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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.
For over four decades, Bob Veres has been at the forefront of journalism in the wealth management industry, having written for some of the top financial planning websites and magazines. Now, Bob’s industry-changing newsletter, Inside Information, serves as the go-to for advisors looking to learn, network, and discuss the industry’s hottest topics. In this episode, Bob joins Steven to share his thoughts on where the industry is now headed, why things are starting to change, and where taxes fit into the mix.
Listen in as Bob explains how the pandemic changed the financial industry significantly and how you can keep up with this constantly evolving world. You will learn the software you should have at your practice, how to improve the digital experience with clients, and Bob’s advice for younger advisors hoping to make a name for themselves in this industry.
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 email@example.com.
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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 am your host, Steven Jarvis, CPA. And in this show, I teach financial advisors how to deliver massive value through tax planning.
I’m really excited to have with me on the show today, an industry legend, the publisher of Inside Information, Bob Veres. Bob, thanks so much for being here.
Bob Veres: Well, thank you.
Steven Jarvis: I’m excited to have a conversation with you. I spend a lot of time talking about taxes on this show, but I’m speaking to financial advisors, and so I guess every now and then, I got to take a step back and acknowledge there’s more to the industry than just tax.
Bob Veres: Oh my God. Really? Seriously? Wow!
Steven Jarvis: I know, a CPA who will admit there’s more to life than taxes. So, Bob share with the audience what’s at the top of your list of trends you’re seeing in the industry.
Bob Veres: Alright, well, there’s a whole confluence of stuff going on right now, and I think it has the potential to drive a lot of evolutionary change in a positive direction, which I’m always looking for and happy about.
You start with the fact that … you probably didn’t notice this, but we had this thing called COVID. What COVID did was it drove everybody out of the office and it required advisors to figure out how to talk to their clients remotely and clients to talk to their advisors remotely. And it accelerated a trend that had been kind of percolating along slowly and suddenly, it was something ubiquitous in the profession.
And I don’t think a lot of people really understood what the implications were of remote client communication. But the implication is that you can market to anybody anywhere in the world. You can schedule a conversation with somebody in Beijing or on the other side of the Mississippi.
And that also, means, so you can market to everybody. You don’t have to be confined to people within a 30-mile radius in your office. But you also have everybody in the world competing with you in your market. And so, what do you do?
Alright, the implications are that you’re going to have to figure out some way to compete with everybody. And you’ve got two options; one option is that you can be the low-cost provider in America. And I’m not sure that’s a great proposition, a business proposition. I don’t recommend it in my newsletter.
The other is you can offer deep expertise in a particular area or to a particular kind of clientele. And of course, tax planning, there are any number of niches that you can work with, any number of types of people who have unique tax issues that they have to deal with.
I just got back from the AICPA ENGAGE Conference, which was … you could see the curvature of the earth in the exhibit hall in the conference. It was so big. But they talked a lot about various kinds of fairly … nichey is not the word I’m looking for.
But fairly specific, kinds of situations that people run into that you can develop an expertise in and general expertise, also — small business owners and how to help them figure out what to do with their businesses and how to run them.
The point is that most advisors in the future are going to be specializing. And so, what does that mean? We’re following a chain here now, and that means that the value of your advice becomes much more important.
Your value proposition is the fact that somebody walks in your office and you know what their challenges are, you know what their jokes are, you know what their idioms are, and you know basically what they’re facing and what kinds of solutions you can offer, because you’re steeped in that particular group of people.
And so, what does that mean? We’re following the chain one step further; that means that the value proposition of assets under management diminishes. It becomes a commodity. And that’s another trend that’s been percolating for years, that it finally comes to its consummation, if you will, now.
And so, we’re going to have to figure out how to charge appropriately for advice and asset under management is not really the best way to charge for deep advice. It is a great way to charge if you’re mostly managing portfolios.
One of my laugh lines when I give presentations is I say, “I don’t know another profession in the world where you ask how much …” A client says, “How much are you going to charge me?” And you say, “I don’t know. How much have you got?” Just doesn’t seem like a professional engagement to me.
So, there’s a lot of change. The potential is wonderful. The potential is that we will be more professional and more helpful to more people.
Steven Jarvis: Yeah, there’s lot of great insight in there. I definitely think that you’re spot on with that small little COVID thing you mentioned of kind of accelerating the need for this. I mean, I’ve heard people talk about niche marketing as long as I’ve been working on my career.
But it definitely kind of forced the issue for a lot of people to say, “Okay, I have to, essentially, I have to go beyond just the people on my street, the people in my neighborhood,” to your point — “That means I either got to compete on price or specialty.”
And specifically, my focus is on tax planning, I’ve noticed a shift amongst advisors who used to always say, “Hey, I want to work with CPAs, I want to work with tax repairers who are local to me, who are down the street, that I can send somebody to their office.”
