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“I think in year one and year two really what we were trying to do that was different was bring advisors together, not with the salespeople who sell technology, but with the people who actually develop technology. The whole premise of T3 was bring your developers to the booth. Don’t bring your salespeople.”

— Joel Bruckenstein, Producer of T3 Technology Hub

Fourteen years ago, an up and coming journalist named Joel Bruckenstein had an idea to launch a technology conference just for financial advisors. Since then, the T3 Advisor Conference has grown from a small group of vendors selling photocopiers and bookkeeping services, into a premier industry event where all the biggest software providers plan to launch their biggest announcements. I spoke with Joel and seven other experts in financial planning for the special edition live from the T3 conference of the Wealth Management Today podcast.

As the third in our series of three special episodes recorded live at the T3 Advisor Conference, this week is dedicated to financial planning. Our group of industry experts include Tony Stich from Advicent, Aladin Abugazaleh from ATA RiskStation, Andrew Altfest from FP Alpha, Kevin Hughes from Envestnet MoneyGuide, Drew DiMarino from Riskalyze and Sara Glakas from Black Barn Financial, Abraham Okusanya from TimelineApp, Joe Elsasser from Covisum, and last but certainly not least, Joel Bruckenstein from the T3 Tech Hub.

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This episode of Wealth Management Today is brought to you by Ezra Group Consulting. If your firm is evaluating new technology or looking to improve your current wealth platform, you need to contact Ezra Group. Don’t spend another day using technology that doesn’t offer an elegant user experience. Your advisors and clients deserve better and you can deliver it to them with the help of Ezra Group.

Topics Covered in this Episode

• Why Advisory Firms Need Better Process Mapping with Tony Stich [03:16]
• How Broker Dealers Can React to Pressures on Their Business Model with Aladin Abugazaleh [08:22]
• The 17 Disciplines of Financial Planning with Andrew Altfest [11:49]
• The Lifestyle Goals Block & The Longest Vacation of Our Lives with Kevin Hughes [15:24]
• Advice for Advisors Seeking Risk Management Software with Drew DiMarino and Sara Glakas [22:46]
• Managing a Sustainable Withdrawl Rate in Retirement with Abraham Okusanya [27:25]
• Social Security Optimization & Tax Implications in Retirement with Joe Elsasser [31:45]
• The Evolution of the T3 Ecosystem with Joel Bruckenstein [37:10]

Companies Mentioned

• Advicent [03:16]
• ATA RiskStation [08:22]
• Black Barn Financial [22:50]
• Bloomberg | BNA [36:13]
• Cerulli [07:43]
• Covisum [31:45]
• Envestnet | MoneyGuide [15:24]
• fp Alpha [11:49]
• H&R Block [36:12]
• Milliman [17:01]
• Riskalyze [22:46]
• Salesforce | Einstein [38:40]
• TimelineApp [27:25]
• TurboTax [36:10]
• Wela | Benjamin [38:13]

Related Articles

• #ItzOnWealthTech Ep. 40: Highlight Reel #1 from the T3 Advisor Conference
• #ItzOnWealthTech Ep. 41: Highlight Reel #2 from the T3 Advisor Conference
• AI Finally Arrives at the T3 Advisor Conference 2020

Complete Episode Transcript:

Craig: Thank you all for joining me here on this special episode of the Wealth Management Today podcast. I’m your host Craig Iskowitz and I run a consulting firm called Ezra Group. We help wealth managers, asset managers and wealth tech vendors make better business and technology decisions. And if you’re a subscriber to the podcast, you already heard our first two episodes that were recorded live at the T3 Advisor Conference in San Diego, California. In fact, we recorded 24 interviews at the conference and we couldn’t squeeze them into just one episode. So we made three, this is the third part of our special conference coverage and it’s dedicated to financial planning. We brought together some of the top financial planning vendors as well as a few innovative smaller firms you may not be aware of. In case you missed the first two episodes, as I said, they were episodes 40 and 41, you can go back and listen to them anytime on our blog at EzraGroupllc.com or you can find them on iTunes, just search Wealth Management Today. And on this episode we have a terrific lineup of experts. They’re sharing the thoughts and trends and updates on their products and trends in the latest of wealth management technology. You will hear in order, Tony Stich from Advicent, Aladin Abugazaleh from ATA RiskStation. Andrew Altfest from fp Alpha, Kevin Hughes from Envestnet MoneyGuide, Drew DiMarino and Sara Glakas, Drew is from Riskalyze and Sara, is an RIA, from Black Barn Financial. You also will hear Abraham Okusanya from TimelineApp, Joe Elsasser from Covisum, and finally Joel Bruckenstein, who you all know. So, without holding up the no longer remember to give us a five star review and like it on iTunes if you’re enjoying this content. And now onto the highlights.

