Early Retirement - Financial Freedom (Investing, Tax Planning, Retirement Strategy, Personal Finance)

How Does Root Differ From Traditional Financial Firms?

• Ari Taublieb, CFP®, MBA • Episode 230

Share episode

In this behind-the-scenes episode, James and Ari explore what sets Root apart in the financial advising industry. Moving beyond traditional roles like stock pickers and planners, they emphasize Root’s mission as “protectors” of clients’ most cherished goals, helping them achieve a life of purpose and fulfillment. They discuss how Root’s culture prioritizes personalized care and intentional growth, from hiring advisors who embody Root's ethos to reinvesting in services like tax planning and estate planning to enhance client experiences.

James and Ari also address how Root balances expansion with maintaining high service quality, ensuring each client feels uniquely supported. They share insights into Root’s “master plan,” which includes innovative frameworks for advisor development and creating scalable yet deeply personalized services. Root’s philosophy of holistic, forward-looking financial planning integrates life coaching elements, focusing on helping clients live richer, more meaningful lives. This episode offers a fresh perspective on financial advising, showcasing Root’s commitment to redefining the industry.

⏱Timestamps:⏱
0:00 - Root in one word -- protector
3:54 - Life advisors
7:31 - Beating the waiter
9:31 - Integrating tax planning
12:45 - Services to add in the future
16:47 - Gauging fit; growth philosophy
20:23 - Client satisfaction and advisor development
24:07 - Wrap-up

Text us your thoughts on the show!

Create Your Custom Early Retirement Strategy Here

Get access to the same software I use for my clients and join the Early Retirement Academy here

Join the new Root Collective HERE! (COMMUNITY)

Ari Taublieb, CFP ®, MBA is the Vice President of Root Financial Partners and a Fiduciary Financial Planner specializing in helping clients retire early with confidence.

Speaker 1:

Welcome back to another podcast episode. Today's episode is not gonna be the traditional retirement planning, roth conversion strategies, investment withdrawals all the typical stuff. Instead, today is a look behind the scenes at Root Financial. It's a conversation between myself and Ari Taublieb to talk about how do we approach things at Root so that we can help implement the strategies we talk about with our clients. So if you're looking for specific tips and strategies, awesome, I'm going to direct you to previous episodes or wait until next week's episode. But today is not going to be that.

Speaker 2:

Today is going to be a peek behind the scenes and I hope you enjoy my conversation with Ari Taublieb.

Speaker 2:

So last week we talked about how do we hire advisors at Root. How do you know if you reach out to Root you're going to get that same vibe you get from watching James videos or my videos. And we went into detail. We talked about hey, how do we hire and we use analogies almost like hey, if we're a baseball team right now, we want to help as many people as we can, so we need some free agents, but at the same time, we want to develop so that we're getting the best of the best and they're growing right from the roots, if you will. So today it's going to be a little different spin, where all of you out there listening right now, many of you either have an advisor, you're wondering if you should get an advisor Maybe it's not today, but it's in the future and you're just wondering why would I pick root over anyone else? And that's what we're going to explore. So, James, if you were to describe root in one word versus any other firm, what would you say?

Speaker 1:

I would say a word that's probably not what most people think I would say protector. And let me explain with about a thousand words what I mean by that one word. What's the difference in different kinds of advisors? This advisor says comprehensive financial planner. This advisor says comprehensive financial planner. That one says fiduciary. How do you distinguish what advisors actually do? And I think that traditionally there's pickers, there's planners and there's protectors.

Speaker 1:

Historically, if you had a financial advisor, they're just picking stocks for you, they're picking mutual funds for you Cool, who cares? Anyone can pick stocks. Anyone can pick mutual funds. You can do it online for practically free. At this point that's not valuable.

Speaker 1:

Then the industry kind of evolved into planners and I think that's kind of where it is today, like okay, cool. Now they're an advisor that not only picks stocks or mutual funds or ETS for me, they're also planning. Meaning I go to them and they run a Monte Carlo analysis for me and they tell me you got a 90% probability of success. Or you know what? They tell me I can retire. They tell me that's great, you're getting someone doing some planning for you. Essentially, you give them data and they do the number crunching and come back to you with some feedback, protector's kind of a next step to that.

