With Rob Santos and Rory Henry
On Episode 86 of The Unique CPA, Randy welcomes Rob Santos and Rory Henry of Arrowroot Family Office to discuss the opportunities for collaboration that exist between accounting firms and financial planners. Co-hosts of the AFO | Wealth Management Forward Podcast, Rob and Rory talk about the modern technological solutions that make individually tailored wealth management available to everyone—and explain what a massive improvement in your service offering they represent.
Today our guests are Rob Santos and Rory Henry of Arrowroot Family Office—and “family office” is going to be something I want to talk about what that means, but family office—because I have an idea in my head what it means, but I’m thinking that Rob’s gonna give me a definition that maybe changes the way I’m looking at this. So Rob and Rory are our guests today. Rob is the founder of Arrowroot. He has over 20 years of financial experience working with institutions, companies, entrepreneurs. Arrowroot is a boutique wealth management firm working with a wide range of international and domestic clients to provide customized and specialized investment and family office services. And Rory has over 15 years experience working both in tax and financial advisory services. He is also co-host of a podcast called AFO | Wealth Management Forward, which is for the accounting and finance industries. Together they also have another business that they work on, AFO | Wealth Management, that is an educational program created to allow accounting firms to integrate wealth management services into their practices with ease.
There’s a lot more things they’re doing. There’s a lot more things that I want to talk about at some point. Actually, some charitable work too, that we’ll work in here that they’re doing. But first, that’s enough. Rob, Rory, welcome to The Unique CPA.
Thanks so much.
Thank you for having us, Randy. That was quite the introduction.
Yeah, so everybody knows, I stumbled through that a lot. When you hear it, it’ll sound much better than what Rob and Rory just heard. But we have great editors. So that’s good. And I told these guys at the start, we need to do some laughing. So we’re starting off with laughing already, which is nice.
So we got that out of the way immediately. Look at us.
I love it, Randy. Let me ask you this because you led off the intro—what is your definition, or what do you believe a family office is?
Oh, wow. See, you are a podcast host! You’re already turning this on me! Nice. I like it!
It’s like when Howard Stern goes on Letterman. And then he just takes over the podcast. I’m sorry.
No no, you do that all day. I am completely fine with that. In fact, I honestly like being a guest more than I like being a host, and I’m very fortunate I get to be a guest on a lot of podcasts.
Oh see, I’m the other way around. I like hosting and asking questions instead of being the guest, Randy.
Well, it’s probably because my ego’s bigger than yours. And so when I’m a guest, I feel it’s around me. Maybe that’s—I’m psychoanalyzing myself right now. That might be part of my problem. We’ll have to work on that.
I love it. Do a psychoanalytical podcast next time on ours.
That’s right, we’ll team up, we’ll get that going. Alright, so my definition of family office. So when I think of “family office,” the first thing I think of is, you know, you’ve got this generational wealth, you know, these billion dollar, you know, family assets—the Waltons, the Pritzkers, they have their family office, and we have people just working there on what their investments are, and what their needs are financially, from an insurance standpoint and everything else.
That’s what I think of “family office.” I think that’s different than what your definition of family office is. And I think, Rob, do you want to give us what that definition is?
Yeah, sure. So you hit it, I think as far as what people perceive the definition of a family office, which is historically, it’s been the wealthiest families, multigenerational, that have essentially said, we have so much money, why are we outsourcing all this stuff—let’s bring it in house to make this more efficient, and we can be able to do the things we want to do, we can be able to get reporting in the way that we want to do it, we can have staff at the way that we want to staff it and operate our family business, our legacy, everything else that’s needed as a top priority, as opposed to outsourcing it to multiple firms, where you might be one of a handful of very, very wealthy people.
The way that we’re using the “family office model” definition is really in tandem with the software and technological revolution that we’re all living in, right? And so for accounting professionals, we’ve seen this in our industry on the accounting side, we’re feeling it in a lot of different ways. And the reality of what a family office really is today is that people don’t need to be mega, mega wealthy in order to have a lot of these needs be serviced by a single firm.
The increases in technology, the increases in broad partnerships across service providers in a compliant and secure manner, is providing folks like Arrowroot Family Office, as well as a lot of accounting professionals who may or may not be listening to this podcast, to provide that family office experience to their clients. Now, there’s a lot of ability there to niche it, right? “We only work with these kind of large families or doctors,” or, you know, something like that. But we build every family office on the belief that we can service this family office model in a more bespoke, tailored way to clients that are ultra affluent, all the way down to, you know, average, regular people—nurses, teachers—they deserve great financial advice as well. The real trick there is being able to provide those services that are most impactful to those different groups of clients.
And so, you know, we were chatting kind of before the podcast here… It’s our belief that the absolute best CFO—and we use CFO as the “Chief Family Officer,” instead of the Chief Financial Officer—the absolute best chief family officer of the future, is going to come from the accounting industry.
