Read The Transcript Below:

Steven (00:54):

Hello everyone and welcome to the next episode of the Retirement Tax Services Podcast, Financial Professionals edition. I am your host, Steven Jarvis, CPA, and in what can only be described as a Mother’s Day edition of the podcast, I have with me Eric Brotman, who has very generously agreed to dedicate this episode to his mother. So Eric, welcome to the show.

Eric (01:15):

Thanks, Steven. Mom and I both thank you.

Steven (01:16):

Well, I’m excited to be having this conversation. I mean, we probably could talk for days about the impacts our moms have on our lives and that cannot be understated, but we will stay true to the theme of this podcast and at least talk a little bit about taxes here.

Eric (01:29):

It sounds like less fun than talking about moms, but okay, let’s do it. Let’s talk about taxes. Let’s talk about taxes in a way that not only gets everybody fired up, but that hopefully teaches a few folks a couple of tactics too.

Steven (01:41):

A hundred percent. It’s all about being able to take action. I love having tactics. So Eric, before we dive into kind of the meat of it, give us a little bit of background of who you are and why people should listen to what you have to say.

Eric (01:51):

Well, I’m the CEO of BFG Financial Advisors in Lutherville, Maryland, so a Baltimore suburb. I’ve been at this 31 years, which makes me the old guy on the call and that’s hurtful. At the end of the day. We’ve been managing money for clients in 36 states doing financial planning and full wealth management now for decades. We have a team of 20 folks, eight financial advisors and represent folks from very high net worth families down to folks who are just getting started and need to find a financial plan that will meet them where they are. It really is a full set of resources. My professional passion is financial literacy. I write books and do podcasts and do public speaking about why retirement is such a bad thing and no one should do it before everyone says, what in the heck is this guy talking about? What I mean is not that you shouldn’t be financially independent, but that you should make sure you still have something to look forward to and something to grow into, and we can talk more about that on the show, but for me, it’s about empowering families and helping them reach financial independence.

(02:48):

They can do whatever they want to do and be hopefully as joyful as possible in life.

Steven (02:52):

I love that context for it. It can be really easy, especially with a topic like taxes to get lost in the weeds, but at the end of the day, it’s about making good life decisions and then figuring out the most tax-efficient way to go about those things. No one ever leads their financial plan with, Hey, my biggest goal, my only goal in life is to make sure I pay as little tax as possible. That’s certainly one of their goals, but it usually doesn’t even crack the top 10. It’s, Hey, let’s figure out what’s most important to you and then let’s figure out tax-efficient ways to go about it so we can spend more time and money on those things that are most important.

Eric (03:21):

I totally agree with you. I mean, taxes matter, just like fees matter, just like various contract provisions matter, all the things that we do, but from a tax standpoint, I have seen too many people try to have the tax tail wag the financial dog. It can’t do that. We have to be tax-savvy, tax smart, we need to practice tax aversion, tax avoidance, but not tax evasion. Let’s not break any laws here and let’s figure out a way to navigate what are really ridiculous rules in every state, and of course at the federal level, how can we navigate these rules to win what is really a game that feels rigged sometimes and there’s ways to do it. You just need to understand and have the rule book. You need the little black book of tax planning or you need the right advisor.

Steven (04:02):

Yeah, some combination there of it. That actually just reminded me of a little bit different direction. I wanted to go in because of some of the work that you do with other financial advisors, and I know that you’re a real big fan of this concept of collaboration over competition, and so I won’t try to butcher how you approach this. You lay the groundwork for us and we’ll tie it back into what this means for tax planning. 

Eric (04:21):

I think it’s really important for advisors not to look at each other and for us not to look at each other like sharks around chum. There are so many opportunities in the marketplace. There are so many families who need us. There are businesses who need us. There are communities that need us. There are organizations, charitable and otherwise that need us, and there are not enough financial advisors to go around. This is not a scarcity opportunity. This is an abundant opportunity and we couldn’t possibly serve everyone. There’s nothing I could do to serve the entire zip code much less the entire country. So I think it’s really important to figure out where your niche is and then to figure out if you are really the right person or the right firm to help a specific client because in so many cases we’re not. Have your niche, have your specialty area, be great at it, but also understand that there are other advisors who can be part of your team.

