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Tech-Driven Financial Advisory: David’s Vision for Revolutionizing Wealth Management · The Accounting Leads Now Podcast

• 0:01
  Speaker 1: Welcome to CFO Chronicles the secrets behind success the go-to podcast for fractional CFOs and accounting firm owners who want to attract more high-paying clients and increase their revenue.
• 0:14
  Speaker 1: Hosted by James Donovan from Nine Two Media, this podcast dives into marketing strategies specifically designed for lead generation and client acquisition.
• 0:24
  Speaker 1: In each episode, you'll hear from industry leaders sharing their success stories and Thank you to your bottom line.
• 0:49
  Speaker 2: David, so excited to have you on the podcast today.
• 0:53
  Speaker 2: I was looking forward to this one had it circled on the calendar.
• 0:56
  Speaker 2: I know we got connected a couple of weeks ago, but I would love for you to do a quick introduction for those of you, for those who don't know who you are.
• 1:06
  Speaker 3: My pleasure and thanks for having me in this discussion.
• 1:09
  Speaker 3: I, about six years ago, started Harness, which is a platform for helping next generation equity holders and business owners navigate financial complexity.
• 1:20
  Speaker 3: We focus principally on creating a best-in-class tax experience through software that we build to power great relationships between CPAs and their clients, and then also have a marketplace of related services financial planning, holistic wealth management, trust in estate, et cetera.
• 1:39
  Speaker 3: So the goal is to be a reasonably one-stop shop for this emerging wealth builder community's most important financial advisory relationships.
• 1:51
  Speaker 2: Awesome.
• 1:51
  Speaker 2: How did you get into that?
• 1:52
  Speaker 2: Because that sounds, like you said, like a one-stop shop.
• 1:55
  Speaker 2: It's something that I'm sure every CPA could use for their clients, so how did you get into this space?
• 2:07
  Speaker 3: So how did you get into this space?
• 2:08
  Speaker 3: So you sort of understand, you got to go back to the early days of the last business that I helped to build, which was Compass, now the largest tech-enabled real estate brokerage in the country, in the US, and we initially started with a view that we had to disrupt the role of the traditional real estate agent.
• 2:28
  Speaker 3: We were going to have salaried neighborhood specialists to reimagine the delivery of that advisory service and what we found in the first few months of running the business was there was this big innovation opportunity, but it actually didn't involve disrupting the agent who most clients generally liked.
• 2:46
  Speaker 3: It was disrupting the role of the traditional brokerage that was taking, you know, on average, a third of the economics in the US, and so we spent you know the company's been around for you know almost 12 years continually sort of you know building in all but the first year, basically a platform to create a new type of 21st century brokerage or platform for great agents to run their business.
• 3:13
  Speaker 3: And that theme of tech enabling advisors to have the digital resources and other tools to serve their clients more intelligently, more seamlessly, more smoothly, more delightfully, more conveniently, was still in a pretty nascent stage across a lot of service verticals where people still cared about the advice of the advice they're working with, but where there was a big gap in what people kind of expected from a paid service in most verticals in the 21st century.
• 3:48
  Speaker 3: And so I had the opportunity to go back to Bain Capital.
• 3:52
  Speaker 3: I'd been there before Compass, before business school, and worked with their venture team and sort of had this pattern recognition of gosh know.
• 4:03
  Speaker 3: The tax financial advisory space feels very similar in that people still really care about, in many cases, working with an advisor, understanding the nuances of complex decisions.
• 4:15
  Speaker 3: Um, there's a lot of data.
• 4:17
  Speaker 3: It generally is very poorly utilized for anything other than like the exact thing that someone's trying to solve for today, and wouldn't it be cool if there was an opportunity to sort of pull stuff together.
• 4:32
  Speaker 3: The other observation, you know, or thread of this is really like it does resonate with me personally.