Speaker 1:

What I mean by that is like someone who gets you and knows you and loves you at your core of who you are and wants nothing but the best for you and is willing to say like I'm diving into this with you, I'm coming in this to walk alongside of you to say, whatever your most cherished dreams are, I'm going to protect those no matter the cost, even if sometimes that's like push it back on what you're saying. Maybe sometimes that's encouraging you to do something different, to spend more, to live more, to take that trip with your family that you're afraid to pull the trigger and spend the money to do. But someone that, beyond just picking good investments, beyond just running some financial planning software, gets you and says I want to protect this vision that you have for your future and your family's future and I'm going to use all that I have in my skill set to accomplish that for you.

Speaker 2:

We might have to change the name from Root Talks to Root Protectors, because I think that sounds really cool.

Speaker 1:

Yeah, Honorable mention, by the way, to the peddlers. We had to get the P's in there. The peddlers are the people just selling life insurance products and calling themselves not life insurance. You got a lot of peddlers out there. They're just saying to make a quick buck, a quick transactional thing. So you got peddlers, pickers, planners, protectors. I want to be that protector.

Speaker 2:

Love it. What do you want Root to become? And legitimately, I want to know, like when you go to bed at night and your head hits the pillow, of course you're thinking is my family, okay, do we have what we need? Is our health there? But beyond that, when you think of what Root could become, what do you think of?

Speaker 1:

Well, I think it goes back to what do we need to do to protect? And protect has this sense of defense. There's a connotation of, oh, you're playing defense, You're helping me avoid things. No, protect means advancing you towards what you need to do, Like what do you need to do to get the most out of life? And protecting you from the things that are going to prevent that. Sometimes that's inertia, Sometimes that's lack of resources, Sometimes that's not knowing what you want to be doing.

Speaker 1:

And so I think, when I go to bed and even I wake up, and you know thinking about this, it's how do we, if you were to assume for a second the entire financial services industry didn't exist and you could build it from the ground up, Like, what should financial advice look like? Well, it would go beyond just being investment pickers. It would go beyond just being investment takers. It would go beyond just being a planner. It would go like how do you take this thing called money? But, for better or worse, plays an enormous role in what our happiness could be and what our impact could be and what our overall intentionality with how we approach life could be? How can you combine incredible money skills? So that's tax planning, investment planning, retirement, all those things with incredible life advice.

Speaker 1:

You know, advisors aren't just naturally life coaches, but we talked about this a little bit last episode. We have a very intimate place in our clients' decision-making. They're talking to us about things they don't talk to anybody else about. They ask us things they don't ask anybody else about, and so you have this enormous privilege of getting to talk to people about the most important things in their life and it's not enough, like we talked about, just to know okay, well, I see what you want to do with your life. Here's this awesome investment I have. There's a disconnect there. So how do you combine everything that you do with investments, with planning to move people closer to their vision life? So what does that mean?

Speaker 1:

For the question that you asked me, it means that anything that could impact that different service models to be able to reach more people added services to say, how are we the absolute best, both technically on the planning side of what we're doing, as well as the if we can make it easier for you to travel the way you want to travel, if we can make it easier for you to connect and find community the way you want to connect and find community, if we can make it easier for you to give to organizations that you care, like those.

Speaker 1:

I don't have answers for everything, but these are the things that we think about is how can we move people closer to a better life a significantly better life because they had the tools, they had the financial planning, they had the resources, they had the guidance to get them from where they are and, honestly, in some cases, help them envision a bigger life than they could have even envisioned on their own. So that's such a broad thing that goes beyond just, oh, we're going to have better investments and tax software to model stuff. It goes well beyond that and I don't think I know the half of what we'll be able to do in the next 10 years, because that's like our North Star, I would say what's going to happen over the next three, five, 10 years to get there, who knows? But I know it's going to be a lot of exciting, fun stuff.

Speaker 2:

Yeah, I thought of a quick story that I will tell and I'll be very transparent when I do this with people. But someone once reached out and said look, I think my CPA sucks. I said look, that's kind of a weird word, like why do they suck? They said well, they didn't tell me tax brackets are going to change and I'm retiring soon and that should be impacted by my plan. He didn't tell me that. I said what else? They told me three other things about. They didn't tell me about inheritance rules and all these different things. And I said oh, I see what's going on here. I think you're beating up a waiter. And they said I don't know what you mean. I said I think you're being really mean to a waiter, your CPA, who's trying to bring food to your table and 500 other tables, and it's not a competency thing.

