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Ep. 96: Converting Tax Returns Into Actionable Insights for Advisors with Kevin Lozer, Holistiplan

“How Holistiplan came about was we were looking for a way to automate tax planning a little more, to scale it so that as you grow as an [advisory] firm, and bring on more clients, you can support all of your existing clients without having to pick and choose who to do it for. If you’re an enterprise firm, large RIA or broker-dealer, you can make the tax planning process  so much more scalable and consistent across all your advisors.”

— Kevin Lozer, Co-Founder, Holistiplan

Come on in, sit back, relax and enjoy episode 96 of the WealthTech Today podcast. I’m your host, Craig Iskowitz, the founder and CEO of Ezra Group Consulting. If you work for an enterprise wealth management firm, an asset manager, RIA aggregator, or at one of the many technology vendors in our space, Ezra Group can help you make better business and technology decisions. Check us out at EzraGroupLLC.com.

This podcast features interviews, news, and analysis on the trends and best practices all around the wealth management technology industry. A few housekeeping tasks before we start, be sure to subscribe to this podcast wherever you listen to podcasts so you don’t miss future episodes. And a quick shoutout to our sponsor, the SebastianStrong charitable foundation, you can find them at SebastianStrong.org and now let’s get this interview started.

Click here and schedule a free Discovery Session to find out how Ezra Group can help your fintech firm grow revenue in the wealth management space.

Companies Mentioned

Topics Mentioned

  • Holistiplan Background
  • Why Pivot Mid-Career to Launch a FinTech?
  • Advice to New Startup Founders
  • Analyzing Instead of Entering
  • Product Roadmap

Complete Episode Transcript

Craig: I’m happy to introduce our guest for this episode is Kevin Lozer, Co-Founder of Holistiplan. Kevin, welcome to the program.

Kevin: Thank you Craig. Thanks for the invite and looking forward to having this conversation with you today. It’s good to see you again.

Craig: Good to see you! We were just talking about conferences again because we used to sit next to each other at conferences and listen to panel discussions and things and make jokes, and hopefully we’ll be able to do that again in the fall.

Kevin: Yeah, I hope so. We’re definitely planning on it, the last time we you and I saw each other was, and it’s the last conference I was at T3 in San Diego back in February before things really started getting shut down. So that’s the last time I was on a plane, last time I was at a conference, I’m looking forward to getting back.

Craig: Yeah, me too, man, that was the last conference and it seems so long ago, but it will happen again. I’ve already committed to a couple conferences in the fall, I know you guys are looking at conferences too. It’s definitely gonna happen, we’ll get back to it. And we were also talking about football, you are a Pittsburgh Steelers fan, correct?

Kevin: I am, since I was five years old back during their heyday in the late 70s, so. And being from Pennsylvania, I was about three hours east of Pittsburgh in kind of the central part of the state. I grew up a Steelers fan. I’ve changed allegiances across my other sports now moving to the DC area but I’ve always kept my allegiance to the Steelers.

Craig: Oh that’s good. I’m an Eagles fan so I’ve been an Eagles fan for over 40 years so I know the feeling. But the Eagles and Steelers do not play this year so we can’t make any bets on the head to head, and the Eagles are going to be bad this year so I don’t want to make any bets either about who will have a better record. But we can certainly have another another podcast on football discussions and about the two franchises and their direction.

Kevin: Yeah the two Pennsylvania franchises, we will have to have a healthy debate about whether I chose wisely being in the center of the state.

Craig: Exactly.

Kevin: I had my choice, I could go Steelers or I could go Eagles and for football I ended up taking the Steelers because they were in Super Bowls when I was a kid.

Craig: In World War II when they had a manpower shortage, the two teams merged for a couple of years, and they call themselves the Steagles.

Kevin: I almost said I remember that, I don’t remember that.

Craig: No you don’t.

Kevin: But I read that.

Craig: And I don’t remember either. Just to set the record straight. Alright, so enough football talk. So, Kevin, give me the 30-second elevator pitch for Holistiplan.

Holistiplan Background

Kevin: Holistiplan is gonna allow you as an advisor to implement if you’re not currently doing tax planning, across all of your client base. Tax planning, I know, can be kind of a vague word, like financial planning, lots of people have different definitions of financial planning. I’d heard different things that you can do with tax planning, it started with the tax return review process that we automated, but now it’s expanded into letting the adviser know what your client’s tax situation is very, very quickly, in seconds, in some cases, and then you can make sure you’re incorporating that information into the entire financial picture for your client. Did I hit 30 seconds there?

