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#120 - Taxes Don't have to Be Scary: Insights from Catherine Tindall · Only Fee-Only

• 0:05
  Speaker 1: How's it going?
• 0:05
  Speaker 1: Everyone, welcome back.
• 0:06
  Speaker 1: This is the Only Fee Only podcast and, as always, we appreciate you being here.
• 0:12
  Speaker 1: In this episode, we talk to Catherine Tindall, who is a strategic tax planner and the founder of Dominion Enterprise Services, which is a firm that works with financial advisors to control their income tax and file accurate returns as they grow their firms.
• 0:31
  Speaker 1: Super insightful conversation.
• 0:33
  Speaker 1: She was actually out of the country when we did this podcast, so really cool to be able to talk to her and for her to have the time to hop on and speak with Peter and I for a little bit.
• 0:41
  Speaker 1: A lot of great things come out of this episode common misconceptions around tax, things that you should be thinking about.
• 0:47
  Speaker 1: So, without further ado, here is Catherine Tindall on the Only Fee Only podcast.
• 0:54
  Speaker 2: What's up everyone?
• 0:55
  Speaker 2: Welcome to another episode of the Only Fee Only podcast.
• 1:00
  Speaker 2: I'm Peter Travolo, I'm here with my co-host, brock Buckles, and today we are so excited to have Catherine Tindall on.
• 1:06
  Speaker 2: I'm really excited to have her share her expertise in tax planning and how she is helping financial advisors.
• 1:13
  Speaker 2: So, catherine, welcome to the show.
• 1:15
  Speaker 3: Yeah, thanks for having me.
• 1:16
  Speaker 3: It's great to be here.
• 1:18
  Speaker 2: Yes, you bet.
• 1:19
  Speaker 2: So we've been seeing your name pop up quite a bit, but for those who don't know who you are, do you want to give a quick overview of who you are and how you help financial advisors?
• 1:26
  Speaker 3: Yeah, sure, so my name is Catherine Tyndall.
• 1:28
  Speaker 3: I'm a CPA in my firm.
• 1:30
  Speaker 3: We're a CPA firm that our specialty is working for financial advisors, so we work with people that are RIA, ibd just 1099.
• 1:39
  Speaker 3: But really our focus is working for the practices themselves, because I found over the years of doing tax planning and working with advisors we realized that we really enjoyed those relationships the most and the nuance in them and also the education is a really big part for me because I love doing tax education and really switching into more of those planning relationships.
• 2:02
  Speaker 3: So that's who we serve and that that's who we, you know, talk to as advisors.
• 2:08
  Speaker 1: So getting into, like Catherine, and how she wanted to get into this industry in the in the beginning, like how did you decide that you wanted to be a CPA?
• 2:17
  Speaker 1: Like where did that come from?
• 2:18
  Speaker 1: Is it something you always knew what you wanted to do, or did it just seem like the right path eventually?
• 2:23
  Speaker 1: Like where did you come to wanting to do that?
• 2:25
  Speaker 3: Yeah, so my parents had a tax practice growing up and so I thought for the longest time like I would that this was an unappealing industry to me, really seeing the guts of it.
• 2:37
  Speaker 3: But you know, at a certain point I originally wanted to go into medicine because it's like I want my life to be helping other people, and I realized that pretty early on into that experience.
• 2:49
  Speaker 3: I had an elective course.
• 2:51
  Speaker 3: They said just take accounting, it's super useful.
• 2:53
  Speaker 3: And so I took it and I immediately fell in love with it and, talking to them and realizing the depth of the relationships that they had with their clients because they ran a small practice, I realized, oh, you know, this is actually a way to really help people on a long term basis where you get to choose the relationship.
• 3:11
  Speaker 3: You know they have really, really had really great relationships with their clients.
• 3:14
  Speaker 3: And so I realized like no, this is actually a meaningful way for me to to be able to do this with people and I like the content, like I love the puzzle element of it.
• 3:24
  Speaker 3: I love the having to explain things that are complicated and dry and stupid.
• 3:29
  Speaker 3: Not that the tax code is completely stupid, but there's a lot of stupid parts of it, but you still have to understand it, to deal with it.
• 3:37
  Speaker 3: Explaining those things to people and helping them navigate it when it's it causes a lot of fear and anxiety.
