Read The Transcript Below:

We’re not overpaying. No, we’re not overpaying. We’re not overpaying anymore. The tax code’s complicated, boring, and overrated. You don’t want that, you want a pro. One thing that you should know: this is a radio show. It’s not tax advice, don’t take it that way.

Steven (00:49):

Hello everyone, and welcome to the next episode of the Retirement Tax Services podcast, financial Professionals Edition. I’m your host, Stephen Jarvis CPA. And with me today I have Jeremy Straub, who’s the founder, and CEO of Coastal Wealth. So Jeremy, welcome to the show.

Jeremy (01:04):

Steven. Happy to be here. Thanks for having me.

Steven (01:06):

Yeah, Jeremy, I’m really excited for our conversation today because since I spend a lot of my time talking about taxes, all of my time talking about taxes with financial advisors, I get to hear all sorts of different things. And one of those things that comes up all the time is kind of just this constant refrain of insurance is the worst thing that’s ever been invented, and we hate all these people out there trying to just shill insurance as this tax-free vehicle. That’s the only tax thing you could ever possibly need. And the reality is that while there’s some people who do questionable marketing there’s a lot of need for insurance and it’s this huge industry and one that you’re a part of. So I would love for you to share your perspective on where insurance fits in and how you found success using it.

Jeremy (01:49):

Sure. And I appreciate you having me on the show too. So, you know, I grew up in the AUM world in the wirehouse side and spent a lot of time really focusing in on gather assets through financial planning. And one of the things is advisors, we always shied away from the insurance and protection conversations. As I started building out my own firm and working with different types of advisors from different backgrounds, I found that a way to differentiate for your clients is to not just do assets under management, which is a relatively commoditized business, but you can differentiate yourself in being able to provide the protection side of their house. And I also found the competition to be a lot less than, so if you’re a financial advisor, you might have 50, 80 good wealth managers in your town.

(02:36):

You might only have three or four really competent, smart, articulate insurance professionals. And if you’re really doing financial planning and you’re following the CFP discipline, you know, insurance protection is part of it. You can create that as a differentiator for yourself and really put yourself in a spot where your competition isn’t close to as much as it is and you just being able to gather assets. And the truth of the matter is, I think about it, I mean, you look at the trust companies, RIAs, family offices, you know, people you start competing with in the higher net worth, ultra high net worth space. You know, people are, you know, chasing down lower fees over and over again. Everybody’s running similar asset allocations. You’re trying to articulate that you do a better job and managing a portfolio and maybe you do a better job with financial planning and service. But insurance, I found is a place that you can differentiate and it’s an area that we’ve decided with our advisors to help provide a lot more structure advice and training to make sure they’re covering that side of the house.

Steven (03:34):

And Jeremy, just for context for our listeners, I mean, you run a large team, you have some 400 advisors under Coastal Wealth. And then, I mean, I think you said 3000 more that that you work as a distribution network for. Do I got the numbers at least roughly correct?

Jeremy (03:48):

Yep. You’re a hundred percent accurate. Yeah.

Steven (03:49):

So  you work with whole teams of people

Jeremy (03:52):

Yeah, 400 financial advisors that are, you know, career advisors with us that run all their business through us. And then we have a few thousand brokers, meaning if somebody wanted to do protection insurance, but you know, they still wanted to keep their own broker dealer. They were doing their own business through their own RIA, but they needed help and expertise to start taking care of the insurance side of the business. They wanted to be able to partner up with a company to do that. And so what I found is I’m not gonna be able to have everybody manage assets through me but I can be a resource to them to help take care of the insurance side of the business. And that’s another 3000 brokers that we have that just run their insurance through us.

Steven (04:29):

As we are getting ready for the show.  You kind of smiled and it seemed to at least agree with me that there’s certainly some extremes out there of people trying to disguise their sales pitch around tax-free income related to insurance. And so, you know that’s not my favorite thing to see. But again, there’s a real place for insurance, but you’re also running a financial planning practice. I mean these 400 advisors who are career advisors, they’re doing other things besides just insurance. So for your company, where does taxes fit into the conversation?

