Podcast: Post-Acquisition Business Value & Tax Planning Services

Mike:

Hey, there. It's Mike Langford. Welcome to the Advisor Financing Forum, a podcast presented by SkyView Partners. This week on the show, Aaron Hassler and I are joined by Roger Pine, CEO of Holistiplan, a company that makes providing tax planning for your clients easy and affordable.

            We invited Roger to come on the show as part of a series on improving the value of a financial advisory business post acquisition. We spend a lot of time on this podcast talking about buying and selling RIA firms and solo advisory businesses. But one thing we wanted to dig into a bit more is what a buyer can do after the deal closes to maximize their ROI. I mean, you don't buy a business for what it is today or what it has been in the past. You buy a business for what it can be and the value that it can deliver in the future, right?

            In this series, we're going to help you discover new opportunities for increasing the return on your investment. And maybe if you're in the early stages of exploring the prospect of acquiring another business, this might help you see things through a new lens.

            Now, before we get started, as always, if you have questions about your specific M&A plans, please feel free to swing by SkyView.com or call 866-567-6282. And the SkyView team will be happy to walk you through the options that are best for you and your business. Okay. Let's get through a conversation with Roger Pine.

            Well, Roger Pine from Holistiplan, Aaron Hassler from SkyView Partners, it is so wonderful to have you both together on the Advisor Financing Forum podcast. Welcome to the show, gents.

Roger:

Thank you. Good to be here.

Aaron:

Thanks, Mike. Appreciate it.

Mike:

Well, I'm so thrilled to have Roger finally on this show, because this is a subject that I've wanted to cover a lot on the show is that how can we improve the value of an advisory business post acquisition? Right? And we're going to talk a lot about that today. I think solutions like Holistiplan can play a very big role in that. Before we dive into it, I figured maybe it might be a smart idea, Roger, for you to give the audience a bit of an understanding of what is the Holistiplan and how did the solution come to be and how can it help them in their business?

Roger:

Sure. Okay. Well, my co-founder and I, we are both financial advisors. I was in the chair with clients for over 10 years. I'm also a self-taught software developer. So toward the end of my time as a financial advisor, I and my partner, Kevin, we started really thinking about how do we make financial planning more scalable? There's a lot of great tools out there for making investment management very scalable. I mean, even the mutual fund, the ETF or scalable technology innovations, but then there's a lot of rebalancing software, great robo-advisor technology.

            But if you go back to financial planning, very intensive, labor intensive, you got to talk to the client and get to know them. You got to go back and run numbers and then type it up into a deliverable to explain what you came up with. So that was really the challenge that we were working on. So Holistiplan came out of that effort and it's a year round tax planning solution. And before people leave, when they hear tax planning, hopefully we'll get into why tax planning is interesting. I promise it is.

            But really the major kind of thing that kind of blows people away with the software is what we have an OCR, optical character recognition routine that will read in a PDF tax return. So you, the advisor get a PDF tax return for your client, upload it into our system and literally within a minute, you've got a full multi-page deliverable with your branding on it, to give to your client a lot of great rich information to talk about what the client and then their tools for throughout the year, doing tax planning, taking that forward to actually act on some of the recommendations, observations that you come up with for clients. So it's a year-round solution for that. We've been at it for a little over two years now, and we have several thousand financial advisory firms using the product now.

Mike:

That's really amazing. You and I have talked together on podcasts before Roger. One of the things that really stood out to me about how powerful the solution is, is we don't think about tax planning as one of those things that is easy and partially because it's just so many moving parts to it, but the OCR piece, or I guess it's not easy. It's simple, right? The concept of, "Hey, these are uniform forms." Right?

Roger:

Yes.

Mike:

And while it would take like a human being a lot of time to go through all this type of stuff and then translate what you want out of it and bring it in, the computer, the OCR stuff is able to read it in. It knows where to look for every specific detail and bring it in and then repackage it in a way where it's useful and actionable.

Roger:

Right. Yeah. There's really two things in there. So there's just the efficiency. So it's true. I mean, I guess I should have said this. I need to get a better elevator pitch, but it's true doing a real tax return review is like a 45-minute process because you're flipping through pages and you're going back and let's calculate the thing. There's a lot of things that are not on a return.

            For example, your marginal tax rate is nowhere written on the return. So you would have to have a little spreadsheet on the side to calculate that. So that's one. That's just the efficiency piece, right? If we can cut 45 minutes down to one minute, multiplied out by our number of clients, that's a big deal. The other piece is consistency, right? So if you have hundreds of clients, thousands of clients, how do you make sure that you're producing the same product for all of them?

