April Walker: On today's podcast listen to hear more
about leaning into technology for your tax practice.
Hi everyone and welcome to
the AICPA Tax Section Odyssey podcast,
where we offer thought leadership on
all things tax facing the profession.
I'm April Walker, a lead manager from
the tax section and I'm here today with
a repeat guest. His name is
David Snyder he's a founder and CEO of Harness Tax.
Welcome back, David.
David Snider: It's a pleasure to be here.
Thanks to April.
April Walker: David, I'd love for you to
start tell us a little bit about yourself and
tell us a little bit about Harness Tax and where you see
yourself in this world of tax.
David Snider: Thank you for having me. Yes, so Harness
has a platform for
routine tax advisors that are looking to make
their relationship with their clients
more seamless and insightful,
and what that really means is
a practice management solution
that's tied into a much broader set of offerings.
That includes business development
to help advisors with leads,
a concierge team to help with support,
as well as a broader network of resources to help
guide advisors and give them
the resources of bigger firms.
April Walker: Wonderful, I feel since
we talked in spring of 2022,
if it's possible I feel the importance
of technology is even more important.
Maybe that's just me being dramatic but
let's start off just by pretty broad question,
how do you see technology transforming
the way tax advisors interact with their clients?
David Snider: Absolutely, I think about it being
in the second of three inevitable phases.
I think the first stage,
which is very typical across industries.
My background was spending now
12 years building technical enabled services,
software solutions, first at compass that real estate,
advisory firm, and now at Harness.
Before that in the middle spent a lot of
time at Bain Capital looking
at different disruptive technologies and
so that first phase that we went through,
very similar to a lot of industries.
Adoption of email,
adoption of technologies that clients can
actually submit core documents
digitally and not just in paper.
The ability with the early softwares to
actually complete and file electronically.
That really is table
stakes and if you look at the data it's
99% of advisors have an Efin
The second phase that we're really still in the early to
mid innings ARB is the software collaboration phase.
What that looks like is work-flow automation,
ways of interacting with clients to
create leverage for advisors and scale,
it's not just - I typed an email send it to one,
or I create an engagement letter sent to one.
It's using the efficiencies of technology
that can at the vanguard
be AI but really doesn't need to.
In the vast majority of cases it's just having
good practice management software
to create efficiencies,
for the advisor that ended
up ironically, even though you have to spend
less time, creating a better client experience
and one that's more customized to the individual,
It gives them more visibility into what's
going on, what's coming next.
The third phase which I think only a handful of
firms are really investing in fully tapping into,
which is totally fine. I don't
think the client expectation is
there is around customized insights.
How do you not just deliver it efficient workflow?
But how do you at the outset
of a tax season demonstrate to your client,
you already know some stuff about them from prior years,
here's why we really need just to tweak that.
Showing your work.
Here is all the different analysis that we
ran in the completion of
your return or the discussions that we
had at the end of the process.
Yes, here's a completed tax document or analysis
that you requested but also here's what it means.
I think that ability to both give insights to people
and we leave clients like they
actually understand tax,
the tax process, the work that you did is going to create
massive benefits in terms of client's willingness
to pay, their retention, their happiness, etc.
Very few firms are at a Phase 3 in
our opinion. You don't need to be concerned if
you're not because there are a few if any are,
but certainly making sure that
you've put in place or have
the opportunities to go into
next tax season and really nail Phase 2.
I think that will put advisors in a great place to really
capture what is happening on the vanguard in Phase 3.
April Walker: We definitely hear from people and
when I'm out talking to firms,
people who are definitely still in that Phase 1,
where they transferred to cloud. That seem like
a huge deal and leaning into some technology,
but maybe taking that next step
into [phase] two even is difficult.
Do you have any advice or thoughts on that?
Because everyone is so busy and it's hard to figure out,
especially if you're a really small,
it's hard to figure out how to take that time and really
invest in trying to get to that next step.
Any ideas or suggestions there?
I think the good news is, there are a lot of
very good practice management software
that did not exist or did not have
the robustness that they do today five years ago.
One of the things to consider in
evaluating the different choices is,
ensuring that you price in the value of
your time as a practice leader. In that
there is a learning curve on anything,
no matter how good the technology is.
