some cpas have a once-in-a-generation opportunity to take over a new service sector.
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by rory henry cfp®, bfa™
for 卡塔尔世界杯常规比赛时间
as teddy roosevelt once said, “people don’t care how much you know until they know how much you care.”
when people ask why more accountants are incorporating holistic finance services into their practices, it’s because they’re realizing the power of empathy, trust, and the future of financial advice. it starts with a “human first” approach that goes beyond putting numbers into boxes.
seth fineberg, founder of accountants forward, and philipp hecker, ceo of bento engine, two of the expert contributors to the new book, holistic guide to wealth management, believe that accountants can leverage their trusted relationships with clients and adopt a more holistic and proactive approach to working with them.
that approach can include financial planning, wealth management, estate planning, and other non-tax services. by using technology thoughtfully, fineberg and hecker maintain that accountants can deliver timely, personalized advice that strengthens relationships and drives better outcomes for clients while maintaining a deeply human connection. rather than replacing the advisor, technology allows advisors to show up with greater confidence and relevance across a client’s entire financial life.
the profession at an inflection point
according to fineberg, the accounting profession is at a crossroads thanks to pandemic-era shifts, evolving client demands, and increased private equity investment. “traditional services—tax prep, audits, compliance—are being automated or commoditized,” fineberg said. “if you’re an accountant who wants to grow, you have to offer more than just forms and filings,” fineberg cautions. but he calls these challenging times an opportunity for accountants to “reimagine the role they play in their clients’ lives—not just as problem-solvers, but as long-term guides and partners.”
evolution of financial advice: from brokers to human first advisors
in the 1960s, ’70s, and early ’80s, hecker says stockbrokers made a very good living by doing little more than merely providing access to the capital markets. that was the only way that american retail investors could participate in the incredible wealth-creating engine that the markets are” he says. in the 1990s, hecker says the focus shifted to products—mutual funds, portfolio management. then, financial planning became more widespread in the 2000s. and in the 2010s, hecker points to the robo-advisor scare, which democratized access to financial advice, which “broadened the pie” and “increased the demand for skilled human labor,” hecker says.
today, hecker believes we’re in the advice 3.0 era. “comprehensive advice is advice that is delivered across the full balance sheet, that is timely, that is impactful, and that is done at scale in a compliant fashion,” he says.
why comprehensive wins
citing recent j.d. power research, hecker notes that transactional advice earns a mediocre net promoter score (nps) of 38. however, he says “goals-based advice” earns a strong nps of up to 66, and fully “comprehensive advice” — the kind that spans the full balance sheet and engages across generations—achieves as stellar nps of 88. that’s not by accident,” explained hecker. “it’s because the advice is more relevant, more personal, and better timed,” he said. and from where i sit, it’s what we call a virtual family office offering that is outlined throughout the book.
with mckinsey projecting a shortage of at least 100,000 financial advisors by 2034, there is a tremendous opportunity for accountants to fill that void. “cpas already have the trust,” notes fineberg. “they’re already at the table. they’re already in the room for some of the most important financial decisions clients make. they just need a framework and some support to start having those bigger conversations,” he added.
fineberg encouraged firms to start small but think big, adding that the leap into holistic advisory work is less about learning a new skill and more about leveraging the relational strengths they already possess.
the firms that win tomorrow won’t just offer holistic advice. they’ll deliver it with heart, at the right time, to the right people, across the entire family. that’s what an advis-ror® does. it’s return on relationship (ror) in action.
5 advis-ror® takeaways:
1. technology is meant to amplify your human advice—not replace it.
2. comprehensive advice across age-based milestone and life events drives a firm’s net promoter score
3. helping clients optimize their social security timing is one of the clearest ways to add real, measurable value.
4. learn why accountants are in a great position to fill the 100,000+ financial advisor shortage over the next decade.
5. return on relationship (ror) is about being there when it matters most.
more about seth fineberg
seth fineberg is an accounting industry consultant, content strategist, analyst, and speaker. through his current business, accountants forward, he aims to see the accounting profession progress through the creation of and guidance on practical and useful content from vendors, industry organizations, and accounting firms themselves. he has been a business editor and journalist for over 30 years, the vast majority of which has been spent overseeing the accounting profession’s evolution. to this end, he has served as technology editor at accounting today and the head of accountingweb’s us team.
more about philipp hecker
philipp hecker is passionate about wealth management advice that goes beyond investing. hecker is a co-founder and the ceo of bento engine, a fintech at the intersection of technology and impactful wealth management advice. he is a wall street veteran, having spent the past 20 years at firms including deutsche bank and j.p. morgan, always focused on wealth management and personal, impactful advice. at j.p. morgan, he founded and led the wealth planning & advice organization, spanning the advice lab, the philanthropy centre, and the firm-wide goals-based advice teams. hecker holds an mba from harvard business school and a diploma from the university of passau.
transcript
(transcripts are made available as soon as possible. they are not fully edited for grammar or spelling.)
