Hello and welcome to The Unique CPA with your host, Randy Crabtree. We're committed to creating a thriving community of accounting professionals who are physically and mentally healthy, fulfilled, and energized by their work. Our ultimate goal is to elevate the reputation of the accounting profession and vastly improve the lives of those in it. The Unique CPA is brought to you by Tri Merit, the specialty tax professionals. Today our guest is David Snider.
David is CEO and founder of Harness Wealth. I'm very excited to talk about that, but just talk about the profession in general. David, welcome to The Unique CPA. Thank you. After having been with you in person out at the ACPA event in Las Vegas, it's great to join you virtually. Yeah, I was very, uh, fortunate to get invited to, uh, lunch with the, uh, the Harness Group.
Just a short walk, although nothing's a short walk in Vegas, I think you gotta take ten different routes to get there, but short walk from the, uh, hotel we were staying at, that was a lot of fun, so thank you for the invite to that lunch, it was fun. So, before we even get into, uh, we're gonna get into the profession, we're gonna get into ways that we can help the profession in general, things that we see going on in the profession, but before we even Do that. I just gave you a quick intro.
Why don't you give us a little more background on, on you and, and where you two, uh, how, uh, Harness started. Fantastic. Well, I've spent probably the last 12 years focused on how technology can enable advisors to be more effective in working with clients and creating value for them. And the first chapter of that was in the real estate space, helping to build Compass, the tech enabled real estate.
Brokerage Row is the COO, CFO, and they were really stumbled into how powerful it can be to create software that enhances the collaboration and the experience of working with advisors, but doing that in a way that is not software only, but is software sort of surrounded by tech enabled services that really help advisors and their businesses thrive.
And so that Theme was really exciting to me and I've had the opportunity through a short stint back at Bain Capital where I'd been earlier in my career to launch Harness and try to do something similar in creating value for tax advisors principally, but also some other areas that can support them as well. Yeah. So it was interesting what you just said. You were working with advisors. They were in the real estate area now.
Now you're working with advisors and tax and wealth and, you know, I'm sure a myriad of other areas as well. And I talked briefly beforehand, but I've heard the story, at least bits and pieces of it before, Harness really was born out of a situation that you had, an event that you had that ran into it. So why don't you give us that story. Yeah, I, you know, what you're alluding to is a seven figure personal tax mistake, basically, and it was not fraud, you know, it was not a bad investment.
It was, you know, listening to, um, two different Harvard Business School professors who I thought were brilliant in the classroom. When I took over the CFO role at Compass, we were exploring sort of whether or not to introduce an early exercise program and, you know, it was steered towards an answer that was probably not right for the context, certainly of a post Section 1202 QSBS venture backed world that I'm not sure these guys even knew had shifted or existed.
And so, um, The fact that really bright people giving what seemed like really good advice was so painfully wrong when it came to actually, you know, filing those years of, of 1040s. That was part of the inspiration that especially for next generation business owners, equity holders, there's just a lot more nuance than I think there was 20 years ago.
And the ability For technology to help great advisors navigate clients through that complexity, I felt like was a huge and, and still fairly nascent segment of the ecosystem that intersects tech and tax. All right. And you said that you went back to Bain Capital. You were at there before and went back to after the Compass, uh, years were up. And by the way, side note.
I remember, I don't know if it was exactly when Compass came out, but I remember at least early on hearing about this technology based real estate firm, I don't know what you call it, real estate platform. What would be the right term? What would you call it? Real estate? Depends when you're asking those that were bullish or those that were pessimists back in, uh, you know, 2013, 2014, 2015 as we were building it.
I mean, I think you looked at it from one side and you're like, Hey, there's, there's Building other brokerages that have raised hundreds of millions of dollars of venture capital. I think you looked at it from, you know, the side that I was using to sell people to put in capital and to grow the business. It was, hey, this is a huge market. It's one where there's an enduring demand for the service and where the good professionals are really good. And valued by their clients.
