Read The Transcript Below:

Steven (00:49):

Everyone, and welcome to the next episode of the Retirement Tax Services podcast. I’m your host, Steven Jarvis, CPA, and in today’s episode, I’m really excited to be able to answer one of the most common questions I get from advisors, which is what software solutions are out there to help me do more with all this tax planning stuff you’re constantly rambling on about, not quite how they phrase it, but that’s the general idea. Thankfully, I am joined by someone who can speak to this from firsthand experience, both as an advisor himself and as the founder of a technology company. Andrew Altfest is the CEO and founder of FP Alpha, as well as the president of his own RIA. So Andrew, welcome to the show.

Andrew (01:31):

Steven, and great to be here with you today.

Steven (01:33):

Andrew, before we dive into the software piece of this, it’s always been important to me in all areas of my life that I’m learning from people who have firsthand experience, that it’s not someone coming to me and theorizing of, Hey, this thing might do good for you, but that people are speaking from their own experience. So before we dive into what FP Alpha is doing for advisors, talk about your own background and your own experience that led you to saying, you know what, in addition to all this stuff I’m doing with clients, why didn’t I go ahead and figure out how to be a tech entrepreneur as well?

Andrew (02:03):

Yeah, so my story starts very early, so I’ve been around the industry my entire life. Both my parents are financial advisors, so I grew up really around the industry going to conferences. They were early RIAs, they had an early RA that they started way back in the eighties. So I’ve been an advisor now for north of 20 years, and I would say a few years ago, really back in 2016 when robo-advisors were first coming onto the scene, we were thinking about, and I was thinking as a next generation leader about what we did differently as advisors, where our clear value add was. And certainly part of that was on the personal side, but part of that was beyond that, and you have to have the economics. It can’t just be personal. It has to be, if I’m going to pay you, what else am I going to get? Am I going to pay you more than I’m going to pay Betterment or Schwab or Vanguard? What else am I going to get from you? And I gave it a lot of thought and it was clear that we did more, but this more was in this financial planning category. There’s more competition on the investment side. That’s what was starting to emerge. And we as advisors, we’re offering a lot more on the planning side. So tax planning, estate planning, insurance planning.

(03:25):

Our clients were asking us for more help in these areas too. We survey our clients every other year, do these detailed engagement studies, and they were always asking for more help in these areas. The problem that I had was you could provide a lot of help in this comprehensive advanced planning in these advanced planning areas to your wealthiest clients, but there was no way to provide that to all clients. And so the typical client that we had, who was, let’s say, in this one to $10 million range in terms of assets that we managed for them, it was very hard to just perform these services at the great expense of time that it was taking. So we’re talking about reading long estate planning documents, long tax returns, visualizing those documents, and we literally created just an estate planning alone. We created a 35 page checklist, and that 35 page checklist, I mean, it would take hours and hours of time to be able to go through the documents to visualize them, to find the ways that they needed to improve their planning.

(04:43):

So yeah, you can do that for your wealthiest clients, you can do that for the Rockefellers that you work with of the world. But in terms of just doing that for all clients, there was no way to do it. And as an advisor, I knew what clients wanted, and as a business leader, I knew where I wanted to take our firm thinking about competition that was emerging. And I knew that there was advanced technology and AI that was out there, and this is when machine learning was starting to be discussed and how machine learning was going to revolutionize the world. And so I knew that there was a better way, and I knew there was technology, and I didn’t know exactly how far we could push this thing. So I started to network within the tech community, and ultimately I connected with the person who became our CTO, who had a background in AI development. And I was really, really favorably impressed with what we could do with the technology and things that you could, it was almost like things that I could dream of were actually possible. And so I would do these interviews of other friends and colleagues, other advisors to see if they also had that pain point that I had. And in terms of if we were to automate a lot of this really manual work in terms of data gathering and reviews of client situations in advanced planning areas, would you use technology that enabled this?

(06:23):

And I give the example. Let’s say I were to upload a legal document, I would upload a will or trust and then have that read by AI and then visualize, and then you were to get all these insights from it. They were like, yeah, that’s Finish Plan 2.0. That sounds amazing. And we actually have been able to develop that and actually build it within FP Alpha. And I would say fast forwarding to today, years later, the technology, the ability of technology to solve problems has only increased and it’s increasing exponentially. And so today, it’s kind of like being a kid in a candy store with what we can do to help advisors better plan for their clients. So the genesis of it came certainly out of a pain point that I had, and then I soon realized that many people, many advisors have, and that’s what led to FP Alpha.