Why Advisory Firms Need Better Process Mapping with Tony Stich

Craig: Kicking off this special episode of the wealth management a podcast. We’re starting off with none other than Mr. Purple himself. We all know him. He’s Tony Stich, the Chief Operating Officer at Advicent. And if you want to know why he’s called Mr. Purple, just check out his LinkedIn profile photo and you will see what I’m talking about. I asked Tony a little bit about some of the things Advicent is doing that they announced at the conference. They’re expanding their practice management offerings and he was talking a little bit about that and why they’re doing it. And also how advisory firms need better process mapping if they expect to improve their advisor efficiency.

Craig: So let’s talk Advicent, let’s talk NaviPlan, all of the products. I know your products are some of the top financial planning solutions on the market, but give us a 30 second elevator pitch for people who want to know.

Tony: For those that aren’t familiar, Advicent is the developer of three financial planning softwares, NaviPlan, Profiles, and Figlo. We’re in about 10 countries on four continents, we service about 140,000 users globally, so we come from a position of thought leadership working with all of our clients to advance not only in our industry, but financial planning software. When you think about it, these largest banks across the globe, largest insurance providers all the way down to independent advisors use NaviPlan in their practice.

Craig: So could you talk a little bit about why you moved into that space and how you’re helping advisors?

Tony: Sure. So we’ve done a lot of research and we’ve leveraged a lot of research. We found an alarming statistic that almost two thirds of advisors do not have correct process mapping around providing financial plans. And we’re seeing this industry shift around the value of plan, however, if advisors don’t integrate that into their process, it won’t be effective for them. They can’t monetize that. And I believe that’s the next area of growth for clients or for advisors is through monetization of fee based services like a financial plan that’s there.

Craig: That’s the next area of growth, monetizing those services.

Tony: Yes, yes. I mean we’ve all heard it before, Craig, right? The 1% AUM, the fee compression stuff. I don’t want to go over that again. It’s a dead horse. But we need to look at ways to monetize our practice but also to create more sticky client base, and that’s through a genuine good financial plan. So we need to, as advisors, be better about creating the process and that workflow to provide financial plans for more people. Let’s be honest, advisors are great at providing advice, they’re not always great at business, right? And if you have a good process laid out intuitively of how and when to bring financial planning into the conversation, it’d be much more effective at monetizing that. Right? There’s a fear, advisors are scared to charge for a financial plan. We are moving into this fee based industry model where we to be competent about the plan and charging for that. So if you can improve that process, you can better demonstrate the value of the plan, which means you can then charge for it comfortably and confidently.

Craig: Yeah. Advisors shouldn’t be scared cause they’re adding value. And if you’re adding value, you should charge for it.

Tony: Right. I almost liken it to, and I know this might be that cheesy cliche, but I almost liken it to purchasing a map, right? Back in the day when you needed to get somewhere, you bought a map and you paid for it because you trusted that map. And this is no different.

Craig: Now it’s all free, we just use the GPS.

Tony: Now it’s a little different, which might be disrupting idea, but the idea is if you can demonstrate the value of that plan, if you can lay out their financial map for them, they’ll gladly pay for it. In fact, studies show that 51% of the US population is willing to pay for a plan. I’m sure Craig, you’d agree with me that the other 49% they don’t know the value of the plan yet. Otherwise they would also be willing to pay for a plan as well.

Craig: And I don’t think a lot of advisors know that.