            Again, on the investment side, it's a little easier, you have rebalancing tools and it's all numbers. But when you start to get into financial planning, how do you know that your advisor in Omaha is seeing that if they were given the same tax return, they're giving the same recommendations, the same insights that someone in Miami would give. So that's the other piece of it. A computer never gets tired and a computer always will return the same information, given the same set of original facts. So those are the two pieces that I think really start to create a scalable financial planning capability enabled by software.

Mike:

I love that you went down the road, but making it scalable and consistent and offer the opportunity to... And we're going to talk a lot more about this, about offering more value, because one of the primary reasons why an independent financial advisor or an RIA acquires another business, and that's the business that SkyView is, is in, right? It is providing the financing and the facilitating through investment banking, the acquisitions of businesses effectively.

            One of the reasons why you do that is to create more value. If you're going to buy another business is to create more value for the business? It's not just to get bigger, right? So if you think about acquiring $100 million AUM firm, if you're already at a 100 million AUM, you should expect the firm to more than double in value. I want some scalability, as you mentioned there. Opportunities for scale is one of the primary reasons why you buy another business. Aaron, how do you and the SkyView team consider post acquisition value creation or growth, I guess, growth opportunities. When you fund an M&A deal, right? You look at the deal. You're not just thinking about, "Hey, this is the way the business is today." We're just going to staple them together if you will. We're talking about creating more value for the future. How do you guys think about that?

Aaron:

That's a great question. And it's one of the questions we ask in that kind of underwriting phase for a prospective buyer client. But one, it is a couple of things. If you talk to a valuation expert, there is some economies of scale, adding another, say 100 million, right? So that business, that's 100 million when you buy it is inevitably just worth more when you combine it into a firm that's double or triple its size, because you just have some efficiencies and economies of scale.

            What Roger is describing in tax planning is something that I think a lot of firms don't do. It's a super interesting value add, but we always look at what's the experience of a practice owner in terms of assessing the services that they currently have in that seller's firm.

            But it's kind of the stage we're in, in terms of the life cycle of these wealth management firms and that the founding generation isn't as adept at technology. They aren't used to maybe some of the multitasking that younger professionals are today and they don't offer the in depth, financial planning services or tax planning services and or investment services in the way that a larger firm is.

            So you just inevitably have added services that we think enhance value. So we always look at what does the buyer currently do that the seller does not? And will they be replicating those activities, but do these economies of scale allow them to add in different solutions? I'll be interested to hear more as Roger describes his business. But I feel like that's where we got into in today's world is that there have been some FinTech solutions over the last five years that have really made wealth management practices a lot more efficient.

            So we are seeing that people are retaining their pricing and offering more services. And from a financing perspective, that's music to our ears. You're retaining revenue and you're enhancing the value to the customer, and that's a win-win in our book, and it sees big dividends for evaluations in the future.

Roger:

While Aaron was talking, I thought of something which is also, there's the issue of when there's a succession story, this is someone who's got a relationship with these clients. It goes back 30 years. And then let's say they're selling the business to an acquirer, and they're saying, "Hey, don't worry. This new young Turk is going to take over everything." And they're going to be great. Well, the reality is that person needs to prove themselves, right?

            This happens even within firms when you're moving advisors from one person to another. So a lot of times, it's really great to have something which is you work with Bob for 30 years, but let me show you this new thing that I'm able to offer you a quick win that allows me because I can't build a 30-year relationship quickly. But if I can earn trust within a couple months by really wowing you with these new services. That cements that relationship and then gives credibility to the whole transfer of ownership, the transfer of the relationship, it's true within an existing firm, but it's especially true, I think when you're transferring your branding and moving relationships that have gone on for a long time.

Aaron:

Yeah. Especially, if you're moving from that senior aged professional to a younger professional. Right?

Roger:

Right. Where's all this guys' gray hairs? I don't know if I can... Right.

Aaron:

Right.

Mike:

I didn't really think about it that way, that every time you change relationships, even if there's been a little bit of warming it up, like, "Hey, this is my success." Or you can trust him or her to do right by you. There is a little skepticism or a resetting of the comfort zone of like, "Are you really going to be my person?" It's logical to say, "Hey, if I'm changing advisors anyways, why don't I now look at other advisors that are available, right?"

            So this is a good time to make an evaluation and you'd better be there to make sure you retain that business. It's funny, but in prep for this pod, one of the things I brought up as I think about this improving the value of the business that is being acquired is I liken it to the real estate business, a rental real estate, if you're going to buy a rental property that if you're going to suddenly have a new landlord and if I was buying that property, I don't want to just keep the current rents. But also if I'm a tenant, I'm like, "Hey, what are you going to do for me?" Are you just a new owner?

