Transcript

Steven Jarvis:

Hello everyone, and welcome to the next episode of the Retirement Tax Services Podcast: Financial Professionals Edition. I am your host, Steven Jarvis, CPA. In this show, I teach financial advisors how to deliver massive value to their clients through tax planning. As my guest on the show today, I have Matt Miner here with me, who is a certified financial planner, the founder of Miner Wealth Management, and a podcast host of his own -The Work Pants Finance Podcast. So Matt, welcome!

Matt Miner:

Steven, I am tickled to death to be here on the Retirement Tax Services Podcast today.

SJ:

Oh, that might be a whole new level of excitement. I don’t think I’ve had a guest yet who was tickled to death. I’m so excited now.

MM:

All right. I’m going to try to keep that level of excitement for the show.

SJ:

Perfect. Now Matt, you and I had a chance to meet in person at fin con earlier this year, which was a lot of fun. And of course, because I’m a nerd, I brought up taxes and we talked a bit about taxes. And so really there’s a couple of reasons I want to bring you on the show, but I was really intrigued by the level of service that you go to, to help facilitate a relationship with your clients and their tax preparer. So maybe start by just a little bit talking about what you do in general. And then let’s specifically talk about how you work with your clients and tax preparation.

A Brief Background Of Matt’s Work [1:48]

MM:

Yeah. So I love how you say on this show to tip your server and not the IRS. And I think that you’re working hard to provide ways for advisors to help their clients do just that. And kind of ever since I got started in wealth management, which is only about three and a half years ago, I’m a career switcher into this industry. Tax planning has been a huge part of what I focus on. A lot of my clients are – like many advisors – relatively high income folks. I work more with people who are still in their earning and accumulation years than I do with retirees. And pre-retirees at least at this time and most of them have something they can be doing from a tax planning perspective, whether it’s around their HSA or whether it’s related to how they utilize their retirement accounts, or many of my clients are property owners.

Sometimes we set up property management companies to make some of that income active rather than passive. And so I just, I love thinking through different kinds of tax strategies for clients. And then of course I do not prepare tax returns at least at this time. And so part of that becomes, uh, collaborating with the client’s tax preparer to make sure that all this stuff is communicated and makes its way onto the return in a good way and that the CPA and I are not working at cross purposes. And so that’s just been a focus of my work as an advisor and also something that I really enjoy. And I love of course doing this, you know, legally and in a straightforward way, but the less you can pay the government, the more you can starve the beast, the better from my perspective. So some of it is philosophically driven.

SJ:

Uh, obviously everyone’s got their own philosophy, their own political views on taxes, but what I love in particular about this topic and you really highlighted it – working with your clients on this, is that when we get to an individual level, it stops being political. And it really comes back to that person’s ‘why’, that person’s goal and whatever we can do to help them minimize their tax burden just helps them accomplish whatever their goals are. So, I love that focus you have, and I think it’s important to highlight that you mentioned that you’ve only been in the finance world or the financial advisory world for three and a half years or so. So, I mean there’s advisors who spend a lot of their career not embracing tax planning, or not finding new ways to deliver this. Experience doesn’t or years in the industry doesn’t have to be a prerequisite to providing value to your clients on taxes. It’s really about learning from people who are excelling at this and finding the way it applies in your practice and for your clients. So Matt, with that in mind, talk about what it actually looks like when you’re helping a client work with their tax preparer, because we talk about that from a high level, but I’d love to hear, you know, really in the weeds what all are you doing to facilitate that relationship?

How To Effectively Facilitate Client-CFA Relationships [4:37]

MM:

I mean, there’s several different ways that that can go and in my experience. So, some clients are – this isn’t the question you asked, but I’ll answer the question I want – you know, some clients are self-preparing. And so we look at that, like, I’m not above doing a screen share and TurboTax with a client, if that’s what they want to do for clients who are working with tax preparers, if they’re willing to make that introduction. And if that tax preparer is willing to be like, basically responsive to phone and email, uh, we’ll work together on making sure that the data transfer is convenient for the client and that the form that the tax return takes is, you know, aligned between the tax preparer and myself. And then I think what you’re alluding to is a conversation that we had that relates to sometimes actually getting involved in helping the client find a CPA, and sometimes even sort of quarterbacking that relationship between the client and the CPA.

