047: The Future of Wealth: Innovations in Tax Planning with Jim Duggan

In this episode, I welcome Jim Duggan, founder of Duggan Bertsch, a Chicago-based business, tax, estate and wealth planning firm comprised of attorneys and accountants.

Join us as we explore Jim's transformative journey from corporate law to pioneering comprehensive tax strategies, ensuring solid wealth management for high-net-worth individuals. In our conversation, we also discuss our anticipation for the upcoming Elite Growth Academy in San Diego.

Jim 's Journey

• From Corporate Law to Tax Mastery: Jim started his career focused on corporate law but soon found his passion in estate planning, tax strategies, and asset protection. This shift showcases his adaptability and deep knowledge.
• Evolution: Under Jim’s guidance, the firm goes beyond typical legal services. It provides comprehensive solutions in estate, tax, and business planning, reflecting his innovative approach.

Diving Deep into Advanced Tax Planning

• The Start of Specialization: He moved into tax planning because he was curious and wanted to meet the complex needs of his entrepreneurial clients. This shows his dedication to providing complete, client-focused solutions.
• Successful Partnerships & Client Achievements: Jim has used his deep understanding of his clients and strategic partnerships to achieve big tax savings and protect their assets, showing his skill in handling complicated legal issues.

Key Insights & Innovative Strategies

• Changing Legal Advice: Jim promotes a team-based approach to legal counsel, stressing the need to blend different financial and legal areas to create customized solutions for clients.
• Personalized Planning for Every Client: The firm’s approach is all about fully understanding what each client wants, offering advice that covers everything from estate planning and tax strategies to setting up businesses for the best results.

Building Wealth Across Generations

• Focus on Legacy and Learning: Jim’s work goes beyond just legal advice; he aims to teach the next generation about wealth management. This shows his comprehensive view on preserving wealth and building family legacies.
• Stories of Success & Client Growth: He has worked with clients from the start of their journey to managing wealth for multi-billion dollar families. His dedication to helping clients grow, learn, and maintain lasting bonds is evident.

About our Guest:

Jim Duggan  is a founding principal of DUGGAN BERTSCH, LLC, a Chicago-based business, tax, estate and wealth planning firm comprised of attorneys and accountants.

You can learn more about his work at:
Website: https://www.dugganbertsch.com/
Email: jduggan@dugganbertsch.com


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.

Claim your free audiobook copy at: www.theshortbookformula.com

Transcript

Speaker 1: 0:32

Welcome everyone to another episode of the Million Dollar Producers Show. I am your host, paul G McManus, and today I have a special guest, mr Jim Duggan, who is the managing member and founder of Duggan Bersh, an attorney firm. Welcome, jim, it's great to have you on our show today. Thank you, paul, great to be here, appreciate it Just out of curiosity, where are you located today? I?

Speaker 2: 0:53

am in the middle in St Louis. I am actually in Chicago. I'm not remote. I actually do go into the office five days a week. I'm an old cadre that is sticking to my old habits.

Speaker 1: 1:03

I'm in the home office, but we're not too far away. Thank you for taking the time to do this podcast with us. I'm really looking forward to it. Of course, we're both going to be speaking at the upcoming Elite Growth Academy in San Diego in June. I'm excited to have you on the show. Learn a little bit more about you and your background, and how you work with advisors on advanced tax planning. Tell us who you are. What's your backstory. How did you get to where you are today in helping advisors with advanced tax planning?

Speaker 2: 1:33

I will do. But before I do that, I have to ask you have you decided it's black tie optional? I heard. Are you opting for the black tie or not the black tie? I need advice.

Speaker 1: 1:42

Yeah, I'm from San Diego. I recently moved, but I'm from the area and really for me it's flip flops and a t-shirt and shorts. I'm going to have to see if there's any blue pulls. If that's optional or not.

Speaker 2: 1:55

I think we'll talk to Ant and see if we can flip flops optional, I will talk to Ant.

Speaker 2: 1:59

Yeah, black flip flops. There you go. Jenna might not be happy with that answer, but I like that's great, yeah. So how do I get to Ant and ERT? I don't know how many years it's been. It's probably been around five or so. It could be more. I'm sorry if I misstated that. It's a funny to me. It's funny as a geeky lawyer.