• 4:37
  Speaker 3: You know, despite having been a CFO and investor on the private equity side and an MBA, every three to six months I'd be like, oh shoot, I totally missed this thing that I could have done.
• 4:53
  Speaker 3: That would have created more value.
• 4:54
  Speaker 3: And not like, oh, I didn't buy NVIDIA when it was trading at one-tenth the value.
• 4:58
  Speaker 3: No, I just should have put this taxable investment in this type of account.
• 5:00
  Speaker 3: I just should have put this taxable investment in this type of account, or I could have, you know, use pre-tax dollars for this, or I could have saved, as it turned out.
• 5:10
  Speaker 3: You know, I'd seven figure some in taxes based on Compass stock, if I hadn't gotten bad advice from you know, a really smart person but not the right CPA that knew about some tax law changes in, you know, 2012, et cetera.
• 5:23
  Speaker 3: So that stuff all kind of led to this idea that there was a business worth trying to build.
• 5:31
  Speaker 2: Okay, interesting, and a lot of that is over my head.
• 5:37
  Speaker 2: It sounds very complex for the business owner who's not involved day toto-day in all the taxes and the regulations.
• 5:47
  Speaker 2: So do you guys go to market directly to other CPA firms?
• 5:52
  Speaker 2: Do you also go directly to the end user?
• 5:55
  Speaker 2: What does your like?
• 5:57
  Speaker 2: Who's your ideal client essentially?
• 6:11
  Speaker 3: So we have both a D2C and a B2B side of the business.
• 6:12
  Speaker 3: So we actively go out and look for advisors breaking away from a top 100 US tax firm interested in creating their own practice, as well as really well-run small boutiques but ones that typically don't have, you know, the most compelling digital experience or sort of automated workflow, et cetera, to create better outcomes and power the experience both for those tax advisors and the existing clients that they serve.
• 6:38
  Speaker 3: Where the business started, which we still have and is thriving, is this consumer-facing marketplace where, if James was going out and looking for a CPA personally tax services for your business, financial advisor, whatever that we've curated some of the best out there and in some of these verticals it's just about finding the perfect advisor or an ideal advisor to kind of meet your objectives In tax.
• 7:11
  Speaker 3: It's that plus.
• 7:11
  Speaker 3: We've actually built and created the service experience, leveraging the expertise of an existing advisor, but where the full experience is harnessed, powered on a technology standpoint.
• 7:24
  Speaker 2: Okay, that's really interesting.
• 7:26
  Speaker 2: How are you guys getting in front of new potential clients right now?
• 7:35
  Speaker 3: On the tax advisor side and I would say that there's overlap in some of the strategies for both of those demographics or markets For tax advisors.
• 7:46
  Speaker 3: We're creating a lot of content around what it means today to run a really efficient business.
• 7:51
  Speaker 3: What are the components of doing that?
• 7:54
  Speaker 3: To hopefully demonstrate the insight that we've had from a lot of the team working in tech enablement of advisor services for more than the last decade Our head of product at Adapar, the leading wealth tech data company for financial advisors.
• 8:10
  Speaker 3: Me and our head of sales at Compass, building software for real estate advisors, and then our head of engineering, who was at Flatiron Health, not for advisors but working with really big data sets and figuring out how you draw better insights to create better outcomes, in that case in the health space.
• 8:32
  Speaker 3: So content is a big piece of it.
• 8:35
  Speaker 3: We have this very large interconnected marketplace network in the sort of ether out there.
• 8:43
  Speaker 3: Financial advisors work with tax advisors, tax advisors work with trust and estate advisors, and so we also triangulate among the network that we have of figuring out who really good advisors we already have collaborated with, who else they work with, who they like, and using that to kind of expand the web of those that are familiar with Harness, partners of Harness, et cetera.
• 9:05
  Speaker 3: As we expand On the consumer side, we've also found a lot of success in that a lot of large US financial advisory firms increasingly want to provide as comprehensive a solution financially as possible for their clients, and tax is a really big part of that, and so for some really large institutions our ability to have a national scale technology forward but very competitively priced offering is a really compelling opportunity for them to be able to send clients to us when they have those tax needs.