Tony: Right, they don’t because they’re too scared to ask. In fact, we have a great study on that particular case. So there’s varying levels of plans, right? We talked about the third wave and how that’s a more comprehensive planning using goals-based and cashflow technologies, a couple of data aggregation. What we’re seeing is, for instance, if you generate a targeted financial plan, which means it’s kind of surface level, but you know a good amount about the client, on average, you can charge about a thousand bucks for that plan. If you’re more comprehensive, not investing a lot more time, but just better understand your client, you could charge more than twice that over $2,000 on average.

Craig: That’s what your data is showing you.

Tony: Right? So that’s our data story, Cerulli has actually seen this as well. NaviPlan, our average advisor that charged for planning actually charges $4,000 per plan.

Craig: That’s incredible. For every plan?

Tony: Yes, because we have more comprehensive software which allows you to charge more because you’re demonstrating that gamma better. So that’s about the average for our NaviPlan users.

Craig: Because you’re now is more comprehensive, right?

Tony: Correct.

Craig: And we’ve seen that in our, in our reviews cause we do a lot of software reviews and it’s incredibly comprehensive, very granular.

Tony: Thank you.

How Broker Dealers Can React to Pressure on Their Business Model

Craig: Aladin Abugazaleh is founder and CEO of ATA RiskStation, which is a provider of cloud-based risk management software. I met Aladin at a T3 enterprise two years ago and I was immediately intrigued by his approach to viewing risk across all advisors at the firm level. In this interview I asked Aladin about what he’s seeing in the market, and how broker dealers can react to pressure on their business model as well as some of the trends that he’s seeing from the risk data that they’re gathering across the industry.

Aladin: ATA RiskStation starts as a client engagement solution to help advisors and clients better understand not just the current risks in their portfolio, but how they’ve evolved over time and capturing the client’s tolerance so that they can provide feedback that ultimately votes back into both the financial planning process and the compliance oversight.

Craig: And we met a year ago, I think at T3 Advisor last year. And I was really intrigued by your product because there isn’t really anything on the market like it. There’s lots and lots of risk profiling tools, but they’re all individual advisors doing their individual client’s risk profile. There’s nothing looking across advisors at the enterprise level.

Aladin: Our focus is very much on the enterprise side. Now enterprises can be small or large, but right now because of the deadline pressures of RegBI, we’re spending a lot of time on the larger end and our solution because we’re saving the data over how risk profile changes for every scenario, every day, that data is incredibly helpful to enterprises trying to demonstrate oversight and compliance. The pressures on the broker dealer business and operating models really come from a continuing need to define their relevance to both advisors and clients. Because now it’s very easy for large producer advisors to leave and start their own shops, which forces advisor payouts to rise, which again presses broker dealer margins. Clients and their children who will ultimately inherit this massive wealth that’s transferring, are not just expecting, but demanding better engagement via technology. The compliance pressures are also rising. So the broker dealers really need to step back and look at this from a, not just how I comply with RegBI, but how can I use this opportunity to enhance my value proposition and drive better outcomes for both the advisors and the clients. For certain types of portfolios, one of the things that has surprised me is even though the market is making new highs, so everybody’s sort of comfortable because nobody’s getting a quarterly statement that’s lower than the prior one for certain types of portfolios, I’m seeing the risk actually rise. So the projected risk for a portfolio’s behavior, if the market drops, say 20%, is significantly higher now than it was a few months ago. And again, because it hasn’t been recorded in a loss anywhere, people are just not aware of it. And I think that’s an important conversation to have between an advisor and a client before correction happens to understand that risk can rise while the market’s making new highs.

The 17 Disciplines of Financial Planning with Andrew Altfest

Craig: Andrew Altfest is founder and CEO of fp Alpha, which is a new AI powered financial planning app that was launched at the T3 Advisor Conference. We talked a little bit about his firm, what they do, some of the things he’s seeing in the industry, and is it really AI that’s powering his tool? How does it work? What are some of the underlying aspects of the technology?

Andrew: fp Alpha is the first artificially intelligent enabled software program for comprehensive financial planning. So we enable financial advisors to practice across 17 disciplines of financial planning while saving a tremendous amount of time.

Craig: I didn’t know there were 17 disciplines of financial planning.