Jeremy (04:59):

It’s part of the financial planning process. Like it would be with any other CFP that would want it, right? You’re getting a copy of the tax returns during the data gathering phase. You’re reviewing the tax returns for opportunities to proactively plan. Right? and so the conversations around that is, you know, training them to be able to read tax returns to identify opportunities with their clients. And luckily we have a very strong trading program, a lot more smarter people than me. They’re sitting here helping the advisors be able to identify those opportunities. And then using them to be able to start to create the conversations. And we try to create the conversations around taxes is not just around how to save income taxes in the year beforehand, but it’s proactive tax planning. How do we be able to save you taxes in the future, including in the distribution phase. And then we also spend a decent amount of time talking about estate taxes and how you’d be able to reduce your estate taxes and if that’s important to them or not. And what planning gets associated with that.

Steven (05:53):

So when you talk about getting tax returns during the data gathering phase, I find that often there can be a difference between what people talk about and what reality looks like. Is that a prerequisite for you? Like that’s mandatory, we’re not moving forward or that’s nice to have and you get it for half of your clients. Do you have any insight on that?

Jeremy (06:08):

Yeah, you know we have different advisors at different spots, right? So our fee-based financial planning advisors, they use our planning production unit, which is basically a group of CFPs and smart people that don’t like being in front of clients, but like ripping apart a sure a client’s financial situation for them to be able to write the financial plan and to be able to give the advice to the advisor to best position it with the client to help them meet their goals. That tax return has to be part of that. Okay? So if you’re going to charge a fee and you’re gonna use my team to be able to write the financial plans for you, because if you’re thinking about it as an advisor, what you wanna think about is your hourly rate, right? How much do you get paid per hour?

(06:47):

And you putting in data inputs into a financial planning software, you being able to kind of just even run all the illustrations and run the scenarios isn’t always best for you. If you can be able to, you can be able to delegate that out, that’s a good use of your time. But you might not wanna pay for that. You don’t like the idea of having that staff or you don’t do enough of it to be able to do it. I shoulder the cost of that for my firm to be able to do that. But if I’m gonna do that for you, here’s the list of stuff you need to come with and I’m not gonna help you unless you do that. And so I’ve had to make it where it’s a relatively strict process that the tax returns have to come because I can’t give enough value to the advisor to then the decline if we don’t have accurate data to be able to do it.

(07:27):

And what it allows for me is to be able to provide training to those advisors by working with my plan production unit to be able to do that. So for the fee-based financial planning clients, yes we get the tax returns. Now if I start, if you’re just looking at an advisor that is just trying to move rollover, they’re just trying to take their retirement dollars, you know, we give them best practices, we train them how to do it, but I would be lying to you if I could get all 400 people to do it. It just doesn’t happen. So, you know, the way that I’ve only been able to do it is if I have it in a way that I’m giving them something for free in the advisor, then I can start dictating what I need from them to do where I’m providing value.

Steven (08:06):

Well I I really appreciate your transparency there. I always love learning how other people are doing this and so much what you’re saying really resonates with me and  we have listeners that are across the spectrum of size of firms they’re at, I mean all the way down to solo RIAs, but regardless of the size of the firm you’re with or if you have a planning production unit like Jeremy’s talking about, I mean that emphasis on, you have to have real data to do real planning. I mean I love that. That’s just part of the expectation cuz and it seems so intuitive, but so seldom is the case that people wanna jump right. To let me give you recommendations, let me build a plan for you. But if we don’t have real data, what’s the point? So I love that you’re starting with No, give me the real data, give my team the real data and then we’ll give you some real answers.

Jeremy (08:49):

Yeah. I think one of the hard parts we run into is, so we do hire a lot of people from other companies that have been trained in firms. Whether you were trained at a Mero Morgan or you were trained at a Northwestern or a New York Life a lot of  the career shops are leaning towards a certain product sale that they’re manufacturing from that bank or that insurance company. And so to be able to help advisors see, hey, that doesn’t have to be the answer in the solution because you cause the, your company produces that product. Maybe you start out with the, where’s all the opportunities for that client and what are you trying to solve for them? And then fit the products afterwards. You have to unwind some of what they’ve been trained on. But most advisors really want to do the best thing for the client.