[00:00:00] intro: welcome to afo wealth management forward, a podcast powered by arrowroot family office that’s at the intersection of accounting, wealth management, behavioral finance, technology, and entrepreneurship. we help accounting firms and financial advisors grow their practice by going beyond the numbers as we learn from industry leaders and subject matter experts to discover the secret to their success. a podcast that highlights everything from the transformative power of ai to embracing the human-first approach of behavioral finance to help you understand the psychological and emotional relationships to money and meaning. here is your host, rory henry, director at arrowroot family office and author of holistic guide to wealth management.
[00:00:44] rick telberg: my name is rick telberg from 卡塔尔世界杯常规比赛时间, and i’m here to introduce rory henry, the chief author and editor of the holistic guide to wealth management. they were really proud of it, just came out, hot off the presses, and it features the work of not just rory, but 34 other renowned experts in the field, and you’re going to meet two of them today. rory, in case you didn’t know, is director at arrowroot family office and co-founder of the afo wealth management forward podcast. he’s also the originator of the advis-ror methodology, advis-ror, r-o-r, for return on relationships. he’s been doing this for more than two decades, and he’s created a new program to help accounting professionals incorporate holistic wealth management and proactive planning services into their practices. and with that, i’m going to turn it over to rory henry.
[00:01:50] rory henry: thank you so much, rick. i appreciate you publishing the book. i am excited to have two of my esteemed friends join us today, seth fineberg from accountants forward. seth, how are we doing?
[00:02:05] seth fineberg: doing great, man. doing great. thank you for including me on this and also in the book itself. it was a pleasure to write, and i really am just, i’m pretty passionate about the topic as well as yourself and also our guest here today as well. really can’t wait to get into it, rory.
[00:02:27] rory henry: yeah, you’ve been a journalist, a writer for over 30 years here. i know majority of that’s been in the accounting profession. and you’ve seen it evolve, which we can discuss here on the panel. yeah. let me introduce our next guest, philipp hecker, ceo of bento engine, which is a platform that helps practitioners provide personalized, timely, and impactful advice. philipp, thank you so much for joining us today.
[00:02:50] philipp hecker: rory, great to see you again. likewise, very much enjoyed the collaboration on the book. and seth, we had the pleasure before. i look forward to partnering with you yet again today and sharing with our audience out on the lines some hopefully insightful and practical perspectives to better serve their clients and drive their organic growth.
[00:03:15] rory henry: yes. you know, we can talk about the what, definitely the how here, but i want to start off with the why. and that’s, you know, seth’s contribution to the book here is why now it’s important for cpas, accounting professionals out there to embrace wealth management and holistic advice. can you kind of talk about your chapter here and why you believe now it’s so important for professionals out there to start offering holistic advice?
[00:03:39] seth fineberg: yeah, absolutely. thanks, rory. when you and i first met, we were talking about this idea of why, you know, you already had been talking to and starting to work with more cpas and accountants in general, getting them more informed about the idea of wealth management. something historically cpas haven’t quite embraced. sure, maybe at the larger level, you see some larger firms that have even acquired wealth management practices, but only in fairly recent years. and for the rest of the profession who are not, you know, mid to large firms for everybody else out there. if you want to stay in accounting in this field, you realize that there are a couple of things kind of pulling you towards the idea of doing more than just the numbers. and also, just as your own business, you’re looking at ways that you can evolve your own practice to, you know, being, you know, kind of an annuity for you and really growing by, you know, percentage points each year. and to do that, you kind of need to start thinking outside the box. the accounting profession right now, in my view, is and has been for, i’d say, a handful of years now at a point of inflection. you have a lot of the so-called old guard aging out. the old ways, the traditional ways of doing accounting, being an accountant are changing. and you know, fresh ideas are starting to come in. they’re more open to a much larger world of partnership out there that if it’s going to, it’s all about service for their clients. realizing that the basic mystery behind a lot of the tax work and the books, a lot of that is and will continue to be sort of done by technology. not that you’re not always going to use a human. and i know we’ll get into more of that aspect of things. but just the whole dynamic of being an accountant right now, i think, is ripe for change and is already evolving. so the idea of wealth management entering the space and being a part of the conversation as services that are out there like philips and others and technology platforms available to do that level of work. i think it’s, to me, i am not getting down on accounting. quite the opposite. i am very encouraged by the future of, and the present, but definitely the future of what accounting can be. and i think wealth management is a real strong sort of spoke in the whole client advisory services flywheel.
