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Are you trying to learn how to deliver massive tax value to your clients? Then look no further. Retirement Tax Services Podcast, Financial Professional’s Edition is a show hosted by Steven Jarvis, CPA. Steven aims to bridge the gap between tax professionals, financial advisors and their mutual clients in their quest for reducing tax expenses in retirement.
Reese Harper, CFP, is a dental finance thought leader with a Master’s in Finance. He is the Founder of Dentist Advisors and the CEO of a service platform called Elements®, which is used by Advisors to help dentists across the country plan and retire better. In this episode, Reese joins the show to discuss the importance of actionable tax advice for clients and how his platform is hoping to achieve this.
Listen in as he explains the importance of getting the client involved in their tax planning by encouraging them to ask questions. You will learn why effective communication around taxes is key, why advisors are equally as important as software (if not more), and the benefit of understanding job maps.
Steven and his guests share more tax-planning insights in today’s Retirement Tax Services Podcast. Feedback, unusual tax-planning stories, and suggestions for future guests can be sent to firstname.lastname@example.org.
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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 Jarvis: Hello everyone and welcome to the next episode of the Retirement Tax Services Podcast Financial Professionals Edition. I’m your host, Steven Jarvis, CPA. In this show, I teach financial advisors how to deliver massive value through tax planning. With me on the show today, I have Reese Harper, who is a CFP that is actively serving a book of business. But he is also the CEO of Elements, which is a company he built to help financial advisors have a system for serving their clients and doing it profitably. So Reese, welcome to the show.
Reese Harper: Hey, Steven, man. Good to see you again. I still remember our long conversation when we met in Nashville, I believe. It’s been a while. Were we at NAPFA where we first connected?
Steven Jarvis: Yeah, NAPFA was the first time we met live. I think we kind of overlapped a little before that. Yeah.
Reese Harper: We met before that, yeah, digitally and through couple of emails here and there. But I just remember really enjoying your insights. I actually got to meet Matthew for the first time at that show too. So it was fun to kick off the family relations.
Steven Jarvis: Yeah. It’s always great to meet people who aren’t just working with clients in this industry, but are working on how do we improve the industry as a whole. With your platform, which I’d love for you to talk a little bit more about, one of the things that instantly stood out to me is I’m going to take note anytime someone is working with financial advisors and including taxes in the process.
Reese Harper: Yeah. Yeah. Well, as I built my RIA, I started having some feelings about productivity and standardization. As you start to get bigger and you go from a solo to an ensemble firm to a larger practice, you start worrying about quality control and making sure that the client experience is consistent. That’s where I felt like the overall planning process really was never baked into standard financial planning software. It’s kind of what I would consider in my world a job to be done or a job that an advisor’s doing for a client.
It’s the way I think about software building, what job is this software trying to do, what job is this software trying to do. Some software platforms or some services, you really can extend it to any business. Some jobs are narrow, some are broad, some are platforms that are trying to do multiple jobs in one place. So taxes is clearly, in terms of the client’s priorities of their jobs that they want to get done and advisors that are prioritizing five or six different tax jobs, it’s kind of hard to avoid that being one of the… If you take a survey of clients, you take a survey of advisors, I mean, taxes are just a critical part of the overall process.
So our platform tries to identify how to more efficiently get these jobs done across the clientele and do it in a way that uses mobile technology and communication to the client in a real efficient way. We’re really early stage and have kind of a hybrid between I’d say like a project manager, a communication system and financial planning software in one that tackles dozens of different jobs that we’re trying to get done for the client, so.
Steven Jarvis: Yeah, I like that lens of thinking about what’s the job that the software’s trying to get done. As I work with advisors, I never have to debate with an advisor whether taxes are important. Everyone seems to agree on that. I do quite often have to not necessarily debate, but really try to get this message across of, I mean, for an advisor to really be delivering value to their client, taxes have to be part of the conversation. But if we take a step back and look at the software that’s usually available to advisors, that job of tax planning is not included.