(09:33):

They’re worried about it slowing down the sales process and losing sales. So you’re trying to balance with them going, hey, if you take a little bit more time upfront to do the due diligence, uncover the opportunities that would come in a tax return or uncover all opportunities that would come through their wills and their power attorney and the documents they upset aside or come in just from taking a look at their investment statements a little bit more in detail with it. If you’re taking a look at that, you’re going to have a much a client that’s gonna be with you more long term. You’re gonna have a client that’s gonna implement a lot more products with you than they would be if they didn’t. And you’re gonna have somebody that’s gonna wanna refer more business to you. And what we found is the a when I took, like I’ve taken over a couple different firms, the average product per household when I take over is about 1.2 products per household. If they implement the financial planning process, which includes being able to look at the tax return, we’re able to get to about 5.6 products per household and it’s by doing the right thing for the client, now the sales process is longer yet you end up with a more satisfied client that has more engagement and you have more penetration inside that house.

Steven (10:36):

Yeah. That makes, that makes so much sense that you’re seeing the impact from taking that time up front to understand that client’s situation, that this isn’t then, hey, I’ve got this list of 10 products and I’m gonna force ’em on every client. It’s, I’m learning this client’s situation so that when I’m making recommendations on products, they actually fit and make sense and so the client’s more likely to follow through and and implement. Yeah.

Jeremy (10:57):

The hardest part is for somebody that doesn’t have a tax background or CPA background, how do you make it so simplified for them to be able to take a couple key points from a tax return, A couple key aspects that they can be able to feel like they’re providing value but not feel like they’re heading down a road they can’t answer questions or they’re giving tax advice where they’re not allowed to. And I think that’s the harder thing, that’s the harder needle to thread with an advisor and and I think that stops them from wanting to even take, wanting to even have the conversation around a tax return to be able to do it. And so that’s been something from a training perspective that we’ve really had to just tie into the CPAs that are with our firms trying to simplify it.

(11:39):

And then one of the things that we found that we thought would work and didn’t, right? We thought that we have advisors that have CPA backgrounds or l l M backgrounds that could be able to give better advice that they should just do joint work and go with the client, we’ll go with the advisor. Bad idea. No advisor wants to bring another advisor that can hurt their relationship. And so that model didn’t work for a couple years. What I found is I actually had to put people on my payroll on my staff that might not be the aggressive salespeople, but they’re knowledgeable from a tax perspective that could jump on a call and just be the technical commentator on certain areas to give that advisor the confidence that they can go down that road without putting themselves in a place that’s gonna make them look like they’re not intelligent or not know knowledgeable there. So we’ve had to solve it by staffing in the right way to be able to get advisors to have confidence in those conversations.

Steven (12:31):

That’s really interesting. In some ways that’s what we do with our RTS premier membership is become that resource for advisors who don’t have the scaler capacity to be able to bring that fully in-house but are still looking for that expertise you’re talking about. Cuz I definitely see that with advisors that will clearly value tax, but  it feels big and scary and unknowable of how much of an expert do I need to be before I start bringing this up to clients And what if a question comes up, I’m not sure how to answer. And so you’re absolutely right. Trying to thread that needle  gets pretty complicated for sure.

Commercial (13:05):

How many client referrals have you got? Because your tax planning advice is so good that your existing clients just can’t stop talking about it to their friends. If you are like most financial advisors who know that they need to improve the tax planning advice that they give clients but struggle with knowing how to implement that and what actions to take, then you need to join us September 27th through the 29th in Las Vegas, Nevada. Go to retirementtaxservices.com and register for the event where leading financial advisors will be presenting materials alongside lead CPA Steven Jarvis on how they implement tax planning advice in their practice. You’ll leave this conference with actionable advice that you can take and make a change in the way that you structure financial planning advice when it comes to taxes. Join us in Las Vegas, Nevada, September 27th through the 29th by registering@retirementtaxservices.com.

Jeremy (14:06):

One of the things I’ve had a couple advisors do that have been what I thought was pretty brilliant is when they have a joint client with like an accountant or not during tax season, they’ll go with the accountant go, can you just identify to me what you’re seeing in his tax return that you’re kind of lowing, this makes me uncomfortable, this makes me nervous. Or I think this is an opportunity a financial advisor should be looking at. And so, and they do that with five or six accountants by the time they get to the fifth or sixth accountant now they’re able to say, Hey, this is what I identified this, this, this and this. What else am I missing? So by the fifth client, cause they got educated by the first 1, 2, 3, 4 by the fifth accountant, sorry, by the fifth accountant, that person thinks that financial advisor is brilliant.