MM:

And so in that situation, I’m looking for CPAs whose practice areas align in some sense with what the client actually needs from a tax prep standpoint, and then not only facilitating the introduction, but sometimes actually contracting the service between the RIA and the CPA, and then having the client pay my firm and then me being billed by the CPA for the tax prep work that’s going on. So, it can run the gamut from, you know, helping with self prep, to, you know, communication and data transfer and looking at returns together to actually helping the client get in a relationship with a CPA, and then even managing that relationship with the CPA so that the client doesn’t sort of have to add one more relationship to the set of relationships that they’re managing, because everybody who’s in this industry knows, and entrepreneurs know that like having more stuff on your plate to manage is not desirable. So if you can hand something off, usually everybody feels pretty good about that.

SJ:

Now I want to circle back in just a second and talk about how you actually go out and find CPAs and feel good making those recommendations. But I work with a lot of advisors and there are definitely advisors out there who are trying to proactively help with these relationships, but you’re one of the first advisors I’ve met, who really has formalized that relationship to the point where you’re contracting with the tax preparer and with the client. And we don’t need to get into the specifics, but you are charging the clients more than the tax repairer would have in part because of that, that quarterbacking that you’re doing, because you’re adding a real value there, but that’s so unique that I kind of just want to hear your thought process of how you came to this, of, you know, what this is a value I’m providing to my clients. So I’m going to charge for it. And here’s how it’s gonna get set up.

MM:

I guess, if necessity is the mother of invention, that’s probably how I came to it was because no disrespect to any individual CPA, but I will share that in general have sometimes had difficulties with responsiveness and service levels from both CPAs and the operation staff that support them, or just the service experience hasn’t felt great to clients. And what I’m looking to do in doing that is like, I know how I want the service experience to feel when a client deals with me. I’m not saying that I always deliver on that perfectly, but I know how I want it to feel. And if I can provide that service experience in dealing with me and I can be the one to have to manage whatever challenges might exist in dealing with the CPA’s office, then that’s a lot better of a client experience, you know, from, from my side, the worst thing ever. And this happens and, you know, to your point about, you know, how do I get comfortable making these recommendations? It’s one of the hardest things that I do, and it doesn’t always work out like the worst thing ever, is when you make a recommendation and then the person that you recommended or referred or introduced, you know, falls down on the job. So, the more of that risk that you can take out of making the introduction the better. So that’s kind of the thinking behind it.

SJ:

I really liked the model. It certainly entails you to take a lot more responsibility for the process because you, I mean, you’ve contracted with the client. So if something goes wrong there, they’re probably coming back to you, even though I’m assuming that the tax repairer is still the one putting their name on the return. So, you’re certainly in a position of more responsibility.

MM:

Yeah, no, I mean, I think that that’s true at the very least the relationship between the client and me, there’s additional risk being loaded into that relationship by taking, by taking this on it. And you’re right. I do want to clarify that the tax preparer is signing the return. And typically the tax preparer has to go ahead and actually have a contract with the client as well to provide the services. So they, the client is sort of entering into a dual relationship, but as far as how the fee payment goes, it’s like we’ve described

SJ:

Now, myself, fellow CPAs, enrolled agents out there, tax preparers, aren’t notoriously known for being open-minded about new ideas and relationships. So, I mean, how has that conversation gone when you go to the tax preparer and say, you know what, I’ve got this client who wants to work with you, but you’re going to contract with me and you’re going to bill me for this and I’ll handle the client.

MM:

I think it really just depends on the individual CPA, but for the reason that you mentioned, like business development is not always a favorite activity of CPAs. And so if you’re, in a sense, originating the client for them, they’re going to quote me their standard fee, which presumably they’re happy enough with, not having to go find the client and not having to do the client service. It’s probably actually lowering their costs in completing the return. So I haven’t had a lot of pushback along those lines. I think if someone is not able to sort of understand or appreciate the idea of that model, or if a CPA was very relationship oriented and really wanted to have that direct client relationship, then this obviously, you know, this wouldn’t be a good way to go in that case

SJ:

Sense. Okay. So let’s, let’s circle back to like, literally logistically, how do you find these tax preparers? Are you Googling people in your area? Are you making phone calls? Are you meeting with them like, as advisors listen to this, it’s helpful to have, like, here are the actual action steps to go through.