[00:06:43] rory henry: yeah. and i agree. we are at inflection point.
[00:06:46] seth fineberg: i didn’t give away my whole chapter.
[00:06:48] rory henry: it’s okay. love to buy the book. yeah, i agree. we are at inflection point here, seth. and i believe the pandemic accelerated that. private equities involvement in the profession has accelerated that. people are starting to be able to do or have been doing business virtually. and i outlined in the book, i call it a virtual family office, really integrating services, whether that’s tax planning, holistic financial planning, which i believe is that base. and philipp can talk to the importance of holistic financial planning as really the foundation for any type of engagement here. and i go back to being a servant, not only to the service that you have, but a servant to the relationship. and that’s why i go back to the return on that relationship. so whether you’re providing this in-house-
[00:07:27] seth fineberg: it’s live and breathe on it, man. that’s their lifeline is that relationship with the client. how do you make it better? how do you deepen it? it’s through the service and meaningful service. and they’re already in the numbers. so it just makes sense to me.
[00:07:45] rory henry: yeah. speaking of services here, maybe i want to get professor philipp hecker on the line to talk about the evolution of services within the profession. from the stockbroker way back in the 70s, 80s, now to in the early 2000s, probably more the portfolio manager. now we’re seeing the holistic advisor really providing for the many needs of that client. so can you kind of talk about the evolution of the profession and how really technology has been at the forefront of that?
[00:08:15] philipp hecker: very happy to, rory. i come from within the wealth management industry. that’s been my background and focus over the past many years. and indeed that industry has and continues to evolve in very meaningful ways. if i were to oversimplify to tell the big picture arc of the evolution, i would point out that indeed wealth management has evolved from merely providing access to financial markets, where in the 60s, 70s, up until the early 80s, frankly, many stockbrokers, you’ve called them, made a very good living by doing little more than merely providing access to the capital markets, because that was the only way american retail investors could participate in the incredible wealth creating engine that the markets are. with the emergence of schwab and other business models, that changed dramatically. regulation kicked in, deregulation kicked in, enabling americans to access and participate in the financial markets in more direct, less costly, less complex ways. stockbrokers evolved into mutual fund salesmen, financial advisors, and broadened their services beyond merely providing access to actually giving advice, but it used to be fairly limited and focused on the investment product itself. that changed in the 2000s, i would argue, broadly speaking, when people realized, wait, there’s much more than, quote unquote, just investments, let me serve the clients across the balance sheet, lending, banking, trust in the state, other considerations, including the tax accounting field, began to really come into focus for many advisors. in the 2010s, we had a bit of a scare with the emergence of the robo-advisors, that would dislocate, displace the humans, guess what? it didn’t. if anything, it broadened the pie and increased the demand for skilled human labor. we face a massive shortage there, as we’ll discuss later on. these days, i would argue, the journey of the evolution of what defines a financial advisor continues, in addition to serving the client across the balance sheet, now the focus is increasingly on the client family unit at large, not just the primary account holder, but also her husband, her children, her parents, her grandchildren. that focus away from investments only for the account holder, to cross balance sheet and now intergenerational comprehensive advice, in my mind, summarizes the state of evolution and guess what? we ain’t done yet. i am sure in five years’ time, it will look different still.
[00:11:19] rory henry: yeah, i agree. that’s why i coined the term or popularized it, the virtual family office, because really holistic financial advice really can be encompassed by a family office. what was for the ultra-affluent, the john d. rockefellers, the jp morgans, the jeff bezos, the elon musk, now through technology, philipp, we can connect these professional services to provide for the many business and personal financial affairs of a family. then i go back into, as we can discuss, really that human first approach is understanding really what the client wants, providing that personalized and timely advice that’s impactful, that can hopefully lead them to where they want to go and optimize their well-being. let me shift here. what’s that, bill?