You know, folks in this industry are so heavily involved in the daily life of their families and have so much data, and then last but not least, are incredibly intelligent people. And so there’s no better suited Chief Family Officer than accounting professionals, and that’s what we really focus on, on working with accounting professionals that want to start incorporating a part—not all of that family office service model—but a section of that, to start increasing what in the accounting profession is just advisory services, or “people advisory” to use all these other flash terms. You know, that’s where we really believe the future is and where there’s a tremendous amount of opportunity and excitement to be able to work towards.
So your main “go to market,” if that’s the right term, is CPA firms or tax preparers or accountants. Is that right? I wasn’t sure—I didn’t know that.
Yeah. So our AFO|Wealth Management Forward program is focused in a similar way that we think that these broader financial services should not just be for the ultra affluent.
We also think that these, using AFO|Wealth Management Forward as a potential family office engine, to power some of these accounting practices; we also think that not just the largest firms are the ones that should be using it. And by the way, they’re very large—you know, the larger accounting practices—$10, $20 million a year accounting practices are doing things like this already through solicitor relationships, and wealth management firms. And we certainly think that is exciting and wonderful, but we don’t think that this is only for them.
This is something that, you know, all the way down to a single practitioner, has the ability to start incorporating—maybe not the whole suite of packages, but certainly a subset of those advisory practices today. And a lot of this, you know, from the large firms down to the small firms, have had traditionally really awful experiences with that. You know, either using a very large wealth management firm, that’s kind of cookie cutter, and the reporting is awful, and the person they’re stuck with is awful, and the communication is difficult.
The world has changed, and it’s changed dramatically in the last five years. And so the opportunity both for the large firms and the smaller firms to start incorporating a lot of this tremendous software and partnerships that are available in the marketplace, in a compliant, transparent and value-additive way, and also in a way that doesn’t require them to be an absolute expert in everything, right, has never been greater than it has been today. So, you know, our AFO|Wealth Management Forward program focuses with accountants and accounting professionals of all sizes.
Alright, I think that’s huge, and I want to expand on that. But before I do that, let me ask—because you talked about this “menu” of services, I don’t know if you used that term. And in my mind, I’m thinking, you know, financial advisory services, but what in addition is this menu of services that you offer, and you’re allowing through the AFO|Wealth Management Forward program, the CPAs to offer?
Sure. So, for a lot of the accounting professionals that we work with, we try to focus on the lowest-hanging fruit, and some of that is around retirement advisory services—so SEP IRAs, traditional IRAs, but also the corporate 401(k)s. So because Arrowroot Family Office is a registered investment advisory firm, you know, we can be able to do advisory on these corporate 401(k) plans, defined benefit plans, as fiduciaries, and do a lot of the heavy lifting there on the compliance side, the advisory side. And those accounting firms that are working with this, in a fully disclosed manner, are able to share in that advisory fee. The client isn’t getting a higher cost type fee, but what it does is it allows the accountant to step into that advisory role from their tax and compliance expertise fashion, and get much deeper, meaningful relationships and build better trust, both with the executives and the employees of those company firms that they’re working with. That seems to be a very low hanging fruit.
But if you go past that, there’s financial planning and financial advisory that a lot of accountants are starting from the tax planning side. To move over into a financial planning side really requires maybe some partnerships and sharing of some software solutions. So we’re seeing that is kind of the next step. But it also incorporates things like life insurance, you know, we are again, we are an RIA, we’re a fiduciary, so we don’t get commission, right? But there are wonderful solutions out there that are non-commission life insurance solutions that are available to people of all net worths, that they can start to incorporate into their practice. Estate planning, you know, we’ve talked to a lot of accounting professionals, they say, the corporate 401(k) and the retirement advisory sounds great because we work with a lot of CEOs and business owners, but we want to do some more business advisory for them, right? So more kind of future-facing financial planning for the business, and make that part of the solution. And that naturally starts to gravitate towards if they want to sell that company, right? So we can help to make affiliations with people to help them to eventually advise their clients or help guide them towards a place to help them sell those businesses down the road.
And a big aspect here is that if CPAs or accounting professionals want to do this work themselves and charge an advisory fee, they would need to become an RIA themselves, which is burdensome from a compliance standpoint. By joining something like AFO|Wealth Management Forward, they’re essentially coming under our compliance umbrella. There may be some licensing that they may need to do, which shouldn’t be all that difficult—especially for people that have taken the CPA exam—but they’re essentially underneath that umbrella already. And all the real focus that they need to do after entering the program is how can they best understand, to present these opportunities to their clients, and then really become a team member—either with Arrowroot Family Office, or another RIA. We’ll advise folks if they want to do this with another RIA or wealth management firm, to really deepen client relationships, increase recurring revenue, high gross margin recurring revenue, in an effective and timely manner to move away from backward-facing compliance work and towards future-facing advisory work.
Yep. I think that’s great. I think, you know, obviously, we all know it, we all hear it and you know, CPA firms or even just rebranding as advisory firms, you know, or at least call themselves advisory firms—whatever level of advisory it is, whether it’s, you know, client advisory services, whether it’s investment services, whether it’s HR services—that they’re getting into all these other areas. And I think this is a huge one to be part of, and I talk to CPAs, and, you know, tax preparers, I always say CPAs, but tax preparers, whatever, you know, EAs or CPAs, all the time. And many of them have told me, you know, “Our financial advisory services ends up being a bigger revenue stream than our tax and accounting services.” You know, they’re deep into it. They’ve been into it a long time. But it’s, I mean, it’s an annuity sitting out there that ends up being nice for the firm.