Craig: I wasn’t even timing it, I was looking at my notes. No, I really liked the idea and I have no bias here. When I heard about what you guys are doing, I was really stoked about it because, my firm, being a technology consulting firm, we work with a lot of broker dealers and enterprises about what software they should use for their advisors and tax planning is becoming way more important now and more and more advisors are involved in tax planning, but there really was never any automation around it. It was always hire a CPA, get people, throw bodies at it, that’s how we do our tax planning. Or if you have really high net worth clients then you had software for a very complicated tax optimization. But your software is really for regular RIAs, mass affluent to just run through tax returns and give advice, am I correct?

Kevin: Right, it is. And to your point, I’m an advisor, I was running a mid sized fee-only RIA, my co founder and partner Roger Pine likewise running an RIA in Texas, and we both identified that tax planning involved checklists. We had to have cheat sheets at our desk with all the different phase outs and thresholds and limits. It was a very time consuming process. In fact, the firm that I was helping run, we had to make decisions on which one of our clients we thought would benefit the most and segment them, because we didn’t have the capacity to do it for all of our clients.

So we were having to make decisions like that which in my view weren’t ideal. So again, because it takes a lot of work, a lot of time to do it manually, that’s really how Holistiplan came about. We figured there’s got to be a way to automate this a little bit more, to scale it, so that as you grow, as, as a firm, and bring on more clients, you can do tax planning for all of them and all of your existing clients. You don’t have to pick or choose who to do it for. If you’re a much larger firm like an enterprise firm, large, large, large RIA or broker dealer, you can make the tax planning process and deliverable, so much more not only scalable but consistent across all your advisors. Because one of the many things I’ve learned being in the industry for more than a decade about tax planning is advisors, while there’s some consistency as a framework, we all had different ways to deliver the end product or the things that we were potentially looking at in a tax return for example, for potential planning opportunities that, if you’re a large firm, you can’t do that consistently across, you know 200, 300, or 1,000 advisors in your organization without software.

Why Pivot Mid-Career to Launch a FinTech?

Craig: Exactly and you’re jumping ahead on my questions here so I’m trying to catch up with you. Don’t worry, don’t worry. So my next question was going to be, why you founded this firm, you’re running a successful RIA. You’re a CFP, your co founder is a CFP, why pivot mid career to launch a FinTech? You already gave me that but really, what did you think about? That’s a big decision to go from running an RIA, I’m happy I’m successful, to switching to a very very different business model and a very different kind of company?

Kevin: Yeah, it was a desire to really help the industry scale more. It was an opportunity to, I’ll put it this way, what I realized is I did really enjoy being an advisor and having client relationships, I had 75, 80 client relationships. I was also recognizing that you can either build a big team underneath you to continue to scale and reach more people, or when Roger and I were talking about scaling financial planning overall to reach potentially 1,000s of people instead of just hundreds. Or you could pivot to software, and that was part of the impetus to start it was part of the, the original ideas to really try to touch as many clients as possible. We we both believe tax planning was really, really important. And, again, everybody could benefit from it, we pay taxes every single year, as citizens, and even for folks that you would think have a pretty static situation, tax legislation changes, particularly now so frequently. So it’s really an opportunity to build those relationships with those clients a little bit more, and be able to touch more and more clients that I think by doing it mainly advisors just aren’t able to serve as many clients as they could otherwise.

Craig: It’s all about scale. I want to congratulate you, I remember I’m one of the ways I heard about you was when you won FinTech competition at XY Planning Network, that kind of puts you guys on the map back in 2019, can you talk about that a little bit?

Kevin: Yeah, that was exciting, and we’re always wanting to say thanks to XYPN. It’s great that they do that every year, they weren’t able to do it in 2020 unfortunately because of the pandemic, but what a great opportunity for startups. That was very early stage for us. When I compared the product that we showed at that compared to what it is now, I mean it’s lightyears ahead of where we were in 2019. But, we were so new, we launched in late June, and we had only had a month or two in the market when we went to XYPN so we didn’t really know what to expect. We weren’t sure if it was ready for primetime or not, at that point but we won that and like you said, it definitely launched us, we got a lot of buzz from that. And then it just snowballed from there. As advisors started to hear about us and sign up and start using it and then tell their friends, who told their friends in the industry. It really just launched us tremendously. For the first year or so, from September to September I don’t think we did much of any marketing, it was all just word of mouth at that point but we were signing up so many subscribers, that’s all we really had time to do.

Craig: It’s a crazy time when you’re a startup, and things are happening and you’re making some progress, you’re building a company it’s the proverbial “jump off a cliff and build an airplane on the way down”.