[00:12:03] philipp hecker: if i may, two quick comments, rory, to build on that. number one, to your point around the virtual family office, i get that concept. i like that concept because no single advisor, no matter how skilled, can cover all the needs of the client equally well. advisors need to partner with experts in trust and estate, in insurance, in accounting, in banking, in lending, to bring the proper solutions to bear at the right point in time. yes, that can and should be facilitated by smart technology that is client and advisor facing that ties it all together. if i may, i also want to circle back briefly to something that seth said earlier on, which very much resonated. that is the power and importance of the relationship aspect of our business, be it in the cpa world, be it in the financial advisor world. i want to share that quickly as one of my favorite quotes from teddy roosevelt, who said, clients don’t care how much you know until you know how much you care. it took me a moment to fully appreciate the power of that statement, but clients don’t care how much you know until they know how much you care. what does that mean? we as an industry, i believe, stand guilty, we must be accused of oftentimes being overly technical. alpha, beta, theta, inverted yield curve, and i’m sure there are similar scary concepts in the accounting world. we oftentimes tend to focus on how smart we are. that may not always be the best path. clients assume that we are smart. what they really want to know is that we care. when we lead with personal, timely, impactful advice during key junctures of a client’s life, that is a great way of demonstrating that we truly care about the client.
[00:14:08] rory henry: yes. i know you’re going to go into that later on. you have those age-based milestones and life events that actually give you the ways in which we can have those conversations with clients. now, seth, i know you talked about the importance for the accounting professional to have those conversations. can you talk about, because i love that part of your chapter, on how we can go beyond the compliance work, beyond those tax questions, to really ask questions about who they are, about their family, and where they want to go in their life?
[00:14:36] seth fineberg: at the core of that, rory, and the core of building a real relationship and working towards the return on that relationship, is really to what phil, or i guess teddy, said, is really sharing that you care. having the client that you care is going beyond just telling them what happened, keeping them compliant. all those things are valuable. they should not be discounted. the world of compliance, i think, is still incredibly valuable. what you do from there matters, i would say, exponentially more than just the work that you’re doing. my point is, when you’re thinking about the relationship, that big a that sits in the middle of the cas initials is advisory. advisory, like the concept of advisory, i think, gets accountants, when they first hear it, they’re like, oh, well, everyone’s doing advisory, or i do that already, or i don’t even know what it means. what it means is that you care enough to have a very meaningful and pointed conversation. that all starts with the data that you have. the information that you have is telling you a story. it’s telling you there’s more here than just what happened. you can start with very simple, like if you’re in someone’s books, you can start going, okay, let’s kind of set up a cash flow forecast for you. let’s start talking about these things. the more knowledge that the accountant has, the greater their value, and the more that they’re going to be able to show that they care. not that accountants don’t care, i don’t want to get into that, but what you’re able to really do is use what’s available to you and their own relationships outside of what they know. this is a whole new world, for the most part, the idea of wealth management, but it’s still, it’s a natural evolution, because you’re already in the financials, you’re already in the numbers, you can kind of see where life events can happen. philipp, it was possibly you, maybe in our previous conversation, we were walking through the whole life cycle of when you start having these conversations as a financial advisor, as a life advisor, and sure, some accountants might be into estate planning and things like that, but that’s kind of paperwork, for the most part. not to belittle it, but it’s okay, i know the forms that need to go here, and we can set this up over here, and this bank, and this trust, and they can do that. it’s great, because all of a sudden, it’s this great mystery of, i don’t know how to do that. okay. but then it’s the conversations that happen at very specific pointed times. it’s the same thing in your business client’s life. you can kind of see when it’s time to have these conversations. you can even mark it off on your calendar, like, okay, time to start talking about the-
[00:18:03] rory henry: our friend ron baker likes to call it from womb to tomb, and maybe that’s a good segue into this, philipp, because i know you have talked about early advice 1.0, which was transactional. you have advice 2.0, which is goal-based, and then you have advice 3.0. can you talk about the evolution from 1.0, 2.0, 3.0, to really provide this comprehensive or holistic advice for our clients out there?
[00:18:29] philipp hecker: yeah, rory, and i believe you’re referencing some interesting research that came out from a couple of years ago from j.d. powers, the big consumer client satisfaction research shop, and they indeed surveyed american investors and advisors, and they categorized the advisors in terms of their value proposition and business model today into three buckets. does the advisor provide only sort of transactional advice, think investments, my portfolio is better than theirs, versus is the advisor leading with a goals-based advice proposition, think financial planning, you know, as a pillar of that type of practice, and the third model is truly comprehensive advice that does transactional for sure, that does financial planning for sure, but then also comes close, i think, rory, to your vision of the virtual family office really serving the clients across balance sheet and across generations on all their wealth needs broadly defined. those are the three models, and then they surveyed, you know, both advisors to figure out who fits into what model and clients, investors, on their likes and dislikes of the models, and just to read out the data and people can google it, you know, j.d. powers, wealth management, advice experience, and net promoter score, the transactional advice model, 42% of advisors still fall in that business model today. clients who experience that business model have a net promoter score of 33. so 42% of advisors, 33 net promoter score. when it comes to goals-based advice, again, think financial planning, 47% of advisors have that as the core of their value proposition, leading to a doubling of the net promoter score to 66. it really makes clients more happy if you do financial planning with and for them as opposed to just, you know, the transactional investment side of the equation. leaving the most comprehensive advice model, only 11% of advisors are truly providing comprehensive advice today, coming close to your model, rory, of the virtual family office, but when they do that, the net promoter score shoots up to a whopping 88%. so in a sad way, the most dominant model, which is still the transactional one, has the lowest client satisfaction, and those advisor practices who evolve towards the more comprehensive benefit from having demonstrably happier clients. super interesting data from jd powers. i’m sure we can put it into the show notes for people to read more.
