Jim is also a valued client. He'll lead us through the complex world of wealth management and taxation. His book serves as a guide for business owners, affluent families, and their advisors, simplifying the intricacies of financial strategies. We'll explore how Jim's clear solutions enable individuals to confidently manage the often perplexing aspects of wealth and taxes.
Challenges with the referral model
- The referral model can create challenges in finding the right professionals to work with.
- The client may not have control over the recommended professionals and their expertise.
- Building a team of specialists through referrals can be time-consuming and may not result in an effective and coordinated approach.
- The virtual family office model offers a team-based approach where professionals work together to provide holistic and coordinated services.
Benefits of a virtual family office
- A virtual family office is a collection of professionals who specialize in different areas and work together to provide comprehensive services.
- The team-based model allows for better coordination and communication between professionals, ensuring that the client's goals are met.
- The approach is more efficient and cost-effective compared to traditional referral models.
- The client remains in control and can pick and choose which recommendations to implement.
Importance of proactive planning
- The book emphasizes the importance of proactive planning and being future-oriented.
- Compliance-driven professionals focus on past tax returns, while the virtual family office takes a more proactive approach to help clients save money and maximize their wealth.
- CPAs and tax professionals should read the book to stay informed and provide clients with holistic solutions and proactive advice.
Examples of practical applications in the book
- The book provides practical examples of how the virtual family office approach can benefit clients.
- Examples include increasing cash flow for college expenses, utilizing tax deductions for real estate transactions, and setting up trust structures to mitigate taxes.
- The book is packed with big ideas but can be read in just over an hour.
About Your Host: Paul G. McManus is an accomplished author and expert in helping financial professionals grow their businesses. With over eight years of experience working exclusively with financial professionals, Paul has helped his clients generate tens of millions of dollars in fees and commissions.
Jim is also a valued client. He'll lead us through the complex world of wealth management and taxation. His book serves as a guide for business owners, affluent families, and their advisors, simplifying the intricacies of financial strategies. We'll explore how Jim's clear solutions enable individuals to confidently manage the often perplexing aspects of wealth and taxes.
Challenges with the referral model
- The referral model can create challenges in finding the right professionals to work with.
- The client may not have control over the recommended professionals and their expertise.
- Building a team of specialists through referrals can be time-consuming and may not result in an effective and coordinated approach.
- The virtual family office model offers a team-based approach where professionals work together to provide holistic and coordinated services.
Benefits of a virtual family office
- A virtual family office is a collection of professionals who specialize in different areas and work together to provide comprehensive services.
- The team-based model allows for better coordination and communication between professionals, ensuring that the client's goals are met.
- The approach is more efficient and cost-effective compared to traditional referral models.
- The client remains in control and can pick and choose which recommendations to implement.
Importance of proactive planning
- The book emphasizes the importance of proactive planning and being future-oriented.
- Compliance-driven professionals focus on past tax returns, while the virtual family office takes a more proactive approach to help clients save money and maximize their wealth.
- CPAs and tax professionals should read the book to stay informed and provide clients with holistic solutions and proactive advice.
Examples of practical applications in the book
- The book provides practical examples of how the virtual family office approach can benefit clients.
- Examples include increasing cash flow for college expenses, utilizing tax deductions for real estate transactions, and setting up trust structures to mitigate taxes.
- The book is packed with big ideas but can be read in just over an hour.
About Your Host: Paul G. McManus is an accomplished author and expert in helping financial professionals grow their businesses. With over eight years of experience working exclusively with financial professionals, Paul has helped his clients generate tens of millions of dollars in fees and commissions.
Welcome to the Million Dollar Producers show. Brought to you by more clients, more fun. I'm your host, paul G McManus. This podcast is here to help answer the key question what are the insider secrets to stand out in a noisy marketplace and consistently attract and convert iValue clients? To get answers each week, subscribe to the Million Dollar Producers show Today. I'm honored to welcome Jim Livornia to the show. Jim is a client of ours and we recently had the privilege of helping him write and publish his first book, wealth Unleashed Navigating Wealth and Taxation for Business Owners, Wealthy Families and their Advisors. I'm very interested to dive into Jim's background and what his new book is all about. Let's get to the show.
Speaker 2:
Hey, paul, thanks for asking me. Appreciate it, you can be here.
Speaker 1:
Congratulations on publishing what I believe is your first book. Is that correct?