There are some that I think are much cheaper
and may have the technologies
you want to check the box on,
but I think really understanding
what is the on-boarding team look like?
What does the client success infrastructure
of that solution look like?
Who's gonna make it as easy as possible to set
you and in many cases your
team up to use it successfully?
To answer issues that will
inevitably arise from any change.
I think we have over-invested in
those resources because we know
there's a lot of change and fully transitioning
the way that you think about practice management some of
the potential third-party software you can
plug in etc. That's important.
I think whatever approach
that you take whether it's working with Harness,
or a whole host of
other solutions that are out there that are very good.
I think just making sure that you understand,
what are the functionality each have,
what's gonna be accretive to the way
that you want to work and
your staff and perhaps your clients?
But also what's the process going to be to
fully utilize and take advantage of that.
Those are some good thoughts and just
maybe if we can talk about a few examples
of ways that firms can use practice management tools
to really help them
because this is really what it's about.
It's about helping not having to have
an Excel spreadsheet of clients and that's all you have.
I'm not saying that's what
our firms have, I'm just saying,
I was in practice for some time and I remember that.
What are some ways you can use
tools to really advance your practice?
David Snider: I think there's external components.
How do you enhance the way that your clients
perceive their process. And then there are internal things.
How do you ensure that you don't
miss a filing. The reason that advisors have
Excel is just a mechanism to ensure that
they do the work
for their clients that the clients expect.
I think on the external side,
the more frequently you're
interacting with clients around the tax process,
generally the better, not in an
annoying way, but I think tax is something
clients generally don't want to
think about but definitely want to get right.
It's no different than a patient coming
in to a doctor if they have an issue,
but don't really totally understand it.
Having a solution that allows you
to email before the season starts,
to preview of what's to come
and the deadlines and things that are upcoming.
What do you need from your clients?
What is the engagement going to look like
from a pricing standpoint going to be?
Being able to send out
engagement ladders that reflect that.
So someone feels like they weren't
surprised because they had
exactly what's being done for them and the pricing terms,
etc, outlined being laid out.
Having the client questionnaire customized
ideally to what the clients
already told you in previous year.
So it feels intelligent. Not like you're starting at
day one every year with
the same advisor or around your materials etc.
All that stuff is beneficial,
being able to update them that
I've received everything I need.
Or expect to hear from me
this time in March for business filing. Aspirationally,
late March not April 14th but whatever that
may be for the draft filing
what their advisors recommended, etc.
Or at extension deadlines.
That stuff all again
can be done without moving your practice to Phase 2.
But it's going to be dramatically
more time consumptive. And it's
stuff that you can't
bill and price for in the way that you want.
Because there are lots of other tax firms
that have already made
those investments and therefore they can do
those things with very little time invested.
Internal stuff is really around collaboration,
tracking, knowing what clients have uploaded what, who has been filed,
who's working on documents, etc.
Where are they in the process?
Have they paid?
The more visibility you have,
the easier it is to spend each day,
not driven by who is pinging
you over and over in your inbox,
but who actually needs
something based upon external deadlines
or prioritization or the revenue
they're going to drive. Wherever that may
be as you think about,
being the quarterback of
your practice rather than playing defense.
Or just having the scrimmage
run towards you over and over
again during tax season and hoping you're
still standing at the end of it.
April Walker: Yes. I love football analogy.
I was just in Minnesota to watch my Tar Heels play.
My first trip to Minnesota anyway, it was fun.
David Snider: I went to the Super Bowl when the Patriots
played there against the Eagles a number of years ago.
It was bone chilling.
April Walker: Yes, we're recording this in early September.
it will come out in a couple of weeks,
and what we're really thinking about,
and what I hope are practitioners are thinking
about is year-end planning, and boy,
there's a lot to talk about with impending legislation,
there's Tax Cuts and Jobs Act sun setting.
There's a lot going on for you to be
in front of your clients and prevent your value.
Talk a little bit about how technology
might assist you with some of
those conversations, or pulling data
together to be able to
help understand who you
need to talk to you and what about.
David Snider: Number 1, I would say and this is anecdotal,
I don't have the data to prove it.
