← AICPA Personal Financial Planning (PFP)
AICPA Personal Financial Planning (PFP)
Deeper CPA Financial Planning Connections | Celebrating 30 Years in the Industry {PFP Section}
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- [00:01]
A
Welcome to AICPA's Personal Financial Planning Podcast. This is Kerry Sinnott. On behalf of the AICPA Personal Financial Planning Division, the home for professional personal financial planners, we're happy to bring you insights from experts in tax, retirement, estate, investment, risk management, practice management, and client relationships. Be sure to Visit us@aicpa.org Pfp to find more resources and tools designed to help you guide your client. And now, over to our guest.
- [00:40]
B
Welcome to another episode of Deeper CPA financial planning Connections. This is Lyle Benson and I'm joined today by Chris Benson. This is the 30th episode of this podcast which really delves into deeper discussions with leading CPA financial planners in our profession. And it's also the 30th anniversary of the founding of our firm. And Chris, my son is a key part of the success of the firm, so I thought it would be appropriate to have a discussion with him about the CPA financial planning profession and his background as part of this discussion. Chris, welcome to the conversation.
- [01:13]
C
Thanks for having me.
- [01:15]
B
Why don't we start out, Chris, by talking a little bit about your background and how you got into this area of financial planning and CPA financial planning world. And I know you really didn't start this way from a college perspective.
- [01:28]
C
Yeah, as you know very well, we went on college visits looking for engineering schools. I thought I wanted to be an engineer. Never really gave any thought to financial planning, accounting, anything like that. Going into college and after less than a year of engineering classes, I decided that wasn't for me. I switched to a general business degree. At first I took an accounting class and really liked it and felt like it fit me very well and wound up switching into accounting. And I did take some investment courses. I did a student managed investment fund and I think that kind of piqued my interest in investing, too. I had both investing and accounting background in college, actually interviewed at a few investment bank firms in addition to accounting firms, and wound up going to an accounting firm to spend time in their tax department. So after college I joined Grant Thornton and spent five years in their tax department. While I was there, I got my master's in tax and passed my CPA exam and my PFS credential. So that's how I got to where I am now. And after that I joined you.
- [02:32]
B
That's a great summary, great overview of that process of getting there. That decision to leave a big international CPA firm with a lot of opportunities where you were focused on the tax area, that was a big decision to make, to move Into a firm, a small firm like I had, especially at that point where it was really just small practice that I'd had going for about 15 years at that stage. How did you make that decision? What were the pros and cons that you thought about as you made that decision to make that transition to a firm like ours?
- [03:01]
C
You'll remember we had a lot of conversations about it. It wasn't something that we decided on overnight. I certainly enjoyed my time at Grant Thornton and there were a lot of things to like about being at a big accounting firm. We worked with a lot of people. I had a great community, friends, people that I worked with there that I was giving up if I came to work with you where it was a much smaller firm and we don't have happy hours and we don't have get togethers and things like that like we did at a bigger firm where there was a lot of people working there. So that that took some time for me to get past. I also had some really strong connections there and I really enjoyed working with the people there. So it was hard for me to say goodbye to them. And I think you'll remember when I did transition, I actually spent a tax season working for both. So I gave them some extra time to get through tax season, started working with you. I think that really what I saw was that what I was doing there wasn't what I wanted to do for the rest of my career. I didn't want to just be doing tax. I saw what you do. I know what you do. We had a lot of conversations for a couple years at that point about how you help clients. And I had tried at Grant Thornton to get into the wealth management space, or private wealth services, I think is what they called it at the time. But there really wasn't that much support. What you saw early in your career was that the accounting firm, the big accounting firms, that's not really a priority for them. And I thought that I could do work that I enjoyed more if I joined you. And I think it's been a pretty good fit so far.
- [04:25]
B
Oh, it really has. And it's such a different approach, you're absolutely right, than what a lot of the big firms do in terms of their focus in this area. But tax planning and compliance are still an important part of what we do. It's something we struggle with, obviously, a little bit, especially in April and October when we get overwhelmed with the tax side of the business. But it's such a key element of the services we provide when we're Providing that all around wealth management expertise to clients. It really does dovetail into it. Give me your thoughts on why that is an important part of what we offer to our clients.