(14:50):

All that financial advisor has been doing is regurgitating the stuff that the other accountants have said. But those other accountants are seeing at the end now all of a sudden have a lot more competence than that advisor to start building a better long-term relationship with them. And then even if, you know, the idea of setting up COIs that you get good referrals for is a very hard thing for advisors to do. Assuming that doesn’t happen, you’ve now been educated by a bunch of good clients on what to be able to look for in the in the tax return so you can provide better advice to your clients. And that’s one of the things that I’ve seen advisors really kind of latch onto in trying to not build COIs but build a relationship with the COI to build confidence to make sure that the client stays sick and doesn’t go anywhere else.

Steven (15:33):

Well Jeremy, you either are an avid listener of the RTS podcast or these concepts work in multiple places cuz I mean, you’re hitting all of the things that we work with advisors on as far as building those COI relationships and making sure they’re learning from experts. I I love that emphasis on being able to, to kind of get those reps in with an expert and then learning from and building your confidence from there. I took note of, of how you are phrasing that. Cause I always love hearing the words people use of okay, what makes going to a CPA and saying, okay, what on this return makes you uncomfortable? I really like that phrasing. I think that that’s one one I’ll have to graciously borrow from you.

Jeremy (16:11):

Well, yeah, I appreciate that. I love kind of how though you’re positioning with the podcast here on taxes being an area that an advisor can be able to provide a different level of value. I think we have to, as an advisors, stop trying to act like managing assets or even just doing a retirement projection is something that is gonna be a differentiator for you or your service or your personality. And so, you know, for you’ve kind of positioned it where it’s really on the tax returns and I think we’ve done an average job. I I’m not on here saying this is something I got figured out at all. But I think we did it on the protection side. We said, okay, you know what, we’re going to differentiate ourselves and help our advisors really understand the insurance side of it because the level of expertise in that area in marketplaces is very low. And it’s an easy place to be able to differentiate and I think advisors should just be as they listen to you and going through it is going, okay, how can I position myself differently than the rest of the competition? And obviously if they’re a listener on this, they’ve already see that and notice that and have already putting themselves in a different stratosphere than most advisors in the marketplace.

Steven (17:15):

Yeah, I think there’s some really good insight in there because whether it’s insurance or taxes I mean obviously these are all common words in the industry and I see advisors hesitate to, to spending more time on some of these topics cause they say, oh, well everybody already knows about that. Everyone wants to already be doing it really well. And that’s just not the case. Whether it’s taxes or insurance yes, everyone knows those exist that they have to deal with them, but the number of advisors who are doing a a just a fantastic job around taxes is still very much the exception. And even taking some of these kind of small steps initially of meeting with CPAs  and learning from them or getting tax returns and then getting that practice and reviewing them and identifying opportunities, starting to build your skillset around those things, those really will differentiate you from really  the entire industry.

Jeremy (18:04):

Yep. And it can’t be, you know, the insurance industry screws up and just says, well, I’m just gonna pitch tax free income. Well, you know, that’s not enough to be able to differentiate yourself and it’s also not completely accurate in how you explaining it. So you know, your ability to be able to not be like everybody else and actually explain it for what it is and how certain insurance products can be able to help efficiencies around taxes if they’re structured correctly. And being able to articulate that in a way that the high net worth accountant, the high net worth attorney along with the client sees that as something of value in their situation. Is that what leads you to differentiating on it? And a lot of times advisors don’t want to take the time to learn it. So for example, I had no idea what premium financing was when when I started in coastal wealth and then I had a couple advisors work with a couple billionaires, especially internationally and started explaining me how they’re structuring those types of products to be able to effectively work with some international clients and domestic clients.

(19:09):

And so it was, it was important for me to be able to learn that because that all of a sudden made me understand a lot more of why a wealthy person would actually see someone talking about insurance as additive than opposed to how the stereotype of the typical old school insurance agent isn’t and saw that person just as important to them as a wealth manager. And that’s not, that was a change in perspective for me coming from the AUM world.