            So what usually happens? New ownership paints, adds new carpeting, adds new services or whatever. It makes the building more energy efficient. A whole bunch of new things to improve the quality of the property, to be able to increase rents a little bit and hopefully keep their attendance. I think the same thing is at play here for an advisory business, right? How do we keep everybody happy as you just described, Roger, but how do we also find more value in the business?

            One of the things you said that was really interesting in that prep call, Roger, was that the biggest challenging facing the industry is how to make financial planning process more scalable. And you hinted at that way, you were describing your elevator pitch there for a list of land. Let's elaborate a little bit more on the financial planning process and why has it been challenging to date to scale it?

Roger:

Because everyone's different, right? I mean, human beings are different and their circumstances are different and their jobs are different and where they live is different. Whereas we've spent many years building the technology and the infrastructure to make portfolios look very similar. And even when they are different, to be able to kind of abstract that back to rebalancing equations and things like that, whereas financial planning, there's these three elements. There's the gathering of data, which is very labor intensive. I got to sit down and talk to you. There is some, I think, good work happening now around allowing clients to provide information on their own time.

            We don't always have to bring them in for a meeting to... Maybe we can just upload a document to start that conversation, right? Things like that, whether the Amazon experience where at three in the morning, you can engage with your advisor on your own time. So that's the data gathering piece, which is probably the least scalable of all, because that's the getting to know the client piece.

            That's not bad actually, because that's how relationships are built, right? That face time is valuable. So if anything, that's the last thing we want to commoditize. There's the analysis piece next, right? And that is taking all this data and taking it down to creating observations, creating recommendations, giving a client a plan for dealing with that. There is quite a bit of software around. I mean, there's financial planning software, obviously.

            A lot of it is tailored toward what we in our company calls strategic financial planning, the 30 year horizon type decision-making. Like, hey, yeah, if I save this amount and make this amount and spend this amount, by the time I'm 85, I'm going to be broke or not, that sort of stuff. But the reality is, when you're a financial advisor, a lot of your time is spent on what we call tactical planning, is an internal term, but tactical planning, being this thing happened to me this week. I have to make this decision about how much to put into my 401k this week. Or my employer has added a new set of benefits. Should I look at them? What should I change? It's open enrollment season.

            All these sorts of things that some of them happen every year. Some of them happen at very specific times of someone's life. That is very labor-intensive stuff that an advisor just needs to do. That's the firefighting. Again, very heavily relationship building stuff, because if you can prove that you have credibility in those areas, it's very valuable. But again, not scalable unless you have a ton of great checklists and models and stuff like that.

            And then there's the communication piece. It's coming back to the client and saying, okay, I have distilled all this information, you've given me down into this set of recommendations. And now I'm going to explain to you, first of all, what we're talking about, because this may not be a subject the client knows a lot about, and then I'm going to give you an action plan and help you through the process of doing it.

            All three of those stages are by their very nature, not terribly scalable. And also remember, I consider scalability to be not just efficiency in terms of time, but also the consistency in terms of the deliverable. How do you as a larger organization... If you're a firm, again, our audience here is people who are building firms potentially through acquisition. How do you make sure those two firms that you've merged together have consistency across the deliverables they're giving to clients?

            And the actual answers they're giving clients, given the same fact pattern. So I think those are the areas where those analysis and communication sides. There's a wealth of opportunity for advisors who are building infrastructure, who are using technology solutions to really hone their capabilities there because that's where a lot of firms, because it's hard, they don't do it. Or they'll do it for only their top 10% of clients. You know what I mean? And this is an opportunity for us to give, I think, valuable planning to all our clients and deliver on the promise that we made to them when they hired us.

            Then we can talk about this later, but I think there's a massive prospecting opportunity there as well to show that you can do these things when the guy down the road doesn't do them or your existing advisor doesn't do those things.

Aaron:

Well, and from a valuation standpoint, Roger, I think that consistency of output is probably one of the harder things to achieve, right? When you're talking that firm with multiple advisors, especially as you're bringing in junior advisors and/or adding people into that team, that consistency of output certainly makes a tremendous difference, I think in terms of how these firms grow organically. And that's where we see firms that are really valuable. It's one thing to go out and acquire because I think it's fantastic.

            When you impact a hundred million into your firm, it's an incredible growth. But if you can then turn that around into a 20% organic growth from that a hundred million, now you're really having an exponential growth factor that's hard to replicate right from just another acquisition. Obviously, it makes that acquisition, I think that much more efficient than much cheaper. So I love the idea of that technology efficiency of client uploads, one document. And then you can create that consistent output and that consistent result every time and have something to revisit on an annual basis.