• 3:44
  Speaker 3: So in particular, that's how I kind of got into accounting.
• 3:48
  Speaker 3: I always knew I wanted my own firm and as I worked for other firms with the eye of how would I make this better, how would I build this better, how would I do this business model better, I realized that leaning with the planning focus was really my preference.
• 4:03
  Speaker 3: It was the need that I saw in a lot of the client relationships at other firms that I worked at, where you know getting a tax return filed correctly as table stakes, but that's not actually the meaningful thing to the person running a business right.
• 4:16
  Speaker 3: The meaningful thing is the cash flow and how that's impacting you, and you know if you're going to have to cut off 35% of the money you made to the government.
• 4:26
  Speaker 3: You want to make sure that that's happening efficiently and, at the very minimum, that you know what's going on ahead of time so it doesn't turn into a surprise.
• 4:32
  Speaker 3: And so we got into that.
• 4:34
  Speaker 3: And then, with the advisors in particular, I realized when I launched the practice, when I looked at our book of business between the different types of clients we were working with, I realized that I synced up the most with the advisors in that I enjoyed those relationships the most, just because they wanted to understand the why of what was going on with the tax planning and deploying those things in their own practices.
• 4:56
  Speaker 3: They're also very dynamic.
• 4:57
  Speaker 3: They grow really quickly.
• 4:58
  Speaker 3: They acquire other practices, they sell books of business.
• 5:02
  Speaker 3: There's a lot of things going on and I found for a lot of them there wasn't anybody that really was paying attention to them as a group.
• 5:09
  Speaker 3: So that's how we shifted into working particularly for the advisors.
• 5:15
  Speaker 2: Yeah, that's very cool.
• 5:16
  Speaker 2: I was gonna exactly ask that question how did you find the niche of financial advisors?
• 5:20
  Speaker 2: So I mean, what are some of the main problems that they are facing?
• 5:24
  Speaker 2: You know, because I also look at this.
• 5:26
  Speaker 2: As you know, financial planners could also maybe be difficult to work with, right.
• 5:30
  Speaker 2: It's like doctors working with doctors, or doctors, you know, caring about their own health, right?
• 5:36
  Speaker 2: So what's that kind of dynamic look like?
• 5:41
  Speaker 3: their own health Right.
• 5:42
  Speaker 3: So what's that kind of dynamic look like?
• 5:43
  Speaker 3: Yeah, I would say, for the most part it's you know, on the personality side of things, most people who approach me, it's you know they're people, people like, they love serving people, they love helping people.
• 5:53
  Speaker 3: And I think when they come up against the tax code, I think a lot of them have the right response, which is just I'm an expert at my thing, I'm not going to be an expert at this.
• 6:01
  Speaker 3: I know enough to be dangerous.
• 6:04
  Speaker 3: I just want this to be done correctly, because me mastering tax is not what's going to get me to the next level of where I'm trying to go in my business, and so it's not worth my time to really become an expert on this on top of all the rest of the stuff I'm I have to deal with in my, you know, clients lives and then just building up my, you know, building up my firm.
• 6:23
  Speaker 3: So I found, for the most part, they're one just wonderful to work with, wonderful people.
• 6:28
  Speaker 3: They're people, people, and I think for me it's, you know, realizing that a lot of the work that I do with them they then get to translate into their client relationships to, like them, having a better understanding about how some of these nuances work and how to really think about the tax relationship and just some of the core technical misconceptions that I run across pretty frequently between entity selection and things like that.
• 6:52
  Speaker 3: They tend to be really dynamic relationships.
• 6:57
  Speaker 1: Yeah, so what are the things that are some of the most common misconceptions that advisors have?
• 7:02
  Speaker 1: Right, because, again, they have a good understanding of money.
• 7:05
  Speaker 1: They know how money works more than your average person out there.
• 7:09
  Speaker 1: Right, but because you've heard things or you've seen things posted on LinkedIn, you might overestimate your knowledge when it comes to taxes.
• 7:16
  Speaker 1: Right, you might be like, well, I heard you could do this with an S corp or whatever it might be.
• 7:20
  Speaker 1: What are some of those misconceptions that you hear a lot?
• 7:24
  Speaker 3: I would say probably the biggest one has to do around with entity selection.
