Read The Transcript Below:

Steven (00:51):

Hello everyone and welcome to the next episode of the Retirement Tax Services podcast, financial Professionals Edition. I’m your host, Steven Jarvis, CPA, and this week on the show we’re going to talk about IRS birthdays, which you probably didn’t know you have, but really, really we’re going to talk about our moments that matter. Philipp Hecker is my guest this week from Bento Engine and this is really the idea, and Philip, I’ll let you speak to this more that Bento Engine is built around creating engagement, creating these moments that matter in a client’s life, some of which happen to be age-based and some of which are very tied to taxes. So Philip, welcome to the show.

Philipp (01:30):

Steven, great to see you again. Really looking forward to this conversation and you’re spot on. Bento Engine helps client-centric advisors to serve all of their clients and prospects during moments that matter on their life journeys. Those could be age-based milestones, those could be life events, those could have to do with teaching fin lit to the next-gen of the client family. I look forward to unpacking that and bringing that to life for you all in this conversation.

Steven (02:01):

Yeah, absolutely, and we’ll talk at the end of the show about how advisors can do more directly with Bento Engine. So if you’ve heard of Bento Engine before and you’re excited to learn more, listen through the end, we’re going to get you all that information. But I mean since I am the tax guy, Philipp, there are so many areas of financial planning that a software that an advisor could address. Where did the motivation to include taxes come from for Bento Engine?

Philipp (02:25):

Bento Engine was born around two and a half years ago and it’s based on a realization and that realization is that many financial advisors out there by now have some kind of promise of holistic, comprehensive advice as part of their value proposition. That’s awesome. That’s great news. However, let’s be honest, oftentimes that work is being done manually and thus it’s not scalable. If you are a client at the top of a book of an advisor, you’re probably getting awesome service during all moments that matter on your life journey. However, if you are in the middle of the book or God forbid at the bottom of the book, oftentimes those clients are being woefully underserved and in our mind represent a major organic built in revenue growth opportunity. So the idea is simply Steven, to scale the great advice that great advisors give to their greatest of clients already and bring that via a technology and content solution to the middle and the bottom of the book. And as I mentioned before, the moment that matter, they break down into highly predictable age-based milestones, happy to bring some to life, to life events, and fin lit for the next gen. 

Steven (03:45):

Yeah, Phil, go ahead and give us some examples of what some of the specific to taxes, what some of those moments that matter, some of those age-based things that you’re already addressing.

Philipp (03:54):

Absolutely. Let’s start perhaps with the age-based milestones. The IRS birth dates as you caught them from our perspective, there are 15 regulatory birth dates that really matter in wealth management in the US. Those birth dates range from zero birth all the way to 73 RMDs. There are 10 of them that are retirement-related, ranging from age 50 where you can make catch-up contributions in your retirement accounts all the way to 70 and a half qualified charitable distributions and 73 required minimum distributions, 10 age points, 10 age-based milestones that are retirement-related. There are also five for the next gen that have to do with the coming of age of the next gen of the client family. Those include, for example, age 26, having to move from parental healthcare coverage to finding one’s own age of majority 18, 19, 21 depending on where you live. A big one obviously, but there’s also age 14 if I may. Steven, let me bring two age-based milestones really to life for our audience. I’ll pick one that’s retirement-related and I’ll pick one that’s next gen related. Would that be okay?

Steven (05:15):

Yeah, that sounds great. Let’s do it.

Philipp (05:17):

Awesome. Let’s stay with the next gen. Age 14. When kids turn 14, they can legally start earning income. So in many ways, 14 is the working age in the US to do so. They need something called the working papers, at least in the majority of states. How to get the work with the papers via your school system or via the local government is state specific. Once they have the working papers and once they start legally earning income, good advisors advise their client families to not spend all that money on ice cream, but instead teach children how to save and invest and ideally invest in tax-aware in tax-smart ways you may sense whether it’s going. We encourage our advisors to guide their clients to open custodial IRA accounts under the kid’s name so that the kids get to enjoy the power of text deferred compounding for decades to come.