I mean, there’s these financial planning softwares out there that will spit out 50, 100 page reports and maybe taxes are included in there somewhere, but not in an actionable way, not in a way that the client can keep using and come back to it and know at a given point in time here’s how this impacts my situation. So there definitely is a lack in several areas, but particularly for taxes of, okay, what’s that ongoing job and how do we solve it.
Reese Harper: Yeah. Yeah. I think I view software is kind of either a point solution, or in some cases, it’s a platform that’s trying to coordinate and document multiple jobs. Elements is definitely a platform that’s trying to identify problems or identify next actions, identify low hanging fruit that can be surfaced to create some standards. But there are a lot of point solution platforms where taxes are kind of the focal point of the platform. I kind of view us as a hub to the spokes of these point solutions rather than being a point solution ourselves.
If there’s a main thing we do is like trying to engage the client to communicate, to understand, to learn, to get involved. A lot of the platforms out there right now, they really were designed for the advisor, not for the end client. There’s sometimes a lot of confusion between what does an advisor want to see, what does a client want to see, what is an advisor job to be done around taxes, what’s the client job. Maybe the client’s job is literally just to confirm their gut feeling of an estimate about something or provide a document or provide a confirmation to a list of assets or a list of debts.
There’s a lot of things that the client can do, but a lot of times those are in the context of a job map that the advisor’s doing, not a job the client’s trying to do. So think of the job, like a job might be described as review my taxes to ensure I’m paying as little as possible. That might be what the client wants to see happen, but that job’s going to be done by a professional and the client’s going to be doing a step in the job along the way.
Hopefully, the software that you’re using correctly maps out the job, gets the right parties to complete each step. It’s a big challenge and I’ll be working on it for years and years to come. So it’s been cool to see that’s where the market’s going and also just fun to be a part of an industry that’s an important industry to both the clients’ mental health and their enjoyment of life. So I’ve enjoyed it.
Steven Jarvis: Yeah. Yeah. That’s really cool. A lot of that really resonates with me as we work on serving both advisors and their clients and that software element of it. Our focus on software is much smaller compared to what you’re doing. But as you describe all those different jobs that might take place a lot of times with taxes, it stays really high level. You can find articles for days written for advisors on Roth conversions or safe harbor provisions or whatever else you want to find, but getting from here’s the topic or here’s the tax rule, to wait we implement today and it got reported correctly, there can be a huge gap between those two things.
You mentioned that some of those jobs need to be done by a professional, some of them can be prompted by a software, but whatever combination of resources that advisor uses to get from identifying the opportunity to execution, there definitely needs to be resources in the middle.
Reese Harper: Totally. It’s very tricky, I think, to in taxes, especially, there’s a reason it’s its own industry and it employs… There’s more people employed in tax than there are in financial advice.
Steven Jarvis: Oh, definitely.
Reese Harper: By 4 or 5X. It’s a more dynamic job. The job map of completing the job is not the same year to year. Super tricky and makes it hard to automate inexpensively. So I think you guys are definitely on the right track trying to heft and push your way through that. It’s not an easy thing for software to stand up a solution that consumers can self direct or automate in any kind of way. Advisors sometimes are cheaper than software. So that’s what we’re seeing right now in a lot of the tax world. It’s humans still can sometimes be cheaper than software can be built, because there’s just too many contingencies and if-then statements. It’s not an easy job map to build. A job map around tax that you could build that’s more simple, there’s just a lot of job to be done in financial planning that don’t require quite as many contingencies, so
Steven Jarvis: Yeah. Well, I can definitely relate to your point about, hey, we’ll be working on this for several years to come. We’re really excited about what we’re already doing, but it’s going to continue to be an evolution as we figure out the right balance of which of those jobs get done by a professional versus a software. For me personally, I just don’t worry that software is going to replace tax professionals anytime soon. Hopefully it’ll continue to take some of those pieces out of there so that the professional, and just the same on the financial planning side, software should take out the repetitive things, should take out the things that aren’t the best use of the advisor’s time or the tax professional’s time so that you have more time to focus on those things that only you can do.