Speaker 2:
First book. Yeah, I haven't been in the works for 20 years and never got out of the starting gate.
Speaker 1:
I'm very excited to have you on and have a conversation about the book and its content and just what that process was like for you. So you and I met, I want to say, back in late July at an event at Elite Resource Team. I spoke there about writing books and you and I had a great conversation. Since then we've been working together to publish your book Believe. It's been a week or two now that we've had it on Amazon. Tell us a little bit high level, what's the book called and just what's the high level overview of the content of the book? Who's it for? What's the promise of the book?
Speaker 2:
The title of the book is Wealth Unleashed Navigating Wealth and Taxation for Business Owners, wealthy Families and their Advisors. I had a good team that helped me with this.
Speaker 1:
Appreciate it. I'm going to break down those categories business owners, wealthy families and their advisors. Talk a little bit about how does it address their desires or their challenges.
Speaker 2:
The book itself the reason I wrote the book. I've been in the financial services business since 1976. You might need a calculator to calculate my age, but over those time I've developed a diverse background in areas of insurance, investments, tax both international and domestic and estate planning. One thing that I found out is that in these areas, other professionals can make these areas extremely complex. The reason I wrote this book was to show people that they still can take advantage of these areas, because what we've developed is a way to take complex strategies and topics and make them easy. I wrote the book to show people what they should be doing, how they should be doing it and who they should be doing it with if they want to make it easy on themselves. Of course, it's mainly for business people not worth individuals Sometimes. More importantly, there are CPAs, there are EAs, there are trusted tax advisors. We find that many of those professionals are more compliance driven.
Speaker 1:
What does that mean specifically?
Speaker 2:
I was going to just say that compliance driven basically means they're into tax returns, they're into defending people front of the IRS. What is a virtual family office? Okay, a virtual family office is a collection of professionals that work together in specific areas and they're specialists. We've gathered about 60 of them. We've done due diligence on them. They basically work with our team when necessary in areas that we don't have confidence in. When I say we, we form a team with the client's advisor and myself. Okay, now we also have other team members, a facilitator that is proactive and helps with with the engagement as far as making sure everything gets done.
Speaker 2:
Let me just give you an example. In a normal setup in a compliance-driven area, a client comes in and says that they need to increase their cash flow because they want their children to go to college. Great example, very common situation. It's extremely expensive, and so when you have somebody making a half a million dollars a year come in and say I don't have enough cash flow to send my kids to the schools I want to send them to because I need a small endowment fund, they come into a compliance type office. Okay, and first thing, the CPA says, for example, we need to do something about your accounting system. We need to streamline that, make it more efficient, increase your return on investment. We also maybe need to do some cost segregation for your building. Okay, that will increase your return on investment. And then in your situation, we could do some R&D, research and development tax credits that will help in the same manner.
Speaker 1:
All right, so wait a minute. That's not what happens when I go see my CPA. They say, hey, this is how much you owe. You've had a good year. You should count your blessings.
Speaker 2:
There are and I run into them. There are compliance oriented people who basically say, well, you really should do your fair share and pay your taxes For the compliance oriented professional that does truly want to help. Okay, if they do some advisory services, maybe they can help streamline the accounting system. Maybe they can get the reports done five days after the end of the quarter instead of five months or five weeks, so maybe they can do that. However, most are not qualified to do cost segregation I mean, some people do say they are, but they aren't and R&D tax credits. That's another situation where you need a specialist. First thing they have to do is they have to go find these professionals, and so maybe they might have one or two that they use all the time and they know that's usually like an estate planning attorney that turns out to be, but when you have the worst clients coming in, they have all different needs. Are you going to have 50 or 60 people on staff? Because obviously you, no matter how good you are, you can't be that good, and so now you have to go out and you have to do your due diligence. Okay, and now you have to introduce your client into another professional, or two professionals, or three, depending on what you need. So now there's a level of trust that has to be built there between the client and a lot of times that breaks down. There's no control by the CPA or tax professional.
Speaker 2:
In our system we've got a team-based model where we work with the client's CPA or tax professional and I'm just using CPA as a placeholder for all the tax professionals that we work with, including bookkeepers and EAs.