But the enabling technology is totally absent and Zillow and Trulia and others did amazing things for elevating the insight of the consumer, but they were not built to be great advisor tools. They sort of grudgingly allowed advisors to pay them, you know, for the pleasure of being part of that ecosystem. And I think we felt like there was an opportunity to really build. Technology that would enable real estate agents to be great advisors.
Um, and I think that piece has worn out over a long period of time and Compass now being the largest real estate brokerage in the U S on the residence. Is it really? I did not realize that. I, I mean, I do see them everywhere. Yeah. Yeah. And I've told you this before. My sister is a, an agent with a Compass and honestly, I don't know the numbers, but like. Got to believe she's probably one of the top ones at Compass.
She does a lot of work, and she recently helped me, or in the middle of helping me, we just bought a house, but we're looking to sell our house too, and man, I'm just like super, I'm getting on a tangent. This is what I do sometimes, we go on tangents, but I was super impressed, and I'm sure a lot of the tools she's got with Compass has helped her a lot. Okay, I'm going to go back. This is not a compass podcast. This is not a real estate podcast. It is a accounting podcast.
So let's get into then, you know, so you went back to Bain Capital for a year and then these ideas were coming into your head. I mean, and is Bain part of this then with Harness or, uh, yeah, I mean, I was very fortunate that. Matt Harris, who leads the financial service technology practice at Bain Capital on the venture side, invited me to come back to Bain and said, we love having entrepreneurs in the office, you know, sitting alongside the investment professionals.
And as I mentioned, I was really excited by this theme of where are there advisory services where clients still care about. The advisor and his or her expertise, but no one's writing home about the quality of the technology or the digital experience for the advisor, the client, the intersection of tax and financial advisory in particular was sort of what piqued my interest.
And it actually was, you know, a couple of years into the journey where tax really came front and center that we just found consistently for the clients we were trying to serve, tax tended to be The first advisory service needed came before trust and estate.
It generally came before financial advisory because these are people that were getting a slew of K1s when they became part of a partnership at a law firm, or they made principal junior partner at a private equity or VC firm, or they were getting the alphabet soup of equity from a venture backed company that they were joining or building, leading, etc. And that just felt like it was an opportunity to build something compelling yet.
Okay. And so let's just, cause you and I are both passionate about this profession. You probably become more passionate recently than I have. I've been around it quite a while, but we're always looking for ways that we can be better as a profession at the person level, in my mind, you know, the firm level, obviously, but the person level as well, but so let's, before we even talk about that, let's get into harness them. What is the tool? What is it? Who is it going to help?
How is it the tax advisor, the financial advisor? What is it? Give me the background of what. This Harness Wealth Tool is, is tool, right? You can correct me when I'm wrong too. Do you call the tool? Uh, entrepreneurs are grandiose. We like platform. I thought it was platform. It sounds grander. Yep. The core of what we. Have built over the last two years with an amazing technology team is a next generation practice management suite.
So the entire end to end experience of what your tax clients would go through and how you build, shape, and automate that experience to create. A more seamless, be a more insightful experience, you know, for you and your clients is the core of what we've done.
On top of that, we also have a concierge team because we found that for advisors, there still are a ton of administrative questions, whether it's technology related, or it's more administrative that we with a centralized team can create a lot of leverage for tax advice and how they do that, as well as business development. So we felt there was this bizarre. Mismatch in the tax base that you have.
Extraordinarily high levels of demand, decreasing supply of good advisors, but many of the good advisors, whether they're recent breakaways from bigger firms or folks building and maintaining small practices, it's not like you snap your fingers and all of a sudden all these clients you know need tax services are like running at the door. And so we've built a marketplace component as well that drives high value tax.
Service seekers into the advisors that are powering their practice off our platform as well. And so we think platform makes sense there that there's really a core software that's pretty, but we're also helping advisors to, you know, to drive their top line as well. Okay, so you just said you're able to connect the taxpayer, the client, the person that needs the advisory with an advisor. How does that role work? I mean, how do they get to harness first and then go to an advisor? How's that work?