Speaker 2: 2:18

I did not intend to be doing this for my living at all, but I sure am glad I do. I intended to just be a corporate lawyer. I was in a business school and undergrad and came out and got a joint MBAJD with the intent to be a very sellable corporate lawyer who could be a quasi-director for my clients. While that worked, the problem was I had taken all the estate planning courses and tax courses in law school. As I was dealing with my private clients, my entrepreneurs, I found it inescapable to ask the question how do you own your shares? Tell me about your estate planning? What about administration? What about taxes? What about asset protection? So it was a great line of questioning to understand the totality of the client circumstances. It was a bad line of questioning for a guy that wanted to only be a corporate lawyer. So I ended up going down this path of integrated business and corporate trust in the States and tax.

Speaker 2: 3:09

Whether I liked it or not, that led to bigger clients. That led to some family office planning, then virtual family office structuring, dealing with multiple disciplines for clients and dealing with the different advisors they work with, and that's what landed me squarely in the center of ERT's world, because that's what Anton has created with his networks. I love what I do and I really like the opportunity, so it's been great.

Speaker 1: 3:35

I heard you said that you've been working with Anton and ERT for roughly five years and again you'll be speaking at their event in this June. What attracts you to working with ERT? What have you learned, or what do you see in the advisors that Anton attracts that has you wanting to be part of that group?

Speaker 2: 3:51

Yeah, it's a great platform for me to present at because it aligns so similarly to how I view planning for the High Networks client's health. I've been doing this for 30 years. As you go through time and you meet this insurance agent, that CPA, this wealth advisor, this strategy finder and broker, you do see the good, bad and the ugly. Without doubt, a lot of people are really driven just to sell and get commissions. Other people really are looking for best practices, best value add to a client and what I have found is the network he's creating are people that are genuinely intrigued in trying to understand the totality of the planning offering for the High Networks client and delivering best in class together. It's an easy group to work with because everyone's really trying to accomplish the same thing, and I think alignment is probably the best word there. So I'm delighted to speak there.

Speaker 1: 4:43

That's awesome. I know we were joking about this before we went live on camera. What is the core message of your speech or what you hope to accomplish by speaking at the event in June?

Speaker 2: 4:54

So the joke was once I figure out what that topic is and Jenna approves.

Speaker 1: 5:01

But what we do know is it's gonna be really good. We know it's gonna be great.

Speaker 2: 5:04

We'll say this, paul we don't wanna have a committed topic yet because it wants to be current events, so we're gonna wait, get a little closer, so it's right, anyway. So there'll be a number of different topics we'll choose from and the hope there, of course, is that, regardless of what that specific topic is, the real message is that's one part of a comprehensive plan. So how we work and what we do is to make sure we're really addressing all the different pillars of a plan and talking to the client about all their objectives and integrating those, but also connecting all the advisors to the same. And I am hoping always when I speak that the advisors that are there are taking from that the power of the collective, the need to plan with multiple objectives in mind and multiple solutions at your disposal and integrate that in the most optimal way for a client. I always hope that's the primary message that's taken away from my presentations.

Speaker 1: 6:01

I know you've been with Anton and working with him as advisors for five years. How many years have you been in what you do?

Speaker 2: 6:07

currently. I've been in the business for 30 years. I came out in 1994, but what's interesting is I was actually doing this while in law school too. So I have really been in the closely held planning arena for probably 32 years now and it started with the basic estate planning, basic corporate basic tax. But instantly I really got into this kind of integrated approach. And in the industry it's been interesting to note that when you go to bigger firms and they still have that very siloed approach towards practice of law and it's not changing anytime soon, it's not a place that I could really coexist in.

Speaker 2: 6:43

I have to have created this separately to deal with the RIAs of the world, the independent accountants, the wealth advisors that really like to see this, how we do it and how they want to do it. And so it's been 30 years really of this, which has been great. So I've seen quite a bit. It wasn't like I was doing M&A transactions for 10 years and wanted to get out of that mess and see where that could take me. I've really grown with it and I've grown with the clients. So clients started as a million dollar client, a two million dollar business, a five million dollar client, then 10, then 20, then 50, then, 100, then, yes, we have the big multi-billion dollar families.

Speaker 2: 7:21

I look at them all the same. I have your start of millionaires, in fact, might have more exciting planning to do versus the person who came to me with already $100 million. So they're all exciting, they're all their own Rubik's Cube and I like to solve them.

Speaker 1: 7:37

Can you share a story of an experience with an end user client or an advisor, just to highlight some of the things that you've accomplished working with these clients?