Roger:

Totally. Yeah. We didn't get into that, but taxes happen every year among some other planning things.

Mike:

Yeah. Let's dive into that now. I had something else that just popped into my mind. I'll have to remember it. Roger, I want to follow up on... Because you and I had had a conversation prior to me introducing you here to this, the team with SkyView. We'd had a conversation about how valuable tax planning can be for folks who have a lot of money or for folks who don't yet have a lot of money, right? The impact on tax savings and tax planning can be great. So I want to talk about that. But let's dive into the whole recurring nature of taxes. Not only as the thing that we all have to deal with, but as a revenue stream, right? So advisors are, or at least they should be always on the hunt for new recurring revenue streams, right?

            If you are a business owner, you should be looking for ways with the same customer base you have, can I add a new revenue stream? Can I serve these people better? And honestly, one of the greatest things about our industry, I think makes it so attractive is the recurring nature of the revenue stream, right? It's remarkably stable as a SkyView team will tell you. That's one of the reasons why their lending partners are so excited about this is like it's stable. These businesses don't go out of business. They don't declare bankruptcy for the most part.

            You don't see them suddenly have a revenue dip of 50% in one year. It's very consistent. Yet more RIAs and independent financial advisors rely almost exclusively on AUM fees for their business yet tax planning and strategy offers another opportunity for recurring revenue. So would you mind explaining why taxes are such an attractive recurring revenue stream for advisors? Yeah.

Roger:

We're making the case for taxes. I'm hoping that people didn't leave the podcast already when I said earlier that we're a tax planning solution.

Mike:

Listen, they're all hopped up on Red Bull and caffeine. They're excited here. I mean, look, who doesn't want to just hang out with these guys?

Roger:

If people have made it this far, I will, yes, try to make the case for tax planning. I think you said a few things there that are totally on the money. First of all, taxes are everybody, right? I mean, it's not just millionaires. I mean, some advisors there's certain services that only make sense for multi-millionaires. I'll look at estate planning, for example. Everyone needs it, but a lot of them are really hardcore estate planning things start to come up when you talk about the difficulty of multi-generational wealth, et cetera.

            But taxes, all of us have to do it. And like you said, all of us have to do it every single year. There are a lot of topics that as a financial planner, you would like your clients to deal with and estate is one of them. Please get those powers of attorney billed. And it's like, "Yeah, I'll do it next year. I'll do it next year." Well, guess what, you, the advisor do not have to beg your client to file a tax return every year, because they are required by law to do it.

            So you get to reap the rewards of someone else's hard work. Do you require your clients to file a tax return? Yeah. That offers an opportunity every single year for engagement multiple times through the year. And you mentioned extra revenue or not. It kind of depends on the business model, right? I mean, if you're a retainer based and in any case, no matter what your revenue model is, it's more touch points, which is always what drives client relationships, it always drives retention, it always drives growth. I need a good, valuable reason to be talking to this client. And tax gives us multiple opportunities to do that.

            So the first one, we'll start with it's April or it's May, and your client just filed their tax return, and it was kind of a painful process, but they're glad it's done. And they get this document, which is hard to understand, right? I mean, it is an ugly, poorly designed document with no nowhere on it doesn't even say what your marginal bracket is, which blows mind. But that's that thing that people want to know. What percent did I pay? Not on the document.

            So you, the advisor level one of value was just saying, "Hey, I looked at your tax return. Thanks for uploading it, giving it to me. And here's some observations I have about it. You were in this bracket. You pay this in capital gains. Your income is within levels that make you eligible for these things. But not these things." That's level one. Level two is then, "Well, I may be level zero." Let's just say, sometimes CPAs make mistakes on returns. And you, the advisor, sometimes they're making mistakes on something that you advise the client to do.

            I've had this situation where that causes stress for the client, right? Having a mistake on the tax return is not anybody wants. And if it's something on a strategy that you advise or recommended that Roth conversion last year, that can be a problem. So you got to check for that. And by the way, if it's not captured right on the tax return, it didn't happen. So the best laid plan, that's going to save your client all this money, if it didn't get reflected on the return, it didn't happen.

            So that's level zero. So in level one is then here's what happened. Level two then is, "Okay, I looked at this. I noticed some things that we could probably try to change for next year to actually save you money on taxes. Now, that's a conversation every client wants to hear. Right? I guarantee in that conversation, they're not asking, "Okay, let's go back to talk about my investment portfolio." They are locked in on that tax return conversation.