(05:09):

Maybe they’re terrific at life insurance planning, but not tax planning or maybe they really know the real estate business, but not the private equity business. We all have different areas of specialty and it’s good to have a primary care physician medically, and it’s good to have that relationship manager and that primary care physician for your finances, and that’s maybe your CFP professional, but you’re also going to have specialists of all different kinds, whether it be tax or real estate or employee benefits or law, and it’s good to have a large tent in my opinion. We’re not competition for each other. The things we can do together to drum up not only more opportunities for us, but to make a bigger difference.

Steven (05:44):

I really like how you’re that Eric, because people talk about having an area of focus or a niche all the time, but usually they talk about it strictly from a marketing standpoint of who are you talking to, who’s your avatar? And that is great from a marketing standpoint, but you’re really taking it a step further and saying, Hey, this isn’t just about your marketing, this is about the services you deliver. This is about how you have an impact on families, how you help them accomplish their goals, and there’s going to be areas where you say, Hey, I’ve reached the edge of my expertise, but rather than just give up and say, Hey, all the best of luck is you go find someone else you are talking about, even if that’s another financial advisor, someone who has a similar title, a similar logo name, whatever it is, if there’s somebody out there who has that expertise to help a client in that area, then at the end of the day, what we need to solve for is what is the best value add for the client? And if we’ll be as advisors, as the primary care physician, if we’ll be willing to expand our network and have those relationships to, you’re not graduating a client to say, Hey, go work with someone else, but you’re facilitating that piece of the relationship.

Eric (06:45):

Without question and you’re developing relationships in the industry that can only help you long term. I use medical analogies a lot and think about this, if your podiatrist said, I can also do heart surgery for you, run to the exit, don’t think twice. There are things that we’re all good at. We have strategic alliances with firms all over the country, some of whom have specific criteria for clients they work with, and if it’s outside of that bandwidth, they want to try and find a referral source and we can help. There are some firms who, for example, do an incredible job with asset management but do no insurance work, and we have a team of people who can help with that. There are firms that do a great job with employee benefits and 401Ks. We do none of that. If our clients or someone comes to us and they need that, we need to refer it out and I want to know that we’re sending them to somebody not only qualified and competent and ethical but somebody who would absolutely be in the same position to do the same for me. I mean, it’s altruistic, but it’s also in its weird way, selfish, if you’re helping other people grow their practices and they run into a situation that’s not right for them, who are they going to think of? You!

Steven (07:47):

Eric, you mentioned before wanting to make sure that we get tactical on this episode, so let’s dive into this a little bit. Even if we get a little bit removed from technical tax topics, it’s a lot easier to say, Hey, here’s a nice idea. Go execute this. But I think where a lot of advisors get lost is, okay, great. That sounds nice to have referral partners have strategic alliances. What does that look like? What was the first conversation you had with another advisor to say, Hey, instead of being competition, let’s have a strategic alliance? Is that formally revenue sharing? Is that just handshake agreement? That’s something you did over the phone. Spell it out for me. If I’m an advisor interested in doing that, what’s my next step?

Eric (08:21):

Well, there are lots of ways to do it. It depends on what kind of individual you’re talking about. So if we’re engaging, for example, a CPA firm, that’s different than if we’re speaking to another CFP. Sure. I think your question, Steven, was really around another CFP, somebody who ostensibly does the same thing that we do. The first place to start is for any of the advisors listening to this, if you are part of a network or an independent broker dealer or a corporate RIA or something where there are hundred or 200 or 20,000 advisors within your network, start there because you can not only have really ample ways to meet them, you can be introduced to the right people if you know what you’re asking for and you can share revenue and opportunities, and yes, you can do that with a written contract. It doesn’t have to be a hundred pages and cost you 10 grand in legal fees.

(09:10):

It can be something simple, but I think it does, if it puts a client’s interest first, the firm involved is going to be thrilled that you’re doing it and they’re going to help you. I just don’t think that we need to sort of step on other firms and kick their reputation around if they’re good firms and they’re doing good work, let’s promote that. There’s not enough good financial advisors in this country. There’s such a shortage, so it makes sense. So that’s where I would start. I’d start in your own organization. If you don’t have your own organization, I would start with what are your core competencies. What are you best at? If you work specifically with pre-retirees and the clients who join your practice are all 60 or older, you need a place where you can send a 40-year-old or you need to bring somebody in-house.