• 9:43
  Speaker 2: Okay, awesome.
• 9:45
  Speaker 2: This is really interesting and I think hopefully a lot of people listening will want to reach out to who.
• 9:51
  Speaker 2: Who would be like the average size of businesses you're working with?
• 9:56
  Speaker 2: Is it?
• 9:56
  Speaker 2: Is it CPA firms with like 50 plus staff and they're doing you know X amount of revenue per year?
• 10:05
  Speaker 2: Or generally smaller firms like?
• 10:08
  Speaker 2: Who would be the ideal clientele for you guys?
• 10:12
  Speaker 3: So we have successfully partnered with everything from the breakaway advisor who's starting their business, you know today, but has a very impressive pedigree and a pathway to build a successful independent practice all the way up to, you know, probably a $5 million revenue practice with multiple partners and, you know, a staff of you know 10 to 20 people.
• 10:39
  Speaker 3: I think what we built will ultimately be highly valuable for the next segment in terms of scale, as you build up more towards, like, regional scale firms.
• 10:50
  Speaker 3: But we haven't focused on that.
• 10:52
  Speaker 3: You know, quasi enterprise level permissioning functionality yet we will, but a little bit less so so far.
• 11:01
  Speaker 2: OK, interesting.
• 11:03
  Speaker 2: I'm curious, david what gets you excited about what you do on a day-to-day basis?
• 11:08
  Speaker 2: What gets you out of bed each morning?
• 11:12
  Speaker 3: So I'd say two things, I think, similar to the process of buying or selling a home tax in particular, but also kind of financial planning advisory is stressful to a lot of people.
• 11:24
  Speaker 3: It's very important.
• 11:25
  Speaker 3: It shapes your wherewithal to meet your objectives paying for a kid's school, buying a second home, taking care of a parent or others, et cetera and so having a business that hopefully creates a lot of confidence in the clients that we serve, that the advisors we work with do a great job.
• 11:51
  Speaker 3: There is an overlay of a client success team that creates another layer to help make the process more intelligent, more seamless.
• 11:58
  Speaker 3: There is technology that supports all of these components, etc.
• 12:03
  Speaker 3: That we're just giving people comfort and confidence in what they're tackling.
• 12:15
  Speaker 3: A business book when I was in college and had the great fortune of interviewing Seth Carman kind of one of the legends of hedge fund and investment management and I was asking him about sort of the justification for fees and value of an advisor and he's like listen, if someone in financial services only matches the market in performance, services only matches the market in performance but provides the confidence for his or her clients that they can sleep at night they're not dumping all their money in the stock market when things are at its frothiest and pulling out at the bottom when it seems scary.
• 12:49
  Speaker 3: That's someone who is creating an exceptionally high amount of value and that's coming from someone who's managed to remarkably beat the market, you know, on average by hundreds of basis points per year.
• 12:59
  Speaker 3: So what we're doing, I think, is obviously a lot more than that, especially on sort of the tech side of things.
• 13:06
  Speaker 3: But giving that confidence is there.
• 13:08
  Speaker 3: I think the second is running a small business is really hard in general.
• 13:14
  Speaker 3: I think it's really hard in real estate, where it's a cutthroat, highly competitive industry, fast moving, et cetera.
• 13:24
  Speaker 3: It's really hard in tax, where it's seasonal, stakes are high, clients have high expectations, don't totally understand things, et cetera.
• 13:37
  Speaker 3: And so if we can actually help those business owner entrepreneurs to deliver a better experience to their clients, hopefully create more visibility, transparency, hopefully allow them to just generate better outcomes for themselves as well as for their clients, et cetera, that's super exciting.