(07:30):

I mean, my ambitions with FP Alpha are much greater than just the work that I do or we do at Al Fest as advisors. It’s really to allow our industry to become more valuable and more indispensable to clients. God knows there are many people who would prefer to just have us intermediate and have advisors be a thing of the past. And really to improve the wellbeing of many people out there. And I know I really believe in the work that we as advisors do the valuable work that we’re doing all day long for our clients. And what gives me great satisfaction in the work with FP Alpha is to know that I’m through FP alpha playing a part in helping advisors be more indispensable to their clients. And that’s my backstory.

Steven (08:27):

Well, I appreciate you taking the time to share that. Like I said, it’s really important to me just even on a personal level to understand how people approach problem solving, what it comes down to. You talked about the advent of robo-advisors, which I’ll be honest, as I came into the industry, because my background’s as a CPA, I originally thought that Robo-advisor was some kind of pejorative that advisors that were not robo-advisors used against the Vanguards of the world until I started getting emails vanguard about how they want me to use their RoboAdvisor. But to your point, it’s not so much that directly the fact that roboadvisors exist means that financial advisors don’t have value. It’s what you identified in there is, okay, how do we do some of these pieces more efficiently so we can spend our time on what is the highest and best use or what is the unique value proposition of an advisor? Because anytime I’m looking at a software solution, that’s one of those kind of balancing acts I’m looking for. And I’d love your thoughts on this as far as how you see this with FP Alpha and other software that you use of where’s that line between having a really good tool and then still being that essential operator of using this resource to elevate what it is that you can uniquely provide to your client?

Andrew (09:44):

Yeah. Well, it’s a great question, Steven, and I think it’s changing. And so before you would try to automate, and we spent years automating a lot of that mundane work in the back office, that’s really I think where technology, let’s say five, 10 years ago was being applied. We started out with advanced trading software, rebalancing software, and then there’s a lot of this talk around automation of account openings. And so you’re talking about things that are really in the back office, and there’s only so much work though to squeeze out of the back office. And so the work in a firm that employs financial advisors, the work that we do all day long is the opportunity eliminate is to take a look at that work, the workflow of an advisor and say, where’s the waste? Where are the things that are not as valuable that we’re all doing?

(10:53):

And allow us to spend time on things that are much more valuable and higher impact. And so if you look at the work that we do, I mean, we’re all communicating with clients. We’re all analyzing at our desk doing analytical work. We’re certainly in a high communication role. And this is the opportunity going forward is for technology to serve as almost like a genius assistant to us as advisors, to be able to work with our clients so that we can spend our time solving our clients bigger problems, spending more time with our clients, playing more to our strengths as humans, as people, and connecting with them and coaching them and coming up with solutions that leverage our creativity and our judgment. And so today, I think we started this conversation talking about how there was a problem of time and not being able to treat every client like a Rockefeller and how this work has been completely manual.

(12:08):

I think the opportunity is going forward to be able to provide more support to advisors so that they can save time and do more for clients without having to spend even more time. And that’s what we’re investing in. And it’s not certainly, FP Alpha is one example of that, but we’re doing this in many areas, both in terms of how we analyze and do work for our clients, and also in terms of how we’re growing our firm, which is leverages a lot of digital marketing and combines the human sales side with the content side and the insight side that technology serves up for us in a silver platter. So that’s how I look at it. I look at it as far as where are we? Where can we save time? How can we increase our value proposition and how do we play to our strengths going forward so that we become more indispensable to our clients?

Commercial (13:17):

Prospects walk through your door for investment advice, but they become clients because of the tax advice you provide them. If you are a financial advisor who struggles with implementing key concepts of tax planning for your financial advisory clients, then on September 27th through the 29th, you will want to be at the live in-person event hosted by Retirement Tax Services in Las Vegas, Nevada. Register now at retirementtaxservices.com.