(09:53):

So I think a lot of strategic alliances become mergers or acquisitions or partnerships too, where you start working with somebody, you get to know ’em, and then you say, you know what? We ought to be joining forces more formally and we ought to just grow our brand and grow our firm together. And so we’ve done twice over the last five years, we’ve actually onboarded other advisors who we didn’t necessarily know that that was going to be the outcome, but it’s been incredible for us. It’s been good for our clients, it’s been good for our team, it’s grown the firm, it’s been good for our equity, our shareholders, but it’s most importantly, it’s been good for every touch point. The client, the employee, the advisors, the families, the ancillary advisors, everybody is one.

Steven (10:30):

Eric, I really appreciate you sharing the details of that. It’s always good to hear how this works in practice. One of the things going through my mind as you described this is just delegation at a whole other level. And the reason, I think part of the reason that word comes to mind is I have a virtual assistant. We work really closely with one of our summit sponsors, Belay on things like that, and so always have this topic of delegation in mind. And at the end of the day, if that’s what you’re doing, you talked about it’s what are your core competencies and how do I not give up responsibility but help coordinate the execution of things that aren’t my core competency. And so that could be within a team with a virtual assistant, with a team member, with full-time advisor, whoever that might be, or that might be reaching out into our network. I appreciate the specific recommendation of, Hey, if you’re already part of a larger organization, this might be real simple to go into that directory that you already have access to say, Hey, who’s working with retirees, who’s working with younger professionals? Whatever that distinction you need to make is. But we’ve all heard over and over again that if you try to be all things to all people, you’re going to miss out on really delivering massive value. But here’s a concrete step you can take.

Eric (11:34):

And another step I would strongly suggest, especially to advisors in their thirties, forties, fifties, there’s a third of financial advisors will be retiring in the next 10 years. That is a ridiculous number. And there’s not enough financial advisors coming up through any kind of education system or pipeline to take those spots. So two things are true in my opinion. One, there’s a battle for talent and you better be hiring, grooming, training and surrounding yourself with incredible humans. That’s one. And two, be looking for those opportunities, those sole advisors, the ones who are 63 and haven’t monetized and don’t have a succession plan and don’t have any idea what they’re going to do five years from now, they need help. They need resources. They have an incredible asset that they haven’t monetized. And if you can teach them and show them how to monetize it, you can not only be their hero, but you can allow them to keep a promise they made to their own clients, which was, I will take care of you for the rest of my career and beyond.

(12:34):

And if the surface to that client ends the day that person retires or dies at his desk, then you have, I think, failed those clients to make sure that they’re okay beyond your involvement. So this is a multi-generational world. Our clients are multi-generational three and four generations, so are our advisors. If you’re an advisor out there and you’re 57 and you have no 20 or 30 somethings in your office, it’s time. Because even if they can’t afford necessarily to buy your interest out and to take your firm over, you need that bandwidth, that depth. And by the way, if they did their CFP two years ago and you did yours 30 years ago, your education’s barely relevant anymore. I did mine in 1998. None of those questions would’ve the same answer today. It’s just not true. So I read a book recently, Steven called From Strength to Strength.

(13:23):

It’s an incredible book and it’s about the shift from an intelligence curve to a wisdom curve. And when you’re in your twenties and thirties, it’s all about intelligence, the education you have, it’s knowing the newest techniques and the most recent rules and regs and how to do this. And then someday you pass over this threshold where now it’s more about your gray hair and your experience and your life lessons and less about the textbook, but it requires both. I think it really requires you need somebody who is technically sound and somebody who has seen it and done it and lived through it and helped people through it. And if you can marry that, you have a really, really good healthy collaboration, whether it’s in your firm or whether it’s two firms working together.