Speaker 2:
We put them at the lead because it's their client and they know their client and their client knows them. However, we don't have to go out and refer business to some other professional. We do a high level client questionnaire with the CPA and then from there, whatever can't be handled in-house, with the CPA's background, my background, whoever else is on our team, and we go to the specialists and we speak with specialists and we say listen, here's the situation. We think this is appropriate, what do you think and how can you help them? And if it's a positive response, okay, then we set up a meeting with everybody, including the specialist who played it to the client and how it can help the client. In all cases, clients always in control, if they like the analysis that we do and the recommendations. They can pick and choose what they would like to implement, and if they want to implement anything, then we go from there. But we don't have that old referral system that kind of gets bogged down and typically nothing gets done.
Speaker 1:
So break that down for us, because I'm listening, I'm thinking there's maybe two other potential approaches. One is, as you alluded to, the referral system, and I want to hear about why that's common practice. What's wrong with it is the question. And then the second one is what's to stop, say, a business owner from simply making some calls and reaching out to some specialists themselves and working one-on-one with them?
Speaker 2:
Number one. There's nothing to stop them from doing that. We'll take that one first. No, okay, but they're basically operating a vacuum. I remember I said before we work holistically. Holistically means looking at the complete picture. It's like we used to do in financial planning. We just didn't go out by insurance or we didn't go out and buy just investments. We would see how they would work with each other. In the realm of taxation, of efficiency, saving money. We do the same thing on the business side. If you go out and you start doing all these different things with different specialists without any coordination, you could have a lot of piled up tax deductions that you can't use or you can't use for the next 40 years. Clients can do.
Speaker 1:
I would probably compare to like building a house right. Having a contract when buying a house, pire all the individual specialists that come in to build the house Technically yes, I would not have much confidence in that house. This is outside of your lane, as you're saying. The holistic part these things need to work together. You don't just put the roof up, you have to put the walls up first, and before you put the walls up you have to put the floor in. There's all kinds of complex things that need to work together in such a way that you want I think you called it a coordinator, but you want someone that has that general expertise, has his team of people who are experts, of vetted, trustworthy and all those things, so that you can actually seamlessly live in a beautiful house. To me, this is an analogy that is applicable here.
Speaker 2:
It's good analogy. Let me do one better, using your analogy. Say you're in your 20s and you just get married and then you're going out looking for a house. Okay, if you get that 20% down or whatever you do, you go and you buy that starter house, okay. So you go into development, you find what you like, you move in Next time maybe you're in your 30s, 40s and you're moving up the ladder and your wife says I want to have one house that we design ourselves.
Speaker 2:
Okay, we won't put the roof up first, we'll put the walls up first. What we need to do is we need to design a house, right. And so they design their house and they find a builder, like you said, and they have the house built. So now they get to be around 50 and now they're in the big time. They're very successful, and they say listen, I want an exclusive neighborhood, let's hire an architect. Okay, and we'll do this and we'll tell them what we want. We'll get the right plans and once they bring what we want in front of us, okay, we'll tell them we'll let them lose. Remember, this is wealth unleashed, right? Yeah, we'll let them lose and we'll have them go build our house. As people become more successful, they don't number one, have the time. Even if they have the expertise, even if they weren't out of their lane, they don't have the time to do this.
Speaker 1:
Yeah, whatever, or potentially the desire, there's plenty of things that I can do and whether it's competency or whether, to your point, is time.
Speaker 2:
I would much rather turn it over to someone that's very competent and can do the job as well if not much better than I can do, but you have to find that person or group of persons who can do have the expertise to do it, and that's how we feel the the virtual family office with a team-based model approach really works.
Speaker 1:
Just to dive into that, because I remember, during the process of working together to write and publish the book, there was a point that you were telling us about your own background and expertise, and so one if you could just share a little bit about your background and expertise. But one of the points I remember you making was that, and I'll say it for you, even as smart and as well educated as you are, there comes a point where you can't know everything about everything, and even yourself specializing in this field, it can be a challenge without the right resources to find all of those proper specialists that can come through and do the job effectively. You recall that conversation. Yes, I do, and so I just love to encourage you to expand upon that, because, I mean, it really is what you have through what you describe as the team-based model. You really do have something unique and special.
Speaker 1:
Just a personal example is that recently I was reincorporated by company and so I have an attorney over here that someone referred to me and I had my existing CPA and I had a couple other people involved. I don't wanna spend time thinking about this. I just want the experts to do what they're gonna do and tell me what I need to sign and be done with it, advise me as appropriate. And because they weren't communicating, the process took five times longer than it should have, and they kept on asking me questions and my thought was I don't know the answer to this. You guys need to talk to each other, figure this out, let me know. So I think that's just a practical example of what you know myself. I'm a business owner. A lot of business owners go through that we don't think about oh, is there a better way to do this?