An Insight Into Matt’s Collaborative Approach [10:59]

MM:

No, that’s great. And I don’t want to make this sound larger than it is. I’ve done this primarily with one firm and primarily with one CPA at that firm. So this is not a massive program across 30 CPA firms or something like that.

SJ:

Not yet.

MM:

Not yet! So, the way that I’ve developed that is just to start with a CPA with whom I have a pre-existing relationship and who I am confident is competent at tax prep and then who is willing to be responsive to me in communication. Like, I guess those are the three basic qualifying criteria. And then, you know, having agreed on all that, then working together has been pretty successful. And if there’s a return review meeting of the CPA, and I both sit in on that, but when it comes to sort of the data gathering for the CPA, I’m doing that for them and then shipping that data to them. So again, that’s a benefit to the CPA and it’s, it’s not really a big deal to me because I’m already having to do that data gathering for the, you know, for the wealth management.

SJ:

Yeah. So Matt, I love how you described that relationship. And, there’s a piece in there I really want to highlight that you said, ‘Hey, listen, I’m gathering most of this data for the wealth management piece anyways, why not collaborate better?’ And, you know, I speak to advisors. So I definitely focus primarily on what advisors can do to improve these relationships. I’m not saying the tax preparers shouldn’t also be responsible, but at the end of the day, you can only control what you do. So that’s why I have that focus, but that really highlights where the opportunity is. Of rather than, um, operate in silos. And, you know, there’s advisors at times who will say, ‘oh, well, taxes with your CPA, go handle it there.’ And if that’s the approach you take, the client is the one who loses. That’s when things get reported, incorrectly, things get missed and then we’re left amending returns instead of doing it right the first time.

SJ:

And so how, whatever approach you take as an advisor to building that relationship, your client’s going to be better served. I think it’s great that you’ve developed this relationship where you can more formalize it and deliver this incredible client experience. But wherever an advisor is currently, I mean, looking for ways  to step that forward, whether that’s finding better ways to share the information you’re already gathering or working on that relationship, to the point where the tax preparer feels comfortable sending a draft return before it’s even finalized. These are all things that are going to help the client experience be better and ultimately deliver more value to the client.

MM:

And I think if I had to, I’ve had to say about how I would recommend expanding something like this would just be to look for CPAs who have capacity to take stuff on and who either are newer in their craft and are still sort of building the business or who don’t like the prospecting part of it. And then the other part of that that we’ve kind of already touched on would just be that the CPA’s practice areas overlap with the type of tax need that your client has. So, if your client has a lot of rental property, then that’s an important thing to take into consideration, or if they have, you know, meaningful business tax considerations or things like that, just sort of qualifying who the CPA is.

SJ:

Yeah. I appreciate you bringing that up. It’s come up a few times recently on the podcast of kindness idea of, should my client work with a CPA or an EA, like, you know, how do we make that determination? And that the experience and focus that you’re talking about is really the more critical part is, is this, is this a professional that’s serving similar clients to mind, to the needs of what my clients have.

MM:

Hundred percent.

SJ:

So, Matt, you mentioned that tax planning has always been kind of top of mind for you and how you serve clients. Are there areas in particular that kind of drew you to that, or maybe common themes you see with the clients you serve within tax planning?

MM:

Yeah. Interestingly this has changed post tax cuts and jobs act. When I very first got into wealth management, my first few clients were going through divorces. And so the structure of the alimony payments was one of the first areas that I dived into this, that’s less, or that’s not in play right now for clients. You know, things were kind of looking out for right now. None of it’s surprising, but still people don’t always know about it. You know, how to structure their accounts, to be able to make backdoor Roth IRA contributions is always something that comes up. Looking for opportunities to do tax planning within the course of small business or side hustles. So, there are a lot of, you know, non-working spouses that have three to $10,000 in self-employment income. So, how do we help them make the best possible choices as it relates to tax planning, even for that relatively, you know, small amount of income?