Andrew: Yeah. If we just count all of the things that we do for our clients across legal areas and tax areas, and lending and insurance, you’ll get up to up to 17. Some of them are the core areas we think about. And some of them are a little bit more niche areas that our clients care about. I’m not even including investments or retirement planning. There are a lot of great retirement tools out there and they tell you if the client is on track to hit their retirement goals. But all their other areas of financial planning, like estate planning and tax planning, insurance planning, which are of course very much linked to retirement planning are under the radar, and either it’s not aligned with the client’s goals and the client is at risk of missing the goals or the clients potentially paying too much in taxes, very likely are insurance premiums. So what we do is we allow the advisor to identify these opportunities very quickly and to practice in all of these areas and to do this at scale is impossible. And no matter how intelligent we all are as advisors, these areas are very complicated and we need to simplify them to get to the best insights because opportunities are missed and our time is precious and limited and we want to be able to hit on the things that are very important that could be causing the client to be at risk. This is definitely artificially intelligent technology. And so we do really cool things like you can take a will and a revocable trust and drag and drop that into the software and you can do the same thing with tax returns and insurance policies, and the software reads those documents and you can have 10 wills drafted by 10 different attorneys and it will read those documents and extract the key information and then combine that with the brains of all of these subject matter experts. Every advisor has 40 people looking at their particular client situation.

Craig: 24 hours a day, seven days a week.

Andrew: Yeah, it’s live planning. That’s another key part of it, which is, as a client, just as we learn as planners, as a client’s finances change, their goals change, tax law changes, the software makes additional recommendations and so we keep track of their financial lives so we can drive a proactive experience. With this software we’re killing the sacred cows that I grew up with. Let’s kill them.

The Lifestyle Goals Block & Longest Vacation of Our Lives with Kevin Hughes

Craig: If you’ve been to any T3 or any other technology conferencing in the industry, I’m sure you know my next guest, Kevin Hughes, Chief Growth Officer at Envestnet MoneyGuide and he’s been at MoneyGuide for over 12 years so he knows his stuff when it comes to financial planning. We talked about one of my favorite new tools and functionalities that MoneyGuide has released, which is called Blocks, we talked about the longterm care block and we talked about how it creates probabilities of longterm care events occurring, whether too much choice is a bad thing as well as a new block they released this year at the T3 conference called the Lifestyle Goals Block. It’s for clients to build their own goals and then import them back into their plans. So let’s take a listen to Kevin Hughes.

Kevin: I think the big thing is giving the client choice because what we all know is that we don’t really know what’s on their mind. And the great thing about blocks is maybe it’s on their mind, but for somebody else. So a lot of people ask us, well, can you hide blocks? We’re going to send this out to a 40 year old, we don’t really think they need the longterm care block, for example. But if they click that longterm care button, probably thinking about their parents and they do care about longterm care for their parents. So there’s this whole ecosystem that allows you guess, and you can try and predict what your client wants to see. But if you predicted wrong, there’s a lot of choice there. And the great thing about it is, the entertainment user experience that this obviously emulates, has proven that choice ain’t such a bad thing. In fact, put 15,000 videos in somebody’s face and it turns out they’re actually not as intimidated to pick one. We use Milliman, one of the largest actuaries in the world, so they do a ton with healthcare costs. They help us with our healthcare costs that we use in MoneyGuide as well. But that’s where we’re getting our data from to run that.

Craig: Yeah. And I can tell you that from personal experience, I just went through a whole issue with my father who recently passed where he had to go to a nursing home and it was just horrific because my parents didn’t have this when they were our ages, if I could say. Mid life, to understand whether they needed a longterm care insurance. My dad had $25,000 in life insurance. That was it. Cause no one talked. They didn’t have an advisor who could show them this and explain how this works.

Kevin: I’m the guy in his forties who clicks on that LTC block for their parents. Both my grandpas had a five years in a secure nursing facility, it’s a lot of money. And 10, 15 years ago it was even more money. So a big thing with MoneyGuide, anybody that knows MoneyGuide, we’re this goal based planning software. We’ve been doing it for a long time, got a lot of passion behind it. One of the biggest challenges is is how do advisors get good goals out of their clients. A lot of that rests on the client’s shoulders, but they don’t have a clue where to start. So we’ve created over the years and experimented in all sorts of creative ways to get clients thinking about goals, prioritizing those goals and making sure that they’re not just thinking of it in context of one big number, they’re looking at the stuff that’s fun. I mean, let’s think about this for a second. We’re going on the longest vacation of our lives.