You know, I've been doing this for a while and have a bunch of really effective digital strategies and built a ton of content expertise sort of in the market and the SEO and all that stuff. But really I think what's most impactful is sort of a growing number of relationships with incredibly large financial service institutions. Ah, makes sense.
They're principally financial advisors and have recognized that for financial advice to justify their fees, and hopefully we'll get to the tax advisor side because I like that. I'm about to. Yeah. You know, they have to be really a comprehensive quarterback.
And one of the top three issues that come up for good financial advisors, especially those that are introducing private investments or MLP or anything else to their clients is if you create tax complexity, you better darn well have a solution to help them solve it when their CPA retires. They can hear them Googling the terms that they need advice on, um, or they've been DIY historically, but now need guidance to, to navigate. And so. Yeah. Keep them out of a seven figure mistake, huh? Correct.
We hope so. Um, so that, that makes us a very unique partner in that we have the scale of a regional player because of those that are partnered with us. Yep. The technology of What many of these larger scale financial service companies have or aspire to have, but, you know, price points that are still, you know, a fraction of what a big four or a large regional player would charge on average, just because of who we're partnering with, everyone's benefit.
Okay. And so then when we look at platforms, I got it right that time. When we look at platforms, I've seen a lot of, a lot. I've seen a handful of advisory type platforms pop up in the last few years and I think they're all growing and getting to a spot where, you know, becoming useful. But what are the types of activities that your platform then helps the tax advisor?
How's the tax advisor get involved with Harness and then what do they use within Harness that's going to help them help their clients and help themselves?
So, Everything from the way that you interact with a client prospect, engagement letters dynamic and far more intelligent client questionnaires, what the client is uploading, where they are in the process of doing that follow up documentation, needs, payments, digital signatures, like anything that touches the client experience, we have built in a way that. Advisors can spend far less time and actually have a far more seamless and slick experience for the client going through that.
And then are layering insights coming out of the process on top. That again, makes the advisor, I think, seem far more forward looking in the way that they handle their clients than what many are forced to do because it's just so much work and so seasonally driven that without good technology, it's, Incredibly challenging, you know, to deliver the type of experience that people aspire to have.
Yep. And so that's one of the key things that, that I love talking about is using technology to create efficiencies within your firm and elevate you to a level of being that advisor rather than that data collector or that follow up emailer or whatever it is, it's let's free you up to do the things that are most passionate to you and probably More high level, uh, fees that you can spend your time on increasing then your, your whatever, however you bill,
hopefully it's not by the hour, but that we won't get onto my soapbox about that. And so we mentioned earlier, you've seen this profession now for a while, and we've talked a little bit, even before this recording, even earlier this, this, this, Wow. We talked, no, that was last week. We talked as well. My mind shot. And, um, there's a lot of things going on in profession.
You, you just mentioned one five minutes ago, the fact that we don't have the inventory, if that's the right word, of new advisors coming in to support the clients. What are you seeing as a, I don't wanna call you an outsider 'cause you're an insider, but you came from a different, uh, industry. What are you seeing going on with the accounting profession that needs to be addressed? Yeah, well, I'll give two semi counterintuitive thoughts on that front.
I think the first is more so than any other advisory service that I've been a part of. Clients want to pay you more. Yes. In the sense that, like, you don't meet real estate brokers who are like, oh, my clients really want to pay me 6 percent or 7 percent versus 5%, whatever. You know, you don't meet a financial advisor with a client who's like, I really think you should be getting 150 100 or whatever it is. Tax is different. There is the opportunity.
To have real communicable ROI on what you're doing, and I haven't met, and I hang out with a lot of people that I think are sort of target clients for a lot of people that want to serve high value clients, people that aren't excited to spend more if they feel like the advisor is unlocking more value in the approach. The guidance, the strategies, et cetera, in that stuff.