Reese Harper: Yeah.
Steven Jarvis: Obviously you can speak more eloquently to this, but as I’ve had conversations with you about what Elements does, this is not, hey, we’ve got an app and we’re going to get rid of advisors. We’ve replaced you. It’s over.
Reese Harper: No, it’s been—
Steven Jarvis: This is facilitating.
Reese Harper: Yeah. What we’re doing honestly is we’re trying to create efficiencies around communication between the advisor and the client. The origin of our platform is on mobile, right? We’re Android native. We’re iOS native. We see the main value of an advisor is communication, thoughtful, customized communication that takes into context all of the client’s personality profile, vision, mission, values. It’s really difficult to draft generic communication, even if you have all the data.
Yet, that’s kind of where we’re spending most of our times. For example, if we’re missing information from the client in order to do an analysis job or provide some kind of decision tree. Can we surface to the advisor a way for them to communicate with their clientele en masse, in targeted batches, in groups that, and prompt them with what the data is that they need to see to be able to communicate, and can we suggest a communication that they can edit and then provide an easy way for them to communicate across hundreds of people, in dozens and dozens and dozens of jobs?
But in terms of programming exactly what to say and exactly who… It’s really hard to get to that level, but that’s where we think the… We don’t even want to try. We’re going to just try to help the advisor be able to interact and increase engagement with the client by bringing a financial planning product, instead of software that’s only built for an advisor to do in-depth analysis, which is a totally different job to be done. If I’m going to do an in-depth Monte Carlo simulation, that’s actually a financial advisor job. It’s not a client job. Clients do not care about that job.
But right now, because that software exists, we’ve been putting a portal on it and being like, “Hey client, you want to see the job that I built for myself to do?” The client’s like, “I don’t really care about 87% complete or what kind of probability of outcome I might have.” They don’t want the stress in anxiety of that, no matter if it’s 100% complete and certain, the client’s still feeling like, “I don’t know. All those estimates might be too aggressive. Is it really going to be that good?” They’re not asking for that.
We just kind of like built a tool that we needed, because it’s an important tool to get certainty around certain we’ll call it decision trees or just a certain analysis or what if scenario we want to model. That’s an important advisor job, but it’s not necessarily a client facing UI. So we have all these tools that are not really built to increase engagement. They’re just built to do financial advisor jobs. Then clients just their biggest complaint if they have one is like, “I just don’t know if we’re getting everything done and we might be missing things. I haven’t heard from my advisor. Or I have, but I feel like he’s forgotten a couple things. Or the system we use, I just don’t feel confident that I’m not missing anything.”
So it’s a communication challenge, I think, more than a technical challenge. We have a lot of tools as advisors to be able to do our jobs, but the client, we need the client involved. To your point, advisors are not going to get replaced as communicators. They just are better at it than… There’s a level of trust that is just so important for this topic. I just don’t think you can automate that trust. It’s going to take people for quite a while. I mean, you’re seeing it with Facet Wealth’s recent like $100 million C round. It’s like they’re on a fixed rate model. They’re still scaling pretty effectively. I mean, yeah, the pricing of the service is changing, the fixed rate, the subscription economy, but humans are going gang busters still compared to straight robo platforms.
Steven Jarvis: Definitely.
Reese Harper: I mean, almost all the robos have converted to some kind of human support kind of backbone. We’re going to be in a hybrid model for decades and I think it’s a great place to be.
Steven Jarvis: Yeah, I completely agree. Because you mentioned earlier, there are definitely starting to be more software solutions geared towards tax planning, a lot of them for advisors. But one of the most common things I hear from advisors who use those platforms is, “Well, I wish there was some of behind that I could ask some questions. Great. I got to report and a graph and some bullet points of here’s what you could talk to your client about, but then where’s the person that I can say, but what about this situation or what about this client and how do I have that conversation further?” We all are looking for that deeper resource.