Craig: Is that retirement?

Kevin: Yes!

Craig: The longest vacation of our lives. That’s a good way to put it.

Kevin: Can’t it be a blast? It should be really specific to what gets you jazzed up and what gets you motivated? Right? So the challenge up to this point is that when you address goals and MoneyGuide, you’re doing it in the context of this big plan, which there’s nothing wrong with that. When somebody’s ready for that, we’ve got a great tool for that. When advisors are ready to engage with longterm plan, we got a great tool for that. But a lot of people don’t necessarily want to commit to the whole process, if you will, to just talk about that basic idea of what their vacation’s going to look like in retirement. So we created this block, based on all the great things we do in MoneyGuide, which we know so much about after 20 years of it. And now what we can do is say, look, here’s a cool way to give the client access to build their own goals. They can come back and change it whenever they want. If you have a plan update meeting next year, you can give them the block, they can just focus on that one thing, takes a couple of minutes to tweak here and there and then you can bring that back into the plan when the advisor’s ready, so they’re not changing the recommendation.

Craig: So it’s integrated, you can just move the data.

Kevin: Fully integrated, all the data moves completely back and forth. It breaks things down in a really conversational way, gives people stats about different goals, uses incredibly smart defaults.

Craig: And that’s something advisors never really had before. We had a portal but there was wasn’t much on there, so they didn’t really have a lot of data. And that’s how every other industry works is getting more data on your customers. But if you don’t have anything for them to interact with, there’s nothing to collect the data on.

Kevin: That’s the thing and the portal adoption isn’t fantastic in our industry.

Craig: No, it’s like 20%.

Kevin: It’s okay, at best. And now we have a reason to keep them coming back. Even better, we get to find out what’s really on their mind when they do come back. And the thing that these portals do today, which is the biggest hard thing to balance, is we’re sitting there saying, don’t look at your investments every day, you’re in it for the long term, yet we’re giving you tools to do exactly that bad habit, right? So we did a great job at MoneyGuide, bringing that plan probability to the portal experience. But that’s not enough. We need people to come in there and want to come back. And that’s exactly what blocks delivers. It’s a reason to come back and engage in and think about things that you just would have never really thought of without seeing a cool a movie block, if you will.

Advice for Advisors Seeking Risk Management Software with Drew DiMarino & Sara Glakas

Craig: Next up on this special episode of the Wealth Management Today podcast is Drew DiMarino, Chief Growth Officer at Riskalyze and Sara Glakas, Founder and Investment Advisor at Black Barn Financial, which is an RIA located in Austin, Texas. We’ve talked about the benefits of the conference, how Sara is using Riskalyze at her firm and some of the things she did before she used Riskalyze, and some advice she would give to other advisors who are looking for similar tools.

Drew: The benefit of this conference is it’s a place for advisors to come to see who are the best in breed technology partners that have deep integrations with each other so that advisors can leverage those integrations to be efficient with their practice. One of our panelists gave an amazing testimonial, where he said he left a large insurance broker dealer where he was able to bring his clients over with him, but he was able to cut his client’s fees in half while doubling his revenue and his profit margin. So it’s that type of efficiency for the use of the best of breed technology that Riskalyze allows for, and Sara has some great testimonials as well.

Sara: Anytime you’re getting up a learning curve with any software package, I think you need to understand the thought process that the developers put into it. And I’ve gotten a lot of help having people explain to me what the rationale was behind the way the autopilot was set up so that as I was going through the training, I could understand why it was set up the way it was. And that makes a world of difference when you’re trying to go through it on your own and trying to make it a consistent piece of your process.

Craig: Right, they didn’t just dump the software on you and say “so long!”

Sara: Right. They didn’t just dump it on there. Exactly right. And again, it’s what makes it easy for me to use as the end user. I think a lot of companies kind of miss that piece, but I really, really appreciated that. And the support team gets back to me as soon as I need support. I feel like it went from being, a beginner or an amateur to be becoming a professional. Right? It’s making that step and that investment to be able to see where and how the growth is going to happen. Some of the numbers that are thrown out about, how many relationships can you have in your firm? How many close relationships can you have with clients? if you’re capped at 100 or 150, you have to be able to show clients and develop that deep and meaningful relationship with as many people as you can in order to be as profitable as you can. And that’s when it comes down to it, that’s the name of the game.