And so that's a great place to be if you're an advisor is being in a field where people want to pay you more, but they expect more. And I think that the downside to that is that it's an industry where for a variety of reasons we can get into, the innovation curve has been slower. And so you have people on the client side that are relying on their tax advisor to do something more and more important in the outcome, but often feeling like.
This is really the experience I'm getting in 2024, and so that creates this conflict that I think advisors have to make some investment in how they look and feel and operate for the clients to understand that you really are going to, you know, leapfrog them forward and to have some tools that create enough workflow automation to have the time to breathe and to sleep, you know, in the four plus months out of the year that it's really, you know, go time to do that.
The second counterintuitive thing, I was just meeting with two Y Combinator founders that are building a business, helping financial advisors get leads through AI.
What they said, which absolutely resonates with our experience with sort of the marketplace in generating new clients for tax advisors is counterintuitively to almost every advisor I talked to initially, the more specialized You are, or the more that you can communicate true areas of expertise, the more new business you're going to get from referrals, from a conversion rate, you know, across the board. And I think that's really hard.
Like we, you know, work with a lot of advisors that join our platform. They're like, well, I don't want to say I'm phenomenal serving law firm partners and, you know, real estate developers with buildings less than 50 million, because there are all these other people like Randy, they're podcast hosts that I can also add value for. And you're like, sure.
And maybe you'll get, you know, some of those, but if you focus and you demonstrate, you know, every one of those lawyers who like, David knew everything about, you know, the K1s at my firm distributing and knew before I read about this change in the law that was going to, you know, be meaningful from a, you know, SALT exemption standpoint, they're going to send you every one of the colleagues and, you know, friends, et cetera, in that field.
That doesn't happen when it feels like you're a generic, you know, utility provider. And so. That's something that we also try to Paisa reinforce is like lean into the differentiation. It may be counterintuitive. You think you're decreasing your addressable market of clients. It's going to have outsized benefit in the speed at which you can grow. I agree completely. That is, you just hit on two of my passions there. Passion areas I like to talk about.
The niche practice, the showing that you're an expert in a certain area. Just as. Unbelievable how far that can go. And I've mentioned this before on the show, but I have a friend who, you know, everybody knows that Josh Lance is a good, was a good friend of mine. Unfortunately died last year, but he built a practice that was servicing craft breweries and I've talked to him in the past about it.
And he said, I would charge probably three to four times more than someone else would for that same client because they know I'm the expert, because I can communicate my value to them through the expertise and the knowledge I'm able to share. I think that, I think so many of us, I'm going on a rant now, David, so sorry, but I think so many of us in this profession get caught up on the, I need clients, I need clients, I need clients that we don't do it strategically.
We just, anybody that's going to pay us, we're going to bring in here. And so I love the fact that you highlighted the fact that, you know, creating this expertise in a small subsection of client base is the way to go. I'm totally on board with that. Yeah. And again, you can have multiple areas of expertise, but I think being able to speak to Those areas, you know, is definitely helpful. Oh, yeah.
And then the automated, so you had mentioned, hopefully we can unpack this even more, but the slow to technology and the automation integration, why do you think that is in our profession? Well, you can follow the money. I mean, maybe we'll get to sort of the recent spate of private equity deals and tax. I think the most obvious areas are things where. It doesn't take a lot of work. In some cases, it takes, you know, less expertise and you have like big profit margins.
So the, you know, large area investment were in commoditized advisory field. So there were some phenomenal travel agents, still are, but a whole bunch of people that were doing things that could be totally automated away. Big air of investment, et cetera. You then, you know, got that big investment in areas that required the relationship, but the actual work was easier.
So the margins could be wide and that was financial advisory, which has been sort of a flavor du jour for private equity investing, especially with the breakaway trends have now been going on for, you know, nearly two decades plus. Insurance brokerage as well. And I think tax has been trickier because it requires a lot of skills and often specific skills. Harder to have massive margins because you need to really know what you're doing and run things effectively.