Alright, that was my commentary. Now I have a question. So we said before we started this, you know, I came out of public accounting, I still support the public accounting industry with specialty tax, but I was managing partner of a firm. We tried adding, you know, financial services to our business 20 years ago. I was awful at doing it. There’s a theme sometimes if you listen to this podcast, there’s things I’m bad at. And that was one of them. I didn’t put the effort into it. But I’m thinking right now, if I’m a CPA and I’m wanting to start to do this, am I going zero to 100 immediately, or are there levels of service that you can offer to kind of ease them into it and get to different places that they want to be?
Yeah! We always say, just get started one. And what I always say Randy, is how you eat an elephant—one bite at a time. And that’s what the beauty of our program is, is a team-based model. So you can work with a wealth manager, and piecemeal this along, and work with your client, so you don’t have to gain that expertise right out of the gate. This team-based model, having a CPA, having a financial, work together with a client, the client loves it, CPA loves it because they get that financial advisory aspect, and the financial advisor loves it, because they get those tax efficient strategies.
So, you know, we always talk about lowest hanging fruit, those corporate 401(k)s, and we do some light financial planning. And we always talk with CPAs and say, “Hey, just get a demo done, or work with us in regards to some of these softwares out there.” I know Rob, we do, Asset Map is one of the providers we use, that is a simplified software technology that puts a holistic financial plan in one page, and simplifies the process from estate planning, to insurance, to cash flow. So getting involved with some of the software providers and working with someone like Arrowroot or another wealth manager is really doing this one step at a time. But we always say just get it started.
And a lot of the issues we have is, is the mindset issues is not believing you can do it. I listened to our friend Joe Woodard, Randy, on an Intuit podcast, and he talks about the two conflicts that are arising out of CPAs is the internal and external conflicts—the internal, that impostor syndrome of believing “I can’t do this,” right? And so we’ve kind of taken that internal conflict, and helped CPAs out by saying, “Hey, you can team up with a financial advisor as you incorporate this into your business.”
And then I think what Joe was talking about with the external conflict is that image out there of “I’m a CPA, I do compliant tax work, you know, I don’t want to present myself as something else besides that in the marketplace.”
But when you’re working with a team-based model and wealth management partnership, like Arrowroot Family Office, we can take on that external marketing piece that people feel comfortable with.
That’s great. And that’s what I was thinking, is that whole, what you kind of just addressed is that external struggle of, “Hey, my independence, and I’m advising them to do this, does it look wrong?” But the bottom line is, the CPA, the tax preparer, always—well, this is how I look at it—has the clients’ best interests at heart. And so I think that’s great. Thanks. And I was hoping we would get you to talk before too, too. So it’s nice to get you into this.
I might start just firing questions away, Randy, better watch out!
You can do that. I’m completely fine with that. What I want to go to, it was something Rob said, and it was pretty interesting, because this is top of mind for me right now. And everybody sees what’s going on in our industry—but every industry—M&A work going on right now. It’s just you know, it’s everywhere. So you had mentioned, and before we even get into the question I had, you had mentioned there’s a lot of M&A going on in just the RIA space. And so tell me more about that. What’s going on? Because I haven’t heard that. And how is that affecting CPAs?
Yeah, So Rob can go into what we’re doing on the M&A side, but Rob and I interviewed Charles Paikert of Barron’s and the Family Wealth Report. And he is talking about this RIA out of Canada, called CI Financial. And they have acquired 30 US firms, Randy, in the course of two years.
They have over $133 billion in assets under management. So they’re scooping up RIAs left and right.
And then I just had Bob Lewis from The Visionary Group on the podcast last week. And he talked about how he’s getting inquiries from RIAs to buy accounting firms. So that’s an interesting aspect, because he’s talking about what our program is about, is that marrying of that tax planning with the wealth management.
So we’re seeing this consolidation from the big players out there. And we always talk about increasing the enterprise value of your firm by adding wealth management services. So those CPAs out there looking to sell here, the next, you know, two, five, ten years, you know, why not add this service line increase and provide enterprise value firms so you look more attractive when you’re looking to sell?
Yeah, I think that we recently added—so I’m big on education, I know you are as well. And we just added a new webinar series, and this will be a monthly webinar on practice management for CPAs. And so one of those, the first one was building a sustainable and transferable firm. And when we say transferable, it’s not M&A transferrable—we want you to build a sustainable firm that’s transferable to the next generation of leaders within your firm. And this is the theme we’re gonna keep building on, not only transferable but that growth—growth through financial services, adding Arrowroot services now to what you’re doing, that growth and being more of an advisory. I’m big on this adding advisory everywhere. Don’t be a reporter of what happened, be an advisor, affect what’s going to happen with your clients. So I think all that’s giant.