• 7:29
  Speaker 3: That's a core issue, but I would say probably even the bigger misconception that I run across is when people and this is true for advisors as well as anybody people don't think they have agency over how much taxes they pay.
• 7:44
  Speaker 3: They think that it's just something that happens to you and you kind of go through your year and then all of a sudden your accountant pops up and says, hey, you got to pay an extra $100,000 this year, and you just get kind of blindsided.
• 7:58
  Speaker 3: And I think, know, I think the biggest misconception like on a structural level, I level I encounter is people not realizing that no, you, you have agency over what happens in this function of your life.
• 8:10
  Speaker 3: You have control over how much taxes you pay, because your business is the thing that's generating the profits that are generating the taxes.
• 8:18
  Speaker 3: And so, unlike with other kinds of businesses like real estate, where the game is all about depreciation, it's all about leverage and depreciation in real estate, in professional services businesses, we don't have that, and so it ends up being a year to year game that's played.
• 8:32
  Speaker 3: And so what I'm always you know the conversations I'm having with people are.
• 8:37
  Speaker 3: If you really want to save taxes, you got to do something more like the Amazon strategy of you have an operating profit that comes through the business.
• 8:44
  Speaker 3: That's a certain level and your dreams and ambitions for what the business is going to be is something in the future.
• 8:52
  Speaker 3: Right, I want to get myself.
• 8:54
  Speaker 3: I'm at 100 million AUM right now.
• 8:56
  Speaker 3: I want to get myself to a billion or I want to get myself to 200 or whatever.
• 9:00
  Speaker 3: It is right.
• 9:00
  Speaker 3: There's a future outcome that you're trying to get out of this business or transitioning or whatever it is that you're trying to do, and I think for a lot of people, they don't realize that when you're playing the tax planning game, a lot of that is accelerating those changes into the future and strategically harvesting the deductions, because most of the time, what's holding you between, like where you are now and where you want to be in the future, once you're at a certain level, in the practice is purely a money thing.
• 9:24
  Speaker 3: It's getting the right resources in the right seats, doing the right things, getting the right trainings, getting the right consultants, getting the right systems, getting the right software.
• 9:33
  Speaker 3: It's a resources allocation thing, and so whatever's holding you back from that future state that you want are things that you can help use to artificially lower that profit margin and pay less in taxes.
• 9:45
  Speaker 3: But that's the mechanism that you got to think about it as, and it's on a year to year game, right, because we're recording this January.
• 9:52
  Speaker 3: You know December 31st, you know at midnight the carriage turns into a pumpkin and you're stuck with what, basically the vast majority of whatever that tax bill is from that year.
• 10:03
  Speaker 3: And so really the game is you have to play it during the year to know what's going on, to make decisions about.
• 10:09
  Speaker 3: Okay, well, how you know how much do I actually want to pay this year?
• 10:12
  Speaker 3: Do I want to have all this profit hanging out?
• 10:14
  Speaker 3: So that's really the biggest misconception, I'd say.
• 10:19
  Speaker 2: Mm, hmm.
• 10:19
  Speaker 2: So what are maybe some items you know now that 2024 is closed out, but for those looking forward in 2025, like, what are maybe just some key checkmarks that you know?
• 10:30
  Speaker 2: A lot of advisors they may already be doing, but you know just a short list of, like, what you're like, hey, you know what, make sure you're doing this, this and this say the first.
• 10:44
  Speaker 3: The first one is like we're going into tax season right now.
• 10:46
  Speaker 3: So first thing is you know you just.
• 10:46
  Speaker 3: You just want to have a bullseye on whatever your tax liability is and not wait on that.
• 10:49
  Speaker 3: I always tell people, even if you can't make all the payments in at least knowing what it is so that you can have a plan around.
• 10:55
  Speaker 3: It's really important.
• 10:56
  Speaker 3: Another really big misconception that people have is that oh, if I owe the irs a dollar like they're gonna send me to jail.
• 11:02
  Speaker 3: This is all crazy.
• 11:02
  Speaker 3: The IRS doesn't really care a ton about being paid on time.
• 11:06
  Speaker 3: They're more interested in just having filings happen on time and knowing what you owe them.
• 11:10
  Speaker 3: Of anybody that you could owe money to, they're actually pretty good to owe money to.
• 11:15
  Speaker 3: They offer payment plans.