Craig: So how long have you been using autopilot?

Sara: That’s a good question. When did it launch? I don’t know if I signed up right off the bat, but it was probably 2018.

Craig: What did you do before then?

Sara: Oh, I would be embarrassed to even say, I think it was an Excel spreadsheet, right? Or even maybe like handwritten notes.

Craig: And you uploaded the spreadsheets?

Sara: Yes, yes. And we’re one of those firms who’s vain enough to have custom portfolios for all of our clients. So it was okay at the time because we were so small. If you have 35 households, maybe you can have 35 Excel spreadsheets and you check off what trades need to be made. But as soon as you look forward into the future and you say, this is not going to work if we are going to have a life, if any of us are going to have lives. So I think it came into my life at just the right time when I thought, okay, now this is the tool that I can use to scale. More than that it’s how does their ability or inability to take on risk, how does that flow through to their expected rate of return? And then of course, that is what drives the projections that pop up in the retirement map, or that pop up in any number of places. When they’re taking risk, it makes it a more mindful decision that, okay, we are taking this amount of risks, we’re going this fast, and we’re doing it because we want to or need to get this expected rate of return so that we’re all on the same page and, and we’re all mindfully making those decisions.

Craig: If there’s some advice you can give to other small advisors who are looking at risk profiling tools, what would you say to them?

Sara: I’d say pay for software that works and don’t pay for software that doesn’t work.

Craig: And you think Riskalyze works?

Sara: I do think it works.

Managing A Sustainable Withdrawl Rate in Retirement with Abraham Okusanya

Craig: My next guest is Abraham Okusanya, Founder and CEO of TimelineApp, a relatively new program available now for advisors. We talked about some of the features that they announced at T3, including the ability to manage a sustainable withdrawal rate in retirement for clients as well as another function that this new, called Livetrack and why it’s such a big change and why it’s important for financial planning tools to do monitoring of the plans and how things change.

Abraham: So we’ve just announced, the TimelineApp Livetrack. So this is the automated, sustainable withdrawal rate tracking that we’ve just introduced. And we’ve received a lot of feedback from advisors and planners about it, so excited to be here.

Craig: So why is sustainable withdrawal rate so important?

Abraham: Absolutely. A great question. So essentially, if you think about how advisors approach retirement distribution generally, the so called 4% rule is by far the most commonly used framework around retirement distribution. Well, that’s great news, but actually there is extensive research around the sustainable withdrawal rate framework. Obviously this research started when Bill Bengan wrote his first paper, which is now known as the 4% rule. But the reality is that this research is no good to us on the pages of financial journals.

Craig: Throw it out, it’s no good.

Abraham: Absolutely. So the idea is that, what we’ve done with Timeline is enable advisors, personalize this incredible body of work to add value to their client’s retirement journeys. That’s what Timeline does and that’s what we specialize in. So as they say, plans are useless. Planning is obviously invaluable. And so it’s one thing to build a plan or to create a strategy around distribution. Well, it’s another thing to make sure that that plan is up to date and that the client’s goals and objectives are constantly being assessed to ensure that they are on track. So what Timeline does is to pull data from the advisor’s custodial or portfolio management platform or CRM systems, and on an ongoing basis, frankly on a weekly basis, Timeline pulls data of the portfolio balance, the asset allocation, the withdrawal from the portfolio and reassesses the plan on an ongoing basis and send automated alerts back to the planner to ensure that the plan is on track.

Craig: Well knowing a lot about financial planning as we do at my firm, that sounds unique cause none of the other companies do that.

Abraham: Oh, thank you.

Craig: As far as I know, they may have a little bit of monitoring but not that sort of proactive monitoring on a weekly basis. And that’s the key for not just making a plan that gets stuck in a drawer but something that’s dynamic.