What I was getting to before that is, so M&A, Rob, you had mentioned—you know, what if a client, you know, wants to sell their business? One before even asking the question is, well, having these financial services now in place, you now, you’re gonna maybe lose a tax client, and maybe lose an accounting client—you just gained an investment client, because they’re gonna take this money, and they’re gonna invest it with you. But how do you advise on M&A? Do you have some—you mentioned you can get people involved? Do you have connections in this space? Or are you personally this space?
Yeah. So, both. We actually through another affiliate, here at Arrowroot, have Arrowroot Advisors, which is an M&A advisory practice. It’s mostly focused on software and technology, but it can go into other industries, as well. And so there is the ability for accountants to be compensated for partnering up with M&A advisory folks as well, through our program, and outside of that, as well.
You hit the nail right on the head—that may be a very large one time fee if the transaction actually comes through. However, if you can be able to get in there, do some tax planning with that entrepreneur or that business owner, before they start thinking about selling their business to make it the most tax efficient, that is a very great way to build that trust, to go into future-facing advisory for their wealth management, for their family, because it touches estate planning, it touches a lot of different aspects of their life.
And this isn’t a new business model. Investment banks—Morgan Stanley, Goldman Sachs, Merrill Lynch—everyone has been doing this model and advising entrepreneurs both large and small to sell their practice, and then, you know, walk them over to their, you know, asset management group. But it’s a tremendous opportunity for accountants that are working, you know, with business owners that are thinking about selling.
And I want to just go back really quickly to your comment, Randy, about M&A in the wealth management space, but also in the accounting space.
Because I think this touches to a really key issue that we run into with a lot of accounting professionals—which is a fear that if they were to enter a program, such as AFO|Wealth Management Forward, or a solicitor’s agreement relationship with another wealth management firm, they may turn off a lot of referrals that they’re getting from wealth management firms. And one thing that we point to, is that that referral relationship may be great—we send you some clients, you send us some clients—but what we want to be clear with is the accounting professional is getting the raw end of the deal here.
We always joke that we’re overpaid, and the accounting professional is underpaid.
Yeah, the accounting professional is getting a transactional, low gross margin client, that they have to fight for and work for every single year. It may be sticky, but it’s not recurring. It’s not high gross margin—for, in exchange, a client that is high gross margin, growing, hopefully, if the advisor’s good enough, with the market and proper planning. And you’re seeing this, to bring it back to the M&A conversation, in the multiples in which accounting firms are being purchased, and RIAs are being purchased. And the multiple difference between those two types of businesses is dramatically different. I’m not gonna quote what that is—people can Google it and research it. But you know, the amount that people are paying for firms—accounting practices that are compliance work—versus an RIA, that has high gross margin recurring revenue, is life-changing.
And so, you know, we tell accounting professionals, we understand this—it doesn’t mean it will turn off that relationship. You’re aligning your interests with that wealth manager that you are sending referrals back and forth, it’s going to incentivize you to send them more if they’re doing a good job for their clients. But if that, in effect, is turning off a potential engine, the growth potential of taking on this advisory practice—in particular in the Wealth Management Advisory practice—should greatly outweigh the losses of those one-time, backward-facing compliance folks.
And we see it all the time, people get some success, a very large corporate 401(k) plan that maybe matches the total revenue of their firm in the last year.
They get a little taste of that and they think, “Boy, I don’t want to do compliance work anymore.”
Right. Oh, I can see that. I unfortunately, think and not everybody, but I think there is a mindset in public accounting at times that they’re not running a business. They’re just doing their work and their firm is a business and I think this is—things like this are great business decisions to help them build that sustainable firm. Going back to them. Going back to my webinar series. I’m just promoting now, so.
But no, yeah, that that’s for sure, we might have to get you guys on one of the one of the monthly webinars and you could discuss this topic. I think that would go well with practice management.
We’d love it. And I also want to bring up, too because back to my interview with Bob Lewis over at The Visionary Group—he’s talking about, there’s one out of every two firms that have ten million or more, that are asking to buy non-accounting practices. So buying software companies, buying cybersecurity companies, buying medical practices. So it looks like we’re increasingly getting towards this flywheel effect, Randy, that we’re moving towards more of an Amazon, or, or Facebook or a Meta model, where you’re basically offering clients a number of different services in a flywheel effect that makes things more efficient, and lowers the cost to the user.
No, I think so, and increases the profitability of the firm at the same time, and continues to service their clients as best as they possibly can—being an advisor. So I agree.
So Bob Lewis keeps coming up. You’ve twice today, I’ve talked to someone else, today. I’ve known Bob Lewis for 15 years, I think—it was 16 years now, I’ve known Bob Lewis since before he was Bob Lewis. And I don’t know how he became the Bob Lewis he is today.
What was he before he was Bob Lewis?!
He, when we started Tri-Merit, 15 years ago, he put together our folders that just said “Tri-Merit” on the cover, and designed that, and our one sheet—not even PDFs at the time—just our hardcopy one sheet marketing materials that he wrote. And that’s what he was doing. It was just marketing work for us and other CPAs. And it’s just amazing to see what he’s done now, because Bob, I run into them all over the place, and I love Bob, he’s great. He’s been on the podcast as well. But it’s just so nice to see the way he’s expanded his reach in public accounting.