And going through this kind of digital transformation, it’s certainly opened a lot of people to the idea of, “Well, why don’t I find the person who’s going to be focused on collaborating with me as an advisor, or who’s focused on serving my specific type of clients regardless of where they are?”
And so, we’ve built this virtual firm to address that, but even in the last 18 months, I continue to see that shift of people being more open-minded to let’s find the right value proposition for the client, regardless of where it’s located.
Bob Veres: Yeah. Well, and one of the things that is never talked about, there are two kinds of advisors, and somebody actually made this point to me years ago. That one kind of advisor provides deep expertise and they have a lot of professional knowledge and when you go to them, you get advice on the complicated stuff, if you will, and taxes are a big part of that.
The other group provides convenience and relationships, and is a thinking partner. And the two can overlap a little bit, but the relationship and thinking partner person really, really needs to have that outside expertise to complete the service, if that makes sense. They sit down with someone and say, “What are your goals and what are your objectives” and help you think through that.
But then when it comes to the nitty-gritty, they’ve got to turn to somebody else. And I would guess that that’s probably — when I go the ENGAGE Conference, it’s like they speak a different language from the other conferences I go to. I would say probably 70 or 80% are the convenience and relationship type of advisor.
Steven Jarvis: You see that more at the ENGAGE Conference, more of the advisors that are more of that convenience, that relationship management?
Bob Veres: No, I think when I go to the AICPA Conference, I see the other. I see people who are … and I hate to use the word nerdy, but I think there’s a … they go to Las Vegas every year and the joke I tell is that they just go wild in Vegas. Some of those people are out until 10:30 at night.
Steven Jarvis: Yeah, having a long background as a CPA, that definitely resonates with me. I can see that. I was the ENGAGE Conference as well. That’s an interesting dichotomy you’re describing there, of the deep expertise versus the convenience.
One of the things I’ve seen, would love to hear your thoughts on as well, is I’ve met advisors, very successful advisors in terms of the value they’re delivering to their clients, who have the ability to have that deep expertise but at some point, realize that they can provide more service, they can provide more value to their clients if they focus on what their highest and best use is.
And instead of trying to keep up on all of these technical expertise areas, they pick their things that they’re really good at, they pick their niche that they focus on, and then they take responsibility for finding those other partners, those other service providers to make sure the client’s taken care of. But it’s not a lack of ability that steers them away from going real deep on the expertise, it’s realizing, “Where do I add the most value?”
Bob Veres: Yeah, and I wasn’t saying it was a lack of ability. I’m not saying those people are stupid. I’m saying they just focus their service model in a different direction. If I did say they were stupid, they probably wouldn’t want to work with my newsletter and they’d be insulted.
But no, it’s true. I’ve always said that the psychology background or a teaching background are really good entrees to financial planning. And that has brought a lot of women into the profession — women who will sit with a client and listen deeply to what they want and need, and be a thinking partner. As opposed to being somebody walks in the office and you say, “I already know what you want and here’s my advice.” It’s kind of off-putting and that is I think a lot of male advisors tend to do.
Steven Jarvis: Yeah, I like that word you keep using of “thinking partner.” I think that’s such a great description of what so many clients really value. I definitely see that come up as we work with people on taxes, to work with advisors even on taxes that the ones who really get it see the value and are willing to ask the questions, take the conversation further, and then just make sure that they’re helping finding that great expertise.
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Steven Jarvis: Bob, I know one of the other areas that you have a lot of passion for that you take the time to put together a survey in, is around technology and the advisor world. So, what are some things you’re seeing in that area?
Bob Veres: Well, there’s two things. One is the quality of the software has changed fairly dramatically. The planning software, you had eMoney and MoneyGuidePro and RightCapital. And RightCapital, I think is kind of an evolutionary step beyond MoneyGuidePro and eMoney, but they’re all very similar in what they do. They’re basically a big spreadsheet. A big spreadsheet with database capabilities built into them.
But now, all of a sudden, we’ve got new planning software that I think is much more focused on different kinds of clients. You’ve got Elements which links to client’s accounts and it shows them month-by-month or week-by-week what their progress is based on the advice they’re getting, and that’s perfect for younger clients.
You’ve got something on the other end, Income Laboratory, which offers dozens of tax award accumulation possibilities, and then sorts and finds the best one for individual clients. And it does something beyond Monte Carlo analysis also.
It shows not the chances of success or failure. Failure to a lot of people means I’m going to eat cat food in a cardboard box under a bridge, and that’s not really what failure means.
It defines failure. Failure means you’re going to have to cut back — in an extreme market situation, you’re going to have to cut back maybe 10% on the money you’re taking out of your portfolio for a certain number of years, because it always recovers as we know, and always has anyway. And then there’s a 50 or 70% chance you’re going to be able to take an increase. And so, it defines the parameters.