• 11:16
  Speaker 3: The interest rates are pretty low and they're pretty easy to work with in terms of that.
• 11:22
  Speaker 3: So I don't worry about that so much for people.
• 11:24
  Speaker 3: But going into the filing season, you need to know what you owe and have a plan around how you're going to deal with it.
• 11:29
  Speaker 3: And then we look at stuff like okay, first step is entity planning.
• 11:34
  Speaker 3: Are you operating in an entity, yes or no?
• 11:36
  Speaker 3: Should you be operating in an entity, yes or no, and a lot of that questions you know come around to if you're not operating in an entity, could you be earning, you know?
• 11:46
  Speaker 3: Could you shift the way that you earn your revenue to be to an entity and would that be beneficial?
• 11:51
  Speaker 3: You know, specifically for most people if they're going from solo, s Corp is the person we look at.
• 11:57
  Speaker 3: It's a pretty rigid structure in certain ways.
• 11:59
  Speaker 3: So it's really dependent on what, where the person's trying to drive the business towards, whether or not it's appropriate and the level of complexity currently in the business, like do you want to have to put yourself on payroll?
• 12:08
  Speaker 3: How much of a benefit is this actually going to be?
• 12:11
  Speaker 3: But usually I tell people, like every you know for our clients, on an annual basis we will reassess that just to make sure that they're operating in the correct entity.
• 12:20
  Speaker 3: So even if it's a very quick, you know a little assessment thing and then we re, re tinker it to make sure that it's you know that it's operating efficiently.
• 12:30
  Speaker 3: So if they're an S corp owner we have to do things like a reasonable compensation survey to make sure they're paying themselves correctly so they're not running afoul of the IRS rules.
• 12:38
  Speaker 3: And then we look at things like you know, big one that a lot of people miss is and this might go away in 2025.
• 12:46
  Speaker 3: So, depending on when this comes out and when Republican tax legislation comes out, this little soundbite might be useless.
• 12:52
  Speaker 3: But you know there's always the pass-through entity tax in different states that you can take advantage of, paying your personal income taxes through your entity, through special regimes from your state, and allows you to bypass the $10,000 cap that's on a Schedule A and so usually for people who have S-Corporations, it's the dual benefit of that self-employment tax plus getting around that.
• 13:14
  Speaker 3: We call it SALT, that SALT cap, so it can end up being really beneficial.
• 13:19
  Speaker 3: I was looking at somebody recently where they had asked their CPA multiple times whether they should be an S corp.
• 13:25
  Speaker 3: They could.
• 13:25
  Speaker 3: You know there's specific rules around what kind of revenue you can move over.
• 13:28
  Speaker 3: Which have had tax court cases about it, which, if anybody's interested in that, just send me a DM.
• 13:32
  Speaker 3: I'm not going to bore you guys with it, but there's specific rules around what you have for, specifically for financial advisors, what kind of revenue they can push into an s corporation.
• 13:48
  Speaker 3: But I was looking at a situation for this guy and he had wasted like over a hundred thousand dollars over the course of three years not operating out of an s corporation.
• 13:51
  Speaker 3: Yeah, so it ends up.
• 13:52
  Speaker 3: You know it can be pretty big money over the course of operating like that for several years for something.
• 13:56
  Speaker 1: That's you know, some allocations on my side, but not actually any extra legwork for the business, for you know the advisor to operate For sure, yeah, so for anybody that wants to know or check Catherine's credibility, just listen to the last three minutes there and I think that you'll get something out of it.
• 14:13
  Speaker 1: A lot of really good points there, for sure, yeah, a lot of it over my head, but definitely useful to know.
• 14:22
  Speaker 1: So talk to us about the firms.
• 14:26
  Speaker 1: That and that's why we have people like you.
• 14:27
  Speaker 1: Right?
• 14:27
  Speaker 1: We don't we shouldn't know those things.
• 14:29
  Speaker 3: You don't want to be me?
• 14:30
  Speaker 3: Yeah, we want to know you right.
• 14:33
  Speaker 1: And then we want to be able to do our own things, like focus on what you're actually good at.
• 14:36
  Speaker 1: That's the way that you are.
• 14:37
  Speaker 1: Yeah, no, that's good.
• 14:40
  Speaker 1: So, Exactly, yeah, yeah, no, that's good.