[00:21:28] seth fineberg: you need that stickiness. you need that kind of wow factor, surprise and delight, they call it. i guess stickiness is kind of more of a marketing term, but whatever it is, once you start looking at, you know, from the accountant perspective, once you start looking at your practice really more as a business and going, well, where’s my value? what’s the value of me? i even just recently wrote about that just in a blog i did. it was just like, what, you know, what constitutes your value? like what is your value? what do you think your value actually is? accountants are guiltiest, i think, of undervaluing themselves at every turn. but now, with all we’re doing here, folks who are watching this, and with rory’s book, it’s just presenting you with an opportunity and showing you how actually a natural of a step it truly is. and partnering with businesses like philipp’s, like rory’s, and a dozen others. yeah, exactly. you know, we all, you know, just, you know, again, another adage, you know, we all go further together. so the partnership idea is really, you know, one that sings true in this scenario.
[00:22:47] philipp hecker: i couldn’t agree more. at the end of the day, it boils down to me to relevancy.
[00:22:53] philipp hecker: are you, as a financial advisor, are you, as an accountant, relevant to your client families? ideally, not just during tax season, but ideally throughout the year. ideally, you are the first or one of the first calls whenever a big life event, you know, happens that upsets the apple cart in the lives of your clients. relevancy is what it boils down at the end of the day. and sometimes that relevancy needs to be reactive. we need to react as advisors to unforeseen life events that invariably will happen. sometimes it’s necessary and okay to be reactive. don’t get me wrong. sometimes reactive is good. sometimes, though, we can and should be proactive. there are many wealth management milestones that are highly predictable. for example, turning 62, the big question looms, do i start taking social security benefits now or am i better off waiting until later? pop quiz question for you, seth. what percent of americans make suboptimal choices around the question of when to best start filing for their hard-earned social security benefits?
[00:24:15] seth fineberg: i’m going to say it’s a pretty high number, phil. i’m going probably, you know, 80 plus percent, 85 even.
[00:24:23] philipp hecker: unfortunately, you are spot on. there was some super interesting research done by professors at boston university recently that studied, you know, the actual filing habits of americans. and you are spot on. 90 percent should file later, not at 62, but only 10 percent actually do so, i.e. around 80 percent. yeah.
[00:24:47] seth fineberg: unless you’ve got some other investment, some other life situation where it’s like, yeah, you can do that.
[00:24:54] philipp hecker: many of your clients should wait until later. rory, pop quiz question for you. when they file too early, what do you think they leave on the table? what is the median foregone lifetime benefits that they leave on the table by filing too early?
[00:25:12] rory henry: well, we’ve done this, philipp, and let me see if i remember correctly. but i think it was around $180,000.
[00:25:19] philipp hecker: $182,000 at the median. when you focus on the top quartile of income earners, that goes up to $290,000. we’re talking meaningful value here that americans are leaving on the table because they’re not getting the right advice on the right topics at the right point in time. to tie that back to our audience, what may that mean for you as accountants? perhaps you don’t have to be the one that provides the detailed guidance on how to think about social security benefits. perhaps you’d be the one that for your clients in their late 50s, early 70s, as they start to think about that best question, you simply ask, has your financial advisor discussed your optimal social security strategy with you? if not, suggest to them to reach out to their advisor to have that conversation. it’s an important one. there are many more like it that are age-based, that are highly predictable, where caring advisors can, should, and do step up in proactive ways.
[00:26:29] seth fineberg: again, when we talk about advisors, and i love that we can use the same language, it’s not just financial advisors. it’s someone who has your future, the future of your business, the future of the people that work for you, and also the individuals who have you really shepherding them through their own life changes. you don’t hire a cpa lightly just because they’ve got those three initials in front of their name. it does lend some credibility, some force to it, some knowledge, and all of this. to be fair, there’s a lot of training and a lot of testing, a lot of work that goes into getting that licensure, but outside of that, it’s the relationship that you have. if you value it, sure, doing your job is great, but showing your worth and your own value and the fact that you care enough to go, okay, look, i know this is coming up. let’s schedule some time to talk about this.