Kevin: Especially from an infrastructure standpoint for Roger and me, that was definitely our first big challenge. So we built a product, we had an idea, we build a product around it, we got some of our friends to take a look at it and provide feedback that helped out a lot, then we launched this product but really it’s still just the two of us, at that point, and then we go to XYPN and win the competition. The next day, we’re getting people, and a lot more people signing up, and that September, October, November. Especially because, and this was fortuitous we didn’t plan it this way, of course, but having won that competition in the fall, during what is for many advisors, peak tax planning season, you’ve got to get everything done by December 31 for it to count. People were in tax planning mode at that point. So October and November was just crazy busy for us and since then, we had to focus on instead of marketing, we had to focus on the capacity and the infrastructure to support the sales that were coming in. And now that we’ve done that, now we’re ready to go and we can launch a marketing engine again.

Advice to New Startup Founders

Craig: What advice would you give to people who are just now where you were back in 2019, getting ready to launch their product, and they really want to make an impact. What advice would you give them in order to help them be more successful?

Kevin: That’s a good question. I would say, first and foremost, be willing to put it, the product and yourself, out there for feedback. We learned a tremendous amount, definitely from our beta testers before we even had launched an actual product for sale. But then, in the succeeding, months, years even, since we’ve been doing this, we have a constant feedback loop with our subscribers and future subscribers. So I would say, get it out there, let people comment on it, have some thick skin if you need it, to take that feedback and learn from it, be willing to learn from it and be willing to to change plans even or change the roadmap a little bit, to go in a direction that the market is suggesting you should take.

Craig: Great advice Kevin.

Kevin: It’s part of that The Lean Startup, the popular book. It’s mixing a little bit of that in with just a lot of blocking and tackling as well.

Craig: So let’s jump ahead a little bit to the end of 2020, and you landed a big client Carson Group, huge. One of the biggest names in the RIA business well respected. Ron Carson, winner of many awards, building a huge brand, how did you get that deal and what is it that they saw about your software that they felt would help their advisors? They have a great tech stack, so for them to pick you to add to their tech stack I think is a great badge of honor for you.

Kevin: Oh, well thank you, and thanks to Carson Group for being willing to give us a shot. First of all, they were hearing about us from advisors in their community, their own advisors, maybe some of the Carson partners firms were even early adopter subscribers of ours at that time. So that’s definitely been our approach with the go to market approach for everybody, which was to get it out there, start letting folks buy it, and then they become our ambassadors for the larger corporate enterprises.

Kevin: But I think they saw some advisors were using it, they worked with our organization to provide a couple more demos, talk about what the product could do, and what it was going to do. I think what they see, particularly large enterprises like that is, two things. Its efficiency, it’s taking what is potentially in an hour long process or longer to review a tax return, turn that into finding some planning opportunities, then turn those opportunities into quantifying those opportunities, and then turn all that into a client deliverable, that is an hour process if not longer per client. So when you’ve got 30,000 clients, that’s an enormous time saver when you can use software that can do all of that in minutes instead of an hour or two. So, it’s efficiency, and then it’s consistency. It’s knowing that now you’ve got a software on your tech stack that every advisor is going to be using. They’re going to be delivering tax planning consistently across the entire organization. They know what each advisor is going to do. There won’t be pockets, this office does it one way, this office does it another way, they’re all using a hodgepodge potentially of deliverables for the client. It’s one consistent client deliverable, and it’s one consistent process to walk through finding potential opportunities for the client so you know every advisor is doing it the same way.

Craig: So looking at the progress of your firm, you’ve gone from XY Planning Network, which is fee based advisors and the smallest firms usually one person shops to small RIAs, and now you’re moving into a Carson Group and larger firms, what’s your enterprise strategy? Do you see your product being useful for larger RIAs and broker dealers?

Kevin: Yes, definitely. So we’re going to continue now that we’ve got a lot of traction in what we call solo advisors and the ensembles, the multi partner type firms that was certainly our first go to market. And now that we have a few other enterprises like Carson, we’re now doing more and more demos, and having conversations with a lot of the other large RIA enterprises, and we’ve had quite a few conversations with with broker dealers as well. And even a few other large enterprises that are outside the BD space, so certainly part of our plan now and it helps to have 1000s of advisors, we’re closing in on on 2000 advisory firms, using the software so having that certainly helps to have the conversations with the enterprises.

Craig: I’ll say that helps, that’s big. 2000 separate clients is big in anybody’s book, no matter how big they are, that’s a lot of work, it’s a lot of effort, a lot of support. A lot of infrastructure required. You don’t just have a two person startup and support that many clients within this industry.