So that was the Bob I knew. And when he showed up on my radar three or four years ago, I’m going “Wait, this is the same Bob Lewis? I had no idea he was doing this stuff!” So yeah. So Bob, you know, congrats, you’re doing a great job. I don’t know if he listens to the show, if he doesn’t, I’m gonna get yelled at.
We’re big fans, Bob. That’ll be one of the CPE questions.
What did Bob Lewis do back in the day for Tri-Merit?
Yeah! And honestly, one of my parents’ family friends, when I was growing up, was working for Bob at the time—that’s how I got introduced to him. I mean, you know, this was somebody I knew since I was five years old that was working with Bob at the time. And Bob and I are two miles apart, where we live.
Well, let me ask you this, Randy.
Who have you not had on your podcast that you want to have?
So I’m gonna quote a name in a second, and I’ve never reached out to her but I want to have Kimberly Ellison Taylor on the podcast. So I’m gonna reach out to her soon. So she—I want to have Chuck Rettig on the podcast, you know, IRS Commissioner. I’m not sure we have reached out to him—I’m not sure that’ll happen. But Chuck, maybe after you retire, if you want to come on, I’d be more than happy.
Obviously, one of my lifetime goals was to have Rob Santos and Rory Henry on, and so now that’s been accomplished.
Yeah, check it off the list!
Exactly. So yeah, there’s definitely some other people out there I’d like to have on the podcast. Alright. And the reason I just mentioned Kimberly Ellison Taylor—
Yeah! Because I love podcasting, because I believe it’s a great medium for us to collaborate, communicate, do business in the future. I think every business out there should have a podcast. It’s better than cold calling, right?
I have a podcast. I’m on The Unique CPA because I, myself, have a podcast.
So I think every business out there should be doing it. It allows you to have—you’re disclosing information about yourself, the dopamine’s working in the brain. I like you better, Randy, because I’m talking about myself. I think it’s just a wonderful way to communicate with people out there. So my question is, who has been the best on your podcast, and what have you learned from them?
Okay, I love all my guests. First, we’re gonna say that. Honestly, I do. They’ve all been—
It’s like your children.
Yes, it’s like my children. You know, there’s not one different than the other, or better than the other. But I’ve had some—a lot of fun, and you know, I’ve loosened up over the years. You know, at the beginning, I was probably not as much loosey goosey and having fun. And so they’ve gotten more fun. But one of the first ones I did was was Richard Kopelman, the managing partner of Aprio. And Aprio, just in the time, in the three years since we did our podcast—and I knew they were doing a lot of M&A work and growing—and they’ve grown significantly. And Richard, I think, does an awesome job of managing that practice, and one of the things I learned from him from day one when we started talking—and I knew him before we did the podcast—was that you know, the firm is his client. He doesn’t have any, you know, client relationship responsibilities. His client is the firm. And you know, a million dollar firm can’t do that. A $100 million firm can do.
So just that, you know, I’ve learned something from every one of my guests. Learning that from him was huge. Lately, I had Scott Serrano on. We had a great time. He’s a host of The Sons of CPAs.
Yeah, Scott. Yeah, I listened to that. Scott sent me something on LinkedIn. I forget what he said. And I said, Scott, don’t make me get Roy Williams on my podcast. Because he’s a big Tar Heel fan.
Yes! That’s right. So yeah, he was good. I just interviewed both of the—I don’t know if they’re called partners or owners—on different podcasts, of Acuity. Acuity is a really interesting business to see how they grew, how they manage it, how it’s based on outbound sales, how it’s so tech based, like you guys—and that was my next question for you is about technology. But that tech based growth that they’ve done, that was so interesting.
So I enjoy all of them. As long as we’re on that, how about you? We’re gonna ask you. I know you love them all, but, your favorite podcast?
No, I love them all. Well, Bob obviously was a recent one I liked. We had Warren Pennington on from Vanguard—he’s the head of fintech strategies at Vanguard, $7 trillion dollars at Vanguard. And he talked about sentiment analysis—so listening to earnings calls, and finding out the sentiment of the CEOs and CFOs to find out if it’s good or bad. So not just looking at a transcript, but listening to their voice, and really finding out what’s behind it. So I thought that was fascinating.
And then I really enjoyed Dr. Daniel Crosby, who has a book called The Behavioral Investor. He’s the Chief Behavioral Officer at Orion Advisor Solutions—probably one of the largest wealth management technologies in the marketplace. And he talked about the three E’s of behavior change, Randy, and those three E’s are education, environment, and encouragement.
Just because you have the education alone, doesn’t mean you will make the change. He talks about people who smoke—13% of the general population smokes 14% of doctors, 27% of nurses. You need that environment. So creating that environment, whether that’s putting the shoes at the foot of the bed to make sure you go running in the morning, or keeping the junk food out of the pantry, to make sure you don’t eat junk food.