[00:27:39] rory henry: let’s have a conversation.
[00:27:40] seth fineberg: that just automatically, those net promoter numbers that you mentioned, that magical number in the client’s mind goes up exponentially by the simple act, that human act of showing that you care.
[00:27:58] rory henry: maybe i want to have you touch on, philipp, because i’m a big believer in making the process as frictionless as possible. your solution really embeds these type of moments into a current crm. can you talk about how you’ve streamlined this process and how you really provide practitioners out there different ways in which they can communicate these various timelines or these various moments that matter, whether it’s life events or age-based milestones? can you talk a little bit about your software there?
[00:28:30] philipp hecker: oh, rory, happy to, without making it too much of a sales pitch. if people want to learn more, they can hop onto bentoengine.com, but just at a high level, you alluded to it. we plug into the leading crms that are broadly used out there, salesforce dynamics, redtail wealthbox, all those great systems. we mine the data, the client data in the system to identify upcoming advice opportunities. when we find one, we alert the advisor via a task, a workflow in the crm and give them compliance pre-approved advisor materials content to execute with. at a high level, think of bento as a one-two punch technology to surface next best action alerts, bit of a buzzword in the industry right now, combined then with the content that people need to actually execute with and deliver the advice. for our audience here, i would also highlight for every topic, we have 38 topics, 38 moments that matter loaded in the system. we not only have multi-format client materials, but also internal use-only advisor faqs where advisors can get smart real quick on how do qcds, qualified charitable distributions at age 17 and a half, how do they work? exactly. if you want to connect with the next gen of your client family and get working papers for the 14-year-old kid or grandkid, how exactly does that work in your state? again, the materials will talk you through that. bento is in many ways a client engagement system, allowing advisors to proactively serve their clients during moments that matter. and it has a baked-in advisor learning and development, advisor training aspect, because frankly, that’s important. these wealth planning topics are complicated. laws and regulations are changing all the time. and even the best advisors-
[00:30:35] seth fineberg: same thing in tax and accounting.
[00:30:37] philipp hecker: have a hard time staying on top of that. so rory, that’s where technology can come in and really help amplify the human advisor. what we like to say is we make human advisors more human more often. using tech to make humans more human more often is what we’re all about.
[00:30:57] rory henry: yeah. and i know we’re going to have the estate planning technologies come on here. i always say that estate planning really provides a family office level of care, really connecting generations. i think that’s the power of this model is really being able to provide and give financial literacy and education to the next generation. can you talk about the next gen work that your platform offers here? because i know it’s important. it’s part of your mission here to provide financial literacy to more folks out there. can you talk about ways in which you’re helping educate the next gen?
[00:31:33] philipp hecker: absolutely. so there are two content programs that help advisors to connect with g2 or g3 of the client family from very early on. one is there are a few age-based milestones that uncle sam gives us that provide great opportunities to lead with timely topical advice. for example, i mentioned age 14. that’s the legal working age in the u.s. kids can legally start earning income at the tender age of 14. not in all, but in the vast majority of states, they need working papers to do so. how you get them differs state by state. sometimes it’s via the school system, sometimes the town hall. with the legally earned income from summer jobs, from babysitting, from lawn mowing, whatever it might be, we advise our advisors to advise their clients to then open custodial ira accounts under the kid’s name so that the kids get to enjoy the power of tax deferred compounding for decades to come. think about it. the advisor connecting with g2 or g3 at the tender age of 14, helping them to learn and appreciate earning, saving, investing, and doing that in location-aware, tax-smart ways, i hope you concur, everybody benefits. a great introduction to the children, a great trust builder for the parents, and guess what? you open custodial ira accounts at your own firm with the next generation. everybody wins when you lead with timely, personal, proactive advice.
[00:33:20] rory henry: yeah, they call that money in motion. i know there’s the great wealth transfer, philipp. the latest stats, i believe, surreally says $124 trillion will be passing down through 2048. so there’s tremendous opportunity to start providing holistic financial planning and wealth advice to the next gen.
[00:33:39] philipp hecker: well said.