Steven (13:44):

Yeah, becoming indispensable to your clients. That’s such a great way to look at this. One of the things that really drew me to FP Alpha is that I constantly talk to advisors about how you need to get the real data. As we talk about tax planning, it is great to talk about the headline grabbing strategies that might be out there, but when we talk about working with an individual client becoming indispensable to an individual client, we’ve got to apply it to their situation. And to be able to do that, we need the real information. So on the tax planning side, that’s getting the real tax returns on the estate planning side that’s getting the actual documents. I mean, I wish it was more surprising to me that you said you came up with a 35 page checklist on going through estate documents. I mean, there’s a lot of data.

(14:26):

I mean, I go through tax returns that are hundreds of pages long and I’ve spent a whole career learning how to personally be able to flip through a tax return efficiently. But I’m never going to outdo a computer and for, well, sorry, I should say I’m never going to outdo a computer when it comes to quickly just processing the data. I’ll outdo a computer all day when it comes to the things you were talking about of judgment and insight. And so when I talk to advisors who don’t have that background, that’s the crux of it of, okay, Steven, I hear you talking about getting real client data and making sure it’s actually applicable, but if I’ve got a hundred clients and they’ve all got an 80 page tax return just doing the quick math, that’s 8,000 pages, how do I go through all of that?

(15:08):

And so that’s what I love about solutions like FP Alpha, where a part of what you’re offering to advisors is to say, great, we’ll take the 8,000 pages for you. We’ll run ’em through and we’ll visualize it. We’ll summarize it. And then one of the things that Brad on your team was showing me that I really, really liked about what you’re doing is that it’s great, here’s the initial data, but we don’t want to stop there. Let’s now help you with questions that will direct us to what recommendations should come next. We’re not going to make a recommendation on your behalf. You need to go meet with a client, you need to understand the client, but here’s some questions to think about to start pushing you in the direction of what comes next.

Andrew (15:51):

Yeah, that’s right. I mean, I think most people don’t see this as a good use of their time. And so if we’re talking about most of our customers are financial advisors, we have people who are taxed in the state, specialists who are using our platform and they’re seeing this type of work, the information gathering, the reading of the documents, reading of tax returns, reading of legal documents is not a good use of time. And so this is definitely a huge opportunity to just automate. And I think this is where a lot of the, it’s a great use of AI because this is in a very similar manner as we’re seeing advanced language models like Chat GPT, who are, you can enter in information, ask query things, have it rewrite articles, create new articles, shorten content, you have the same, we want that for advisors.

(16:53):

We want those types of breakthroughs to be able to save us as advisors time and the work that we’re doing. So we have our own language model when it comes to reading legal documents. We’re using different methods when it comes to reading tax returns, and we’re trying to give, we want that leg up as advisors. We want that something that only we have that is not available just to retail so that we can continue to show, provide that value add. That’s what I wanted to give us our own advanced tool that allows us to do more for our clients. And people are like, well, some people of course naturally said, take it to consumers, but that’s not what my passion is. And I think that has a lot to do with how we’ve built FP Alpha and continuing to develop it further.

Steven (17:55):

So, Andrew, you and your team use FP Alpha in your RIA. Clearly you designed this to solve a problem that you have, so you clearly see the value in this. You guys use this maybe to look at this from a slightly different angle, since I’ve got the founder here on the podcast with me, what’s the next thing that your team would love to see FP Alpha doing? Because my limited experience with software development, I always know that there’s that next shiny thing of, well, what else could we do? So how do you see this continuing to evolve and addressing what advisors are trying to do for their clients?

Andrew (18:29):

Yeah, so big picture with FP Alpha, we’re taking data and we’re turning into actionable advice. And as advisors, we have so much data about our clients. We have it in our CRMs, we have it in the documents that we store for them. We have it in our planning tools, we have it in our portfolio accounting solutions. We have it everywhere. And it’s just a question of making that data actionable. And I think that’s really big picture what we’re doing at FP Alpha. We continue to do that better and better all the time. And I think that as valuable as FP Alpha is for people today, we’re still in the early innings of being able to just take the data and turn it into advanced comprehensive planning with minimal additional time spent. Let me give you an example. We now have just completed our integration with Orion, which is of course, a very widely utilized investment accounting platform.