And lastly, the encouragement. So having that advisor, that personal trainer, that therapist to coach you along. I found those three E’s fascinating, and it applies many times to behavioral finance as well.
And then Donny Shimamoto—I’m a big fan of Donny—and he talks about not selling your services. What talks about, the three things he sells, which is well—I don’t know if I remember… it’s vision, clarity and peace of mind. So he’s really selling vision, clarity, and peace of mind. So those are just a couple that I enjoy.
I love that. I’m stealing that—and I steal a lot of things from the podcast guests I have. So I’m stealing that now as well.
Alright, so let’s go a little bit further, then, and that was a great interlude. I love that conversation.
That’s a palate cleanser.
Exactly! Boom. We got through that, now let’s go on to the next thing. And I just want to go back to this because Rob, you said at the beginning, how these services are becoming a lot more technology-based. And so I want to talk about that. And I mentioned Kimberly Ellison Taylor. And the reason I mentioned her—one, I want her on the podcast, and she doesn’t even know who the heck I am. So she’s gonna wonder, why is this guy out there talking about me, but I would like her on. I heard her on a podcast recently, where I don’t know if it was her data, but on the podcast, they talked about that two thirds of people say they trust their money with robots, or technology, more than with humans. And that eight out of ten think that automated tools are going to replace personal financial advisors. So now you’re talking about this being tech-based. Tell me what that is. And tell me how far you see this technology going?
Well, do you want to give the tagline for our podcast, Rob?
Yeah, our tagline is, “Don’t fight the robots—partner with them.”
You know, but the short answer to that is the genie’s out of the bottle with software. You know, it is, as Andreessen Horowitz said, software is kind of devouring the world. It’s everywhere. And that’s not going backwards, you know? It’s just getting better and better and better.
What that means for, you know, the most important group of people we’re talking about on this podcast—the consumer—what does this mean for the consumer? And the consumer is increasingly more comfortable with the technology interface—less frightened by it. You know, even though we’re hearing about crypto and cyber and everything, we’re getting generation upon generation that are comfortable, and understand that that’s part of life now. The fintech world in itself, sees this opportunity, knows this opportunity is coming, and their initial phase in the kind of early 2000s was, let’s put the advisors and the accountants to the side—let’s just focus on the consumer. We’re going to go directly to the source, and we’re going to build that relationship with the consumer.
They spent tremendous amounts of money—some of them have been relatively successful—but they stubbed their toe. And what they found was, you can create a very intuitive tool that pops out an answer; you still need someone that is a human that can relate and be have empathy and trust to explain what these numbers mean, in a way that they understand, right? They need to be empathetic, they need to be culturally aligned as well, to be able to communicate these things in a valuable way to the clients. And so a lot of them—one of our partners, Betterment, kind of continues to do that on the consumer side, but realized, oh my gosh, this opportunity by partnering with the advisors to provide them with better tools, make the complex in a more easily digestible and simple way, to show to the advisors, is an incredible path for us to do. And so I think that pressure, on the consumer side, is going to continue.
However, the future opportunity there, as this has been with technologies throughout history, is those folks that can be able to be masters—not of all software, or all new technologies—but of some really important ones, are the ones that are gonna ride that wave and be successful in the future. And we’re seeing it both on the accounting side and on the wealth management or family office side, the new generation of people that people are trying to hire—maybe that hungry kid that’s going to cold call and go out there and get business—but increasingly, it’s people that are software savvy, and have an understanding of how to be able to utilize some of these softwares in the best way. And folks that get, you know, look at that and face it directly, and not not be fearful of it, are the ones that are going to be successful, regardless of where the technology ends up going, either directly to the consumer.
But we really believe that the life of a family office advisor that’s holistic, that can focus on certain areas that people are really, really concerned about—and are available to, you know, to relate, and empathize, and worry about them, is something that the robots haven’t figured that out yet.
They’ve got a long way to go to get there. If you still ask Amazon to order you eggs, you might end up still getting twelve umbrellas. You know, they haven’t gotten there yet, but they will.
Rob, why do we have twelve umbrellas in the refrigerator?
Yeah! You know? And I think also the one other point is, I think that as these giant technology firms, giant private equity firms are doing these mass consolidations, or building these giant platforms that are sharing data and know everything about you—and we’ve read about the effects of both of those parties using that in ways to get more money out of you, right? I think increasingly, the consumer has shown over the last twenty years, that they still want to work with that trusted, regional, close advisor, you know? And I think they are still hesitant towards giving everything to an Amazon or an Apple to manage everything that has to affect their financial lives and their family.
So I think, you know, they’re only getting bigger, and I don’t necessarily think that getting bigger is going to be the best solution for the consumer. I think that there’s still a tremendous opportunity for people—for that relationship-based, smaller company—you know, smaller than Apple still could be a $20, $30 million company. But I think that consumers gravitate towards some of that. And I think they’re going to continue to.
And Rory, were you reading something there?
Yeah, no, I just want to—I think people I think in the end, people want to ensure that these complex decisions are being made with competence. And I think they need an advisor to help to guide those decisions.