• 13:57
  Speaker 3: And I think, at a more macro intellectual level, tax is this unbelievably data-rich picture into each person and their household, and I think Canada is a little bit more straightforward than the USS is in terms of tax code and complexity, but there is so much information, nuance, et cetera, that all gets rolled up in the tax process and it is, in 99 plus percent of cases, just used to do a filing and then just kind of disappears and then just kind of disappears.
• 14:36
  Speaker 3: And what we are building and hope to be building is a way that all that data actually is visualized more intelligently to the client.
• 14:42
  Speaker 3: They know what's going into the return, they see opportunities coming out of it and that leads to more confidence, better decision-making, a better collaboration experience with their tax advisor and in many cases, also a better experience working with a tax advisor and in many cases, also a better experience working with a financial advisor, a trust estate attorney, insurance agent, whatever is important, because there's just more clarity on all the components of someone's financial life.
• 15:08
  Speaker 2: You mentioned building a business, running a small business is really hard, and that is so true and probably so under-.
• 15:17
  Speaker 2: I appreciate it Under-assinated how it was mentioned.
• 15:22
  Speaker 2: What are some of the biggest hurdles you've had to overcome while building this business?
• 16:19
  Speaker 3: Well, I think there are both some great benefits of having external capital.
• 16:25
  Speaker 3: You know to scale your business and the challenges for all the advisors quite quickly.
• 16:28
  Speaker 3: When things are going really well, investors are sort of happy to root and be on board and give you new capital if they're convinced that lots of other investors want to give you capital and there's, you know, a sense of FOMO.
• 16:54
  Speaker 3: Things are tough, you know, all of a sudden you can find yourself sort of on an island.
• 16:59
  Speaker 3: You know trying to simultaneously grow quickly and drive to profitability and you know hire and retain great people.
• 17:08
  Speaker 3: That is just a lot of stuff at once relative to the traditional way of building a business over years and growing, but kind of compounding that growth slowly versus exponentially exponentially, I think, for any venture ecosystem entrepreneur who's in a similar starting time period of us 2018, 2019,.
• 17:33
  Speaker 3: You had this highly uncertain COVID period, the challenges of running a business, often with lots of new hires you never met in person, you know, etc.
• 17:49
  Speaker 3: Then shifting into this like ebullient time period, at least for certain market segments you know crypto, certain like consumer things, etc.
• 17:59
  Speaker 3: Then having this total freezing over of any venture activity excuse me for a long period of time, then having sort of a very big pocket of AI activity.
• 18:11
  Speaker 3: But if you're not in AI then you know that can be challenging.
• 18:13
  Speaker 3: So I think it's required a level of humility and tenacity to kind of stick around and have the opportunity to keep building.
• 18:28
  Speaker 3: And I think it's generally either companies that were super lucky in raising huge amounts of money and even if things weren't going well, they were smart enough to pause the breaks with huge balances and then recalibrate, you know, since they had a lot of time to do it or, um businesses that have like a really compelling value proposition.
• 18:48
  Speaker 3: I think for investors even skeptical ones, or even ones where they've got, you know, deep pockets and short arms um, that there's like a compelling value prop to um back a business that a group of investors or a single investor really believes can be one that is going to, you know, 10x plus over the coming years and be meaningfully valuable in whatever industry that business is playing in.
• 19:14
  Speaker 2: Okay, well, we can flip to the other side of the fence.
• 19:20
  Speaker 2: What's been one of your most proudest moments while building this business over the last handful of years?
• 19:26
  Speaker 2: What stands out to you?
• 19:29
  Speaker 3: You know it tends to be individual client experience.
• 19:35
  Speaker 3: Anecdotes more say that you know, recently we just hired a head of engineering, was doing a reference call and one of the references was like wait, harness, it seems so familiar.
• 19:56
  Speaker 3: Oh, you know, my CPA just joined your platform and, oh my goodness, it was so much better working with him after he did that versus before.
• 20:05
  Speaker 3: And you're like, yes, like that is what we are here, you know, trying to do.