Speaker 2:

Often CPAs are really intelligent people. It's. The IRS will give them the worst schedule in the world and on top of that they have so much they're trying to do. They don't have the ability to come to you and help you with Roth conversion planning, tax gain harvesting, all these technical things that you'll see James and I talk about on our show, because this can add a lot of value. We love getting to do this, and so someone said so, have I been like beating them up unnecessarily? I'll go kinda, maybe they're just too nice to tell you.

Speaker 2:

But a large reason people reach out to root is for this tax planning, this integration, and we'll often use the phrase vacuum planning, where someone will reach out and go, oh, I'm going to do this amazing conversion, or I already did it. And we'll say we wish you did nothing. And they're like what do you mean? I thought you were going to be impressed and we go well, you could have retired earlier or actually spent more money, what's more important. And they'll go oh, I almost let like the tax tail wag the life dog, and so you could do a great conversion but not have healthy back because that money could have been used for physical therapy or that, that, that disconnect from tax to withdrawal, to insurance, to a state that term holistic planning. We pride ourselves on that. So the question to you, james, is why did you start talking about tax strategy so early on, and why do you think others don't integrate it in their practice Like we do?

Speaker 1:

I don't think you can really talk about a good, solid retirement plan without incorporating tax decisions. It's so funny because people will come to us and they've worked W-2 jobs their whole life and will say, oh, we're going to talk about tax strategy and say, yeah, I get it For your business owners, yes, for, maybe, people with a lot of real estate, yes. But my situation is pretty straightforward I've got my W-2 and I've maxed my 401k and we've saved some money on the side. There's not a lot of tax strategy that exists, maybe in your working years. No, you're exactly right, you're somewhat limited. You can max out a 401k, an IRA, a health savings account, whatever. But in your retirement years you almost can't escape tax decisions, major tax decisions, because your Social security is going to be taxed differently than an IRA withdrawal, which is taxed differently than a Roth IRA withdrawal, which is taxed differently than interest, which is taxed differently than dividends which, by the way, could be a qualified dividend or an ordinary dividend, which is subject to different state rules that there's 50 different state rules in the same different. So it's the amount of tax planning. Even for people who feel like they haven't had an overly complex tax situation in retirement, you can't do good retirement planning without bringing in major tax decisions of where do we withdraw from, when do we collect social security, how do we invest in different accounts, what about legacy considerations? Now, all those things have a tax component.

Speaker 1:

So I think that traditionally, either because some advisors just don't know what they need to know about that, they kind of kick the can and say I talked to your CPA. If you have tax decisions, I'm here to invest your portfolio. That's the case sometimes. A lot of firms have restrictions, especially bigger firms. I won't mention names, but the bigger the firm, they don't want a rogue advisor who doesn't know how to give proper tax feedback to say something that is a cost to the client lots of money, because so they're going to restrict advisors ability to even talk about taxes. They can say hey, here at this firm, our, our policy is you ask a tax question, we refer you to your CPA or to the internet or something I don't. I don't. It would be like saying, hey, we're going to be. You can't do good advising without talking about how you're invested. You can't do good advising without talking about taxes. So to me it's just too intricately connected to even try to do without bringing up taxes.

Speaker 2:

You're right, because it's easier for them to say go talk to your CPA less liability, less training. It's almost like I'll often go to a client and I've heard you do it as well and say look, you're not going to like me, but you got to spend more money this year or we're going to have a big problem. And they're like what do you mean? I thought I was on track. We go. You're more than on track. You're going to be really mad at me when you're 85 with $15 million, because you told me that this is when you want to be able to go on this trip, or this is so. It's like we almost have to be that tough love in certain situations so that you can actually do what you told us you wanted to do, which, by the way, can, of course, change. With that being said, what are some of those services that we don't offer today that you may want to offer in the future?