So, and then just piggybacking kind of what Rob said about the technology, just to give a little nugget of information—if you’re a firm out there, and you’re advising people maybe on estate planning, there’s some great technologies out there that have allowed us to offer estate planning in a seamless process. Two of them, Trust & Will. One is venture-backed—they’re both venture-backed but Trust & Will is the TurboTax of estate planning. You can do a will, I think, for $149.
I think a trust is $600. And they can do that from the comfort of their own home. So, you know, they’ve put the power of a full estate planning attorney in the form of software. So, you know, if you’re looking to provide your clients with an estate plan, it’s a great technology. Burnell is another one for high end, complex estate planning. They put beautiful presentations, that give you advice, as far as estate planning.
Yeah, I think that obviously, technology is not going away. Technology’s just going to take over more and more—I can’t even imagine the level of technology in the future. But there’s certain things, and Rob, you said it and Rory, I think you as well—there’s just certain things that technology by itself can’t do. You need the advisor still, you’re saying. Like for us, with what we do—six different services, one of them’s—pick one. R&D tax credits. I can automate, I can leverage technology and certain parts of that. I don’t think there’s an AI program out there that can look at a client’s projects and see if they meet a four part test to qualify for the credit.
They can get everything else around that. And maybe, and like I said, I can’t imagine everything that’s going to happen in the future—maybe there’s a way—but I still see us needed, I see financial advisors needed and that hopefully we never lose that personal touch on things as well.
All right. With that being said, we are going way over, we’re at a good length for now, I only have to have one episode for Earmark, I don’t have to lump two together—which is for everybody listening, you probably know—but Earmark is, our podcast is released later, where you can get free CPE by listening to the podcast.
So we’re going to close with a couple of questions. I think we’ll finish up on—I think it was a great finish up on technology and how that’d be involved and how the advisor is still needed. I do want to give me the opportunity to talk about Goalsetter for a few minutes because that sounds like a really cool program that you’ve put together.
Yeah, so we partner up with Goalsetter. It is a technology that is teaching financial literacy in a fun and engaging way. The founder is Tanya Van Court. She’s a female African American fintech founder. She’s partnered with the NFL Players Association, NBA Players Association, she’s done initiatives with them. She has actors like Anthony Anderson that are stakeholders. And she has gamified the financial literacy experience. So her technology is an education banking platform, as well as an investment platform. So think Robinhood, and you can teach kids financial literacy topics through memes and pop culture. She has, you know, how do you pay your bills, bills, bills, and she has Beyonce with a gif, putting money out there.
So it’s a great way to get your kids engaged in understanding the Finance 101, and set them up for success in the future. And we’re working with Fortune 1000 companies to donate stock to help kids in underserved communities gain a pathway to financial freedom, so actually giving them access to the technology as well as funds in an account that they can invest with parental oversight.
is there a place you can direct people to go get more information on that?
Yeah, you could download the Goalsetter app, just go to the App Store, the Google Play or Apple App Store, and you could put Goalsetter in there and download the app. It’s fun and engaging, I know families love it, I love it. And it’s a great way to work with kids and financial literacy.
And get them money. We’re actually working with Goalsetter and a lot of large corporate supporters who are making this as part of their employee benefit package, but are also donating shares and capital to fund these accounts for a million children throughout the United States. And all of the research has shown that just by opening a checking account, funding it, actually with as little as $50, actually increases dramatically the ability of that child to go on, earn a undergraduate degree, and have higher earning capacity later in life. So we think it’s exceptionally important and exciting. And you know, the right thing to do. So it’s really been great.
Yep, well, that goes back to education, and I think financial literacy is huge. And so I really applaud you for that, and I’m gonna have to look into that more myself. So thank you for that.
So actually, I don’t know if you guys are familiar with John Garrett, but I talked to him—I talk to him all the time, good friend—and he’s the author of the book, What’s Your “And”? And John—I was doing this before I had John as a guest—but I told him every single time, I ask people what their passions outside of work. I have to say, I didn’t steal this from John Garrett. So this was just yesterday, I talked to him. I said, “John, you know what I’m gonna do? I’m just gonna put a link after every episode that says to get a copy of John’s book, look at the show notes.”
So I’m going to end this with—I’m not going to use his term—because my term has always been, you know, hey, this has been great. You guys have done a great job educating me, and I think the listeners as well. But this is not all you do. What do you do for fun? What’s your passions outside of work? What do you enjoy doing when you’re not working with financial services?
Go ahead, Rory, you have more fun than me.
Well, I think mine’s easy. It’s “Yes, and…” so that’s improv. I do improv. I’m a glutton for punishment, Randy. I like to go on stage and make a fool of myself with other people. I love it. It’s just, it’s a fun way to just let loose and play like a kid again—improv is just playing, it’s just like play as a kid. And you make believe.
So you get a suggestion from the audience member, and you just make up worlds. And you laugh, and you have fun. It’s active listening—you can apply so much of the improv techniques and tools to real life, saying “Yes, and…” to life. You know? And “Yes, and…” how can I help you? And “Yes, and…” let’s go on a trip. So I’m a big believer in improv. I think if everybody did improv, our world would be healthier and more fun. So that’s my “Yes, and…” hobby.