• 20:09
  Speaker 3: And in that similar vein, one of the tax advisors that we work with, who was a breakaway, had been in a big firm, left to create his own practice and did it.
• 20:18
  Speaker 3: You know, through us, sent a note, you know, either during or just after, like a really busy season, you know in the spring, saying, you know, sitting in the same desk, same chair that I was at a year ago, you know whatever, covid times, et cetera, working for this big firm, and it was like night and day that, even though I was doing the same thing and working just as hard, maybe harder the sense that I owned the outcomes, I own the client.
• 20:48
  Speaker 3: The pressure was not from a more senior partner or some external factor, but like my desire to create value and build a successful practice.
• 20:56
  Speaker 3: It's just so enriching and I wouldn't have done it and you know your team not approached me and sort of given me the confidence that there was a platform that would help me do this in a way that wouldn't be overwhelming.
• 21:07
  Speaker 3: So I think those are the things that you really get most excited about, because there are a lot of bad days or things that are aggravating or things that go wrong, et cetera, and when people hopefully lots of people value what you're doing, but when people actually go out of their value what you're doing, but when people actually go out of their way to tell you that you know or you stumble upon it, that's particularly meaningful.
• 21:32
  Speaker 2: That's cool.
• 21:32
  Speaker 2: Yeah, it never gets old hearing wins from clients, big or small, and it for me as well.
• 21:38
  Speaker 2: I find it always trumps what seems like a bigger win at the time, or, like you said, speaking on stage or a big sale, whatever.
• 21:49
  Speaker 2: It is a big deal.
• 21:50
  Speaker 2: But it's when someone reaches out and says like, hey, this is working, this is really cool, this is the outcome we've got, and you start to feel that ripple effect.
• 21:58
  Speaker 2: It feels very real at that point, which is pretty cool.
• 22:05
  Speaker 1: What's next?
• 22:06
  Speaker 2: for the business.
• 22:21
  Speaker 3: We got a lot on the roadmap.
• 22:23
  Speaker 3: I mean I think there is just tremendous opportunity when you're trying to build a core part of the operating system for anyone, more stuff that creates insight for the advisor and the client around what's happening in the process and their business, et cetera, to create value, to hopefully again really make tax feel much more strategic and central to the clients that we serve, through empowering their advisor to be, you know, more central and more valuable and having that, you know, woven into the broader advice ecosystem that that harness has been building now for over half a decade that's really cool.
• 23:07
  Speaker 2: And then last question for David.
• 23:09
  Speaker 2: I'll slip in my mind now how, how, how do you stay motivated when things are you know they're, they feel like they're going sideways or feels like everything inside is burning down?
• 23:26
  Speaker 2: Because I know for me that happens almost on a regular basis.
• 23:30
  Speaker 2: It feels like everything is an absolute disaster on the inside.
• 23:34
  Speaker 2: And then you do get a message from a client and like, hey, this is, this is great, Thank you so much.
• 23:38
  Speaker 2: And it's like, okay, it's not as bad from the outside, looking in, cause you're, you're in the, you know you're in the picture all the time.
• 23:44
  Speaker 2: But how do you, from like a mindset standpoint, make sure you and you keep your team on track and and you know we are going in the right direction, despite it, feeling like you know the house of cards has fallen down?
• 23:58
  Speaker 3: Yeah, well, I think it's helpful to be doing it for the second time and now to have been doing it for you know gosh, like 12 years basically.
• 24:08
  Speaker 3: So I know how close a business can be to like not continuing and still have a multi-billion dollar outcome IPO.
• 24:19
  Speaker 3: So I think that's helpful to like have seen and lived it and not just have been either part of a business that didn't make it or a business that had it really easy.
• 24:27
  Speaker 3: And you know, like Instagram got going in a year later or whatever it was you know got acquired for off a billion dollars.
• 24:32
  Speaker 3: Instagram got going in a year later.