• 14:45
  Speaker 1: So are there firm sizes that you work better with than others?
• 14:47
  Speaker 1: Like, is there, like you know, if you're boutique or solopreneurs, do you want to work with those big firms?
• 14:50
  Speaker 1: Like, is there a sweet spot with who you want to work with or who you work best with?
• 14:55
  Speaker 3: Yeah, I would say it's more a psychological thing.
• 14:57
  Speaker 3: You know, I've found in our experience.
• 15:00
  Speaker 3: Well, it tends to be if somebody to be, if somebody starts needing like audited financial statements and things that can be.
• 15:07
  Speaker 3: You know, we don't do, I don't have an independent relationship from my clients because we're so in the weeds with them that I couldn't offer them auditing even if I wanted to.
• 15:16
  Speaker 3: And so for RIAs that you know that hit a certain threshold they tend to need audited financial statements for their regulatory requirements.
• 15:24
  Speaker 3: So for people who don't need audited financial statements is usually a better fit.
• 15:28
  Speaker 3: But psychologically, I'd say the most common complaint that I get from people is the I'm the one that's always bringing the ideas to the tax person.
• 15:37
  Speaker 3: I don't feel like I'm getting planning.
• 15:39
  Speaker 3: I'm competing against a thousand other clients and you know my practice is growing and I have ambitions to do things with this, but I feel like I'm alone.
• 15:49
  Speaker 3: Yeah you know when it comes to the tax situation and it's really significant.
• 15:53
  Speaker 3: You know, in professional services, especially for advisors, they kick off pretty big profit margins.
• 15:59
  Speaker 3: They grow quickly.
• 16:00
  Speaker 3: It gets really expensive really quickly and to feel like you're just at a doctor's office where you know you're in the ER and competing against a bunch of people with, like broken arms and legs and you know you have needs, but you know the CPA is going to be going after the person that's getting a levy notice from the IRS, not, you know, you trying to optimize a situation.
• 16:21
  Speaker 3: So I find that that's probably more.
• 16:24
  Speaker 3: You know psychologically, where the meeting point happens is they want the planning but they haven't been getting it, or they just feel like their tax professional doesn't understand them because they don't understand the business model of how they operate.
• 16:36
  Speaker 2: Yeah, I mean there's such a big difference in levels of service in any industry, but definitely in taxes, you know, because a lot of people they think they have a good accountant or a good tax person and you know it's a tax prep person they're submitting it.
• 16:55
  Speaker 2: You're not for four or five hundred bucks and that's a premium return, right.
• 16:59
  Speaker 2: You're not going to get tax planning right.
• 17:02
  Speaker 2: You're going to get somebody to file and I think a lot of people, um, you know they're not proactive with it.
• 17:07
  Speaker 2: So I think that the you know, the accountants or any service professional who's just very good about having a service calendar reaching out to your clients you know, like clients, they want you to reach out to them.
• 17:19
  Speaker 2: Make sure that they're making their estimated payments like being very proactive in those types of roles, unbelievable as far as and then that's how your client retention is.
• 17:27
  Speaker 2: But, like you said, grows quickly and then it gets very expensive to keep it and maintain it.
• 17:33
  Speaker 2: So that's very interesting Question for you.
• 17:37
  Speaker 2: When it comes to, you said, like firms merging and things like that.
• 17:41
  Speaker 2: Like what are you seeing in 2025?
• 17:43
  Speaker 2: Um, you know, how are people really transitioning books successfully?
• 17:47
  Speaker 2: Because you see, in the ria space you're seeing huge multiples on ebitdas and things like that.
• 17:52
  Speaker 2: But like what's actually going down and what's kind of your market status on it?
• 17:57
  Speaker 3: yeah, yeah, like I think part of it in a lot of ways in my experience is that you know a lot of the smaller firms like it's still very person to person, like cottage feeling to me and that might just be the type of the types of clients that I work with, where you know people buying other people's books because they want to retire, or like buying out partial books or doing it in tranches where they buy, you know, 20%, then 30%, or whatever it is Like I'm seeing a lot more of those transactions.
• 18:24
  Speaker 3: A lot of the multiples are, you know they've been pretty high, and even the ones where there's a big discount going on because of, um, you know it's a it's a closely held transaction, like somebody is selling to an advisor who's junior to them and they they're not really looking to try to get a, you know, a big payout from it.