So as you kind describe that, I’m going to go ahead and bet that that means that the tax portion of your platform is not, hey, here’s all the detailed steps that went into calculating your adjusted gross income, or let’s show you all the different buckets of tax rates we filled up. It’s more focused on the communication side. So what are some things around taxes that you work to help advisors communicate more effectively on?
Reese Harper: Well, one, that a conversation actually happens and happens at the appropriate time and that no client is having a year go by without a conversation around that topic actually happening, that we’re not missing documents, that we are communicating to the client a few critical knowledge areas, like how much tax they paid and what their income actually is and what’s the difference between an effective rate and a marginal rate, and making sure that the client has some literacy and the client’s participating in that conversation.
And the advisor demonstrates to the client that they are doing a job in the backend, that they’ve gone and worked with Steven, that they’ve run some analyses or providing a recommendation that they’ve done the job. The client just cares like did my advisor do the tax job. That’s what they want to know. They do it for me and do they do a good job, and either there’s nothing to do, there’s a bunch of stuff to do, there’s no change, we’re doing great. Your answer can literally be like, “You know I did my job. These are kind of the steps I went through and there’s no change that I really want to make this year.”
Fine, you still got to communicate that. You still have to say that. You can’t just go do it and then let that last step of communicating to the client just kind of be in the background somewhere that they never hear about. So our job’s to more surface the jobs, let the advisor document the jobs, let them holistically package it in a way that lets them get credit for all the jobs they’ve done so the client can actually feel they can look at this advisor-client relationship and go, “Man, we did a bunch of stuff this year,” and see it all and all these things that the advisor did and or analyzed or collected, tasks, both custom tasks, vision, mission values related kind of softer life planning tasks.
There’s savings, spending. There’s debt. There’s cash flow. There’s retirement projections. There’s all these things advisors do that they’re not getting credit for because they’re not communicating anything that the client can understand. They’re doing a lot, but then the client’s kind of wondering what’s going on. I think that’s where we’re really trying to both A, drive more revenue, because if you can justify a more rigid process and a more robust process, you can charge more for it, and actually whether it’s a higher AUM fee, a higher fixed fee. I mean, if you’re actually doing some legit tax jobs, you’re going to be able to justify a much higher AUM schedule or a higher fixed fee or just justify your current fee structure better.
So you’re going to be able to justify more revenue, but then we want to try to create more efficiency with how easy it is to sort of not miss stuff and check things off and get credit for the things you’re doing. It’s a big project. I would say that we’re doing an adequate job for a firm that has just gotten off the ground and barely got funding. But we feel like this year is the year where we’re going to be able to really implement a lot of all of our code that we’ve designed. We just raised around a couple months ago to hire the rest of our dev team and this year is a building year. So I’m excited for us to get all these features off the ground.
Steven Jarvis: That’s really exciting. Congratulations on the funding. That’s a huge step.
Reese Harper: Yeah, man.
Steven Jarvis: Software development is a real investment of time and money for sure.
Reese Harper: It’s got to be someone else’s, man, because I don’t have near enough, man. It’s so much money. I mean it’s hundreds of thousands of dollars. Every month right now, I think, it’s north of two 50 for us in burn right now. So it’s just a lot to burn. If you’re trying to build a platform, you’ve got 18 months to really go out and try and show that you’re going somewhere. It’s cool. We’ve got over a hundred customers now. We’ve got some really big firms adopting. So that’s good news.
Then we’ve got a chunk of people that are like, “Dude, this isn’t near far enough developed for me. I’ve got a million spreadsheets I’m running. Look at my spreadsheets. They’d kick your software’s butt.” I’m like, “Oh.” Spreadsheets go faster. It’s true. You could build a spreadsheet way quicker than you can build a platform. But yeah, spreadsheets are everyone’s friend for a while, man. I built this whole software platform on spreadsheets. You can’t sell spreadsheets after a while though.