Steven (14:04):

So much great stuff in there. That’s a fantastic book. I always love when people bring book recommendations. Eric, as you’re describing through that, I’m thinking back to a webinar we recently did that all of our RTS members still have access to. You can go out to retirementtaxservice.com to get access to the recording talking about Building CPA relationships. And because we can take this philosophy, you’re describing this frame of mind with this approach collaborating with other CFPs and apply the same thing to building relationships with CPAs, with attorneys, with whoever it might be to say, okay, at the end of the day, what this is is a way for us to deliver more value to our clients and for us to be a resource to other professionals looking to help their clients. And so it can be really easy, especially as you look at centers of influence professionals in other service streams to say, Hey, that’s a referral source.

(14:51):

That’s only a referral source. But if you look at them strictly as a referral source, that tends to be the best way to not get referrals. When you can approach them and look for ways that they can be a resource for your clients, that you can help your clients be directed to great professionals who are providing a valuable service and in turn demonstrate to them how you can fill a gap that they have in the services their clients need, that’s where your clients are going to win. The families you serve are going to win, and you are ultimately going to end up getting more referrals because you have that trusted relationship.

Eric (15:24):

I think that’s absolutely true, and I can tell you that attorneys and accountants are very, very different. And based on your practice, you’re going to get different levels of success with each of those two lines of business based on who you are. We get an enormous amount of referrals from estate attorneys and none from CPAs.

Steven (15:40):

Oh, interesting.

Eric (15:41):

Other advisors saying what they’re like, we get a ton from CPAs and nothing from attorneys. They don’t do business development and so forth. But the thing is, we speak lawyer, we are accredited estate planners. I go to the estate planning conferences and shake hands with thousands of lawyers. I spend time cultivating that relationship because to me, the fascinating piece of what we do is estate planning and legacy and wealth transfer and philanthropy. That’s what I love to do. That’s my core competency as a human, not as a firm, but as me on accounting, it’s a little different because it is getting harder and harder to find an accounting firm even willing to do the 1040s. Everybody wants to do the big corporate audits, but no one wants to do the 1040s. And if they do do ’em, they either have to charge so much that it’s worth their time.

(16:24):

And then clients balk where they have to charge so little that they’re literally going to kill themselves every April. It’s crazy. So what I’m now trying to do and play some inside baseball, let you know a little secret. What I’m trying to do in the CPA world is actually find one firm that wants to do that kind of work where we can build a true engagement where we can send all of our tax work to them. Doesn’t mean every client has to use them, but they’ll have the option where there’ll be some benefit to them for doing that. And where they can send wealth management-type clients to us, whether we are signing a financial agreement or not remains to be seen. But I think CPAs have become, unfortunately, they’ve become scarce. And so I think it’s important to nail down one in your area that does a great job and to build a true relationship.

(17:13):

The big firms have figured this out. They’ve hired accountants, but I don’t want to do tax returns. I don’t want a firm to do tax returns. Our advisory board has said, don’t even think of doing tax returns in house. I would sooner give myself a root canal than even do my own tax return. I’m not doing it. So it seems like the area for us where we can benefit from getting to know a CPA firm with some depth and with a variety of different specialists so that we can build that out. Attorneys are totally different. I don’t want that relationship with an attorney because we work with two dozen of ’em, and as soon as you have one relationship, you’ve just cut off all those other relationships. It doesn’t make sense. So if your firm is just the opposite and you have 10 CPAs you do a bunch of work with, but you can’t find a decent estate attorney, then you have the exact opposite problem I do, and it allows you to go out and sort of tackle it in the same way with a different group of humans.

Steven (18:01):

Eric, there’s two things I want to highlight out of this, of what you’re describing there. One is that you’re clearly reinforcing there’s more than one good way to go about this. There isn’t just one way to draw the map, but this ties to the second point I want to draw out there that you mentioned almost casually, and I think what you said is that you’ve gone to events and shaking hands with thousands of attorneys. And I think the bigger point here is that whatever map you want to draw, you need to, whatever system you want to have, you need to work that system and that I think that’s something that we will a hundred percent agree on all day long. The work is more important. The system’s important, right? Let’s not dismiss that. You can just do anything, but the work is more important. Getting the reps and shaking the hands, doing the reach outs in ways that are more than just, Hey, I’m at the Chamber of Commerce meeting and was hoping that you would take my business card.