Steven (19:35):

Jeremy, you mentioned that you’ve been involved with several different firms. I mean, where have you seen taxes go wrong at firms when they’re trying to in incorporate that or have that be part of what advisors are

Jeremy (19:45):

Trying to, I think there’s a balance between being able to talk about conceptually how we save you taxes into the future and maybe do some tax loss harvesting and some basic planning you would do as a financial advisor to all of a sudden playing around with tax advice. Where I’ve seen most of the complications come from is someone that played a CPA in another life and then crossing crossing boundaries on where they should be and shouldn’t be giving advice between the two. And as you know, as a registered representative and understanding the different OBA’s you’re allowed to and how to do that, that’s really where I’ve seen the conflict. I don’t see people typically giving poor tax advice just cuz they didn’t know. They tend to stay away from it more, right. So they, it is a, the tax side I think scares people that don’t know it and so they just don’t talk about it, which I think is a, it’s a big miss because if you’re starting to play in the higher net worth, ultra high net worth space, people care about what the after tax return is or regarding what that’s going to do to their taxes more than they someone that is gonna be the affluent to a little bit of mass affluent.

(20:54):

Not that I don’t care, but it’s a different conversation. The pain point’s a lot different. And so for you to not be able to incorporate that with some level of confidence that you actually know what you’re talking about at your prelim resources, I think you’re automatically not on a level playing field with the other advisors in your space. It’s almost now it’s starting to become an ante to be in the game to be able to have that level of tax advice if you’re starting to play with a 10 million plus space.

Steven (21:18):

Yeah. You make a really good point there that all of these conversations do need to be client-specific. It’s not gonna be the same tax paying strategies for your million dollar client as opposed to your 10 million or your a hundred million dollar client and the level of sophistication or the area of focus needs to shift with that. Jeremy, I think you’re exactly right that this is something that advisors will shy away from because it feels big and scary at times. But I mean you made that distinction of where people get into trouble is when they wander into tax advice. And what I see most commonly is that advisors will just stay away from it all together so they  know they’re not getting close to that line. How do you help your advisors know that they can be doing something on taxes without the fear of n now I’m in tax advice?

Jeremy (22:00):

So it’s three things that we do. You know, the first part is if we’re writing the financial plan for them, we know that we’re writing it in a way that is not borderline even tax advice at all. So you have that plan production unit that’s being able to do that for you in a compliant, a compliant way. The second part is on the training side. So one of the things that we run with CPAs that we have on staff is advanced training on how to be able to read different types of tax returns of different types of professionals, right? So if you have a real estate professional with different types of passive income, their ability to take investments that would be more beneficial from them cause of the way they’re getting income is all is different than a guy that’s a W2 or has all earned income and most people don’t understand that.

(22:43):

So when, you know, a lot of people in the higher net worth insurance base deal with a lot of real estate investors and they’re comparing and talking about different types of private placements that have different better tax advantages and they have no idea what they’re saying or not or how it goes through. And that’s where you gotta have a good resource, whether it’s, you know, through your podcast like you talked about in some of the affiliate programs that you have or whether it’s through partnering up with a company like mine, it’s thinking about having some type of resource, whether outsourced or in-house that you know can be able to give you the confidence if you’re starting to play in a certain space. It also though, really pushes the fact of why you should play in niches, right? Because you can be able to quickly learn the tax codes that are applicable to a certain niche and understand how it’s important to them.

(23:32):

So even though you might be their financial planner and you have maybe some of their retirement dollars and you’re managing some of the protection side of the house, but they’re coming to you with things they’re looking at that they just want to bounce ideas you that you know, might be an individual real estate deal, maybe it’s, you know, something that’s, you know, somewhat unique like their equipment from rentals that they’re funding and they’re backed a different way is those types of things. It’s easier if you’re in a niche cuz you’re gonna get the same questions all the time and you can find out the answers. It’s when you’re working with a lot of different industries that it makes it hard for you to become an expert in there. And there’s been enough financial advisory books and white papers written about why the importance of niches, but especially when you’re starting to play down in the tax space, it helps you be able to quickly differentiate yourself and build an expertise.

Steven (24:17):

Yeah, completely agree with that. I love seeing advisors who will take that really narrow approach because it makes, you know, you take that 80,000 pages of tax code and say I’m only interested in this very narrow subset, then all of a sudden it becomes a lot easier to feel like you’re an expert because it’s easier to become an expert in that specific area.