Steven Jarvis: Yeah. Yeah. It’s been fascinating as we’ve worked on software development in our side on a much smaller scale, trying to get that concept across the people of just because you can do it in Excel doesn’t mean you can just copy and paste into a standalone platform. Usually, what helps people realize that is they say, “Well, it’s so easy in Excel.” I say, “Yeah, do you know how much money Microsoft has invested in Excel over the decades?”
Reese Harper: It is so. Yeah.
Steven Jarvis: You think Excel is this fun little tool.
Reese Harper: It’s billions.
Steven Jarvis: Billions with a B. Yeah.
Reese Harper: Yeah, yeah.
Steven Jarvis: Excel’s not going to help you with the communication piece. I love your focus on that. We like to call that the dishwasher rule of making sure your clients know the things you’re doing for them and not just assume that they are going to guess that you’re doing those. I also really like the tracking piece of that. One of the things we work with advisors on really often is making sure they’re getting tax returns for all of their clients every single year. That’s one of those things that that’s a great idea, but then it’s how do you get that executed?
We worked on all sorts of different things, but having a piece of software that would be able to document and tell you, “Hey, here’s the last time you talked with Bob and Sue about taxes. Or here’s the documents that they still need to provide,” so that you can streamline that and you’re not having to individually call each of your clients and say, “Hey, you didn’t provide your tax return yet. Let’s get on that.”
Reese Harper: Yeah. Yeah. If you think about where we’re headed, it’s if you were to logged in every day to the desktop platform, you’re just going to see suggestions from the system on what next action to take with each customer. So I see a world where the software is actually smarter about what needs to be done, both from an onboarding perspective and an ongoing perspective, not in terms of deciding how to do the job, but knowing that the job is woefully underserved or adequately served, but it’ll surface that to the advisor and let the advisor do the hard part, which is making the decision and taking the action.
But the software, I think, can do a better job than we can do as humans of keeping track of… I mean, you take like a hundred clients, let’s say there’s a hundred financial jobs to be done every year in a holistic context. I mean, the job of review and maybe monitor my taxes for improvements is a job that all of us would want to have done, right? The job map for each customer is going to be a little bit different and that’s where the advisor’s kind of decision making ability can come in.
But the software’s going to surface the key information in order to allow the person to make a decision and recommend the next action in order. I’m not going to recommend… Let’s say there’s a life insurance job to do in the system or a spending job, a spending tracking job. Well, if it’s December 1st and you haven’t completed your tax job and there’s three jobs that we could surface and one of them is life insurance and one of them is personal spending monitoring and one of them is tax, this tax job we described, I’m not going to… Taxes is a higher priority based on frequency and timestamp if you haven’t completed it for that customer.
But man, if you have a hundred clients, keeping track of all of that is it’s literally impossible. It’s impossible. I mean, it’s just too hard. So what ends up happening is the planning itself gets… The planning when advisors are having to coordinate it all, it gets simpler and simpler and simpler and less effective and less effective and less effective because the more clients you have, you just can’t manage all of that communication and all of those jobs very effectively. It’s hard. I mean, you did it when you had 20 clients. You did it when you had 15. You get to 50 to 100, you keep growing and 15 people a month want to come on, you’re just done.
So where we’re kind of like focused is growing firms that found their niche that are moving the needle and kind of progressing quickly. How can we surface to them the things that need to be taken care of, not during onboarding, because everyone can kind of do onboarding, but at month six when all the sizzle of onboarding is done and you got paid for your plan and it’s done and you’re still charging people and you’re still getting a nice AUM fee. Now, what are you doing? What’s planning after month six? What’s planning at month 12, at 24 months when this junior advisor who’s delivering tons of jobs is knocking down the door of the client at month 24 and they haven’t heard from you in seven months?
That’s the world that I’m super interested in because I think that it will allow more people to get better planning, get more jobs actually completed for more clients, which should result in better financial health and all the fun stuff that we actually care about. But anyway, thanks for letting me kind of philosophically share my point of view on the space. Taxes are obviously a critical dimension to it all. But I think understanding job maps, understanding what ones are of higher priority, the frequency they should occur, when they apply.