(19:39):

We are now just completing our second version, deeper integration with Riskalyze. MoneyGuide Pro, we have an integration with today, and we’re working on our next version of our integration. So we want to take the data that advisors already have about their clients and then move that into FP Alpha to continue the planning process except extended into these other areas of tax estate insurance planning. And so that this type of comprehensive planning that is done and family offices can be democratized and provided to all clients. And I think that that’s where a lot of our effort is being spent. Of course, we have a lot more in development, a lot of cool features being added, some I can’t talk to you about today, but it’s all within this mission of taking information and turning it into actionable planning. And one solution we have just literally just launched is doing that for homeowner and auto policies, property and casualty reviews.

(20:57):

So again, talk about something that’s demanded by clients. Everyone has a homeowner and most people have an auto policy. Everyone has some type of policy out there. Most of our clients own their homes and drive. And the problem there has been that there hasn’t been a way to actually review those policies and visualize them and identify issues that clients need to take care of. And so now we are just launching our homeowner and auto review process, which is a first of its kind feature. We built it from scratch working with some really smart PNC brokers and claims adjusters, as well as of course, the people utilizing the AI to build the technology. And so we’re just extending the work that we’ve done in tax and estate to PNC. So FP Alpha just continues to get more and more valuable, but I would argue that we’re still in their early innings, which is so amazing. I think anyone using AI is really in the early innings today, given how fast things are accelerating.

Steven (22:14):

Andrew, there’s a lot of great stuff in there. Part of what really stuck out to me is what you said in there about taking data and turning it into actionable advice. That’s something I try to hammer home all the time. The information is nice, but action is what counts. And so I can definitely see where having that as your vision creates all sorts of opportunities in the future. This isn’t, Hey, we want to be a tax tool. We want to be an estate planning tool. With that focus on anywhere you’re collecting data in your client’s life, we want to be able to take that data and turn it into actionable advice. That’s a really impactful mission to have.

Andrew (22:48):

Yeah, because today, right now, we display it, but we don’t make it useful. Our clients are visual learners. It’s very important to have high impact visuals and to help people understand what’s going on and make the complex simple that’s very important. But to take the data and then move it and make it actionable, I think that we have it, but it’s not being made actionable enough. And I think that the years of collecting data about all of our clients through these platforms has given us the opportunity to be able to make that data much more actionable and allow it to be utilized by us and to be able to provide more advice to our clients without spending more time doing so.

Steven (23:45):

Well, Andrew, like I said, we definitely share that commitment on this podcast to making sure information is valuable. And so we want to make sure that people listening know how they can take action on this conversation that we’re having. One great opportunity coming up later this week as this airs, we are doing our first annual RTS Tax Planning Summit, and we’ve partnered with FP Alpha as one of our sponsors to come and do a demonstration of exactly how this software works, exactly how we can use these tools to take data and turn it into actionable advice. And so there’s still an opportunity to sign up for the virtual version of that summit. If you are already an FP alpha user, be sure and send an email to advisors@rts.tax so we can get you the partner code for a promotional rate on attending the summit, and you can sign up at retirementtaxservices.com. Andrew, aside from that, for people listening who think, Hey, not available this week for the summit, but would love to learn more about FP Alpha, where should advisors go to learn more about what you’re doing?

Andrew (24:44):

Yeah, fpalpha.com is a great place to start. We are happy to arrange a demo for you, learn more about your practice, what problems you’re solving for, and there’s more information there about FP Alpha. So yeah, www.fpalpha.com. And yeah, feel free to set a demo.

Steven (25:07):

And then the other thing that I would add is, and I love tools, but you have to have the data to put into the tools. So if you aren’t already getting tax returns for all of your clients, if you’re not getting estate planning documents for all of your clients, those are things that you have to be doing to really elevate the value you’re delivering to your clients. You’ve got to get the data, and then you need to have a system or process for reviewing that data and turning it into actionable advice, including using software tools where appropriate. So make sure that you are taking the time to serve your clients in that way. Andrew, I really appreciate you being here, taking the time to share your perspective and background. Anything else you want to add before we sign this thing off?

Andrew (25:45):

No, nothing else to add. I’ve enjoyed this conversation, really psyched about the upcoming conference. And yeah, thanks for having me on. It’s been a pleasure to be here with you.

Steven (25:56):

Yeah, of course. For everyone listening, until next time, good luck out there. And remember to tip your server, not the IRS.