The majority of advisors do
not proactively emailed our clients in Q4,
unless they need to collect
certain things to do a quarterly estimate, etc.
That is a huge missed opportunity.
Even if you adopt no technology,
take an hour, jot down some thoughts,
a few bullets on what
could be at stake in the election or
the expiration of the Trump tax cuts or of
the estate tax exemption, whatever it is.
Then send something that seems
thoughtful and obviously it's going to be
thoughtful from any practitioner
who cares about what they're doing.
If you do that, you may think,
I actually have the time
to have something more customized.
A, you can use
software at least to have it be addressed to the person,
even if it's a mass email versus just a generic one.
But then you could
potentially also group your clients and say,
hey I've got 15 law firm partners
and I've got 42 small businesses,
and I've got a cohort
of people with multi-state issues, etc.
I'm going to create
three different end of year planning emails.
I'm going to categorize my
clients and be able to send out
something that's not individual,
but that makes you feel like April is really ahead
of the curve in terms of giving me
insights that I wouldn't have expected.
Although it obviously can be automated,
but it takes the advisor having the initiative
to create that content
and think about what's going to be most useful for.
When you do that, feel free
to promote the scope of what you can offer.
Tax advisors are not the world's sales-iest profession,
and in many respects that can be a good thing,
but it also does you
a disservice where your clients don't
know what type of things might be beneficial.
For that end of the year planning
to small business owners be like, hey,
you're thinking about possibly selling or
transferring a chunk of the business to a child,
or an employee,
or selling outright, etc.
There are a whole bunch of things that you should be
thinking about now,
potentially some things that may involve
tax decisions this year versus next year.
: I can be helpful with that.
David Snider: I think highlighting the opportunities
around that and giving people the ability
to opt in for more complex planning
is going to be really accretive.
But yes, whether it's
Harness practice management solution or others,
there are definitely ways to customize,
the messaging, the cohorts, some of that stuff.
But it really starts with
the advisers sitting down and saying,
what is potentially meaningful
on the horizon for my clients and
how much time energy do I want to take to customize that?
Maybe it's one generic
one and there are
ten clients that really move the needle.
These are my 10k plus clients,
whatever the threshold, may be.
I actually want to spend some time and
really make them feel that I'm paying
attention to their holistic needs
and how I can be strategic to them.
April Walker: A lot of times we hear people say,
I don't want to bother my clients.
But I feel like on the other side,
they really want to hear from you.
They want to hear from you when you have something to
say that's really important and crucial to them.
I think it's important.
That's a great point you made about
reaching out in some way fourth quarter of 2024,
because like we said,
there's a lot of different things that you could
bring up that are specific to their situation.
David Snider: Honestly, my
view and it's just a personal view,
having now been in this industry for several years
is book-ended communications are
extraordinarily rare and extraordinarily valuable.
What I mean by that is communication
before the season starts,
the more customized, the better,
but at least something.
And the same thing at the end,
that even after the client has signed a return,
you've completed some analysis,
that post-season follow up.
If it's just previewing when
they think about bringing for the next year or
some of those planning opportunities
goes a really long way I think in demonstrating value.
I'm seeing advisers do the presentation of
insights through Loom videos
and other things that I think is also an element of that.
Which is do more than deliver
the bare minimum of the compliance requirements,
and you will stand out and generate a tremendous amount
of goodwill from your clients in whatever form it takes.
A Loom video, something semi customized,
something even generic will be helpful to a lot
of the people that you work with.
April Walker: Just thinking about some clients
you may have worked with, with Harness tax, do you
have any success stories that come to mind where
technology really improved someone's practice?
David Snider: I think we have
two different types of advisors that we principally help.
The one is a practice with one to 25 employees
under 10 million of revenue that's
really making an investment. [They say]
we've got a good business,
we're going to do just fine regardless,
but we also recognize to make it
a- sustainable b- to enable growth,
we've got to be more efficient.
And we want to not just be good enough that clients don't leave,
we want to be better.
For a number of those practices,
I think the combination of a workflow,
practice management technology that can
save a couple hours per
client with some of these automations of
the client engagement letter or
the intelligent client questionnaire,
the status updates, also
supplemented by our client's
success team that can help field
those level 1 questions that may come into
the advisor. They're not necessarily required to answer.