(06:22):

I hope you concur a wonderful opportunity. Age 14 to teach the next gen and connect with them as an advisor on how to save, invest and do so in tax-aware location, conscious location, smart ways, leveraging custodial IRA accounts. So age 14, one moment that matter. I hope I brought that to life. Let me do the very same briefly for age 50. When Americans turn 50, as you well know, they can make catch-up contributions in a large array of retirement accounts. Pop quiz question for you, Steven. I guess you may know the answer. What percent of Americans who could make catch-up contributions actually do so?

Steven (07:11):

Oh, I have no idea. Most statistics are made up on the spot anyway, so I will forego making up a statistic. You seem very prepared. Why don’t you share it with us?

Philipp (07:19):

Of course, I looked that up and thank God shops like Fidelity and Vanguard study their vast array of retirement accounts to not make the statistics up but share what they see. And long story short, depending on the study, you look at the percentage ranges from 10 to 16%, so let’s call that around 15% of those eligible actually making catch-up contributions in their retirement accounts and thus increasing their tax-advantaged savings and investing rate. By the way, folks, will that percentage ever be close to a hundred percent? Obviously not for obvious reasons, but should that be higher than the loan teens? Absolutely. Oftentimes folks aren’t even aware of the opportunity to make catch-up contributions, so again, good advisors in particular, those who call themselves a fiduciary who have the client’s best interest at heart, advise all of their clients and prospects during these moments that matter so that they avail themselves of all the tax advantaged savings and opportunities investing opportunities out there for them.

Steven (08:33):

Geez, Philip, I really love the way you described both of those IRS birth dates. I know that you mentioned before we hit record that your son wears one of my RTS shirts all the time. You got it at a conference from us, so I mean we’re already close friends just through that, but the way you approach this stuff, I know that we’re going to get along really well because that statistic really stands out to me of only 10 to 16% of people who could make catch-up contributions are, and the reason that stands out to me is that one of the themes I constantly reinforce on this podcast when I talk to advisors is that we need to be helping clients consistently do the simple things. People want to jump ahead and skip over all of the basics and find that elusive exotic tax strategy that they think is going to sound better on TikTok, but the reality is that most people still aren’t even consistently doing the basics.

(09:23):

And to your point, Philipp, usually the reason for that is just a lack of awareness. Advisors in my experience are aware that these things exist but don’t have a good system for how they communicate this to the clients for how they make sure that they’re communicating it to every client. It’s one thing for me to get on a podcast and say, Hey, the age of majority or not the age of majority, but the working age in most states is 14. That’s when people have earned income and can contribute to an IRA. Go do this for your clients. That’s an easy thing for me to do. It’s harder to have a system where you’re identifying every time a client has a kid turn 14 and then doing something to help them actually get that in place.

Philipp (10:02):

Exactly, and that’s the genesis. That’s the gist behind Bento. At the tail end, I’ll explain how the technology works, how we scale that important work, but for the time being we’re aligned, there are these moments that matter, which are crucial to do, right? Some of them call them basic blocking and tackling. I’m cool with that. I take that as a compliment. Let’s do that consistently well for all of our clients and prospects that will benefit everybody. Obviously, clients win via a better client experience and outcomes, but also the advisor practice wins via an increase in loyalty referral rate and share of wallet. Again, everybody wins if and when advise. Do the right thing and lead with timely personal and impactful advice. And these 15 age-based milestones provide 15 opportunities that are highly predictable to do just that. Steven, before we move on from the age-based milestones to life events, may I bring one more age-based milestone to life that I’m really passionate about?

Steven (11:14):

Yes, of course. Please do.

Philipp (11:16):

Age 62 social security benefits. As you all know, Americans can start taking benefits at 62, but many of them are better off waiting until later to increase their lifetime benefits. I recently came across a study sponsored by the Federal Reserve of Atlanta where researchers at Boston University really went deep into when do Americans file and is that a good decision or not a good decision? And here is what they found. Roughly speaking, 90% of Americans should wait and file later, however, only 10% actually do so, meaning a whopping 80% leave hard-earned lifetime benefits on the table. I’m going to put you on the spot again, Steven. Would you venture a guess as to what the median foregone lifetime benefit is that Americans leave on the table because they make suboptimal decisions around social security benefits, timing? I’ll just take a swag here and say a hundred thousand, not too bad at all.