Speaker 2: 7:46

Yeah, for sure. I would say. Obviously a cake of client names is the lawyer, but I'll say his name is Anton. I would probably answer that in two components and both recent. Quantitatively, which is what people like because they see tax savings, they see benefit right.

Speaker 2: 8:02

Just finished a wonderful presale planning engagement for a client where it was the second turn on a private equity structure. Where we sold the first component about two years ago. They've now closed on the rollover equity. Ultimately it's been about a 300 million dollar transaction based on the planning we did back then, the valuations we took the discounts, the wealth transfers, the freezes, the this, that, the other thing. We have $260 million of that off balance sheet, fully protected outside the estate for succession planning through the generations and the rest is in the estate on purpose which we'll get step up or we'll go to the foundation. Clients are happy, we're happy. It's just pure magic, really fun stuff.

Speaker 2: 8:46

But the other is really more the qualitative side and this is just so much fun for me and I say it all the time it's nice to have the tax savings qualified, but the last week I get these, maybe once every couple of months, where it truly is my favorite component as I represent people through time and I just call it the phase two, where I'm bringing in the next generation.

Speaker 2: 9:08

So to have done a plan to create that optimal structure and then bring in the kids and start to educate them on it and see that through, it's really part of the rearing and maintenance of that structure through time responsible way. It's really exciting to see how we can impart upon the next gen the values of generation one, why the structure was created, what we're hoping to attain with that, and that to me is always it's always the most exciting thing for me. So my greatest intrinsic reward comes in those sessions. That has nothing to do with money being saved, it's just planning. So, yeah, good to really good examples, both recent, but in every week with our clientele. It's something like that.

Speaker 1: 9:49

Rickle, I'm curious what's the dynamic so between yourself, say, a client, the advisor, perhaps a CPA, how does that all come together?

Speaker 2: 10:00

Yeah, it really is a team approach and what's what I learned very early on is it's not something one advisor can dictate. I would never dictate and say I have to be quarterback. You really have to figure out who the client is, who's the most trusted advisor, because in one case the CPA may be their most trusted advisor and maybe their insurance agent, maybe the wealth advisor, maybe this lawyer and maybe another lawyer they have who's happy to work with this lawyer, happy to do that. So it's important to know who is the lead person and elevate that person. Then everybody else is on a team on a really connected basis to have what I term not only the upfront implementation but a rolling agenda through time. How does that get implemented? It's got to be coordinated.

Speaker 2: 10:47

So it's critical at this type of planning is what ERT is trying to do is to get well-versed advisors that think across different disciplines so you can have a meaningful conversation. If you're the CPA, you can talk with the insurance agent. You're the insurance agent, you can talk with the wealth manager. So everybody knows a little bit what's going on. To come to a consensus for the benefit of the client or the team is really bigger than anyone advisor and bigger than the client mandate alone. That's when the good stuff really happens. And we're not trying to be the smartest person in the room, we're not trying to say we're in charge of it, but we are going to make sure that people are connected and whatever's supposed to be done is getting done.

Speaker 1: 11:25

I know that ERT does a very structured approach and team-based model. The virtual family office and I can imagine I'd love to get your thoughts on this is that I'd imagine, when you work with an advisor that's part of ERT, that you have a very cohesive team, because really the training is all about how to create that and do that in a seamless way. Of course, individuals and people are different. I'd love just to maybe hear how do you contrast the typical advisor that you work with that's part of ERT versus maybe an advisor that is not part of that type of ecosystem.

Speaker 2: 11:58

So my genuine experience has been with an ERT advisor. I have an advisor that's driving solutions, broad solutions with a higher end game for a client, trying to pull me in to make sure they're thinking everything through. And, by the way, we've got these thoughts and those thoughts and maybe this strategy. That's what's really great about the ERT side, because they are educated and they are connected already on an interdisciplinary basis. If an insurance agent typically calls me up it's to do an insurance trust and they're looking for me then to do all the other kind of thought process around it. A council would just come to me and say, hey, I'm a Hyde-Yarworth client, what would you do? So it's a different type of advisor that's trying to take what they've learned from the other disciplines and apply it a little bit Stay in your lane but think about those things and really try to have a broad solution. So that's been my distinction when I work with them they are driving the broader solution and the broader picture generally.

Speaker 1: 12:55

So, stepping back for a second, I know you've been doing this for a number of years what have you found has been one of the guiding principles that you live by, or you aspire to live by, when it comes to the work that you do?