I love it.
Yes, and… Rob, what do you do?
Yeah! And this ties back to our conversation, I think, which is, you know, we’re very passionate about success. And that doesn’t necessarily mean financial. You know, for me, personally, it’s being able to have a good work balance, to provide a great family life for my boys, my wife, you know? We’re having this conversation, I’m in the U.K., in Hampshire, for two months, I’ll be working while I’m out here, to be able to do it.
And so, you know, those things are very important to me. And this ties into all of our conversations about why adding some of these advisory services is really important. We’ve talked about the monetary ability, and why that’s the better effect. But also just time, right? So all the accounting professionals that we speak, to say,”I want to spend more time with my wife and my kids, I want to have more ability to have, you know, groups that I’m part of, or charities I’m a part of, boards that I’m a part of, I have these other passions that I’ve been telling myself, I’m going to do some day. And I’ve never been able to do it because I’ve just been trying to do more and more and more and more compliance work.”
And so this shift on the advisory side also does a shift cultural-wise, both for the accounting professionals and their firms—and also for their clients—to fill that void for success, whatever that ends up being. And that is something that I’m super, super passionate about. as well.
And it has been a big differentiator for us to attract talent at Arrowroot to attract partners in the accounting profession, and attract clients, because clients don’t want to work with someone that’s 100% burned out and angry and unhappy either. Right? I mean, they don’t.
And if they do, they’re probably not the type of client that you want to work with anyway. So that’s it.
Rob, I’ll book in a flight to Australia, just to let you know.
Alright, nice. So it looks like you’re probably past tea time right now. In the UK there, right?
It’s always tea time. Yeah, it’s always tea time.
Well, I want to thank both of you for being part of this today. I had a lot of fun. We hit the goal of educating and we’ve hit the goal of laughing so this was a good podcast.
It was wonderful. Thanks so much, Randy.
Thank you so much, Randy.
AFO | Wealth Management Forward Podcast
About the Guest
Rob Santos has served as the CEO of Arrowroot Family Office for nearly a decade, having founded the company in 2013. He has over 20 years of financial experience working with institutions, companies, and entrepreneurs. Arrowroot caters to a wide range of international and domestic clients to provide customized and specialized investment and family office services. Robert is also the portfolio manager for Arrowroot Family Office’s fund of alternative funds, Ladrillo Fund, LLC, and Arrowroot Real Estate Fund II LP, a private, sub-advised fund by Roundhouse. Robert is also a founder of AFO | Wealth Management Forward, an educational program created to allow Accounting Firms to integrate Wealth Management Services into their practices.
Previously, Robert was a Director for Salem Partners, a multi-family office and investment bank in Los Angeles, where he served on the investment committee. Prior to Salem Partners, Robert worked at JP Morgan Securities and Bear Stearns, servicing clients in the financial services industry.
Rory Henry serves as Director at Arrowroot Family Office. He has over 15 years of experience working in both the tax and financial advisory professions, and has built AFO | Wealth Management Forward to work with accounting firms to implement Holistic Wealth Management Services. A technology enthusiast at heart, Rory is adept at finding ways to improve the client experience using technology to streamline tax, accounting, and wealth management services. He is the co-host of a leading accounting & finance podcast called AFO Wealth Management Forward. Rory’s interviews include the WSJ, Forbes, Fortune Magazine, Accounting Today, Vanguard, as well as venture-backed fintech companies and nationally recognized thought leaders.
Rory has launched the Arrowroot Family Office & Goalsetter Financial Literacy Initiative to help 1 million kids gain a pathway to financial freedom. The program is enlisting Fortune 1000 companies, athletes, entertainers, and financial thought leaders to bring resources and awareness in the fight to help kids in underserved communities.
Meet the Host
Randy Crabtree, CPA
Randy Crabtree, co-founder and partner of Tri-Merit Specialty Tax Professionals, is a widely followed author, lecturer and podcast host for the accounting profession.
Since 2019, he has hosted the bi-weekly “The Unique CPA,” podcast, which ranks among the world’s 5% most popular programs (Source: Listen Score). You can find articles from Randy in Accounting Today’s Voices column, the AICPA Tax Adviser (Tax-saving opportunities for the housing and construction industries) and he is a regular presenter at conferences and virtual training events hosted by CPAmerica, Prime Global, Leading Edge Alliance (LEA), Allinial Global and several state CPA societies. Crabtree also provides continuing professional education to top 100 CPA firms across the country.
Schaumberg, Illinois-based Tri-Merit is a niche professional services firm that specializes in helping CPAs and their clients benefit from R&D tax credits, cost segregation, the energy efficient commercial buildings deduction (179D), the energy efficient home credit (45L) and the employee retention credit (ERC).
Prior to joining Tri-Merit, Crabtree was managing partner of a CPA firm in the greater Chicago area. He has more than 30 years of public accounting and tax consulting experience in a wide variety of industries, and has worked closely with top executives to help them optimize their tax planning strategies.