You’ve got something like Holistiplan and FP Alpha, which I kind of put the two together and they’re not the same program, but they’re similar. Holistiplan makes it dead easy to do tax forecasting and tax planning for clients, and FP Alpha offers a lot of like outside the box, outside of normal expertise advice. It’ll analyze the various insurance coverages, it’ll analyze, do estate planning in a deep level.
So, you’ve got tools now and I see a lot of advisors, people who look like me, they’re old fogies and they’re the people who created this profession. They deserve a lot of respect for that, but they’re now saying, “Oh, do we really need something else to go into our tech stack?”
So, we did this tech survey and we found that there was an awful lot of really cool solutions that are low-market share right now that deserve a much higher market share.
I think the last time we looked there was only about … we surveyed 5,500 people. So, it’s a pretty big sample of the advisor profession. I think it’s a representative sample, and less than a quarter of them were doing tax planning, or using any of the tax planning tools. That’s got to change.
Steven Jarvis: I knew kind of directionally where we’re at, I didn’t realize the percentage was that small. I love that survey. We’ll make sure it gets linked in the show notes. That’s something I look at every year.
But yeah, with so many tools out there, it’s interesting to me that that acceleration hasn’t picked up more steam of advisors adopting things like tax planning. Maybe I’m just not optimistic enough about what technology will do, maybe I’m just biased towards my own job security, but I don’t see technology completely replacing the expertise needed to do some of these things. But man, it sure makes life so much better.
We started using Holistiplan very extensively to just accelerate the process, to take that 90-page tax return, boil it down to some key data, some key observations, and then be able to layer expertise on top of there.
Bob Veres: Well, and do the data entry for you, and Holistiplan does the data entry for you, which is huge.
Steven Jarvis: Absolutely. As we see these tools, the tools are continuing to improve and empower advisors to do these different things. What do you think it’s going to take to really accelerate the number of advisors who are actually implementing these different value adds?
Bob Veres: You know what, my advice to advisory firms is that you need to let the next generation create the firm that they want to eventually be running or inheriting, or buying into. And so, when someone looks like me and they say, “Well, I don’t know if we really want to change in the next 10 or 12 years.” That’s not the ideal way for a profession to evolve.
And so, what I think it’s going to require is for the change agents within different firms, which is the younger people — I give presentations, when I talk to younger advisors, I say, “Your superpower as a younger advisor is you see more clearly than you ever will again, the difference between what is, and what should be. And that is a resource for your firm that is probably not being utilized to its full extent.”
And if you look at your clients, what do they need? What do they really want from us? There are solutions that will enhance your value to those clients that right now, don’t have enough market share. They don’t have the market share they deserve. That’s just one observation from the software server. There are a number of others.
Steven Jarvis: What do you recommend to those advisors who are young in their career, as far as keeping the balance between utilizing those great tools, implementing those tools, but still developing their own technical skills?
Maybe you disagree with my thought process here, but the software is not to the point where it’s going to completely remove the person from this service. So, how do you keep that balance with the excitement about the shiny tools, but I’ve still got to be able to deliver the value myself to clients?
Bob Veres: Well, we’ve got a hierarchy of how advisors work. You’ve got data, which is kind of at the bottom and there’s a lot of data out there and it’s not very useful. And then you have knowledge, which means you actually know what that data is and you can manipulate it to some extent. And then you have expertise and there is no software that provides expertise at this point.
Advisors can use the information they get and manipulate the data to get that information, but they have to provide expertise on the information. And then above that, you have wisdom. And I don’t think we’re ever going to come up with a wise technological solution. I don’t think AI is ever going to reach wisdom.
Now, I can’t predict 10,000 years out, but what I see at that level, which is giving advice that a client can navigate their life with. You can give them really good advice on how to navigate taxes. Giving them really good life advice based on what you’ve learned is even rarer.
And I don’t think those are things that … those two levels, really, at this point, we have no way to recreate them with any tools we have. The tools just enhance it. We’re all cyborgs.
Steven Jarvis: Yeah, that’s such an interesting framework. I actually, I was making notes of that as you were talking through it, of that we have these different levels of data, knowledge, expertise, and then wisdom. And that software continues to improve exponentially on that data and knowledge piece.
And so, for people looking for that balance, it’s really focusing on how do I elevate my own skills and the expertise and wisdom so that I can leverage that software that’s going to take care of the data and knowledge piece for me.
Bob Veres: Well, the other observation, when I got back from T3, I wrote up a report on it; there was a huge transformation. There were two years where T3 was not in-person and Joel Bruckenstein who runs T3 declined to do an online version, so we didn’t basically have T3 for two years.