Speaker 2: 13:07

I would say it's a client-first focus and it's value-add focus If you focus on doing the best possible work for the client with their interests only in mind. And maybe that's the lawyer in me, but I think it just works across the board. If you really take that approach and you don't worry about fees, you don't worry about anything else, it's just best solution all things considered, everything else falls into place. It really just does, and so the clients that we have are so robust and so dynamic, with the fact patterns coming to you, shifting through that, to just figure out what is the best thing for them and let that be your guide each step of the way. The structures fall into place and so does the success, and just bop-a-hulls from it for sure.

Speaker 1: 13:54

One of the things we were talking about before we went live was how is the industry evolving or changing? And something that you brought up was AI and the impact of AI. So I'm an AI geek. I first started using it. I think I was an early adopter in the sense that in 2022, I started looking into AI solutions. I found that they were so at best. To me, the game changer was really in March of 2023, when chat, gpt or OpenAI released their version, which is called GPT-4. And that was a significant level up from what everything had been doing, and so I've been all in on AI. I see this replacing many jobs potentially, I think, for the right people. There's a lot of upside, which I'm excited about. I'd love to get your thoughts on how is this impacting the work that you do and what are some of the potential upside and what are some of the challenges that people need to think about.

Speaker 2: 14:50

I've thought about it many times and I'm really glad I didn't do what I thought I was gonna do. I thought about taking a year off and finding a programmer years ago and just downloading my whole decision tree of my thought process, of how I come up with planning designs for people right, so I could greater systematize and have a check on all the decisions that one can make. That would have been a wasted year. Knowing chat, gpt was coming, computer learning and generative AI and all that good stuff, I think we're gonna turn a corner here soon. We're not there yet. I think that is going to be the key distinguisher as far as the industry moving forward as far as impact to have an AI mechanism where I know that I can have every single strategy, consistently what my issue is, considered right, with permutations and then options thrown out, so I'm not missing something. That is a really powerful tool. We have a lot of arrows in the query that we can use to solve a problem, but a lot of times you forget that there's more, there's sharper ones, there's better ones that you can pull, and I think having AI behind what we do is gonna help us really assess all the strategies available for a solution and maybe even put like a risk profile to them and help grade those for clients as we make that decision. So I'm very excited about AI in that context. It'll make us more efficient, certainly as we consider all the options, and I also think I talk about the challenges.

Speaker 2: 16:21

I think what will happen in the legal industry alone I don't know about the other industries, but I do feel like in some cases, paralegals and associates could ultimately be displaced by really effective robo lawyers right, robo paralegals. But what I don't see is the rainmaker, the planner, the person with a relationship with a client who's trying to think all this stuff through and put it together. I don't see that person being replaced. So I see AI empowering the types of advisors that ERT is attracting someone like me, because you really do have to condense what's out there and then someone's got to present it as a human, maintain it as a human, talk to the human and harness the power of the AI and those solutions. So I think we're a couple of years out, but I'm very excited where it's going to go. I think it's going to make us all better.

Speaker 1: 17:14

Just as a humorous aside, are you more of the mind that we're going to have a benign AI future or is it going to be more of a terminator situation where we're going to oh no, I think we're going to kill ourselves in short order.

Speaker 2: 17:24

So I'm an Irishman who happily drinks scotch, not worrying about that day every night. Yeah yeah, yeah, I'm Irish whiskey and get us a guy who has pessimistic views of how we will use this technology sadly, but that'll be another podcast A year from now is to say what happened.

Speaker 1: 17:39

but let's do this.

Speaker 2: 17:40

Everyone's going to blame Duggan, with his AI model, for planning to ruin the world. Yeah, exactly, I'm just looking forward.

Speaker 1: 17:46

I'm an introvert by nature and so I'm just looking forward to the day where I can do all the things I need to do from a business perspective meeting with people, doing podcasts, stuff like that and it's really it's just AI politics going about doing all those things. Yeah, exactly, exactly, I'm looking forward to that. So a couple of final questions. The world is changing very quickly. I think people always thought that the world's changing quickly and it's probably changed more quickly in the last 20 years, but my guess is that it's going to change. If we thought the last 20 years were fast, the next 20 are going to be even faster. How do you keep up to date with all the changing tax laws and the things that you need to be aware of when it comes to the work that you do? And, by extension, what advice do you have for an advisor who wants to, already is working in the space with ultra high net worth clients, or aspires to be working in the space? What advice do you have for them?