(12:29):

The researchers found out that the median lifetime benefit that Americans leave on the table by filing too early is a whopping $182,000. Again, advisors can and do add a lot of value by assisting their clients during those moments that matter. Two more data points from the same study, and perhaps we can attach the study in the show nodes. It’s worth a read for many in our audience. If you double click on the top quartile of income earners, typically the clients of CPAs and financial advisors, that median lifetime benefit goes up to $290,000, and if you are serving the proverbial 1%, we’re talking 600k. Again, these moments that matter, the advice that goes beyond investing is not just nice to have or good to have. It is crucial and oftentimes advisors are able to quantify the value of their advice around these age-based milestones again for everybody’s benefit.

Commercial (13:48):

Hey there, advisors, this is Jamie Shilanski. You might recognize my voice from my World’s to Conquer episode over at the Perfect RIAs podcast. I get a lot of questions from my financial advisors about what type of continuing education should they attend, how should they dedicate themselves to professional development this year and what conferences are really worth going to. Well, I’m going to let you in on a little secret. The one conference I will not miss is the Retirement Tax Services Summit this September. It is going to be held in Phoenix, Arizona, and this is the most sensational conference I go to and not because of all the fanfare involved in being in Phoenix, but instead about collaborating with like-minded individuals, and these are people who have legal expert tax planning advice. These are people who do qualified accounts, big retirements. They are creating 5 and 10-year tax plans. They have guest speakers that talk about hyper-efficiency and the things that you need to know to keep you on the cutting edge of being a financial advisor. It is certainly where I will be. You don’t want to miss this conference, so make sure that you jump over to retirementtaxservices.com and register to attend this summit. I know it’s where I’ll be this September.

Steven (14:57):

Those are some really impactful numbers in there. We can absolutely attach the study. I always love being able to look at the details of these things, and again, I obviously, am a little bit of a numbers nerd, that’s why I became a CPA, but I think there’s so much power in knowing the numbers behind these things because when we don’t take the time to understand the impact, it’s easy to skip over these age-based milestones, these potential moments that could matter, and so we’ve got to be able to come back and say, what’s the impact of the client on accomplishing their lifetime goals? I would imagine you’d agree with this, Philip, that we’re talking about the numbers here, but at the end of the day, we’re trying to create a client experience. This isn’t just about racking up the scoreboard so that we can put the biggest number on our headstone. We’re also tying this back to, hey, if we make better decisions around some of these important milestones, we are increasing these savings, which then allows clients to accomplish the goals that really matter in their life, and whether that’s taking trips with their family or paying for things their kids can do that they never had the opportunity, whatever that might be, this is really such an impactful way to change the experience the clients has over the course of their lifetime.

Philipp (16:06):

Spot on, Steven and I would add to it, it also changes the nature of the relationship if and when advisors are proactive around these moments that matter. I’m sure you’re familiar with the famous Teddy Roosevelt saying Clients don’t care how much you know until they know how much you care, and you leading with that type of advice on a proactive, personal, timely basis builds trust and goodwill. That again, benefits everybody in particular over the long term.

Steven (16:38):

Yeah, absolutely. So Philipp, I would imagine this is a lot of the origin of why Bento Engine came to be two and a half years ago, because as we talk through this, again, there’s a difference between understanding these concepts and then having a system that works in your practice. And I’ve met a handful of advisors that are either Excel wizards or happen to also have some kind of programming background where they’ll take one of these off-the-shelf products that you can really customize yourself and they build out these incredible systems to be able to drive some of these things. But that’s the rare exception. A lot of people get into financial planning because they like the client interaction piece of it, they like the money piece of it. Not everyone has the ability to build these systems on their own and going from us having a 30-minute conversation on a podcast to then I can serve a hundred clients or 200 clients or however many households I’m working with, there’s a real big gap on the tools and systems I need to make that a reality

Philipp (17:37):

Spot on. Now, the good news is that by now, CRMs, customer relations management systems, are broadly adopted across our industry. 96% of advisors plus by now use a CRM, be it Redtail, Wealthbox, Salesforce Dynamics, and so on to organize their practice and cover and run the entire book of business in one central place. By now, CRM adoption is, thank God moving higher is up there in our industry. And when I talk about how Bento Engine works, that’s important to us. The CRM is our system that we operate in. Frankly, Steven, five years ago, I’m not sure we could have scaled the advice that we’re talking about as efficiently as we’re doing it today.