(18:48):

These need to be meaningful, impactful engagements where, and I would imagine that as you’re shaking hands with those thousands of attorneys, you even spoke to it a little bit, you are taking the time to be informed about this kind of stuff. You might not be an attorney yourself, but you speak their language. You’re coming to them informed and educated so they don’t feel like they have to dumb things down for you that you can have a collaborative relationship. So whether you want to take the attorney route or the CPA route or a combination of the two, whether you want one accountant or 10 accountants that you’re collaborating with, know that you have to put the work in. And if there’s ever been a time where I’ve said something on this podcast that makes you think that you can skip over the hard work, I apologize, get to work, I try to provide resources for advisors. I try to provide content that maybe helps get through some of the learning curve, but you have to do the work.

Eric (19:34):

You do. And I don’t think we should limit this to accountants and attorneys. There are a lot of other ancillary advisors to be thinking about. One of ’em is employee benefits specialists, 401k.

Steven (19:44):

Definitely.

Eric (19:45):

We do corporate financial wellness programs and we want to work with 401k advisors, not because we do 401Ks, but because we want to put on education and ultimately do some wealth management for the employees and the executive team within those 401Ks. Now, some 401k firms have a wealth management team. They do it themselves. Some of ’em don’t. And if they don’t have one, they’re going to want one. And if they’re in your same network, you can share revenue with them. Like everybody can win here. You can give a better experience to the client most importantly. But you can also solidify that 401k provider’s relationship with that client, because remember, 401k people have to resell that plan every year or two. The executive team wants to kick the tires and look at the fees, and you could lose a plan over two basis points. So you have to differentiate yourself.

(20:32):

Another thing is insurance people. That could be property and casualty companies, that could be specialty companies, that could be life insurance firms. If you don’t do that kind of work, real estate, I’ve never understood why mortgage people network with mortgage people when they should be networking with real estate people. Mortgage people will sit at the bar and have a beer with another mortgage person and complain about mortgages instead of going to an event and shaking hands with 10 real estate advisors like I don’t get it. Go where you are in fertile ground, not necessarily where you feel that competition. And for me, when I go to industry events, even the CPA, sorry, the CFP type events, I look at everybody there as a prospective alliance prospective partner, a prospective learning source, a study group participant, a consulting client. It could be 10 different things, but to look around the room and say, man, this is all the competition. What am I doing here? I think you’re doing it wrong.

Steven (21:21):

I love that attitude of everybody could be a potential collaborator, a potential resource. And it really goes back to what you said before of advisors need to identify what their core competencies are or what they want their core competencies to be if they’re still early in developing. But figure out, here’s what I want to be great at and I need to have relationships to cover the rest. Because whatever it is that you are great at, it’s probably only a piece of the client’s financial picture or their life picture that they need help with. Identify those core competencies. Pick which ones you want to improve yourself and pick which ones you need to go build relationships so that you can serve your clients effectively.

Eric (21:58):

And surround yourself in your own firm, your own team. If you’re the business owner, surround yourself with people who have different niches than you do. One of my partners here is an expert in closely held company stock and in executive benefit plans, if I run into that, I know exactly where to send them. We have folks here who really understand the divorce world. And so when we run into a situation, we can go there or we have clients or advisors who really work with young accumulators and that’s what they do all day. We have others who really understand the ins and outs of social security. You don’t have to know everything. You just have to know where to find everything. And if you can build an organization with five or 10 or 15 advisors who have different specialty areas, who have some diversity in lots of different ways, including age and experience, but lots of different kinds of diversity. And if you can do that, you’re going to have the ability to really collaborate with a team and not feel like everybody there has their own book of business. I hate the term book of business and despise that term. Everyone uses it and throws it around colloquially like, oh, tell me about your book of business. That’s like saying, tell me about your end endoscopy or whatever it is. Tell me about your test results. I don’t want that.

(23:07):

To me, it feels very institutionalized, Steven. It doesn’t make sense. How many clients can we represent? If we were to run an ad campaign tomorrow and 10,000 prospective clients were to call us on Wednesday, we’d have a problem. I can’t handle that. You’ve got to have a big, big network to be able to handle successes, in my opinion.