And a lot more affinity between the client and the specific advisor than a client and a firm that made, you know, investments more challenging, you know, at scale and all different parts of the ecosystem. And I think There's now a view that automation, probably Gen AI, is going to create enough value and operating leverage that this is a space that clearly clients care about. Clearly there is Material market opportunity and value.
And that if people sort of get everything organized or are going to be, you know, pretty successful around. So I think part of it too, is we are an aging profession as well. And it very well could be part of that when, uh, you know, I'm part of the baby boomer generation and.
I'm the young one, so I'm not the old boomer, but you know, it may be, I see automation or integration and technology integration is often, well, let the next person do it because I'm going to retire in five years and I don't want the pain of dealing with this. And I think it's just been going on that way too long. And I was just recently talking, I don't know if you're familiar with Roman Villard? Roman's really cool. He's been on the podcast a few times.
Actually, it's his birthday today as we record. So happy birthday, Roman, even though this won't be being played on your birthday. He did a, uh, he and I had a discussion recently and he said, Gen Z, you know, he was doing, creating a firm culture that's going to, you know, Not cater to Gen Z, but attract Gen Z, and he says the number one thing that they care about is what technology are you using within your practice.
And so, that alone, you're going to need, you have to do, to attract the next generation of people into this profession. So, what you're doing, Is needed. Now we just need to get everybody to implement it. Yeah, well just, I mean, follow the money, right? So the clients that you want to have because they're going to increase in complexity and fees over the next decade.
Are ones more often, you know, Randy, hopefully, you know, you take this my way, you know, are Gen X on the younger side of Gen X, you know, and older millennials, at least for the next, you know, 10 or years.
And so I don't think you need to worry about being on TikTok, but you do want to have a contemporary experience that relates to them because those are the Power earners, they're also the people that will be the beneficiaries of the multi trillion dollar intergenerational wealth transfer that's occurring.
So they're more likely to be the ones that are LPs in private equity and other complex instruments that generate a lot of K1s and they're more likely to be the, you know, business creators and really complex and high value clients as well. And so, yeah, I think that's the other piece of this is you didn't need to shift if your clients would rather.
Drop off paper and, you know, see you in person to sign a complex big stack 1040 return and that, I think, was a change, obviously, that, you know, 2020 through 2022 accelerated, but was already there on the demographics. It definitely was, it was a bad way to move it forward, but it needed to be moved forward for sure.
Alright, David, so all awesome stuff, anything we can do to help this profession, I want to do, but that being said, why don't you give us a summary of a success story of somebody that has started working with you with Harness. Yeah, I mean, I think it's incredibly satisfying when advisors who are, you know, truly entrepreneurs, at least the ones that we work with, express really positive shifts in their experience with this industry and their job from being part of the platform.
So an advisor who was at a top 10 firm, I think had toyed for a number of years with leaving creating his own practice. We got connected and. The existence of Harness sort of gave him enough momentum to say, okay, it's time to, you know, break away, create my own practice.
And on two occasions, one in the middle of busy season and one, you know, talking about ad, a point that he had much later, the Delta And how much more positively he felt as someone with ownership of what he was doing rather than someone at that like junior partner esque level where there's so much pressure put on you from above, there's pressure sort of the bottom of the pyramid and managing below that it just felt unsustainable and talked about in this remote world, he's still working from
the same home office, but how different it felt in the last tax season to be here. In the driver's seat and accountable only to the goals that he set for himself. And I think whether you do this through Harness or through any other platform, I think to have.
And enabling platform and network to help do that, whether it's a reset button for a practice that's bringing in a new partner, generational change, just someone who may be later in their career will say, Hey, I'm excited to be doing this for 10 more years. Like, I'm going to make that investment that you think about it holistically. And I think based on the experience that he and many others have had, it is imminently doable to drive.
Very significant growth in top line for that to actually drive even more growth and profitability and to do it in ways that is generating a more positive feelings rather than just feeling, you know, more overworked in a season. More work life balance, or as a friend of mine says, and probably he's not the only one, life work balance. He keeps telling me, you got to say life work. Okay. I'll say life work balance. We got to come up with a new term. That's just.