We’ve got a savings job, but I’m in withdrawals in retirement and I’m 70, then that savings job doesn’t really apply to me anymore, right? They’re just jobs lose their applicability, but if you don’t define the job and you don’t have a map to execute on it like you’ve done with a lot of the tax work you’re doing, it’s just really hard to wrap your arms around it. I’m not saying we’ve got it all figured out, but I think we really know the problem to solve. It’s mostly a communication thing that we’re focused on as opposed to the point solution of executing on each area. You can’t build a platform that executes on every one of those point solutions, but you can build one that helps you understand if you’ve actually missed something for someone at scale. It’ll still take 10 years. But yeah, you can.
Steven Jarvis: Yeah, I mean, Reese, even if you don’t have it all figured out right now, you’re definitely heading in a really exciting direction.
Reese Harper: Oh, thanks man. Thanks for being encouraging.
Steven Jarvis: Yeah. It’s going to be cool to see where that keeps going because there’s definitely that gap between the ideas and the execution, between like you were talking about, that initial plan and then what do we keep doing. It’s one of the reasons we emphasize tax planning so much at a minimum-
Reese Harper: At least you do it every year, right?
Steven Jarvis: Yeah, at a minimum.
Reese Harper: At least that job comes up.
Steven Jarvis: Yeah. Advisors committed to tax planning never get into that 24 months and say, “What have I done?” Because at a minimum, they’re getting to 12 months. But hopefully it’s much more often than that. So Reese, for people listening, if they’re excited about what you’re talking about like I am, I mean, how do they learn more about what you’re doing?
Reese Harper: Probably the most interesting way is to just subscribe to my Substack, my private personal blog, where I write about all this stuff. It’s called theadvisor.Substack.com. It’s just a personal blog. So you can go to the Advisor, subscribe there and you just see me rant. I try to do a good job of writing some thoughtful commentary, but that’s just like fun, personal stuff. No sales. You’re not going to get pitched. It’s not going to be like I’m going to be selling Elements on you.
Second thing, if you really want to track Elements stuff, you can go to getelements.com. You can subscribe to our podcast there called Elementality. It’s where we’re really kind of riffing on these in more detail. So I’d say those are the two things you could probably enjoy. Subscribe to the podcast on Spotify, iTunes, whatever. Then you could subscribe at theadvisor.Substack.com to kind of get caught up with me and see more candid, less produced content that I’m putting out every week.
Steven Jarvis: That’s really exciting. Thanks for sharing that. We’ll make sure it ends up in the show notes. For people listening today, whether you pursue what Reese is talking about with Elements or not, this is a really important concept of making sure you have a communication plan, making sure you have something in place to remind and prompt these actions with your clients. So really, that’s the biggest action I would recommend as you listen to this episode is whether you’re evaluating the plan you already have in place, or you don’t have a plan at all and you’re creating one, make sure you have a system for pushing these things forward.
It’s not enough to say, “Yeah, taxes sound like a great idea. I should talk to my clients about that.” If there isn’t a formal process for it, whether it software driven or not, nothing’s ever going to get done. You’re going to get to that 24 month mark that Reese is talking about and some other junior advisor’s going to be pounding on your client’s door and saying things like, “Hey, what did Reese say when he looked at your tax return? Oh, he didn’t look at your tax return in the last two years?” and that’s not a situation you want to end up in.
Reese Harper: Yeah, exactly. All right, man. It’s awesome. Thanks so much. I appreciate you having me on and look forward to meeting some of your listeners and learning about their amazing practices.
Steven Jarvis: Yeah. Thanks for being here, Reese. Thanks everybody for listening. Until next time, good luck out there. And remember to tip your server and not the IRS.
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.
The information on this site is for education only and should not be considered tax advice. Retirement Tax Services is not affiliated with Shilanski & Associates, Jarvis Financial Services or any other financial services firms.