Abraham: Absolutely. We make promises to the client. When you onboard a client, one of the things you say to them is that, we’re going to be your guardian angel. We’re going to make sure that your plan is on track and we will suggest or recommend cost corrections if there are changes that you need to make to your plan, we would recommend it to you. The current state of financial planning unfortunately is that we might have to wait a year before we see the client, before we update the plan.

Craig: And you remember, Oh yeah, I wanted to talk to you about this.

Abraham: Exactly. So what Timeline does or Livetrack does, is to take that process back to essentially what is a dynamic process, and we let technology do the heavy lifting while the advisor can spend more time with the clients.

Social Security Optimization & Tax Implications in Retirement with Joe Elsasser

Craig: A firm has been around a while but sort of flew under the radar in the venture planning space is Covisum and I have Joe Elsasser who was the founder and CEO of Covisum next on the program. We talked a bit about how Covisum works, it’s a collection of different modules that can be used together or separately. We talked about social security optimization and how it can be improved as well as how software can help advisors to understand the interactions and tax implications of different income streams in retirement.

Joe: Covisum started out actually as social security timing and that was our first financial planning product. From there we introduced additional tools. Tax Clarity helps advisors identify interactions between different income streams and unusual tax results. SmartRisk helps identify down side exposure in portfolios and Income InSight helps an advisor bring it all together into a comprehensive plan.

Craig: And these are all separate modules they can buy individually or together.

Joe: Absolutely.

Craig: So you mentioned the social security. I think that’s so important for a lot of people who aren’t upper affluent, they’re just mass affluent and they rely on that as a big part. So what are some of the numbers that you’re seeing from your software? That’s the delivery of good decisions in social security and things like tax loss harvesting.

Joe: Sure. With social security, it’s not uncommon. I think a lot of advisors are put off by the rule changes that happened back in 2015 and thought, this is no longer a thing that is so relevant. What’s funny is we regularly and continually see $80,000 or more of present value difference between a good strategy and a poor one for a married couple. Those numbers are a little smaller for people who are divorced or widows, but they’re meaningful.

Craig: So how is that number manifested? Where’s the value coming from? Increased social security payments or..?

Joe: So the way we look at the lifetime value of a social security decision is by taking the present value of all those cash flows that happen out to whatever the specified life expectancy is. So it’s pretty common for life expectancies for a male, for advisors to be using 87-90, 92 for a female, is the most common in our system. So just discounting those back to today’s value gives us the difference between claiming early and following some sort of strategy.

Craig: So how does your system differ than other systems out there? I mean all the major financial planning tools have some sort of social security, not all, but a couple of them do, social security optimizers.

Joe: The ones that are embedded into the major financial planning tools, I would say lack a lot of critical functionality. Some of the biggest functionality that is missing is a detailed look at the earnings test. So when you have particularly a married couple, you might have one member of the couple continuing to work and that influences their decision, which in turn influences the spouse’s decision. So being able to accurately account for the earnings test is a big deal and it’s not in most of the financial planning softwares. Some of the other nuances are things like recalculations when you work after having started collecting social security benefits, the earnings penalty, being able to say, Hey,I might want to go ahead and claim this year even though I’m gonna miss the first four checks of the year because I’ll be slightly over the earnings limit, but not so far over it that I’ll wipe out my entire year. Sometimes that kind of election can make a $5,000-7,000 difference and I don’t think I have a single client that wouldn’t pick five grand up off the floor if they saw it.

Craig: And that advisors need ways to justify their fees. This is can be a great way to do that.

Joe: Indeed.

Craig: Talk about tax clarity. How does that work? You were talking about numbers of the brackets and what bracket they’re in now versus what they’re facing for their effective marginal rate. How does that work?

Joe: I think every advisor has been in that position where they got a tax return back and the client said, what the heck happened? And the advisor says, I dunno. And tax clarity is about, is it process that helps identify the interactions between different income streams, the big ones in retirement are social security, interacting with ordinary income, IRA withdrawals, pensions, etc, and capital gains. And that jump in the capital gains bracket from the 0-15% bracket, where people really get surprised is that someone who’s TurboTax or H&R Block return, even BNA would tell them they’re in a 12% tax bracket. They can be losing 50 cents on the dollar to federal income tax because of how that interaction happens.

Craig: Interesting.