Speaker 2: 18:38

Yeah, I said I learned early on that on some level we're all the same in this space, right? We're all. We're all salesmen of something right, and we're just technical salesmen or sales women. So it's a matter of I sell legal services, tax planning, whatever. And what I'm seeing more and more is if you're just trying to sell insurance with this death benefit or that premium, or you're selling this portfolio with that return, or I'm selling my grat structure versus somebody else's grat structure, that I think the way the industry is evolving is that those people will be expendable, they will be displaced, and I think the real issue is, in order to survive in the high net worth arena, the ultra high net worth arena, you've got to be a comprehensive, higher level planner and really nail that challenge of your business. It's not how do I sell the insurance is how do I understand the total plan? And then where the insurance fits in, how is it the right structure for what this demands, right?

Speaker 2: 19:46

So I think everybody who is going to succeed in the space has to be broader in their approach and knowledge and not limited to the one thing they're selling. And I really do credit and an ERT for what they put together, because that is the basis, I think, of why they have this family office structure and the connectivity of everybody. And it's how you stay on top of it is hearing what others are saying from different disciplines about this strategy, that law, this client fact pattern, this audit. The information comes from all over and if you're on, if you're in your own little bubble, you're just not going to be that valuable to clients on that one thing. So I think to really compete and stay on top of it in the high net worth, ultra high net worth arena, you've got to be connected in different disciplines. You have to appreciate that and understand that.

Speaker 1: 20:38

I would add to that you don't need to be an expert in the different disciplines, but you need to know enough and be connected to the right people to get that earlier, so that you can seamlessly act together on behalf of the client in a way that meets their interests, but everyone is staying in their lane. But also they know who the most trusted advisor is, the most relevant advisor, and they're able to act accordingly.

Speaker 2: 21:02

Totally agree with that.

Speaker 1: 21:04

A couple of final questions. In terms of the work that you do, is there a geographic scope in terms of what clients or advisors that you work with?

Speaker 2: 21:12

There is More in Chicago. That's headquarters. We actually did just expand. We have an office now in an actual physical office in Omaha. We have lawyers in California, florida, arkansas, texas, iowa. We have actual lawyers, partners and places across the country, but we're not at all states. But that being said, we actually work with advisors from all states, clients from all states. It turns out wealth doesn't just accumulate in Chicago. In fact, wealth seems to be fleeing in Chicago.

Speaker 2: 21:42

I was COVID, as everyone goes to Florida and Texas and the usual suspects right, tennessee For me. We work across the country with talented advisors with their best clients. As they come to us and say how would you plan for this? We will either have a licensed person in that state that we work with or we have our connections in each state where we can work with them. Oftentimes the clients have their own lawyers that they actually like and trust, but they're a little over their skis doing what we do. It's not uncommon for us to have the local lawyer that's been with them for a long time. That's been doing their basics, but then for the more sophisticated stuff, we're on the team to oversee that. We all work together to collaborate. That really is the message. It's collaboration. You can work anywhere and all clients are welcome.

Speaker 1: 22:29

All advisors are welcome, to the extent that you're all similarly situated in how you approach this, Final question so for an advisor watching this and they're interested in exploring more how they can work with you what's the best way for them to reach out to you or to learn more about what you do?

Speaker 2: 22:43

Yeah, I think email is the best. Website is the best. I work all day and tend to do emails at night. Those don't get missed, right? The website is dugandbirchcom. B-e-r-t-s-c-h. God, I wish he spelled his name differently, but it's B-E-R-T-S-C-H. We'll link to it in the show notes as well. It is dugand, it is dugandbirchcom. And then my email is just jdugand at dugandbirchcom. Okay perfect.

Speaker 1: 23:07

We'll link to both of those in the show notes for anyone that wants to get the spelling or anything like that. Thank you so much for your time today. I really enjoyed the conversation and I'm looking forward to meeting you in person in June in San Diego. And we'll have to see if you're in the Penguin suit and I'm in the shorts and the flip flops, but I'm sure it'll all come together nicely.

Speaker 2: 23:26

I think if everyone listened to this beforehand, Ann's gonna have 80 people in flip flops. You'll be very unhappy with this.

Speaker 1: 23:31

Yes, yes, yes, this will be like a mini rebellion that we're gonna start Exactly exactly.

Speaker 2: 23:37

All right, Paul, thank you very much. I appreciate it. All right, thanks so much for your time. All right, see you soon. Bye.