Kevin: That’s right. We’ve gone way, way, way past Roger and me, which is where we were 18 months ago or so. We’ve built out a team now, both at the C-suite level and then support organizations, sales organization, developers, things like that. It’s certainly no longer a two person or organization, but by any means, we’re hiring now on a monthly basis it seems, and that’s fun too, to build out the team and build out the infrastructure.

Analyzing Instead of Entering

Craig: Once more about startup best practices, who was your first hire after you and Roger and why?

Kevin: It was our CTO, Chief Technology Officer, so we hired him in December, just a couple months after XYPN, and like I said we were drinking from a firehose in October and November. But we hired Scott Pittman in December of 2019. The reason why is we knew as we continued to build out the infrastructure, even the human infrastructure for the rest of the business we needed to focus on the internal controls, while we knew we were going to eventually get into enterprises and BDs and things like that we would need to make sure we had all our security ducks in a row.

I know a lot of a lot of startups, the first hires are oftentimes on the sales and marketing side, because that’s their challenge. They’ve maybe built a product and now they need to let people know about it. Well, thankfully, we had XYPN and that competition, and Michael Kitces had Roger on his success podcast shortly after that, so we had enough sales coming in to make us happy. We had to focus on the infrastructure, and Roger was a coder, but it certainly wasn’t his profession over the past 12 years, he was an advisor like me, so we knew our strengths were building a product that we knew advisors would appreciate and buy because we were advisors ourselves. But we didn’t have the technical expertise to help deliver it going forward.

Craig: So now that you’re moving to larger firms or as broker dealers in the enterprise space, now you’re moving into my world. This is where my company, Ezra Group, really does a lot of work, since most of our clients are enterprise firms. Being able to standardize across hundreds of advisors and or thousands of advisors is critical when you’re working with these kind of firms and integrations are also critical, since you need to be able to pull data move it back and forth to be integrated well into the environment of an enterprise firm and to make it seamless and to reduce the amount of work they need to do so. You’ve recently integrated with Redtail and Wealthbox. Why did you pick those and why did you pick CRM as the first integration? How does it help advisors be more efficient with your product?

Kevin: We picked a CRM first, we knew we were both holding household information. So in order to start using Holistiplan, you need to create a household and upload a tax return. CRMs already have that household information. We also knew that we were providing planning opportunities through the software’s analysis of that tax return. And those are great notes, great observations to have in your CRM because most advisors are living day to day, all day long in their CRM, that’s one of their most important pieces of software that they have, one of them at least.

So integrating with those, bring in the household data from the CRM into Holistiplan, saves you time entering those couple pieces of information that Holistiplan needs to create that household. On the back end it’s a two way integration for both, then we can send some of the tax data that’s coming from the tax return or that we’re calculating from the tax return. That’s really important information that can give you a snapshot of the client’s situation. We can push that to the CRM, and now it’s in that software that the advisors are living in every day and are going to go to when the client calls, and has a question, and you need a piece of information, you generally head to your CRM and all that tax data would be in there for them.

It’s what we’ve been doing from the very beginning, even with the idea of instead of entering a whole bunch of information into yet another system to get planning observations out of, the pivot very quickly to using technology to read in the tax return. It’s all premised on trying to get advisors out of having to do a whole bunch of data entry as part of their job or their team doing data entry. If we can eliminate that type of work so that advisors can focus on the client relationship and analyzing that data instead of entering that data, that’s a huge win for everybody. So the integrations that we do or have done and will continue to do are focused on, how can we just have this data flow backward and forward so that advisors don’t have to enter data.

Craig: Analyzing instead of entering.

Kevin: Yes. I’m a career changer myself. I was in the corporate world for 11 years before I got into financial planning and became an advisor. I didn’t get into the industry to have to take all kinds of data and enter it into System A, System B, System C throughout the day. So if we can spend most of our time analyzing the data and then reporting out that data and the observations that come from that data to our clients in an efficient way, that’s just going to make advisors’ lives and larger firms’ lives that much better.

Product Roadmap

Craig: I’m just going to keep saying analyzing instead of entering over and over again, because I like the way it sounds. Can you share some of the new products you’ve come out with recently, anything on your 12-18 month product roadmap?

