting firms and financial advisors made up a bulk of the supporters.
These professional service firms are helping hold together the fabric of the Berkshires.
None of this means you should fire your out-of-town accountant tomorrow. Professional relationships are built on trust, and trust takes time. But the next time your tax return comes due, your CD matures or you sit down to update your will, put a Berkshire firm on the shortlist.
We already know where to buy our tomatoes and our two-by-fours. The same logic should apply to where we keep our savings and who prepares our taxes. The firms sponsoring our events and supporting our charities are the same ones keeping this community running all year long. They're betting on the Berkshires, and we should consider betting on them in return.
This article first appeared in The Berkshire Eagle.