Speaker 1:

I think the big one that people ask about is tax prep. So there's a difference between tax planning and tax prep. In the same way, you said, hey, you're beating up a waiter, which I think is a great analogy, because your tax preparer is just preparing what happened last year. What they're not doing in most cases is forward-looking tax planning. That's a much more in-depth. You're not just looking at what happened last year, you're saying what's going to happen over the next 20, 30 plus years. What things can we start thinking about doing either now or in the future to minimize your lifetime tax liability? So we do a lot of the tax planning piece. What we don't actually do is the formal tax advice, tax preparation hey, we're going to prepare your return for you and complete it. It's a completely as integrated as it is. It is a truly, completely different business model with different things, and so is that on our roadmap. We'd love to be able to do that. I've seen a lot of firms do it and do it wrong and hurt their clients, hurt them, and they would say don't ever do it. That being said, I think there's a way to do it Right. And so, as we grow, you know a big part of root growing. We've talked about this on roots master plan. We'll continue to talk about this on future episodes or talk about this as we do, kind of like a annual state of the union check-in, which is kind of funny to say Like somebody's, like who cares what's happening to Root. I don't expect people to care, but those who do want to know what's going on and I want to tell you what we're up to. So, yeah, tax, actually having tax prep so you could essentially be an in-house, you come to Root. Whatever you need to get done is getting done is absolutely what we want to move towards. We've beta tested this a little bit. We've beta tested this a little bit. We've worked with a few different tax planners and with this work, some didn't have the scale of hey, what if you have an awesome tax preparer, but it's just them and once you exceed a certain number of clients, there's not the scale to continue growing with that individual, so that person wouldn't work. Or maybe it was the personality hey, this person's really great, but it's not the same feel, it's not the same personality that people want from their root advisor, so that doesn't work. Maybe there is technical issues hey, this person just doesn't seem like the sharpest person. This isn't what we want in terms of someone actually filing returns for clients. So it's more difficult, I think, than a lot of people give it credit for, to be a good tax preparer and do it at scale you know more for a good number of households and maintain highly personalized services and proactive attention. That's tough. So, like yes, that's something that we want to do. Time frame we don't know.

Speaker 1:

We talked about this in our master plan of first and foremost, we want to expand access to advice. There's not enough access to a good quality financial advisors, ourselves included. The majority of people that reach out. We say, hey, we can't work with you today. Unfortunately, because of bandwidth constraints, we can only work with so many new clients and so we have to set some minimums in terms of asset level. Today that we can work with, it's not because we want to do that. We want to do away with that at some point but it comes with growth and it comes with reinvesting into the team.

Speaker 1:

We want to add services, whether that's having on-staff estate specialists, insurance specialists, tax specialists. These are all things that you can do with scale when you're trying to grow, not just for the sake of saying how can we squeeze out as much short-term profits from this thing as we can? You can start to reimagine wow, how cool could this look if, as you grow, you reinvest into your service offering. You reinvest in the tools that your clients have available to them. You reinvest into the services, which could be tax stuff, it could be insurance stuff, it could be estate stuff, or it could be completely different. How do we help people with their travel? How do we help people with fun? How do we help people design retirements of purpose? Those are the two sides of it. And just trying to reimagine. What would this look like? If you could design something from scratch, without any preconceived notions of what it's supposed to look like, you can start thinking that's some really cool things to do.

Speaker 2:

I had someone reach out a few weeks ago who said I've got about $6 million. I don't want to talk any of that life stuff, but it looks like you guys are pretty smart kids, so when should we start? And I said I don't think we're a good fit. And he said what do you mean? I said well, you said you didn't want to talk about life stuff and I can't really give guidance unless I know about your life. And they said okay, maybe we're not the best fit, but what was your average return in the last three years? And I said we don't really need to keep going in this direction because I think I'm just going to be wasting your time.

Speaker 2:

And I could see that they were getting somewhat visibly upset. I was saying somewhat to be nice, they were more than somewhat visibly upset. And I just said look, I don't. I don't want you to be mad at me later If you work with us in six months and markets are down which, by the way, it's not if it's when you're going to be upset. And you said you never want to be down in any given month and that's just unrealistic if we want to invest for maximum return.