- [04:56]
C
I think we both agree that the tax work that we do, the taxes that clients pay, is a running theme through everything in their financial lives. Everything kind of ties back into that. When we work with clients, we always start with a financial planning engagement. And that financial planning engagement kind of starts with collecting their tax return. So we start with a tax return, we review the tax return. It gives us a, a great base of knowledge about the client. You can learn so much about a client just by looking at their tax return. So we start there. That's almost, that's really the first thing we request from a client. And we use that to understand a lot about their situation. You can figure out their investment style, what are they invested in. You can look at their cash flow. We do a reconciliation to figure out how much money they're spending, how much money are they saving. So that really is the base of all of our client relationships. So it makes sense for us to be the ones to prepare that tax return. We do the tax return and then we do tax planning throughout the year. As we're doing investment management work. If we're rebalancing a portfolio or deciding if we want to take losses or gains, or doing RMDs and qualified charitable distribution. So many things that we do throughout the year for our wealth management clients tie into the tax return. We do the tax return. We do this planning throughout the year. At the end of the year, we typically do a tax projection for every client to see where they stand. Should we do anything else before year end, do they need to make any estimated tax payments? That's easy to do because we already have it in our system. We're doing the tax return, it flows right into the projection. We can talk to the client. It's another touch point for client. Clients love that we can do everything and handle everything for them and then it dovetails right into the next year. So now we're doing projections. We're talking right now in December and we're doing a lot of projections for clients. And when that rolls forward to next year and we start collecting tax documents again, first of all, we already have most of the tax documents because we're doing everything for them so they don't have to collect as much information for us. And then we do the tax return. And when I final review a return, the first thing I do is look back to the Projection and does it compare? Do we remember everything? Do we miss anything? Is there anything we should be thinking about for next year? And then the cycle starts all over again. So it's really just a cyclical way to work with clients. And the taxes, both in the beginning of the year and the end of the year tie everything together.
- [07:06]
B
Yeah. And it really does help cement the relationship we've got with the clients. It's a regular touch point where we're in touch with them. Anything that comes up that's got financial implications probably has some tax implications as well.
- [07:18]
C
So.
- [07:18]
B
So we're trying to weave that in throughout our discussions, throughout the course of the year. So I think that's absolutely right. That's such an important part of the overall plan and especially for a CPA financial planning firm to have that foundation that they bring to the table.
- [07:31]
C
Yeah, I think what clients want to do more than anything often is save on taxes. And we can actually present a concrete kind of way to save them money and to improve their long term returns by minimizing taxes. I don't think many people in this day and age can really provide a huge benefit on the investment side. You're not going to beat the market by 1, 2, 3% a year, but you can certainly save them a lot in taxes and costs and I think that means a lot. And understanding how taxes work is the.
- [08:03]
B
Only way to do that and weaving that in through all the planning that we do. And I think you're absolutely right on the investment side. But at the same time, investment advice is an important part of, I think, what many clients think, think that they want from a financial planning process. And we've taken a different approach maybe than much of the profession in that we have never been an assets under management based fee model in the way we approach this. And I think from my standpoint, I've always thought about the reasons for that as we really feel like the value we provide for clients is really in the planning. That's the essence of what we do. And we see less value added by the investment side. I'd love to hear your perspective, Chris, on how our model, business model from an investment standpoint plays into the services we provide.