They don't require tax expertise, etc.
All that stuff gets unburdened.
Those firms have then been able to take
advantage of new referrals that they
generate and a whole bunch of
Harness generated clients. One of
the earliest practices that came
onto the platform has grown,
I think 80, 90% across two seasons because
the practice leader is getting
a lot more leverage
and amount of time that she spends with each client.
She's gotten more resources to
talk about in the conversation.
They don't use
the network of tax attorneys that we have
or some of the other softwares and
database that they have access to through our platform.
The other group are people that have been at
top 50 firms for a variety of reasons
feel like now is the time to be more
entrepreneurial to create their own practice.
There's tremendous demand for people
that have specialization, nimbleness,
a willingness to create a great experience. And one
that joined had been at
a top 50 firm to create his own practice
and his first-year was able to generate
over a quarter million dollars of revenue.
And that really came from day 1,
adoption of Harness' technology,
a few other components to that workflow,
and the ability to really
highlight some areas of specialization,
and to take a lot of clients that came
through our consumer-facing side
that brings in clients and distributes those to
the right advisors to serve them.
It's really a powerful combination that
no matter how good your practice seems,
if you free up hours and
you position yourself well, you're going to grow,
and I think giving yourself that time,
especially in Q4, to really
think through what are ways that you can
generate, create more value.
Maybe capture a fraction of
that incremental value for
existing clients and create the space for
you to take on new ones that would be
incrementally valuable is wonderful.
And we've certainly seen that just in the top-line value,
and then in really high Net Promoter Scores of
the clients that are being served by
advisors using our technology.
April Walker: We'll go live before the end of September
so hopefully this will be
valuable information for people
and we talk about growing.
Sometimes firms don't want to grow because they feel
like they have too much going on at the time.
But what we have talked about
and heard and I'm sure you'll echo
this is sometimes you need to grow in a different way.
Like you need to cull some clients and really focus on
growing your experience with those really good clients.
David Snider: Grow your free time,
grow your client value and or
grow the amount of money that you
pocket at the end of the year I think.
April Walker: All three, I'm going to say check,
check, check for me.
David it's been
lovely chatting with you today.
Any final thought as we're wrapping up?
David Snider: I think we're turning back to that initial theme,
if you are an advisor in Phase 1 where you adopted
some technology probably 7-10 plus years ago.
It's really important, I think,
to get ahead of clients expectations,
which I think will rise as
more advisers are using
technologies to create a better experience.
But don't also get anxious thinking, oh if I don't have
a fully outsourced AI practice
that I'm behind the curve or my job's going away.
There is secular growth in demand for tax services,
and the more that you can devote
time to areas that you are advising,
building relationships, strengthen relationships.
You will thrive in this profession,
but don't sit in the same as last year mentality.
Look at what is going well,
look at what's going to create the most value
for you and your clients and
make those investments of time and
in some cases, expenditure.
April Walker: Great thoughts. You've been with us
before so you know that in closing on
these podcasts we're Tax Section Odyssey. We're
taking a journey together toward a better profession.
But I also like to think about
other journeys outside of tax, so David,
share a page from your travel journal,
a trip coming up or something you've just recently done.
You already had a spoiler with the Super Bowl trip,
so that was cool.
David Snider: That's way in the rearview, I
don't think the Patriots are
making a run this here unless something dramatic changes,
but the trip excited about I'm heading
actually tomorrow night to Barcelona,
watch the America's Cup race as a father-sons trip.
Always been a big sailor before my time.
He spends a lot of
the summer and now year-round in Rhode Island,
and so that used to be where the America's
Cup always was held
and for the last almost 40 years,
I think it's been elsewhere,
and so we decided rather than just wait,
we will take the trip. So we're hoping that Team USA,
American Magic can at least
win the Louis Vuitton cup to be
the challenger against New Zealand.
April Walker: Worst-case scenario,
enjoy some time in Spain.
[LAUGHTER] Which doesn't sound like a bad plan for me to.
David Snider: Exactly.
April Walker: Thanks again so much, David.
Again, this is April Walker from the AICPA Tax Section.
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