            So now we have a new line of communication we've opened with a client about another subject. Now, we move into the end of the year. Now, there are certain things that have to happen by December 31st. If you're going to do that Roth conversion, if you're going to do that qualified charitable distribution, you got to do it by December 31st. It has to happen. So there's another great touch point with the client. It's October, November. A lot of advisors are already doing some work with capital gains around that time, right? Capital gain, loss harvesting.

            But there's a whole other set of stuff we can be doing then to engage the client. Look at these numbers I ran. Let's talk through these. That's a really, really useful another touch point. Now, we get into the first quarter. We did all this amazing stuff last year. Let's remind the client about it. Also, let's help them prepare all this information for their CPA.

            I mean, I hate to admit it, but we advisors complicate tax situations for our clients. By doing all this cool stuff, we make their tax preparation a little more complicated. So they need to make sure they are communicated effectively to their CPA or to TurboTax if they still do returns on their own. So now we've already reached three major touch points throughout the year, and then now we're back in May, the next year. They just filed a return. We're able to check it. All that cool stuff we did last year landed.

            We can repeat the process again. So just taxes. It happens every year. It's evergreen. We have all these amazing touch points that are really rich. I mean, taxes, touch every single part of your finances. It's emotionally loaded for people too. Taxes is not something that people just like, "Oh yeah. I did my taxes. I didn't even really look at it that much what I paid." You look at it. You may not understand it, but you look at that number. And deep down, you wonder. Did I do it right?

            Could I have saved anything? And if you can assure the client, yes, you did everything you could or next year we can try to do this and save some more. That's an enormous emotionally rich conversation. Not just technically rich, I think. Did we make the case for taxes? Are we pumped about taxes?

Aaron:

Yeah, you did. We're onboard. Mike and I are onboard.

Roger:

We'll have to see.

Aaron:

No. I think it is interesting, Roger, because I use the personal experience. My wife and I, we're meeting with our financial advisor and he does. He's goes in, and one of the things we liked about him is that he's got a good tax knowledge. But he helped us decide, do we do the standard health insurance plan or do we do that high deductible tax plan? Or high deductible savings plan. He was able to assess for us, "Hey, if you did this HSA account in your high deductible plan, you're going to save," I don't know what the number was, "X thousand dollars on your taxes. And it ends up being cheaper than you in the long run."

            That's a super simple conversation. It probably took 30 minutes to resolve for us. It was running through that calculation, helping us decide which plan. We walked out of the meeting, signed up with that plan and go. It's a big answer that allows us to then say, "Gosh, this was impactful for our lives, and it made us want to refer that advisor." More times than not, it came up, "Hey, I got this resolved and this was a big weight off of my shoulders." And that's something that's easy to talk about when you're walking around the block or talking at kids' sports games. It's those kind of little examples that build up referrals in my opinion.

Roger:

Again, that's a great example. Remember, I was saying earlier, that's a tactical planning service, right? I would imagine that you're much more likely to talk about that at your kid's little league game than, "Hey, I had a great conversation with my advisor and he said that when I turn 85, my portfolio is going to be $2.5 million with a 75% probability rate." That's not as impactful in our day to day as these tactical ongoing engagements we have with clients. It's a great example. It's not huge. It's not a really overly... We're not talking about an off-shore Cayman Island tax shelter thing. It's an HSA. But it's a thing that would probably slip through the cracks for someone who didn't have a financial advisor. So it's a great example.

Mike:

You know what it's interesting, financial advisors by the nature of finance spend most of your time thinking about the future. When you remember back from college, we were learning the difference between accounting and finances. Accounting is now and in the past and finance is thinking about the future. So advisors by their nature are thinking about how do I grow this portfolio? And by the way, that's their business model, right? I grow AUM. I can make more money.

            One of the things you said to me, the first time we met Roger was, "Look, we spent a lot of time talking to clients about how we can help them make more money and grow their portfolio." Once the general gist is set, there's only marginal increase. The difference between you earning 10% in a year versus you making 9%, if you have a million dollar portfolio is it's $10,000, right? It's a $10,000 Delta.

            However, we're proper tax planning. We may be able to discover much bigger opportunities there in any given year. We might save you $50,000. And that works at that very, very big high level. And it works at the lower level, if you've got a young client who maybe has $100,000 to invest and maybe as a couple, they're making $150,000. You might be able to have a much bigger impact on their finances with tax planning, right?