MM:

And then of course, you know, employer plans talking even to high-income folks about the fact that their HSA has let them save on Medicare taxes, even if they’re already exceeding the social security wage base, looking at charitable giving timing and tax timing related to that. Some people have stock-based compensation that offers opportunities for tax planning around ISO’s or, you know, kind of more esoterically 83 B elections and things like that. So like, we’re just always trying to think about what we can do based on where the client’s at. And it’s very varied from client to client. What am I missing? You tell me.

SJ:

You’re covering a great list there. And what’s really important about the list that you just gave is that it’s specific to your clients. The tax code is way too big for anyone to ever get their arms around the entire thing. And at times it can feel like, well, the information is out there. I can Google any of this. My clients can Google any of this. They probably already know these things, but I’m constantly surprised at the questions I get, but I’m not really surprised I get the question from a taxpayer, but honestly, I’m surprised at times at the questions I get from advisors that still are trying to learn just kind of some basic tax principles of, well, you know,  ‘if my client has $40,000 of ordinary income and a million dollars of capital gains, the capital gains is all 0%, right?’

SJ:

It’s like, ‘oh no, no, no! That’s not how that works at all. That’s not meant as an insult to that advisor. It’s a learning process. And the advisors who are really doing a service to their clients are the ones who continually learn. Now, like I already said that there’s so much tax information out there that the only way that you’re going to be able to effectively learn and be able to identify these opportunities for your clients, is by going through kind of this process that you either intentionally or unintentionally went through to get to your list of what’s relevant to your clients to say, instead of the, you know, 10,000 different tax topics out there, I’ve narrowed it down to a dozen that come up really often with my clients or two dozen or whatever it is. And these are the ones that I’m in to look for headlines on that. I’m going to read articles on that. I’m going to make sure I’m paying attention to changes in, so that on those topics, even if you’re not an expert from A to Z, that you can identify the opportunities you can identify when questions should be asked, when more information should be gathered, and then you can work to be that quarterback and go plug them in with the right professional to make sure this gets done. That’s, that’s where the value is really going to come from.

MM:

Well, amen to that. I couldn’t agree more, Steven.

SJ:

Yeah. So, I mean, for you specifically, I can’t say, oh, here’s something you should have added to your list because it sounds like you’ve taken the time to understand your clients and know what should be, what should be on that list and what you should be focused on. One of the biggest encouragements I give to advisors is to make sure that they’re reviewing tax returns for all of their clients every year. Cause that’s, that’s probably one of the best steps you can take to, to make that list for your client base and to see how it changes over time. You mentioned the Tax Cuts and Jobs Act and how alimony wasn’t really important anymore. And so, you know, it’s quite likely that we’re not too far away from another big tax law change, and this is how we’re going to continue to see, okay, what’s most relevant to my clients. What’s showing up on their tax returns and what’s new this year that wasn’t there before, so that we can really focus on our education piece of it.

MM:

Good stuff.

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SJ:

Yeah. So Matt, I really, really appreciate you sharing your experience with all of this and kind of what’s most relevant to your clients. We like to make sure that anytime we’re talking about these different topics that we give our listeners clear action items so that we can take knowledge and really turn it into value. So, whether it’s the relationships you’ve built with tax preparers, or just kind of you’re focused on tax planning over your career, what are some actions that you’ve taken that you can recommend that you feel are really impacted?

Action Items [20:21]

MM:

You know, I think maybe the first one, and again, seems obvious, but identify where the client’s pain points are. We’ve talked about it here. One of the pain points is identifying and relating to a CPA who can help. So however that relationship gets arranged, uh, if you can take that pain point off the table, just another way to, you know, add massive value to your clients. And then another one that we’ve also alluded to is, of course, we always want to be careful that we don’t ever sound like we’re talking down to our clients or using jargon. You know, no reason to do that, but not assuming that because something seems obvious to you that it is equally obvious to the client. I mean, frankly, that’s why you and I have a job, but, you know, it’s, it’s never a bad script in a meeting to say to a client.