Steven (18:32):

There’s clearly an excitement in the industry around technology. Really the challenge now is wading through and figuring out what has an impact on the client and what’s just kind of plain office. The other side of this coin is that it’s easy to get fancy-looking softwares that distract us from really serving clients, and we can come up with all of these elaborate, colorful reports. But what I always come back to, what I always look for, and this is why I love that we led with age-based milestones, is how am I going to take action and how am I going to help my client take action? That’s what I want to know from any software that I work with, and that’s a theme I hear from advisors as they try to sort through technology solutions as well.

Philipp (19:10):

And in that spirit, many of our audience are familiar with the infamous Michael Kitces’ FinTech map, that massive monster by now over 440 firms on that. Well-organized play set, Matt, that Cheesecake Factory menu of Choices. Some may find that overwhelming. I am much more positive, much more growth mindset-oriented on that front. To me, it’s a testament of the innovation power in our industry, how wealth management is accelerating its evolution in becoming more scalable, reaching more clients and prospects with better services. In my mind, it’s also a testament that wealth management isn’t one monolithic business model, but in wealth management, there are so many different business models and types operating that each has different needs for the solutions that they need to leverage to bring their own value propositions to life. The last comment I would make is choice is a beautiful thing in particular if it’s framed the right way, choice architecture matters and the very last comment, somewhat self-serving, but I believe in it, there is a new category on there called advice engagement, which includes bento engine and a dozen other firms. And that category is quite vibrant and growing fast because thank God, not all the systems on the map focus on product pushing or infrastructure solutions only. And more systems really have at heart what you allude to, which is the advisor, client or advisor, prospect, dialogue and engagement. That in my mind is the most important aspect of wealth management. That is where the rubber hits the road. Advice engagement is where the advisor engages, serves the client and creates value. So that category growing is a good thing. Everybody should pay attention to it.

Steven (21:15):

Yeah, at the end of the day, the only thing that really counts, you talked about comprehensive and holistic and fiduciary and all these other words that people like to use in their marketing. The only thing that counts is what your clients take action on. And clients are more likely to take action when they’re engaged, when they have a relationship, when they understand and they hire advisors as experts, but they still need to understand a piece of what’s going on or they’re not going to follow through on the action. So again, we can have all of the big shiny, colorful reports in the world, but if the client’s not leaning in and engaged in what’s going on, what are the chances they really follow through on all of these potentially impactful opportunities? Philip, what are the other questions that come to mind? I’m a huge fan of what Kitces does, very familiar with that map. If you rewind to two and a half years ago before you decided, Hey, we should create a separate solution from this, how do you see advisors evaluating that map and evaluating their practice and saying, how do you make these decisions of I need to go find software for this, or I just need to work harder and do this internally. How do people wade through this? Because you had to wade through that to some degree before you decided to start this software solution.

Philipp (22:23):

Absolutely. I get that question a fair bit for understandable reasons, and my recommendation is the following. Start with your own value proposition. Who do you want to be? To whom from there, think through what kind of client experience and what kind of advisor experience do you want to facilitate. Do you see where I’m going? Starting with the end in mind might be helpful once you’ve articulated your value proposition, once you’re clear on what kind of client experience and advisor experience you want to facilitate from there, think through what do I need in my tech stack? What are the solutions that help me achieve just that, bring exactly that to life. That is my recommendation. I have a bonus tip, which is make sure that the solutions that you pick play nice in the sandbox. Everybody is a shiny toy and great in isolation, but the solutions you pick need to integrate well with each other. And on that end, a shout out to Craig Ow and the Ezra Group, which has published an integration score. So they’ve done the hard work of assessing all the applications on the Kitces as FinTech map, and they score the integrability of the respective solutions and looking for solutions with a high integration score that play well in the tech stack is key to success.