- [08:47]
C
Yeah, I think that there's no perfect business model for what we do. I think that what we try to do is align our value with our fees, like you said. So we think that most of our value is in the planning and in the tax work. And yes, we're doing investment management, but we don't think that we're Beating the market. We're not picking and choosing stocks and individual stocks and bonds. We don't think it makes sense to tie our fees to the value of a portfolio. We also, I think, try to minimize conflicts of interest as much as possible. And I don't think you can ever completely eliminate conflicts. Every business model has some kind of conflict. I think there's some under the AUM model that we don't have to worry about. We don't care if a client has their assets managed by somebody else or if they hold some accounts in a different brokerage firm than who we use as our main custodian, as long as we can connect and use technology to review everything and see everything. And we're agnostic from that standpoint. Yes, it's easier if we're managing everything and doing things for clients, and most of our clients prefer that. But because we're not billing based on what the assets are and where they are, we don't have to worry about that as much. I think it avoids a bit of a conflict from that standpoint. It also allows us not to worry about if a client wants to take money out of the market to buy a house or to give to kids or whatever they want to do. That's not going to impact our fees. Our fees are based on the complexity of the client situation. And obviously that complexity could change over time. But I think it aligns us better with what the clients want and what we value. Obviously there are some negatives to that, and I see that when I look at other AUM firms. We don't have a automatic increase every year from the growth of the market. So if we were in A, um, B model, market's up 20% in a year, then our fees are up 20% or whatever it might be based on the portfolio that we have. We have a lot more difficult conversations with clients where we have to raise fees and periodically assess fees and see how do we keep up with kind of the cost of living increases for our staff and everyone else. So there are some downsides for sure, but I think that we've found this model to really work for us.
- [11:02]
B
Exactly. And I think from a profession standpoint, it seems like there is a movement away from solely AUM based fees. I was at a conference, Bob Varus conference recently, and some of the work he's done on some of the fee studies he's done and surveys and all show that there are more firms that are incorporating other approaches, whether it be fixed fees, retainer sort of fees, hourly fees, not 100%. But in some ways to complement an AUM based fee.
- [11:30]
C
Yeah. I don't think we'll ever get 100% away from the AUM fee. I think it's too entrenched and too much of a lucrative business model for the industry. And it really works. And it works well in many respects. But I think that over time more people will move to a fixed fee. I know I see a lot of clients coming to us because we have a fixed fee and they understand that and it makes more sense to them. Why am I paying 1% of my total portfolio? It should be based on what you're doing for me. And if I want you to do X, Y and Z, then how much does it cost to do X, Y and Z?
- [12:04]
B
And we've got some clients that still want an hourly fee. I especially see that with kind of our family office higher net worth clients that who. Our services can fluctuate very dramatically from year to year. A spouse dies and we spend a huge amount of time over the course of a year dealing with estate matters and transition from that standpoint or other issues that arise during the course of a year. For some of those clients, they just, they are more comfortable in that kind of setting. Yeah.
- [12:29]
C
And our flexibility and the way we bill allows us to work with a lot of different clients. And I think we see that in our client base. We work with clients from half a million dollars in assets to $100 million plus. And that's partly due to the fact that we do have hourly fees and we have fixed fees. And it's not just one blanket model.
- [12:50]
B
Right. Exactly. How do you see that the professional landscape has changed over these 15 years that you've been in this area? I know as I was reflecting on the 30 year anniversary of the firm, I feel like it was a different world completely when I started the firm 30 years ago in terms of competition, in terms of the overall investment environment and just the general environment of people being able to access information so easily. What do you see as the changes that happen in the 15 years since you've been here?
- [13:17]
C
Probably enough for us to spend a couple hours talking just about the changes. But we'll try to keep it simple. I think two things stood out to me. One is that financial planning has really become a profession as opposed to just something that's done on the side by an investment manager or kind of something that isn't the core of what people do. There's financial planning programs at tons of universities now. I don't think that was the Case when I came out, maybe a couple. Might have been a couple programs out there, but not many. I think that has certainly changed who's getting into the industry. And it's no longer. You no longer have to either go the sales route where you're a salesman for a few years and then claim to be a financial planner, or become a CPA for however many years and then start doing financial planning. You can now actually train to become a financial planner and do planning work, which I think is great for the industry and the profession going forward. The other thing I would mention is obviously technology has changed significantly in 15 years, both for general consumers of financial information and for us as a firm. When I started, you remember, we had accordion files on every client, and every tax document was in paper and every investment report was in paper. And we would pass them around the office and we'd carry boxes of files around if we wanted to work on things. And now everything is electronic, everything. And we can do more for our clients and we can work for more clients now that we couldn't have worked for 15 years ago. We could never have worked for some of the clients that we work for because of the technology limitations. And having one person try to manually input things and pull statements and things like that that we can now get electronically is. It's been a massive benefit to our firm, I think, and to our clients. Because I think the more clients we can help, the better.