• 18:44
  Speaker 3: You know I've been seeing still some pretty like pretty high multiples off of those kinds of transactions which are pretty shocking to the advisors.
• 18:53
  Speaker 3: I think for a lot of a lot of the advisors that I talked to, because we do, you know, basically in our firm, like we start off with doing an assessment engagement, so even when people just like.
• 19:01
  Speaker 3: I just need a second set of eyes.
• 19:02
  Speaker 3: I don't know if my person's been screwing my stuff up.
• 19:04
  Speaker 3: Like you know, we start with those kinds of engagements and even through those, talking to a lot of the advisors, I think a lot of them don't realize the value of what they're sitting on in their practice a lot of the time and how like if they were their own client and they saw how much concentration risk that they have in terms of like yeah, you've got this practice that's worth a couple million bucks or however much like this is like by far and away the biggest asset that you own.
• 19:31
  Speaker 3: I think a lot of them don't think about this.
• 19:34
  Speaker 3: They don't realize that that's really what they're sitting on and think about the succession planning early enough, or think about doing like exit planning and really trying to engineer their business to be a better business just on its own.
• 19:47
  Speaker 3: So those are probably the more common things that I've been seeing.
• 19:52
  Speaker 1: Yeah, for sure.
• 19:53
  Speaker 1: Now, all good points.
• 19:55
  Speaker 1: Is there anything that before you came on here, you're like I got to make sure?
• 19:59
  Speaker 1: I talk about this for little golden nuggets that you want to leave behind as a last question?
• 20:05
  Speaker 3: Yeah, I would say little golden nuggets.
• 20:06
  Speaker 3: So for anybody who's interested in the pending tax legislation stuff that's about to unroll, I've got a newsletter you can sign up for it.
• 20:14
  Speaker 3: It's the same thing I'm going to be sending to our own clients about, like hey, this is a new tax bill you got to be aware of.
• 20:19
  Speaker 3: This is, you know, cut to the chase.
• 20:21
  Speaker 3: Like this is the meat of what you have to know about this stuff.
• 20:24
  Speaker 3: So for people who are interested in that, we can, I can share the link with you guys to post that for the newsletter.
• 20:29
  Speaker 3: But I always tell people you know, if you're very commonly like with the S corp issue or running into the S corp issue, it's something that you don't want to sleep on that If you haven't had somebody do a formal write up on it, if you haven't had a tax person actually do the math out for you and see if you can do it.
• 20:49
  Speaker 3: It's one of those areas where it's like the most common mistake that I encounter is people not operating in that entity when they should be, or they're operating out of that entity but they're not following the rules for it and putting themselves at risk with the IRS because they're not paying themselves enough.
• 21:05
  Speaker 3: So it's one of those things where, if you haven't actually paid like a CPA to spend some time on figuring that out for you, it probably has not been figured out and you just want to pay attention to that.
• 21:21
  Speaker 2: All great points.
• 21:22
  Speaker 2: So, Catherine, what's the best way that our audience, they can follow along?
• 21:32
  Speaker 3: reach out, maybe DM me with any questions.
• 21:33
  Speaker 3: Yeah, so I'm pretty active on LinkedIn.
• 21:34
  Speaker 3: So if you have any questions, like, feel welcome to send me a DM on LinkedIn or you can follow me on there.
• 21:37
  Speaker 3: I post content pretty regularly on just situations that I come across from advisors, practices and from you know, tax code changes and just different observations of things that I have.
• 21:47
  Speaker 3: So that's the best way is LinkedIn.
• 21:50
  Speaker 1: Awesome.
• 21:51
  Speaker 1: Well, thank you so much for the time.
• 21:53
  Speaker 1: It's always great to talk to you.
• 21:55
  Speaker 1: You put out some great stuff, so really appreciate it.
• 21:58
  Speaker 3: Yeah, thanks for having me on.
• 22:00
  Speaker 3: I appreciate it and it's always fun to talk tech stuff.
• 22:04
  Speaker 3: I hope I didn't get too in the weeds for you guys.
• 22:07
  Speaker 1: No, not at all, it was perfect.
• 22:08
  Speaker 1: It was perfect, very insightful.
• 22:09
  Speaker 1: Thanks, catherine, thanks.