Speaker 2:

And they were like okay, fine, I'll find another advisor and my first thought was great, that is someone I just spoke to who maybe wasn't happy in that moment, but I just saved my current clients time, because my current clients, their advisor is not spending time or effort ever speaking to that individual, which is why myself or Jay or other team members, take that first call with everyone who reaches out to even gauge is this a potential fit? And if we think so, that's when eventually we'll get a conversation with one of our lead advisors. I only want the lead advisors working with you and spending their time on you guys. So my question here, james, is people reach out, they're worried, they're going. Look, it sounds like you guys are growing a lot. You're making a lot of videos and content. How are you protecting the service as we grow, not the new clients, but the existing?

Speaker 1:

Yeah, I think that's the right question and we talk about our growth philosophy when we did our master plan. For people who haven't listened, just type in root financial master plan. We just talk about where do we think this is going, where do we want to go, and we talk about our growth philosophy. And our growth philosophy is there are so many benefits to growth For clients. It means we can reinvest, we can double down on services, on service offerings, on technologies, on tools to continue to be at the cutting edge of what we offer For the team. It leads to career paths. It leads to the ability to have a place where you can go and be developed. It makes it more attractive for the best talent to come to and stay at Root, which, by the way, then impacts clients because they're just on the revolving door of advisors. They get consistency in who they're working with. So we talked about the benefits of growth, but we say there's two non-negotiables, and the way that we'll frame those non-negotiables is number one. We always want every client to feel like they're one of a couple dozen people that we work with, regardless of how many clients we actually have, because of the time, the commitment, the dedication they're getting from their dedicated advisor, it feels like, hey, this is a company that maybe works with 25 clients because of how dedicated they are to me. So that's what non-negotiables we have to ensure, and there has to be data around that, and I'll talk about what data metrics we use to ensure client satisfaction above all else. The second is we want team members to wake up on the balls of their feet, essentially saying we want them to come to work, saying this is such meaningful, fun work that we get to do with awesome team members and awesome clients. The second either of those two things start to suffer. It tells us okay, we got to scale back on the growth a little bit, we need to reinvest, we need to refocus there.

Speaker 1:

So, for client, how do we measure that? How do we measure how satisfied clients are? There's something called. There's many different measures. One is called the net promoter score. Net promoter score is essentially a survey that gets sent out to clients and clients answer in a scale of one to 10, how likely are you to refer? Fill in the blank, in this case rootot Financial and if they answer nine or 10, they're a promoter. If they answer seven or eight, you're categorized as neutral and if you answer six or below you're considered a detractor, and net promoter score says what percentage of respondents are promoters minus what percentage of respondents are detractors, and so the highest you can possibly get is 100. In some industries, being a zero is actually a good thing. You can say you've got just as many people promoting you as you do detracting from you, depending on what industry you're in. Anything above 40, 50 is considered really, really good, and we were at 91 in our fall NPS survey, which is awesome. So it tells us do we have work to do to get even better? Of course we do. We always will, but things are in a good spot and so we we try to standardize this.

Speaker 1:

We talked in our last episode about root university. We talk about how do we run different meetings. We talk about how do we want to train and develop. We talk about career paths for um, not just advisors but the whole team. Here. We talk about how can we do things to where it's not just okay, get the best people and hope for the best, but get the best people and have a standardized development program. And, as I said last time, like I'm not going to say we're the best at this, today, we're. We're what I feel like at the beginning stages of being able to create something incredibly cool in terms of awesome outcomes for people who work at Root, awesome outcomes for people who are clients of Root just tons of great impact all the way around. But it comes with a ton of intentionality around.

Speaker 1:

Okay, when things happen, what system can we create? What structure can we create? So, in the same way, if you go to a Starbucks in San Diego, california, if you go to Starbucks in New York, new York you're going to get the same standardized experience. Now, hopefully, there's going to be a great personality from your barista who's talking to you and taking your order. In the same way at Root, like, yeah, we want there to be. There is personality, like we want advisors who are fun, enjoyable, great people to talk to, but they're not having to reinvent the wheel of saying, oh shoot, ari's coming in and Ari's got all these questions. Where should we start? Should we start with his insurance stuff? Should we start with talking about his legacy goals? Maybe it's investments? I see some, you know like there's a framework that we need to go through where we can address everything, but in doing it that way, advisors can be fully freed up to be what they're just so good at, which is being just incredibly smart and incredibly people-oriented and caring to deliver advice. So it's where are the things that we can add structure to support advisors and what are the areas where we hire awesome advisors who know the nuance?