Kevin: Sure. So in January we launched our tax prep letter feature up until that point our software was primarily focused on you upload a tax return, you get a nice client deliverable with some observations and a pre-populated forecast scenario analysis screen, which allows you to do some forward-looking projections without having to enter much data. But in January, what we did was we launched this tax prep letter feature, which now allows you to help close the communication loop between what you’ve done in the prior year. So let’s take this season as an example, we’re in 2021, the CPAs and the clients are doing tax prep now for the 2020 tax year, what you did last year. What we’ve learned from being advisors and from our subscribers is some of that great planning work that we do doesn’t get communicated fully to the CPA, and therefore it doesn’t get reported on the tax return correctly or at all. And if it doesn’t get reported on the tax return, it never happened, from the IRS perspective, it never happened.

That was always a communication loop that we were trying to figure out how to close, so this feature allows that. Now an advisor can throughout the year even, so now in 2021, as you do, maybe a qualified charitable distribution, or set up a donor advised fund or gift appreciated securities, or do a Roth conversion. Now you can go into the tax prep letter portion of the product and check a couple boxes, write a very brief, quick note. And now in essence, what you’re building now throughout the year is a tax prep letter that you can send to the CPA and or the client to say, Hey, these are all the things we’ve done last year. Here’s all the documentation you need. Now there’s no reason why the tax return is not going to get filed correctly the first time, opposed to the dreaded amended process or flat out not getting to take the opportunity of the benefits that you were trying to take advantage of from a tax planning perspective.

So that was our first foray into realizing that tax planning is not just a one-time thing throughout the year. Maybe some of the heavy lifting is in the fall, when you’ve got to get things done by December 31st. And in the spring time, you’re collecting those tax returns because it’s fresh on the client’s minds because they just filed them. But we’re doing stuff throughout the year for clients as advisors that are tax impacting, and again, I said earlier, tax planning has a lot of different definitions. It’s really being tax aware of your client’s situation in Q1. Now you can use Holistiplan to make sure you create that letter that closes the loop and make sure you’re making the tax prep process for the CPA and the client run smoothly versus the hiccups that historically have happened. So our roadmap going forward is going to be those types of things, where we continue to make this knowing the ins and outs of your client’s tax situation, if that’s what you want to define tax planning as, doing that tax planning throughout the year, making it easy and anything that you’re doing from a client perspective that touches taxes, you’re able to use Holistiplan to make that efficient and scalable.

Craig: Good answer. We are running out of time. So the next to last question, can you talk about any trends you’re seeing in the industry? You’re talking to 2000 advisors, what are some things I guess around the tax area that you’re seeing trend wise?

Kevin: I know people are getting more and more focused on taxes, because of the legislations going on, the Secure Act at the end of 22018 or 2019, the Cares Act of 2020, the Appropriations Bill in December of 2020. Now we have the American Rescue Plan, all things that are impacting tax legislation. And now we’re going to potentially have more tax legislation this year with Biden’s tax proposals. We’ll see how that turns out, but taxes are on everybody’s mind it seems. I think one of the trends I’m seeing is that advisors are becoming more and more focused and realizing that they need to focus on their client’s tax situation. It’s not tax advice, that’s different. It’s doing tax planning, knowing their client’s tax situation. It can be as simple as advisors that are very investment management focused and they historically have said, I don’t talk about taxes, I manage the portfolio that the taxes are for the CPA to do. What you’re doing in that investment portfolio impacts the tax situation and it can impact the client’s expense situation down the road. An example is, you decide to sell 50 shares of Tesla. Well, maybe if you sold 49 shares of Tesla instead 50, they wouldn’t have crossed over the Medicare Part B and Part D IRMAA Premium thresholds causing thousands of dollars of expenses two years from now for your client. So even those investment type decisions, savings vehicles, you’re going to save into a Roth or a traditional IRA. Those are tax related decisions that advisors are recognizing they need to know the client’s tax situation. And the problem is historically, it’s been manual and very hard to do, but now there’s software out there like Holistiplan that allows you to do that much more smoothly. So that’s one of the big trends I’m seeing.

Craig: And one final question for you, Kevin, before we go. Steelers record this year, what’s your prediction?

Kevin: This is the last year for big Ben. So I think they’re gonna try to send them the Superbowl. They’re going to go 12-4. Maybe 11-5.

Craig: You have to add a game there because this year they went to 17 games.

Kevin: Oh, that’s right. There’s 17 games. They play Seattle now this year. I’m going to go then 12-5. That actually makes it easier.

Craig: There you go. And I’m for the Eagles, I’m going to go the opposite. I’m going to say 5-12. So we’ll see who was closer on their own team. Kevin, thank you so much for being here. That’s a wrap. Appreciate your time, it’s been great.

Kevin: Thanks Craig.

Click here and schedule a free Discovery Session to find out how Ezra Group can help your fintech firm grow revenue in the wealth management space.

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