Steven (23:30):

No, a hundred percent. Great. Eric. There’s so much great wisdom that comes out of that. I really appreciate you sharing your experience and your insight. We kind of kicked off the episode. We really want to make sure that people can take what we’re talking about and put it into action where value comes from. So as you think about what we’ve talked about today or what you’ve seen success doing in your career, what are action items you would recommend to listeners when it comes to building these relationships, to building this network?

Eric (23:54):

Have a number of different stakeholder groups and participate in them. And here’s what I mean. Be in a study group with six other financial advisors from around the country who have practices that maybe aren’t the same as yours. Meet regularly. You can do zooms, you can do conference calls, but meet in person and teach each other how you do things and learn from each other and be resources for each other. The financial advisory world, especially for sole proprietors, is a lonely business. So having a study group allows you to get some best practices and to really amplify the resources that you can bring to your own clients. So that’s one. Number two is have an executive dialogue group. This used to be called Mastermind, where you surround yourself with a dozen professionals who do different things. And I don’t mean a leads group, I don’t mean, Hey, I found somebody who needs a dry cleaner.

(24:42):

I mean, make sure that you’ve got some people you can learn from each other. Learn more about the mortgage industry, learn more about reverse mortgages if it’s something you want to know by having somebody in the room and you can educate each other and work together. So have an executive dialogue group. And thirdly, in addition to the study group, in addition to the executive dialogue group, consider having an advisory board for your firm, whether you’re a sole proprietor or there’s 15 of you. We’ve had an advisory board made up mostly of clients for now 15 years. And it has been an incredible experience. Our clients, our stakeholders in our firm, they will tell us what they think. This is not a boondoggle. It’s not Here. Let me give you a steak and a glass of wine, and you’ll say nice things about us. It’s tell us what we can do better.

(25:24):

Tell us where we’re messing up. And one of my favorite stories about the group, and I’ll share it briefly with Steven, is we never had a brochure. It seemed like everybody had to leave behind. And this was years ago. And we thought, well, we need to print something. We need to have something that sums it up. Not the website’s not enough, we need to leave behind, which was a ridiculous idea looking back. But at the time, it felt good. So we hired writers and we went through this thing and we wordsmith it, and we got it, and it was perfect. We had 500 of ’em printed. We brought ’em to an advisory board meeting. We handed it out and we said, what do you think? And every human in the room said, these are crap.

(25:57):

And we went, huh? They said, we get three of these in the mail every week. You sound just like everybody else. There’s nothing unique about these. They’re awful. And we threw ’em away. And that exercise taught me a very, very valuable and fortunately, not horrible lesson. It taught me a valuable lesson, which is instead of guessing what it’s going to be like to be a client, ask clients what it’s like to be a client. And let them tell you and let them tell you, not just the good, like, oh, we’re so happy with it. Tell us the things we can do better and be accountable to that. Tell us what you think of our online access of our staff, of our website, of our materials, of our podcast. If you have whatever, it’s, they will tell you if you give them permission to blast you in front of a room of people. And you have to be prepared for it. And it makes us better.

Steven (26:45):

Absolutely does. And Eric, for anyone listening who is wondering, Hey, where do I find those people to be in a group with? That’s honestly one of the reasons that we do the RTS Tax Planning Summit each year and this year, it’s September 25th through 27th in Phoenix, Arizona retirementtaxservices.com/summit to get signed up for it. We’re already closing in on a hundred advisors that are going to be there. That is a fantastic room of people to go and make these connections, to go and build these networks, to have these conversations to learn. To your point, Eric, from what other people are actually doing, and not just theories out of a textbook. Eric, really appreciate your time coming on and joining me for this episode. If people want to learn more about what you’re doing, where can they find you?

Eric (27:24):

A couple of different spots To learn more about the consulting we do with financial advisors, go to brotmanconsultinggroup.com and to find more of our resources and learn more about the publishing and the book and some of the other things we put out. It’s brotmanmedia.com.

Steven (27:37):

Eric, again, thank you so much for being here. To everyone listening, until next time, good luck out there. And remember to tip your server, not the IRS!