Early in 1994, I met my future business partner through a men’s basketball league. We both worked for local mutual-life insurance general agencies and shared an interest in starting our own firm with a new approach to guiding clients. We thought the financial planning we were each doing was not focused on the right issues and, frankly, relied too much on high-pressure sales.
So, we consulted with several tax and financial thought leaders and concluded that offering comprehensive tax planning could truly add value and build deep financial-planning relationships. In 1995, we founded Sound Financial Strategies, LLC with a different model: a monthly subscription service that included taxes prepared by highly qualified CPAs.
Our mission was simple: to be a one-stop tax and financial-management firm that coordinated all our clients’ financial matters. We wanted to introduce folks to our True Success formula: Great Lifestyle + Money × Time to Enjoy It = True Success.
Originally, we had one level of service. As things evolved, we realized we needed to add different levels of service/subscriptions. Today we have four subscription models. We got a fair amount of press early on due to our perhaps maniacal marketing efforts. We were convinced this would lead to folks knocking down our doors. But it didn’t happen so fast.
Our first several years were difficult, but we stuck to our knitting and only took on folks who embraced our subscription service. We grew because of our uniqueness and tenacity in “wowing” everyone we met. In 2000, on our 25th anniversary, we changed the company’s name to Wealth Management Group of North America, LLC (WMGNA). We now have subscribers in 27 states.
We’ve unexpectedly found that when folks pay us for advice, coupled with “us” doing their taxes, they show little to no “sales resistance.” Instead, they thank us for “taking care of diversifying my stock options” or “rolling over my 401(k),” etc.
For a monthly cost of $225 to $500, our subscription entitles clients to our Tax-Out Financial Solutions plan every year, tax services completed by our CPAs or coordinated with a client’s accountant, storage and organization of financial documents, and access to our strategic professionals. A subscription also includes professionally managed investments, cash-flow projections, educational funding, 401(k) and pension analysis, business planning/consulting, employee benefits review, deferred compensation planning, multi-generational solutions, Restylement™ calculations and more.
We have retired the word retirement and replaced it with “Restylement™,” a dynamic approach to life which evolves as clients evolve. Age is not the main factor; lifestyle is. Our Tax Out subscription model provides a 360-degree view of a retiree’s taxes, monthly income, investments, required minimum distributions (RMDs), Social Security, and more. Specific services include bringing in elder care attorneys and Medicare specialists.
We make sure when our subscribers “restyle” that they have the precise amount of monthly spendable after-tax income to maintain their lifestyle through age 95. (if it maintains their lifestyle it keeps pace with inflation)
Here are a couple of client examples:
A new subscriber in his early 20s works for a tech company in California and was introduced to us by his parents. When we chatted with him to see if a tax-out subscription made sense, we found out that he was making mid-six figures and maxing out his contributions to a Roth 401(k). We showed him that he could reduce his federal and state taxes by $8,405 if he made a traditional 401(k) contribution instead. He also had 90% of his liquid assets in company stock through options and restricted-stock-unit lapses. It was apparent that he had all his income, benefits and investments in one basket.
After that conversation he said, “When can I sign up and will you take care of everything for me?” Since then, we’ve put in place a lapse and diversify strategy on his restricted stock options and we are “managing” all his money.
Our subscription-model conversation led to this work, instead of us talking about how we could better invest his money and then pitching him on specific ideas.
Our subscription model was a differentiator for a couple. One spouse is a partner in a successful architect consulting firm. He attended a happy hour we hosted. Another professional who works with him told us the architect was not “happy” with his 401(k). We chatted briefly with the architect at the event and later met with him and his spouse. They made it clear that they were comfortable with their investments, but did not feel they were getting much if any advice, especially on the tax side.
We did a Tax-Out plan to show them how to save tens of thousands in taxes, by restating the 401(k) plan and having them go from a $3,900 contribution, because of “testing,” to maxing out at $67,500 while enhancing retirement benefits for their employees. We also showed them how do tax-loss harvesting in their Schwab account and repurpose $80,000-plus in cash values in old whole life policies that they no longer needed.
In addition, we helped them eliminate more than $1,700 in annual premiums and address their concerns about long-term care — we helped them do a 1035 exchange into single premium life insurance policy that has a beefy long-term care rider. We also showed them how to save more than $2,700 per year and update their coverages on their auto/home insurance policies. We even added a $2 million umbrella policy.
Once we presented the plan, they immediately signed up for a $275 per month subscription. We didn’t mention specific products in the plan. The pricing works much like everything we do: part art, part science. We look at the complexity of clients’ lives and determine how much hand holding they will need, the additional revenue they might expect in the future, and how much we will pay CPAs for tax advice for them.
We also incorporate the “every dollar has a name and only pay for what you need” mantra into our pricing. In addition, we do provide family/legacy discounts as part of our multi-generational strategy. We also set aside 10% of our time and energy for pro bono/reduced-cost subscriptions. It is good for the public and getting the word out to the community about WMGNA also helps us build future clientele. WMGNA is not your typical AUM asset hugger.
Daniel J Friedman is a founding partner and CEO of WMGNA Tax-Out Financial Solutions. In 2013, he was appointed by Connecticut’s governor to serve on the State Insurance Risk Management Board. Friedman currently serves on the advisory board of the Miracle League of Connecticut. He has long supported an internship program with the University of Hartford’s Barney School of Business and baseball team. Dan can be contacted at firstname.lastname@example.org.