Steven (23:59):

Just to think through, there are so many things that you’re saying in there that are really interesting to me. The question I want to pull out of there though, because you already gave us one item on that list, what are the questions that advisors should be asking as they evaluate a software solution? And you’ve spoken to this a little bit and you gave us one specific, Hey, do they play nice in the sandbox? Do they integrate with each other, whether it’s Bento Engine or any other software platform? Give me some other questions that advisors should be asking about that software before they hit subscribe and give away their credit card information.

Philipp (24:26):

Is it in line with my value proposition? Does it help me bringing to life who I want to be to my target audience? How does this particular software solution impact the client experience and the advisor Experience yourself if you’re a solo practitioner or your employees, if you’re running a larger firm, that is just absolutely key. Again, how does it tie to the value proposition? How does it impact the client experience? How does it impact the advisor experience? And then the fourth lens is, does it play nice in the sandbox?

Steven (25:06):

Phil, that’s super helpful. That’s a great checklist for any advisor to use as they evaluate software solutions they might consider in their practice. I mentioned it already, what counts as people taking action, whether that’s our advisors working with their clients in the actions they take, or our listeners to the podcast taking action. You’ve already given us a few great things here that I’ll summarize in just a second. For people who are listening to this and thinking, Hey, I need Bento Engine in my life. I want to learn more about this. How do advisors connect with you or connect with your team, connect with Bento Engine?

Philipp (25:34):

Steven, that’s easy enough. Bentoengine.com. Come and check us out if you’re so inclined. Book a personal demo, download some of our white papers, check out our solution set. The pricing is very accessible and public on the website and for everybody’s benefit, we integrate into the CRM as I alluded to. And right now we have Redtail, Wealthbox Dynamics, Salesforce Accelerate, and HubSpot up and running. So bentoengine.com. We’re also quite active on LinkedIn and X, formally known as Twitter.

Steven (26:12):

Perfect. And I feel like I’ve just got to point out, I love that you do this. It’s such a great approach for anyone who’s in a relationship-building mode. When I asked you questions you should be asking, I would imagine this to some degree of intentional. You specifically told advisors to ask questions about software that you knew that you had great answers to for your software solution. This is something that we should all be doing in our own practices when we’re given the opportunity to say, what are the questions that people should be asking? So taking this in a completely different direction, if you are prospects questions, they should be asking advisors to evaluate who they should be choosing. Make sure you’re giving them questions that you know have great answers to. I mean, that’s a masterclass right there on how you should be planting questions.

Philipp (26:55):

Yes, and it helps you shape your own strategy as well. Yeah, it is very helpful for authentic soul-searching. What kind of business do you want to run? Who do you want to be as a business person? 

Steven (27:07):

Yeah, so there’s bonus content that has nothing to do with software, specifically. A couple other action items that I took out of our conversation today, Phillip, I love this idea of you need to start with your value proposition. Who do you want to be and to whom? That should be something that we’re all very, very clear on. Whether you’re looking for additional tax planning strategies or software you might incorporate, it’s really easy to get on a podcast and for me to put on a big smile and sound super excited about anything I talk about, you’ve got to be able to tie it back into does this fit into who I want to serve and what I want to be able to provide to them? And then that list of questions that you can be asking as you evaluate potential software solutions. There are a lot out there.

(27:48):

Those are great recommendations. And then of course, anybody who’s listening to the podcast regularly will know that the last action I’m going to recommend is that you’re getting tax returns from every single client every year. And you might think, Steven, that doesn’t apply to this conversation at all. It does because as we try to look for these age-based milestones and then correctly apply them, we have to have the real data. Clients don’t understand how taxes work. That’s why it’s so important that you have a system for addressing these age-based milestones. And so we need to have the real data to make sure that when we get to those milestones that we’re making the appropriate recommendations. So Philipp, thank you so much for your time and insight. This has been fantastic. I’ve really enjoyed the conversation. Things has provided a lot of value.

Philipp (28:30):

Likewise, thank you very much for having us, Steven.

Steven (28:33):

To everyone listening, until next time, good luck out there. And remember to tip your server, not the IRS!