Joe: So you run into situations where, for example, in my own practice, we literally run a tax map for every client in every annual review. We show them where they are and any pitfalls they might encounter that year. You’ve got situations like a client that says, Hey, I’m going to buy an RV. Which account should I take it from? And the advisor’s default answer is always the non-qualified account. Sometimes that’s not the right answer. Sometimes we should be taking from the IRA. Sometimes we should be taking the low basis assets instead of the high basis assets. Those are real ways to add quantifiable value.

The Evolution of the T3 Ecosystem with Joel Bruckenstein

Craig: And finally, wrapping up this third episode from the T3 Advisor Conference is none other than the founder of T3, Joel Bruckenstein. And as I said, Joel founded T3 Advisor Conference and the T3 Enterprise Conference and runs them both. In this interview we spoke a bit about how the T3 ecosystem has evolved, how it’s changed over over the years, and also the influx of new vendors, offering artificial intelligence, applications or existing vendors enhancing their tools with artificial intelligence and how that’s changing the way advisors do their business. As well as, inclusion and diversity, great to see at the T3 conference they’re leading the way with inclusion and diversity. A number of all-women panels, all-women custodial panel, all-women panel with Joel. And these are the kinds of things we need more of in the industry. We talk a bit about that and wrap up the conference. I hope you enjoy it. And here’s Joel.

Joel: Well, I think really this is the first year that you’ve seen AI being used in a meaningful way in software for the advisor.

Craig: Rather than just saying, well, we’re AI when it’s really not, it’s just an algorithm or something. It’s not true.

Joel: So you have Benjamin, which is a virtual assistant, more of a back office thing. Again, what fp Alpha is doing with AI to really tee up key conversations for advisors and also to make sure that nothing slips through the cracks. Amazing. In just a little while, we have CAIS talking about how they’re using AI for training and education, which I think is fascinating and which I think will be successful. So just there, there’s three. Oh wait, I forgot about Einstein, right?

Craig: How could you forget about that?

Joel: Einstein. I mean, some of the things that Salesforce is doing with Einstein I think are very, very clever.

Craig: They’re one of the leaders in the AI space.

Joel: Yes, and it really adds value for advisors. So for me, there’s four great examples that really didn’t exist a little while ago with how AI is being an applied to help advisors serve the clients better.

Craig: It’s changing categories. It’s creating brand new categories that didn’t exist just a few years ago.

Joel: Well, fp Alpha is a new category.

Craig: What would you categorize that as?

Joel: I mean it’s kind of hard, it’s AI assisted planning. It’s almost a virtual para-planner if you want to think about it that way. I think in year one and year two, really what we were trying to do that was different was bring advisors together, not with the salespeople who sell technology, but with the people who actually develop technology. The whole premise of T3 was bring your developers to the booth, don’t bring your salespeople. And that worked very well for awhile. But as this conference grew and as the ecosystem grew, it’s morphed into other things as well. So we call it the T3 Advisor Conference because the whole purpose of this conference is to serve advisors. But it’s not just about having advisors. We love advisors. We have over 350 advisors here, but we have 800 people here. And so who are these other people? There are people who develop software for advisors and they’re here to obviously meet advisors, but also to integrate with other producers, vendors who serve advisors. We have consultants who go out into the field and spread the word, whatever they’ve learned here to hundreds of people, if not thousands. We have broker dealer execs who only used to come to Enterprise, now coming to Advisor to get an early look at emerging technologies that we usually don’t deliver at Enterprise because we don’t think they’re ready to be sold to an enterprise yet, but it’s a great idea. And maybe they just want to get in earlier. We have private equity people here, we have stock analysts here, and all of these people are fueling the ecosystem that fuels advisor advancements. So all of them are part of what makes the technology that runs advisor practices. And we’re happy to have them all and we want more of all of them. So we really made an effort this year to highlight diversity. We’ve made a real effort to highlight women in tech. And I think you see that in a couple of the panels, my panel, three multi-billion-dollar advisory firms talking about cutting edge versus bleeding edge technology, all women on the panel, custodial panel, all women. And both of those sessions were awesome. So, we think they’re not the recognition they deserve and we’re trying to help with that. Same thing with the students. We had a very diverse group of students here presenting and competing, and we want more of that.