[00:33:41] rory henry: yeah. all righty, so let’s continue on here. i know we had on the docket the mckinsey study that just came out that says by 2034 that there will be 100,000 less advisors out there. i know, philipp, you know the wealth space very well. i’m sure that you have ways in which we can probably improve that. but i think this is a tremendous opportunity for those in our audience that are watching here to provide more future-facing advice and fill that void of financial advisors that we’ll be looking at over the next 10 years or so.
[00:34:14] philipp hecker: yeah. so indeed, mckinsey projects a gap of 100,000 advisors over the next 10 years. today, we have roughly 300,000 in 10 years’ time. they predict that we need 400,000. we are 100k short. big picture-wise, personally, i believe that analysis and share that sentiment because from my perspective, too, the demand for skilled human advice will only continue to go one direction in this country, and that’s up. why? because of the massive wealth creation in this country, the splintering of the wealth that you alluded to, and increasing complexity from a regulatory point of view. all of these drive the demand for skilled human labor. at the same time, the supply of that skilled human labor has been flat at best. let’s be very honest. despite our best collective attempts, we are flat from an advisor coin point of view, and we’re facing a massive retirement wave, given that many advisors are at the tail end of their careers.
[00:35:21] rory henry: the fail rate in the financial, the wealth management space is horrible. it’s five to seven years. what is it, 80% or 90%, philip, we’re seeing drop off?
[00:35:33] philipp hecker: you allude to, i believe, the training programs and the intake at the front of the funnel. it’s hard to break into this industry and make it as a young advisor. big firms, the big wire houses have had training programs for decades by now. they’ve tried very, very hard with mixed success at best. it’s invigorating for me, however, trying to see the glass half full here, to see skilled labor coming in via different channels. the ria space, registered investment advisor, very fragmented, 16,000 firms, mostly small shops, but many of them are growing and starting to train their next generation of advisors themselves. at the same time, we see a emergence of interesting academic offerings that not only help existing advisors to upskill themselves, but oftentimes also serve as a conduit for career changes to come into the wealth management space. public service, shout out here. there are wonderful programs out there at many institutions, such as kansas state, university of georgia, interstate, georgia tech, texas, and so on, that provide wonderful undergrad and graduate and phd programs for people that want to enter the wealth management space or upskill themselves. i welcome that development because i believe for our industry to become more like a profession, we need that rigorous upskilling that you see in other professions and the academic route, again, can be a wonderful way of bringing fresh blood outside talent into our space. last comment from my end on that end. in addition to that, that financial advisor shortage is a massive opportunity for the adjacent fields, including accountants, to perhaps step up and fill in the void to some degree, eager to hear what seth might have to say on that front.
[00:37:42] rory henry: yeah. seth, they are the financial first responders. they are the ones that most folks go to when they have an issue, they have the data, they have the trust.
[00:37:52] seth fineberg: like i say in my chapter, and i mention it a lot to my accountant, the connections that i have, accountants that i talk to, is that you have the potential to kind of write your ticket as to what you want to do. if you like the work that you’re doing and you’re comfortable with it, great, but just know that there’s also the potential for more. not that you should feel the pressure of, look, the accounting profession is also similarly going through a period of contraction as well. not as many accountants do the job. now, the answer to this, i think, is that kind of a mantra that i’ve been saying, particularly the really tax-centric folks out there, the burnout that is happening in the profession, that continues to happen, not a new thing. it’s dealing with a lot of the volume of work. and because of how they’re structured, they feel they need to serve x amount of clients to make y at the end of the year. and it’s hard to kind of start moving away from that. but once you start doing that and start showing what i’m calling value over volume, a whole world opens up to you where you don’t actually have to work with nearly as many. and it won’t need as many of you to do it. now, we haven’t even touched on the whole ai discussion yet. here’s an opportunity where a technology platform, now, ai, as you know, is not software. it’s not just some new software trend. no, it is a technology trend that has the potential because it needs, unlike software, which kind of just goes one direction, it’s built to just go if-then, and eventually it’s going to hit a wall, and you have to add things onto it, whatever, whatever. ai has the ability, and this is the scary part, to learn, to work with you alongside of the advisor, alongside of the accountant, alongside of the professional that will help with the work. so maybe those numbers of, well, there’s only going to be this many at this time, won’t really be such a threat. because you’ll have technology platforms like ai to kind of help with those who are remaining to do the work. and then the human obviously has the benefit of the real value, to see the other human and be proactive and really showcase their value. we’ve seen time and time again what people are willing to pay for when they feel they’re getting something out of it, when it’s worth it to them. i’m sure in the financial advisory field, as well as the accounting field now and of the future, it really is going to all be about what are you bringing to the table? i’m excited for it, as scary as it is, because we’re just in the earliest of days. and i remember when there was a similar kind of shiver that happened 15-odd years ago. it was a whole cloud. cloud’s going to start replacing this, that, and the other thing, because what it thought it threatened, really, at least in the accounting world, was the hourly bill model. it’s like, well, how can i charge for things that it only takes me moments or maybe a full day to do, whereas something would take hours or even weeks to produce? and the upside to that was, well, for the first time, you got to work with clients who in real time without having to go to them and bring files or have them give you files to work on on your computer and worry about what version of what software and any of that technical stuff that they had. and you didn’t need as much paper. you didn’t need to do that. you could be on the same screen with them and see what they did or didn’t do. again, the whole potential of it was, you had folks who were afraid of it, you had folks who were embracing it, and you had folks who kind of completely poo-pooed it. it’s going to go away. dude, i remember back in the 90s, people said, oh, the internet, yeah, that’s going to last. so i have two comments to build on your observations real quick. yes.