MM:

Now you may be very familiar with this tax planning opportunity, but I’d like to take a moment to highlight it to you because not everybody knows about it. And, you know, some, some similarly innocuous way of introducing something that on the one hand may be of great value to the client. And on the other hand, if they are already very familiar with it, they just say, ‘yeah, yeah, yeah, we can move on’. And so, you know, those are a couple of things that I think that have come up time and again, in doing tax planning with clients. And I think just honestly, the scope for tax planning and a willingness to do tax planning are things that helped me qualify clients on the front end. So if they don’t have any interest in tax planning, and if they don’t have any scope for tax planning within their life, then you know, they’re probably a bad fit client for a sort of tax forward planning focused practice, which is what I’m interested to build.

SJ:

Those are some great recommendations in there. So, the way I heard that was – make sure you’re identifying pain, whether that’s with a specific tax law or with just the tax process, so that you know where you can deliver value to their situation. Make sure that you’re intentional about educating your clients. I love the way you started that off, you know, ‘you already may be familiar with this, but here’s something we like to walk through with all of our clients’, or however you word that, but you know, you don’t have to talk down to them. We all pay taxes. People will say, ‘well, taxes isn’t rocket science’, and it’s not. But not everyone’s asked to build a rocket every year. Everyone has to pay taxes. And as a professional in their financial life, you should feel it’s your responsibility to help them just understand just a little bit better, what it is they’re paying. And then that last piece of leading with tax planning and use that as a screening mechanism. So that, that’s gonna help you identify the right clients that are a fit for you, but it’s also going to help establish the expectation right out of the gate for the client, that this is something you care about and something you’re going to help them with. And so now as they go through this relationship, they know, oh, ‘Hey, Matt’s got my back when it comes to taxes. ‘

MM:

And I, I love, I mean, this isn’t why we do it at all, but I love both Tom Gow. And there’s another Kitsis interviewee whose name escapes me at the moment that both comment on like an advisor who asks for a copy of the tax return and reviews that with the client is in the top 5 or 10% of all advisors everywhere. And that most clients are surprised or have not experienced that before. So for people out there who are considering how to evaluate an advisor or whether your current advisor is doing anything for you at all, you know, whether they ask for a copy of your tax return is a good clue.

SJ:

Yeah, no, you’re exactly right. Being able to ask that question in a prospect meeting of, oh, ‘Hey, what did, what did XYZ advisor say when they looked at your tax return?’ Because most of the time the responses would be like, ‘oh, well, they didn’t look at my tax return.’ At that point, you’re playing softball of, ‘oh, well, if they didn’t look at your tax return, how are they going to recommend how much you should convert and Roth, how are they going to know what your charitable giving planning should be? You know, how are they gonna know how to recommend, how to withhold from your necks, how much to withhold from your next distribution.’ And so yet you, you were instantly setting yourself apart from the vast majority of the industry. Well, Matt, I really appreciate you being on the podcast. Anything else that you’d like to say, or, or things you’d like people to know about what you’re doing out there.

MM:

Yeah. Thank you so much, Steven. Um, first of all, it was just a joy to meet you and Benjamin Brandt at fin con, and to go see Dave Attell with you guys. That was a really fun night, and I appreciated the opportunity to get to know you better there. I knew that I was really interested to get to know you better when I saw your intro post on the fin con app that you wanted to talk to advisors who were interested to nerd out about taxes.

So that was a great introduction to you. You know, beyond that, I would just say, if people are interested to hear more from me, I’m super proud of the Work Pants Finance Podcast. It’s pretty focused on career and entrepreneurship there, with sort of my brand of financial planning sprinkled in where that’s appropriate. And you can contact me through that website, or of course, through the firm website, minerwealth.com where I do financial planning for people who like to focus on minimizing their taxes and growing their investments and building a great financial plan.

SJ:

Awesome! Well, Matt, thanks so much for being here. Thanks everybody for listening and until next time, good luck out there. And remember to tip your servers, not the IRS!