Generically said, I think, so we'll figure it out. Basically what I want to see is people enjoying working in the accounting profession, anything we can do to make efficiencies fall into that would be great. So we talked on pretty much, because basically you were just talking about, and you know, his mental health was much better during the stack season. So we're pretty much touching on all my, my hot buttons.
The only one we didn't talk about today is the billable hour versus fixed fee or value price or subscription. But I think we'll skip that one today and we'll see if you have, what, do you have any comments on that? No, I can't help myself. Well, I think, you know, our model is allowing great advisors to charge all they want to. So we're not prescriptive in how someone positions things. I think clients are looking for clarity.
And so again, kind of counter intuitively, I'm going to bill you for my time and people thinking about it like an attorney, probably not going to create the most value for anyone in the equation. So we don't mandate that, but I certainly think that what you, Preach, you know, I have observed as being beneficial to both sides of the equation. I agree. I agree. But that's because I say it all the time. So I agree with my, I just told you, I agree with myself. Not the case with everyone.
So I think you should pat yourself on the back. All right. Well, David, this has been awesome. I really like to see that you have a passion for the profession and that your platform, Will be, I was going to say tool, I caught myself. I don't know the terminology. I just talk. Your platform is out there going to help people addressing the things that I think that need to be addressed, at least at some level. So thank you for that. One last question before we wrap up. Actually, two last questions.
And I tell, I ask this for everybody, but you know, we were just talking about all the cool things about the way this profession can Change, especially with platforms like yours, but part of that was work life balance or life work balance and having a good mental health and outlook on life. So to do that, you need outside of work passions. What are your outside of work passions? What do you like doing when you're not building harness? Uh, I would say it shifts. I'm a relatively new parent.
I've got a two and a half year old and a 14, 15 month old now. That contracts, you know, your passion time. I'll say that there's nothing no more exciting than being able to get your kid or kids into your passions. And so I have, I've always loved, I've never been an artist, but I've always loved contemporary art. I took a course in college around art. contemporary art post World War II and just kind of fell in love with it.
And so now being able to take both kids or particularly the, you know, soon to be three year old, you know, to an art museum or to see, you know, something get created, I think is particularly exciting. Still feels a little early on Duke basketball and a few of the other things. I, you know, get a lot more excitement over a Daniel Tiger episode than watching even the Olympics.
Uh, but there's, there's time to, um, continue, you know, to seed many of my passions, hopefully organically, and only if they opt in, you know, into, uh, the next generation. Yeah, that's fun. You mentioned basketball. That's a big passion of mine. And I did see Duke for you. Is that correct? It is. I grew up in the Boston area. I was like a UMass fan during the Marcus Camby era, but I stepped on campus at Duke in 2003.
You know, they had won in 2001, had an incredibly strong team when I got there. Pretty infectious, hard, hard not to leave a college basketball fan if you go to any of the schools like that that just have great. Programs and I think great coaches help create some longevity in them. Yeah, well the current coach there is a local to my area here, uh, John Shire. He grew up, uh, just a few miles away from us here, so we're looking for him to do good things.
And then last, if people want to find out more about Harness or you, where would they go or look? You can always feel free to email me directly. I'm, I'm David at HarnessWealth. com. We also have a, um, a part of our website. So if you went to HarnessWealth. com, that's kind of the consumer facing side. If you navigate to the for advisors section, I think it gives a pretty good perspective on what we have built. And there's a lot more coming in terms of the insights and automations that.
We're excited to bring to the advisors that partner with us. Well, nice. Well, thank you. Thank you, fairly new dad for being on The Unique CPA and look forward to running into you again somewhere soon. Sounds great. Thanks, Randy. Thank you for joining us today on The Unique CPA. You can find the show notes for today's episode And learn more about Tri Merit at TheUniqueCPA. com.
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