Jeremy (24:36):

Yeah. Well one of the things I think though is people listen to this type of podcast, right? You know, you start going down the road, should I buy an accounting firm? Should I partner up with an accounting firm? And what I would share with you is there is the industry is littered with people that have went out and bought accounting firms and tried to cross sell. It’s littered with accountants that got license to do financial planning and have never been able to figure out how to be really big producers from that. So  just, even though we know accountants tend to be one of the more trusted advisors of clients, it does not equate for them to be able to bring in a u m and be able to build a good financial planning practice. So don’t feel like you have to be an expert in and being able to prepare taxes to be successful in financial advice. From there it’s a knowing enough to feel comfortable to talk about it and to be able to partner up with the accountant that’s gonna be able to differentiate you on it. I just, I worry cuz I always have maybe like once a month somebody’s like, can I go buy an accounting firm? And I’m like, let’s explore that a little bit more first before we decided that’s your best strategy to be able to grow.

Steven (25:44):

We could have a whole other podcast on that because I definitely agree. It is very much the rare exception that I meet a financial advisor who has bought an accounting practice or tried to incorporate accounting in-house and has had a good experience with it. There’s way more unfortunate stories around that, just to your point.

Jeremy (26:00):

Yeah, it’s true. It’s true.

Steven (26:02):

Well Jeremy, I really appreciate you taking the time to come on the show today. We always like to make sure that people can take information and turn it into value, which is through action. So we always recommend action items to our listeners. So as you think about the things we’ve talked about today what’s an action that you would recommend that listeners take to keep leveling up what they’re doing, whether it’s around tax address in their practice in general?

Jeremy (26:23):

So I would say four things I would say. One is with regarding COIs and accountants, I would get your mindset away from I need to get them to refer people to me and start thinking about, I need to be able to work with them to help educate me as much as I can to provide value in my clients and really use it the time you spend with ’em to be able to get educated so you can be better in a certain area. The second thing I would say is you don’t need to go hire someone that understands everything about how to read tax returns, how to do tax returns and how to be able to pro properly plan tax in the future. But there’s a lot of places to be able to partner up to be able to do that. And we’ve talked about that a couple times on this call.

(27:02):

The third thing I would say is if you’re going to wanna move up in the high net worth space and ultra high net worth space, you have to differentiate yourself with some other value proposition besides the fact that you do financial planning, you have good service and you know how to manage a portfolio. And whether that’s on the tax side, whether that’s on, you know, you build a niche industry that you have all the executives in that area, whether it’s on the insurance side, I don’t care what it is, but your value prop has to be different than what all the banks and wirehouses have. And they say that their value prop is. And then the last part is, you know, and it’s the fact that if you even got to this part in the podcast, if you’re taking the time to just listen to calls like this and you’re actually seeing self-development as a major piece of how you grow you’re gonna be way better off. And so even if you only get one nugget outta this thing, make this a part of your every week is a podcast similar to this. Cause I think that’s the differentiator long term cuz you’re starting to pull out what’s important to you and what best fit for you.

Steven (28:02):

Jeremy, those are great recommendations. Really appreciate that. If people are interested in learning more about what you’re doing and how can they follow up?

Jeremy (28:09):

So CostaWealth.com’s the company, they could find me on Twitter at Jeremy Straub or Instagram at JM Straub. And then I have a new podcast coming out with one of my executives. He has like 34 designations including a doctorate and financial planning. And we have a podcast called Mindset Meets Money, which has to do a lot more behind behavioral finance and how the decisions your clients make affect their financial situation. How not just to help do the right financial planning piece, but help them actually start thinking the right way about money.

Steven (28:40):

Awesome. Well if you’ve listened all the way through to the end, clearly you’re getting value out of this show. And when you go out to follow Jeremy’s show, you can leave us a five star review and a comment so that our show continues to grow. We can keep helping more and more advisors. Jeremy, thank you once again for being here. Really appreciate your time and for everyone listening. Until next time, good luck out there and remember to tip your server, not the IRS.

Jeremy (29:03):

Appreciate you having me. Thanks.

We’re not overpaying. No, we’re not overpaying. We’re not overpaying anymore. The tax code’s complicated, boring, and overrated. You don’t want that, you want a pro. One thing that you should know: this is a radio show. It’s not tax advice, don’t take it that way.