• 24:34
  Speaker 3: Whatever it was you know got acquired for off a billion dollars.
• 24:37
  Speaker 3: So I think that's important.
• 24:39
  Speaker 3: And the other piece, too, is there are a lot of folks who made a bet on you if you're a founder, I think, most importantly probably the employees and team members that have sort of said, hey, like, I think it's worth like a chapter of my career, you know, contributing to this thing that you know, your team or you are building.
• 25:07
  Speaker 3: You can't take that lightly, because the people you're going after are people that have lots of different professional opportunities, generally speaking.
• 25:16
  Speaker 3: The second constituency are the clients and the early adopters who have taken some form of risk in using a earlier stage, less established business than just sticking to the supermarket brand.
• 25:35
  Speaker 3: You know products of whatever it is that you're offering, and then you know your investors as well, where they've contributed capital.
• 25:42
  Speaker 3: In many cases it's big institutions, you know, and in many cases for us it's also individuals.
• 25:49
  Speaker 3: You know that.
• 25:49
  Speaker 3: I know and are making investment, in part based on the opportunity and part based on me or the team, etc.
• 25:56
  Speaker 3: So it puts a reasonable amount of pressure that you obviously want to perform for all those folks that have invested time, reputation or capital in what you're trying to build.
• 26:17
  Speaker 2: Awesome.
• 26:17
  Speaker 2: I love that and what you're saying about pressure as well.
• 26:20
  Speaker 2: I love the quote.
• 26:22
  Speaker 2: Pressure is a privilege.
• 26:23
  Speaker 2: I think it makes you work in a really mindful direction.
• 26:29
  Speaker 2: Some people might fold under, but I think if you don't have that pressure, personally I feel like you're I don't know you just might not be making as much of an impact as you could be if you don't feel a bit of stress or a bit of pressure from some outside forces.
• 26:45
  Speaker 3: It's so funny you mentioned that.
• 26:46
  Speaker 3: I actually cite that often, including like in a recent team meeting, because it's on the wall, uh at arthur ash, uh around the us open.
• 26:57
  Speaker 3: I don't know if you're a tennis uh fan, but, um, on the player runways, you're going into their, their main stage court.
• 27:05
  Speaker 3: That is on a big sign in the tv.
• 27:09
  Speaker 3: But, knowing it's totally true that there was a ton of pressure beginning of this year when we were launching this end-to-end practice management solution and simultaneously having new advisor and their clients on transitioning existing advisors you know two different parts of the equation that had to work well, thousands of people, and that was a lot of pressure and I give the credit to the team for really working as collaboratively, as hard as they ever have and that being, you know, a success and building from there, which is super exciting.
• 27:48
  Speaker 2: That's so cool.
• 27:49
  Speaker 2: Thanks for sharing that as well that it's the tie with the Open where that quote's listed.
• 27:55
  Speaker 2: That's really interesting, david, how, how can people get in touch with you after listening to this?
• 28:02
  Speaker 3: Yeah, I mean I think for hopefully some tax advisors out there.
• 28:06
  Speaker 3: Lots of you know individuals thinking that in the US at least, hey, we've.
• 28:13
  Speaker 3: We are getting close to the end of extension season.
• 28:15
  Speaker 3: That was maybe not the greatest tax experience.
• 28:18
  Speaker 3: There could be something better out there.
• 28:19
  Speaker 3: Consumer audience that's looking for better advisors, better outcome, some guidance on even what types of services or advisors could be most helpful for their situation.
• 28:40
  Speaker 3: So hopefully that's got the resources that you might be looking for.
• 28:45
  Speaker 2: Perfect Harness Wealth.
• 28:46
  Speaker 2: Look out for David Snyder.
• 28:48
  Speaker 2: It's been a pleasure having you on today and I hope some people go check out your site and have a conversation with you.
• 28:54
  Speaker 3: Thanks, james, enjoy the conversation as well.
• 28:58
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• 29:02
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