Roger:

Yep. Actually that gets back to really the core of why I left my job as a financial advisor to start this company, which is, I saw people who were friends, people who might have life savings of $25,000 or something like that who could not afford to work with me as a financial advisor working on AUM. The question they would always ask me is like, "I've got $25,000 saved. How should I invest that?" And the reality is one or 2% alpha on the return on a $25,000 portfolio, doesn't really move the needle that much. Still make good decisions because of course it compounds. I understand that. But that same person, that HSA conversation, if that person had that HSA conversation with me, a multi-thousand dollars savings on a tax return is much more impactful to them.

            I mean, it's way more impact for them. But that's the sad part is the only people in our society and our country who can really afford that deep, rich financial planning are the people who are paying that retainer because they have a million dollars in the bank. Right? So that was the disconnect that really bothered me. I want to reach a point where financial planning is something that everybody can get access to because the reality is the people who need it the most are the ones who probably aren't getting it as much. Once you got 10 million in the bank, the reality is those returns start to make a big difference. That one or 2% alpha makes a big difference. Saving $2,000 on an HSA is actually budget dust for them, honestly.

Mike:

It does. I'm going to use that from now on. Budget dust is a new term in my vocabulary. I love it.

Roger:

There you go.

Mike:

That's fantastic.

Aaron:

But that is the future of our industry, right, Roger? I mean, the idea that at the end of the day, if we can continue to have more people using financial planning advice, it's just going to further this industry. So I love it. I love that idea that you're getting people to engage at a number of different levels.

Roger:

Yeah. I'll tell you what. I hope that we, as an industry build it before Amazon builds it because I wouldn't put it past them to be working on this stuff. I would much rather this sort of information, these sorts of services come from advisers, the people listening to this podcast, the people who value those relationships rather than something that's much more transactional. Someone coming at it from a pure technology-only perspective. We want to use technology to enable humans to do a better job, because I think that's going to give people the best outcomes. I truly believe that.

Mike:

Totally agree. One of the things I think it's really important to think about if you're an advisor, and maybe you know this internally, we don't think about it openly that much is that look, you're probably the most trusted person in your client's lives when it comes to financial questions, right? If they have a question, they're thinking you're going to know the answer to it, or know how to find the answer to this question. And that may even include tax planning and other financial planning stuff. But as you mentioned, Aaron, when we were prepping for this pod is that you and the SkyView team have discovered that many RIAs and advisors are coming up short when it comes to delivering comprehensive financial planning. Why do you guys consider this a shortcoming?

            I mean, look, you guys have investment banking and you provide financing for M&A deals. Why is this something that you are thinking a lot about when it comes to the advisory business? Why is this a shortcoming in your mind?

Aaron:

Well, it's a good question. I think [inaudible 00:35:09] a little bit, I think some of it is just an opportunity within the age. If you're doing M&A, you've got an older advisor, typically in their 60s, maybe even 70s, or as we're seeing now a lot in their mid to upper 50s. They've all practiced this profession for 20 or 30 years. I think some of the best advisors are replicators, meaning that they can have a consistency to the process and they know what they do. Well, then you're trained to just go get more clients and build more revenue.

            You weren't necessarily trained to add more services. I mean, sometimes that might be a by-product of your growth is to add more services. But when we're seeing it from a succession planning standpoint, I typically feel as we've touched on earlier, it's how do I as that buyer, that slightly younger, maybe age advisor or that newer relationship come in with a trusted voice? One of the ways to do that is going through a full financial plan.

            Some of it is you just simply learn more about the client, right? You're getting better in-depth engagement with the client. You're learning more about that client, learning how to service them better. We see it even on when we're working with clients to sell their business. The intake process is incredible. I mean, just getting the document uploads to get the data on their practice takes us weeks. Right?

            So that's why I love the OCR you're talking about and being able to scan this data in, because we have interns that are literally looking at pieces of spreadsheets and/or piecing together all of our client documentation, because there's just... Let's face it, there is always a limitation. I think the older you get, the harder it is to adapt to some of these technological differences and changes.

            So I think financial planning is just one of those things that it's really digging in under the hood, is providing that deliverable, but it just creates that deeper and client engagement and builds that relational trust. It makes such a difference.

Roger:

Totally. I mean, I don't know if I hear over and over again, that investment advice is becoming commoditized. I've heard that in conferences for 10 years. And I think there's elements of that, that are true, but I think also there's still need for someone... The handholding is a human thing, but if you buy into the idea that investment advice, pure investment advice is becoming a commodity service, this is the way that the industry is moving. If you built your practice based on running investments for people and putting them in those index mutual funds, that may not last as a differentiator.

            So I don't want to be a chicken little saying your business model is broken. I think people can still do a great job just running investments. But certainly what I hear and what I've seen is there are people entering financial planning because they see the writing on the wall for that pure play investment service. By the way, that's born out in the people signing up for our product. I would say a good 50% of the firms who sign up for Holistiplan are firms who have never done tax before and now out of the box, they have that capability. This is a year-round capability that took other firms many years to build up.