Speaker 2:
I can just tell you some real life experiences that, and like I said before, I started out in the insurance business and became a certified financial planner back in 1984. I got my securities license way back then, gave it up to do the only planning. I have a bachelor's degree in business and I've got three law degrees, believe it or not.
Speaker 1:
Just in case audience, you have three law degrees, wow.
Speaker 2:
Yeah, I have JD and I have one LLM in international taxation and offshore planning. The other one was in wealth management and private banking. But, that being said, I wanna give you two examples. The one example is when I was going through the planning stages with a client, and this happened more than once. This was before I went to law school and I thought I was gonna make a difference, but it really didn't. But we were doing the restate plans, okay, and the client and the attorneys were reviewing their wills and trusts. They took so long. In both cases the clients died, oh my goodness. But we had no control over the attorney that was doing the business. Okay, that actually made me wanna go to law school and find out what the stuff you don't know right.
Speaker 2:
The other thing was is that I've been trying to put together a family office. We didn't call it virtual because it was no virtuality in 2005, but I've been trying to do that up until I met the people at Elite and it just wasn't working because what we were using the referral model we couldn't get all people on the same page. Elite, god bless them. They've been doing this. This is their 10th year anniversary coming up. They had gotten it together over the state of Europe period. I guess COVID accelerated it. Everything is virtual and all these people are on the platform and we worked together cohesively. It's a great system and it took what I was trying to do since 2005 and solidified it for me. That's what I'm doing. Just to let you know, they came out with a certification for team-based model certified instructor, and that is or advisor I should say not instructor, but I was one of the first to qualify for it, so I'm hopeful from that. Congratulations Among my other designations. Yeah, I need more letters.
Speaker 1:
I don't think we fully explored this yet, but you were about to talk about some of the challenges with the referral model, so you spoke to just on your own, having a lot of knowledge and expertise, three law degrees, that even then it was a challenge to bring together this family office structure that could really take care of holistically of all someone's needs.
Speaker 2:
Basically what happens in my experience, and it just doesn't have to be through a CPA, it could be through any advisor. When you try to work with somebody on a referral-type basis. I know advisors find that a lot of times referrals go one way, they don't go two ways. But even if it worked, you lose control over seeing what you're recommending the client to do Now. Obviously that probably causes a bigger liability problem than anything else for the professional. Because now, let's take an attorney, if you're referring to an attorney it becomes his client. Okay for the engagement.
Speaker 2:
And if you have attorney-client privilege, you basically have no way of monitoring that until it comes out at the end With us, with our situation. The attorneys that we work with. They know exactly what our end game is, what the client's trying to achieve, they know going in. So when they have their conversations with the client, if it's privileged conversation, it's still in line with their goals. If it's not a privileged conversation, then we're included in it as well.
Speaker 2:
And then there's the trust level. How much can I trust this particular professional? Not saying that everybody's bad, but the point is that Not everybody's good and you have to. That's what due diligence is for us to find out which professionals You're comfortable with. So if you have to turn around and do due diligence on someone that you've never met me, for that's gonna take some time. To communicate with what you're trying to do with the client, that's gonna take more time, and then for the actual process to begin, if it even keeps going, it's gonna take even more time. We have a way of streamlining again our tagline as we make wealth easy. That is what our objective is when we're dealing with clients and their professionals making it easy to do these complex things.
Speaker 1:
I want to ask another question which, in regards to the book now, anyway, touched upon this bullets expand upon a little bit more. The books primarily geared towards business owners and wealthy families, but it's also includes their advisors, which I think primarily is referring to their CPA or other tax professionals. What can a CPA or tax professional should they be reading the book?
Speaker 2:
if they want to stay up with With their clients. They should be, because their clients are starting to read these books and so listen. A virtual family office Is an offshoot of a family office. They've been around for a long time. John the Rockefeller was the first family office and but it was the province of people who had hundreds of millions of dollars, and it still is. You can get into a Multi-family office or a single-family office. They both have pros and cons. The biggest con is that you have to have the amount of money to make it worthwhile to do In a multi-family office. You go in there but you're like a number, you're like at a brokerage firm. You're not the only client at a single-family office. You have to hire people. So you have to go out and do due diligence and people Business owners with one to ten million dollars of revenues or one to twenty million dollars of annual revenue they may think they're very successful and they are, but not in the same league, okay, that they can spend the money to do this.