And so, when we got back together again, the value proposition had shifted dramatically. Everybody was talking about how their software … used to be they talk about their software made you more efficient and made the back office more efficient, and allowed you to leverage your staff. The new value proposition is that plus it enhances your ability to work with clients.
And so all of a sudden, the CRM is talking about how it can flag certain opportunities for clients, and the document management is giving you better information about what you’ve talked about with your clients and what their status is, and what your status is. And of course, once again, FP Alpha and Holistiplan, it gives you an opportunity to give better and deeper advice more easily.
So, it was a big shift from back office to front office. Almost everybody got up in front and said, “We need to improve the digital experience with clients.” And that’s new, that’s different. That’s a whole new proposition.
Steven Jarvis: Yeah, that’s definitely a really interesting shift and as I think through kind of my own evolution of how we’ve been serving clients and how we leverage software to do that, I can definitely see that for my own service model as well.
Bob, as I have these different conversations on the podcast, I always want to make sure that people are not just listening to interesting information, but are taking action so they can turn this information into value, and you prolifically put out content for advisors.
So, for people listening to the podcast, what are action steps they can take to learn more of what you’re putting out, to make sure they’re staying on top of what comes next in the industry?
Bob Veres: Well, we are all herd animals. We humans are herd animals, and that means that we tend to watch what everybody else is doing and then our instinct is to do what they’re doing. And that doesn’t get you moving forward. That gets you staying with the pack. And staying with the pack is not really the best way to stand out in a crowd, if that makes sense. That’s not the best way to evolve.
And so, what I do, I’m kind of not a herd animal. I’m not sure what quirk I have in my brain. As you can see, it’s kind of smaller than most people’s, but I talk to a lot of advisors about what are you doing differently? What are you doing better? What’s working? And then I’ll present that. And what I tell people is what you want, and it doesn’t have to be me — but what you want is to get some kind of outside feedback that’s outside of the herd.
So, when you look around, you don’t see, alright, that person’s doing that, so I’m going to do that. Everybody else is doing this, so I’m going to do this. What you want is somebody’s doing something different, somebody’s doing something out of the box, maybe I should consider that. And you want a steady dose of that because that’s what moves you forward.
When you’re in the herd, you’re not moving forward, you’re just moving with the herd. When you’re looking at a constant dose of information that is outside the box, or is future-oriented, that’s where my value is. And I think that’s ultimately, extremely valuable to people who want to be outstanding in their field, if that makes sense.
Steven Jarvis: Yeah, to look for those things that really are going to set you apart in the industry. Don’t focus on what is 90% of the profession doing, focus on what is 1%, what is 5%, what is 10% even. What are those exceptions that are on that leading edge of changing the industry, of improving the client experience, whatever that might be.
Bob Veres: And it’s always different for different people. Like I put a question out to my audience and they’ll always answer my question, but 90% of the people won’t have any idea what the question even relates to. 10% have thought deeply about that issue and have come up with some really interesting ideas.
And the funny thing is it’s always a different 10%. So, you don’t want to say, “Alright, that particular advisor, I’m going to follow that advisor, because they’re doing everything new and different.” There are a lot of people who are doing one or two things new and different, and everything else the same, if that makes sense.
And so, what I’m trying to do is bring back this person is doing this interesting thing, that person is doing that interesting thing, and here’s a new software product that’s doing something interesting. And trying to bring all of those different experiments, this big laboratory we call a profession, bring those experiments to light, let people see the more successful ones. The unsuccessful ones, I don’t tend to write about that much.
Steven Jarvis: Yeah, I’m definitely a big fan of the idea of, yeah, do what works. Let’s make sure that we’re doing things that we know work in practice.
So, we talked about the T3 Summit and the technology survey, and you publish inside information. I know you have an annual conference. I mean, what are other ways that people are following the stuff that you’re putting out?
Bob Veres: That’s pretty much it. I mean, I write a column for Advisor Perspectives every month, and try and make that different from what I’m writing in my newsletter. But it’s just a monthly dose of something different, that’s really what I provide.
Steven Jarvis: I like that, a monthly dose of something different. Well, Bob, I really appreciate you taking the time to come on the show today. The only other action item I’ll add for our listeners; Bob, you brought up Holistiplan. I’ve mentioned it several times on the podcast recently. We’re actually partnering with them to do a webinar later this month about really unlocking the full potential of how to use the Holistiplan report.
So, go out to retirementtaxservices.com. If you are Holistiplan user who would like to learn more about how you can use that in your practice. Again, Bob really appreciate you being here. Thanks for your time today. It’s been great having you on.
Bob Veres: Alright. Thank you very much. I enjoyed it.
Steven Jarvis: For everyone listening, until next time, good luck out there. And remember to tip your server, 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.