            The other half are people who've done it and they're looking for the efficiency gains, but I'm talking like 50%. So that's thousands of firms who are using our product who came on with very little access or very little infrastructure built on tax planning before. So I think that's very telling that the industry is moving that way. We've talked about good business reasons why moving the relationship from one to the other, but I think this is just the way the winds are blowing. And I think it's a good thing because your finances are not just your investments. All these things talk to each other and feed into each other.

Mike:

Both of you guys just said some great stuff, though the common theme that I heard there was opportunity discovery, right? Opportunity discovery for the client, right? Helping your clients better, like discovering savings opportunities, discovering opportunities to better invest their money from a taxing perspective or it's from a financial planning perspective like seeing things for them.

            But it's also opportunity discovery for your business, right? As you mentioned, Roger, 50% of the companies and individual advisors that are signing up for Holistiplan are doing this for the first time. So they're basically adding this new service to their business because they discovered this is an opportunity or they're discovering, there might be some risk in their existing business model and they need to mitigate that risk by adding another revenue stream.

            One of the things that I imagine, however, is there might be a bit of apprehension from some of the audience members, right? They're watching or listening to this and they're like, "Hey, man. I've been in this business for 20 years. I came in as basically a stock broker and grew my business more. It's relationship based now. I call myself a financial advisor, but I don't know taxes. I'm a little uncomfortable here." How do you go about breaking things down, so it feels simple and comfortable for the advisor who's currently not offering tax planning services? But they get it. They're like, "Oh, that does sound awesome." I've got to tell you, I'm a little nervous here.

Roger:

Yeah. Well, I mean, I will say sometimes a barrier that has to be overcome is just a compliance barrier, right? Within a certain firm, they just say, "Look, we do not do tax planning." So there's a whole other business case that has to be made for why it should be done. But assuming that that's not there, the question is, it sounds like how do I start doing something I never did before? That's really hard. And not just really hard, but it has enormous impact. If you make a tax recommendation, that's wrong. That's very impactful in a very bad way, very bad way.

            And even the word recommendation of course, is regulatory things around what constitutes tax advice? I'm not going to get into that because I'm not a lawyer and that's not my area, but I think it's like anything else, whereas you have to start. I mean, you have to start somewhere and every firm that's been doing tax planning for many, many years, started with someone looking at a tax return.

            Then what happened next was they looked at enough tax returns that they're like, "You know what. I'm going to make a little spreadsheet to help me do this analysis because I've done it three times now." Then they're like, "I want my paraplanner to do this instead of me because I'll make a checklist for them.

            This is how infrastructure gets built over many years. So these firms who does 50% of firms who are already doing tax planning who bought our software, they already have a lot of infrastructure and we're helping them do it faster or more efficiently or whatever. But everyone else, I mean, yeah, you have a choice. You can build it from scratch or there might be tools like ours, or there might be services. There are services like FP Pathfinder.

            It's a firm that sells on subscription like checklists for out of the box. Do you want to start doing tax return reviews? Here's a checklist. So there are ways to do that. There are ways to not have to build it all yourself and do the research and dig into stuff. You still got to understand it. You still got to invest in your own knowledge, but your clients are expecting you to do that anyway, I would hope.

            But it's a choice. If you make the business case for it, I think tax planning is worth doing. There's infrastructure to build. You can buy some of that off the shelf like we provide, or you can build it yourself like people had to do for the last X number of years before we existed. Right?

Aaron:

Roger, are you able to share like an average size, do you think of a subscriber for your software in terms of AOM? Or do you see 90% of your clients are multi-advisor shops? I mean, do you guys have any kind of trends that stick out among your client base?

Roger:

Well, I mean, given that my motivation for starting the company was... Let's provide richer financial planning to more clients. It's been important to us from day one that a solo can use our product and a multi-state, multi-thousand advisor firm can use our product. So it runs the full spectrum. I don't know the exact breakout, but there are a good number who are solo practitioners. Our industry is still a lot of solo to small ensemble firms. I would say, that's going to be 80% of the people we work with. But we do work with your broker dealer names that I probably shouldn't all name because I don't know all the rules we have about naming them. And we have some huge RIAs who are enterprise users on the software.

            And the business case for each are different. I mean, if you're a big enterprise... we talked about ad nauseum, like why an enterprise customer might want to use the product efficiency gains, consistency across all their offices. A solo provider where everything's on fire, and they're just trying to get clients in the door and prospect and all that stuff, they're looking for maybe that more out of the box planning capability that maybe they didn't have time to build yet because they're new or for whatever reason. So the business cases people have for buying the product are different based on who they are.