[00:42:42] philipp hecker: the first one is, i think it’s a really good point that you made, and i think it’s a really really good point. the first one is, i like the saying, i’m not sure who did it, but ai will not replace advisors. however, advisors using ai will replace those who don’t.
[00:43:06] seth fineberg: there’s a mantra going on in accounting too, philipp.
[00:43:08] philipp hecker: i like that mantra very much. it’s the battle cry, it’s the invitation to constructively open up and deal with technologies such as ai, because if you don’t, you won’t be replaced by the technology itself, but you will
[00:43:23] seth fineberg: be replaced by those who do. the firms that are embracing it, the firms that are using it to their
[00:43:29] philipp hecker: advantage with their clients, yeah. and on that note, technology is your friend, not your foe. it can be and is the force multiplier that you need for us to compensate for the advisory gap that rory highlighted. yes, the same number of advisors can serve more clients better
[00:43:54] seth fineberg: by using technology. same thing in accounting. and those who’ve embraced it are learning that. and some might fall somewhere in the middle. everyone has their comfort zone, right? but you have to take that step. you have to be willing to really see what’s available to you now, not just with technology, but with a lot of these opportunities, like potentially partnering with a bento or an afo or dozens of other firms that are out there to work with you, because you all grow and go further together. i know i said that before, but i can’t believe it
[00:44:34] rory henry: any harder than i do. yeah. there’s so much opportunity here in the profession. that’s what i love the tax and accounting professional, because they are the ones that have intimate knowledge many times of the small and medium sized business centers, the backbone of our economy. and i believe we can get more people on a holistic financial plan to really map out where they want to go. and we can be those guides for them. i referenced the hero’s journey in the book. and we as advisors don’t need to be the heroes. we need to have the clients be the hero. and we are guiding them to really the life that they want there in the future. all right, gentlemen, this has been awesome. i want to thank you so much for contributing to the book, providing great chapters and coming on this panel today. if folks want to learn more about what you’re doing, why don’t you let them know how to reach you?
[00:45:27] philipp hecker: i’ll go first. bentoengine.com. we’re also quite prolific on linkedin. my name, philipp hecker, bentoengine.com. and rory, thank you for the great partnership on the book. and seth, i always enjoy our conversations. i think we all concur, including myself from the wealth management side, that accountants are facing an interesting time full of opportunities. and if you’re listening to this pod, if you’re watching this webinar, if you’re buying and reading rory’s great book, you’re on a great journey and have many, many wonderful opportunities
[00:46:06] seth fineberg: ahead of you. no doubt. for me, it’s pretty easy. you can go to accountantsforward.com or find me at sethfeinberg.com. my website is my business card. it comes complete with what i do and why i do it, as well as some articles of the day. you can sign up for my newsletter real easily. and i’m in a partnership with cpa trendline. so if you are a cpa trendline subscriber, it’s very likely that you will also receive my newsletter as well. so it does go out to some of you. but to definitely guarantee that you get it, you can sign up with me. and i’m also pretty active on social media, linkedin in particular. i share a lot of insights there. i get conversations going. i love doing that. and yeah, this has really been great, rory. thank you so much, man.
[00:47:02] rory henry: thank you, seth. i appreciate it. and then next up, we have vanguard, and we’re going to talk about their multi-decade long study on the value of advisor and behavioral coaching with michael joseph. and we also have the folks over at trust & will talking about how to incorporate estate planning into your practice. that’s a full lineup, man. yeah, we do. we’ve got a bunch of these coming up. and then obviously, you get the book at cpa trendline shop. and you can reach me on linkedin. i’m always there. also, the book website is advisoror.com. thanks, guys. thank you. great presentation.