- [15:08]
B
Oh, absolutely. I think the technology is a great point that has enabled, I think it really changed the whole nature of our practice in the investment area to be able to have. We use Black diamond software for the portfolio management side, and to be able to have that access that information on a daily basis and be able to have clients access it as well has really transitioned some of that. And that's one of the things I think clients getting. Accessing information too. I think it's changed the perspective a little bit in terms of the services we provide. I think clients are much more educated. They come to us with a lot of background information. It's not always right and it's not always good advice, but they've done a lot of homework a lot of times from their side. How do you see us supplementing that? And do you see us in this age of AI, does that replace the services we provide?
- [15:54]
C
I don't think it replaces us. I think it will augment us, just as technology always has augmented what we can do as long as we learn to work with it. The calculator didn't replace us. Doing calculations, it just made us do them easier and do them more quickly and more efficiently. Same with spreadsheets and rebalancing software that we didn't have and tax programs. We know you used to have to manually write down the tax forms and you don't have to do any of that anymore. So AI is still developing and I'm intrigued by it and I think I use it fairly often, mainly as something to almost bounce ideas off of. I'll go in and client asks a question, I'm not sure of the answer. I research the answer, then I go into ChatGPT or perplexity and ask that what it thinks. And then I can dig further into that. And I think clients are doing that too. So you have to expect that clients are going to go to these AI chatbots first. They're not always right. They'll get better and better, but the more we can use that and use that to help us help our clients, I think it's going to improve everything we do for clients and they're still going to want a person. This is a money issue. This is not something that people are going to easily trust an AI on. So I think that we're always going to provide a role there. But you're right. Clients come to us now, they've done their research, they know what they want. I met with a new prospective client yesterday who's now going to become a client, and he had already mapped out what his portfolio, what he thinks the portfolio he would have done if he did it himself. We're going to tweak it a little bit and work with him on it. But he wants us to do it because, A, he doesn't want to have to manage it himself, B, his wife doesn't really understand how to do it, and he wants us to be there in case something happens to him. And see, it just makes sense to have us do everything together. And we can do the taxes and combine all the planning into one. So, yes, you can figure out what portfolio you want, but how does that work with your tax return? And who's going to be there in times of crisis like 2008, 2009 or 2020, March of 2020, when the markets are going crazy and they need somebody, not a robot, to tell them, stay.
- [18:10]
B
The course and also be there when things change? Obviously things evolve. Things happen over the course of a lifetime, that particular client has a couple things that were going on that could go one way or the other, that we can be there and be the sounding board for them. When they. When they face those decisions.
- [18:25]
C
Yeah, exactly.
- [18:27]
B
Really important. Tell me about what you enjoy most in the day to day work that you do and how do you stay focused on that too? Because you've got a lot on your plate. You're essentially running our firm now. All the new clients come to you. We're not a big firm. We're what, 10 people total, including some part timers and a couple remote staff. But it's a balancing act.
- [18:46]
C
It is. And sometimes the things that I enjoy most get pushed down that list. When I think about what I enjoy most, I'd say one is client conversations and meetings with clients. Obviously, we try to do that as much as possible. And having those conversations and not just talking finances. Yes, we get into taxes or investments with each client, but just getting an update on where clients stand and what's going on in their lives. And right now, obviously, we're a month out from election, so every conversation seems to start with that. And dealing with those politics is something that we deal with in every client conversation. But I really like our clients. I like working with our clients. And so it's nice to be able to work with people every day. I would say the other two things that I really enjoy is reading and writing, and I do write for our website, and I'm constantly reading and researching and learning. And I think that's what I love about our profession, is that there's always something new to learn, Whether it's a new tax regulation comes out, or they change the tax laws, or some new investment approach, or you're learning about private equity investments, or there's so many different things I'll never know everything. And every time you learn one thing, you learn how much more you don't know. But I love that and I like having time, and I do try to set aside time for that. Sometimes it's at night when I'm catching up on my reading, but still I find time to continue to learn. And I think our profession in general, just as CPAs, has always been kind of pushing forward the ongoing learning and continuing education. We have so many requirements in terms of what we have to keep up with. But I don't see that as a burden to me because I like to do those conferences and I like to do continuing education. I'm not signing up for things just to get the cpe. I sign up for things that I think are interesting and valuable, and the CPE comes along with it.