Speaker 1:
I think maybe you mentioned John the Rockefeller. Probably an example for today would be someone like I don't know Elon Musk, right, pretty much a billionaire, right? I probably name a few of them, but Mark Zuckerberg. People of that nature would imagine have family offices or multi-family offices, but for the not ordinary, but more the Main Street millionaire Business owner who has one, ten, maybe twenty million dollars of revenue, the costs of that are prohibitive, and so the virtual family office actually makes this accessible to your everyday successful business owner and they're not a number advisors CPAs, tax advisors they tend to do this with the top, say, 20% of A&B clients, 20% of their clients, which are usually the A&B clients.
Speaker 2:
So they're giving a lot more attention. If you're a client of a CPA and you're in this top 20 that he's doing this with, you're getting a lot of attention. You're getting attention from him, you're getting attention from the team and from the specialists and and what we tend to do is we have these levels of service depending on the touch points that we need to make throughout the year to the client and the amount of Sophistication that goes into it. Well, we only need to meet with the client one time a year. It's a whole lot easier and a whole lot less money for the client. And then Observing needs to be quarterly or monthly or even more than that and depending.
Speaker 2:
Obviously, it's more sophisticated that we just don't hit and run, see in another five years. We hold the hands of this clients throughout the year and basically it's more of a family type thing than seeing somebody at the bus stop once every couple of weeks or once every year or two type of thing. So it's just a more cohesive type of arrangement than you would normally have go and see your tax guy once a year, right. Then he returns and say I got these problems. I had to pay X amount of taxes this year. What could he do for me next year?
Speaker 1:
And I think the underscore is the fact of the being proactive and future oriented versus compliance driven and past oriented. When you go see your typical CPA, there's only so many things they can do at that point.
Speaker 2:
That's true, it's an after the fact type of thing because they're dealing in past numbers. But as far as the CPAs are concerned, try to talk to a CPA. If you're a client, all right, nevermind a guy like me. Try to talk to a CPA during tax season. One of the things we're helping CPAs do is develop a better quality of life, work, life balance type of thing, and that only helps their clients because now they have time to actually talk to them during the year. So a lot of perks for CPAs and tax advisors to get out of the rat race and develop a more lucrative practice, because you're helping clients with more, bigger and better things, and so that's just gonna in order to you bigger and better clients.
Speaker 1:
Yeah 100% Happier clients, more time saving on taxes what's not to love? So is there any question that I haven't asked you that you would like to share?
Speaker 2:
while we have you here, some of the practical applications that were in the book. Some examples were we did have that one client that was looking to send their kids to school, so we were able to reduce, to increase their cash flow by reducing their taxes to generate and position them in a situation where they could actually have enough cash flow to do what they wanted to do with that. We have another situation where a client did a 1031 exchange with multiple properties and one of the properties fell through and we were able to set up a charitable lead trust for this client that through a giant tax deduction that was able to offset the tax that was due from the broken part of the 1031. Cause it would have had to be a complete execution to go tax free from one another. We helped them manage to get out of there and there's a lot of different things in the book that stories like that.
Speaker 1:
Yeah, and what I like about the book and I'll take some credit for this cause as the publisher, this is our goal for our authors is that it's packed with big ideas, but it can also be read in just over an hour. So you know a lot of books out there, filled with lots of knowledge, but unfortunately, most people never read them. I very much enjoyed working with you on this book and distilling a lot of the years of experience that you've had and trying to create what I think would be most impactful for that business owner or that family who is looking for genuine help, feels that they're overpaying in taxes or is looking for a better way to manage their wealth, and I think you did a great job in distilling that message.
Speaker 2:
I got it. I've got to hand it to you guys. When you said on the subject, I came in with 10 times more information than you needed and you helped basically simplify my complex writing into something that people could take away, I think if you read the book you're gonna know right away if you're interested in moving forward and finding out more about it. I had gotten some good feedback on the book.
Speaker 1:
Thank, you so much for your time today. Very much appreciate it. Congratulations on the new book and we'll have to have you back at some point to hear about all the business owners that you're impacting in a positive way.