Mike:

That's really interesting. Well, I think we're reaching the end of our time here, but one of the things that I imagined we're going to get is how do I get started with this? Or how do I try out a Holistiplan? What's the process for getting this ball rolling? Because I would imagine as you mentioned, a couple of times, there may be some people that are like, "Tax planning, I'm out. They pulled the plug on this." I doubt it. I think most people have made it to the end with us here and they're like, "Okay. You guys sold me. Let's go. Let me get this in my business."

Roger:

This takes you through all the tax stuff. Yes.

Mike:

Exactly.

Roger:

They're believers by now, yeah.

Mike:

So what's the process for whether it's a solo advisor or a firm, as you mentioned, a larger firm getting started with Holistiplan?

Roger:

Well, we have a free trial. So you can get in there and upload your own tax return. Right? Just get in there. If you're an adviser upload your return or there's certain political candidates who put their tax returns out there publicly. Every once in a while we see these same names of senators and stuff come through. So if you're worried about putting clients stuff up there on a trial, that's cool. So just give it a try. Our trial is seven days and you can upload up to three returns and just give it a shot.

            I will say, like you mentioned, Aaron earlier, the 529 example. The very first return that was ever uploaded to our system was an adviser who uploaded his own return. Our system saw that there was no 529 deduction on the return. So one of the things we pop up in this report is you might consider contributing to a 529 because it's an above the line deduction, and this is your bracket. This is what you would save. He had actually contributed to a 529, but his CPA missed it. So right off the bat, the very first return that ever got uploaded, he was like, "Yeah, I just refiled my return. I saved another 4,000 bucks." Or I can't remember what it was. But that was a huge win. I don't know.

Mike:

That's awesome.

Roger:

Upload your own return and see if you find in there. I don't know.

Mike:

Success on the first try. Awesome.

Roger:

Great.

Mike:

That's fantastic.

Roger:

Great. It was all downhill from there, but that first one is amazing. It's great.

Mike:

Oh, that's amazing. So Holistiplan.com and we'll make sure we have the links to that on the show notes. Any other way, if somebody wants to connect with you individually, you're active on LinkedIn and other places, I assume?

Roger:

I'm not terribly active. We do have a Twitter handle for the company and I am on Twitter. Don't touch it much. You actually see me the most, we have a YouTube channel. When we do a lot of feature updates and things like that, that's where we show pictures of it. So if you kind of just want to spend some time looking at what the product does and how it's evolved over time, there's actually a video I did in there. A feature release video where I was running across the Grand Canyon and back.

            So during that, I actually did feature updates from the bottom of the Grand Canyon from the north round. That was a popular out there video that people seem to like. So find that one out there on our YouTube channel.

Mike:

I love it.

Aaron:

I'll tell my kids. I know they spend most of their time on YouTube watching some of your old videos.

Roger:

They'll be riveted by talking about tax planning, yes.

Mike:

That's awesome. Well, Roger Pine from Holistiplan and Aaron Hassler of course of SkyView Partners. Wonderful having you both on the show. Thank you very much, gents.

Roger:

Thanks. It was a lot of fun.

Aaron:

Thanks, Mike. Appreciate it.

Mike:

Thank you very much for listening to, and/or watching this episode of the Advisor Financing Forum podcast. It's fantastic having you with us as always. So what do you think? Tax planning, am I right? Seriously though, if you reached this part of the podcast, or as we call it in the biz, the end, you get it, adding tax planning to the services offered by your RIA or independent financial advisory practice can dramatically increase the value of your business. And if you're already offering tax planning to your clients, leveraging a technology solution like Holistiplan can add efficiency and scale to your efforts.

            To that end, huge thanks to Roger Pine for joining, Aaron and me today. I love chatting with Roger. He's got such a calm demeanor. You feel like you can conquer the world after you spend a few minutes with him. So awesome having you on the show, Roger. Thanks, again. Okay. Before I let you go, if you have a moment, make sure you subscribe to the Adviser Financing Forum podcast on your favorite podcast platform or YouTube, if you haven't done so already. We are working on a lot of great content and we've got some big announcements coming from SkyView. So you're not going to want to miss any of that stuff. Okay?

            Lastly, make sure you swing by skyview.com to learn more about your options for financing to facilitate your plans to buy or sell an RIA or independent advisory firm. The SkyView team is here to help. Okay. That's it for today. We will see you next time on the Adviser Financing Forum podcast. See you. Bye.