- [20:41]
B
A great perspective. Absolutely. And there were client relationships, obviously are something you really thrive on. And really enjoy. And I've seen you evolve in that over the last 15 years and it's been amazing to watch that. Another part of what we've both done, both. Another aspect of how we've both been become leaders in the CPA financial planning world is that we've jumped in and gotten very involved in our association, various associations, whether it's the State Society or the AICPA or other groups. Tell me a little bit about how that community of the CPA financial planning world has helped you along the way and what role has your involvement in that played in the evolution of the practice?
- [21:19]
C
I guess I would start from the beginning back in. I guess I was a senior in college when I first went to the PFP conference, the AICPA's PfP conference. I remember seeing Jack Bogle speak and I think that was one of the things. That conference was one of the things that really piqued my interest in getting into financial planning. Definitely. And I saw that conference and once I joined you, how great that network of other advisors around the country you had was and how valuable it was to you and how much you learned from them and lean on them and lean on each other. When I started with you, one of my concerns was going from Grant Thornton where if I had a state tax issue, we had a state tax department that I could call up and find the answer to or whatever the technical question was. There was somebody who was an expert in that. And we're at a small firm, we don't have that. But you had contacts all over the country through your work with AICPA to where I could call somebody up if I had a question about something and they would be happy to answer and help me out. So I saw right away how valuable that was. Of course, I started attending the conference as well and met a bunch of other younger advisors my age at the time. And we made a good connection and formed a study group. And we meet now once a year. We have calls periodically. Anytime anything's going on in my business or I have questions or challenges, we reach out, we text each other, become very good friends, but also people that I lean on and I rely on and making business decisions or client situations. So I think it's really helped me feel like I have a bigger firm, feel I have people I can lean on and a small firm. And I think it's helped us move our firm forward because lots of ideas that I get to implement in our firm come from that study group and come from connections I've made elsewhere and I think just giving back to that community has been incredibly valuable too. And we both do webcasts and webinars, and you do this podcast, and not only do you benefit from it in terms of getting your name out there, having visibility, but you also get a lot back that you don't see initially. We have an employee who found us through some of these connections and watching us. And I have people reach out all the time. And I'm always open to talking to somebody who saw me on a webcast. I just had a webcast a week ago, and I've had a conversation since then with someone who's trying to do what we do. And it's a very valuable conversation. It might not help me right now, but down the road you never know what will come back to you. And I think that's really helped us both personally and as a firm.
- [23:54]
B
I was always amazed from the start, from the first PfP conference that I went to, gosh, in 1987, which I think was the first official AICPA Advanced Financial Planning Conference. And just the willingness of our. Of other members of our profession to share their experiences and share their knowledge and their expertise. And I think that's really helped build. We lift each other up. And I think that's been an amazing part of the process along the way. And I think it's wonderful that you've done the same thing with your generation of CPA financial planners and others in our profession that are essentially leading firms now. How do you see the challenges that they face being different maybe, than what we faced or the direction that they may go in being different?
- [24:35]
C
From a perspective, I think a lot of it's similar, maybe slightly different. I think that we face the same challenges as we get to the same point in our careers as some of the first generation people did. I have friends who started their own firms and have grown to a point now where they're adding staff and what does that look like and how do I add staff and issues that you might have had back 30 years ago, 25 years ago. There's different ways to resolve that now. I know people who outsource a lot of that work. They have administrative help that isn't actually on staff, they're outsourced, or they have a tamp that they're using for the investment side. I think there's a lot more resources there for planners now and different ways you can grow. You also have the option to do a lot more remote work now. You don't have to have an office location. I know Advisors who don't have an office location and don't go into an office ever. Everybody, their entire staff is remote, their clients are spread around the country. They have zoom meetings with everyone. And I think that's certainly different from the way it was in the past. Some of the bigger firms are different from that and they still have a location. Everybody goes in. I think on that side, going to the next generation, there's a lot of acquisitions and mergers and acquisitions going on in the industry and roll ups. And I think that is different from what maybe was in the past. In terms of a succession plan. There's a lot more big firms out there buying small firms. But I think in terms of growing a firm, there's a lot of similarities now compared to what they were when you started.