Speaker 1:

There's an awesome quote from Picasso that I use a lot.

Speaker 1:

He says and I'm going to take some time to think so I don't butcher it it's learn the rules like a pro so you can break them like an artist or something like that, and I feel like that's how a development program should be. You learn all the rules, you learn all the textbook answers, you get all the certifications like you learn mastery of things, so that you can understand when do you break the rules in certain instances in pursuit of the higher goal, of the actual thing that matters. And so the structure is learning the rules, and even the structure of when do you break the rules to and break the rules in finance sounds like oh no. What are you doing? No, just like break the rules of. Should you use this bonus to pay off your mortgage or to invest? Okay, the rules might say one thing, but breaking the rules might say another, based upon an understanding of a client, for example. So I don't know if that was too much of an answer or too little, but that's what I've got.

Speaker 2:

I loved it, and in the same way we strive to do quality holistic planning for everyone. Starbucks will guarantee to spell your name wrong, whether you're in San Diego or New York, so the consistency is where it's at, that's right?

Speaker 1:

Yes, that's the one thing I think we're going to not do is not spell people's names wrong as part of our standard operating procedure.

Speaker 2:

Yeah, have you ever had a name wrong? I feel like James is pretty straightforward, but have you ever had it wrong?

Speaker 1:

I don't think so, and I don't go to Starbucks a whole lot. We've got a few good coffee places here, so it's not often Starbucks, but I don't have any fun Starbucks stories, unfortunately.

Speaker 2:

You probably get much. I've got Ari with a Y and then I've got Ari with an A-I-R, so Air is a potential new name, not even close to Ari.

Speaker 1:

I mean close, but pronunciation-wise no.

Speaker 2:

Yeah, just a little word scrambling. So that's it, it guys, for this episode. James, if they want to find you on Instagram, where you post more personal things, where can they find you? James Canole.

Speaker 1:

James Canole Yep, I don't think there's a period, I think it's just James Canole Awesome. If that doesn't work, try JamesCanole LinkedIn. James Canole company page Root Financial. Youtube page Root Financial. So type my name, type Ari's name, type the company's name. Trying to put a lot of stuff out there, especially going into 2025, which is when people will be listening to this. So search us there, follow us there, interact with us there.

Speaker 2:

And we'll have by the time this comes out. We'll either have, or be right about to have, our new community, in addition to the fact that we have our academies, and then we have, of course, working with Root. So we want to make the type of guidance more accessible and then, of course, add on those services that you heard James go over today.

Speaker 1:

Awesome, very cool. Thank you, ari. Thank you See you guys.

Speaker 2:

See you everyone.

Speaker 1:

The information presented is for educational purposes only and is not intended as an offer or solicitation for the sale or purchase of any specific securities, investments or investment strategies. Investments involve risk and are not guaranteed. Any mention of rates of return are historical and illustrative in nature and are not a guarantee of future returns. Past performance does not guarantee future performance.

Speaker 2:

Viewers are encouraged to seek advice from a qualified tax, legal or investment advisor professional to determine whether any information presented may be suitable for their specific situation.

Speaker 1:

Once again, I'm James Canole, founder of Root Financial, and if you're interested in seeing how we help our clients at Root Financial get the most out of life with their money, be sure to visit us at wwwrootfinancialpartnerscom.

Speaker 2:

Thank you all, as always for listening to the Early Retirement Podcast. I love getting to host these shows and make different content for you guys every single week. I've not missed a single week in years and that is because I love getting to do this. Now, please be smart about this. Before you actually execute any strategy that you see me talk about or hear me talk about, should I say Please talk to your financial advisor, your tax preparer, your estate attorney. Please be smart about this. None of this should be construed as financial advice. This is for fun, educational, informational purposes only. Once again, just quick disclaimer here. Guys, please be smart about this. Appreciate you listening, as always, and you can, of course, submit a question on my website, earlyretirementpodcastcom, if you, of course, want me to address a specific case study or topic. I will not promise I can get to it, but I respond to every single person and if I find it will be helpful for a lot of people, I will absolutely make an episode on it. At the very least give you some insight.

Speaker 1:

That's it.

Speaker 2:

Thanks guys.