- [26:14]
B
You're going to be on a panel, Chris, in January at the ASCPA's PfP summit, a G2 leadership panel. And I think that as we prepared for that a couple weeks ago on a call, I was really intrigued by the fact we've got a mixture of types of practices. Someone that's with a private equity backed firm, someone that's with a very successful regional firm. And I think it shows that there's so many different approaches to success in this area. There's not one business model that is the way you have to go. And I've always felt that way with the pre conference session, the workshop that we've always done at the PFP conference on starting and building a practice. There's so many different approaches to this and I think the key is really trying to find the one that fits for you and that you're comfortable with. And the business model that is what you want to do, that uses your strengths in growing, does that make sense?
- [27:02]
C
Yeah. And also that works with the clients that you want to work with. So who do you want to work with? Who's your ideal client and who do you enjoy working with and do you build a firm where you can work with them? So if you want to work with young people, then the historical AUM model is probably not going to work because they don't have the assets to manage. If you want to work with retirees, AUM makes a lot more sense. If you want to work with really high net worth clients, maybe AUM doesn't make as much sense. So finding a business model that kind of works with the clients you want to work with can make some sense.
- [27:35]
B
And that's one of the things that we sort of struggle with a little bit in that we've got this diverse types of clients within the firm. From the multifamily office kind of clients, the real high net worth clients to the typical 2 to 10, the 15 million dollar kind of client that's planning for retirement, trying to get to retirement. I think that can be a challenge in a firm like ours.
- [27:56]
C
I think it's a challenge. I think it's also. It can be a decision too, in my mind. I am the type who likes to take on new challenges, as you can tell. And I don't like to just do the same thing over and over again. And I want to learn and I enjoy taking on a new client who's different from my other clients. I don't think I could work with 100 of the exact same client who's all a retiree facing the same issues every single day. Yes, that's easier and maybe make some more efficient practice. But I like learning about new things and uncovering different areas of financial planning that I hadn't thought about before or hadn't encountered in the past. And our business model is one where we can work with a lot of different clients in different ways. And I like that.
- [28:39]
B
Yeah. And that variety. There's so many times where I'll come up with a planning strategy or something I've seen for $100 million CL that really can be applied in a different sort of role to a client that's got five to $10 million and the crossover there. So many of the planning strategies can really cross over.
- [28:57]
C
Yep. Good.
- [28:58]
B
Any. Anything else we haven't touched on? I think we've covered a lot of ground in the profession and where it is and where it's going. Any other perspective from your side?
- [29:06]
C
No, I think I'm excited to see what happens in the future. I don't know what the future holds. I'm not going to try to predict where our profession goes from here. I think that I'm excited to see and I'm excited to learn more and see how technology advances in the. In the coming years. I'm sure 15 years from now we'll look back and think the way we were doing things was way outdated. And look at all this new technology now and I don't know what that'll look like, but I'm excited to find out.
- [29:35]
B
Thank you, Chris. You've made such a great contribution to the profession. It's been so wonderful to see that happen on many levels, obviously in the firm with being my son and seeing the profession move forward this way. And I'm really excited to see the future as well. This has been another episode of Deeper CPA Financial Planning Connections with Chris Benson and Lyle Benson. Thank you very much for joining us.
- [29:57]
A
And thank you for sharing with our community of listeners. Our hope is that you got a valuable takeaway. Check out the Show Notes to find resources related to this episode. To learn more, visit the AICPA pfp section@aicpa.orgpfp we'd love to know your speaker and topic ideas for future episodes. Send an email to us@financialplanningicpa.org if you get value from this podcast. We would appreciate your support by following the podcast in your favorite podcast app. Thank you for listening and I look forward to next time. This content is designed to provide illustrative information with respect to the subject matter covered and does not represent an official opinion or position of the aicpa, the association, or cima. It is provided with the understanding that they are not engaged in offering legal, accounting or other professional services. If such advice or expert assistance is required, the services of a competent professional person should be sought. The aicpa, the association and SEMA make no representations, warranties or guarantees as to, and assume no responsibility for the content or application of the material contained herein and especially disclaim all liability for any damages arising out of the use of, reference to, or reliance on such material.