Beyond the Portfolio: The One-Stop Advisor with Danny Lohrfink

In under five years, you've earned approvals from all the major broker dealers and custodians. What had to go right, and what did you learn along the way?

[00:00:35] Danny Lohrfink: You know what had to go right was that you had to actually go left a few times. And you had to pivot really quickly. I think in the startup world, you have to be okay being wrong, and you need to take those learnings and then you need to put them into action. You need to overcome obstacles. And that's like the up and down fun of being a founder. It's truly a roller coaster. Nothing is just a linear straight line. You're going to zig and you're going to zag. But as long as you're willing to do it with enthusiasm, be grateful for the journey, and every step along the way, don't take anything for granted, but also pause every now and then, look back, appreciate where you are, and then take those big next steps forward.It makes it all the more worthwhile.

[00:01:23] Doug Heikkinen: Wealth.com is such a broad name, and your initial focus was very specific. Why start with estate planning and, we all imagine estateplanning.com would've been a much cheaper domain to purchase.

[00:01:36] Danny Lohrfink: It really would have. But that's the ambition of it, right? starting with estate planning was really intentional because estate planning, it is one of the three legs to the stool. So you think financial planning, estate planning, tax planning, all make up that quote, "family office experience." But estate planning, it was the most antiquated piece of that stack we'd say. it also required the most technical expertise, and so it was the hardest problem to be able to solve in our opinion.

Estate planning documents, drafted by different trust and estate attorneys that use different vernacular to describe the same things, that was like the hardest piece of the pie to solve for. And we wanted to really tackle the harder things first. But there was the additional benefit of estate planning necessitates a 360 degree view of everything, right?

So like all the client's financial information, all of the family dynamics, so not just who's who within the family and who are the trusted people in the client's life, but also like, are they getting along with one another? Is this person getting excluded from the estate planning? Is this person getting more money than that person, right?

And so you get a lot of information from the estate planning process, which can then serve as the foundation to then start to layer on more added services thereafter. So a perfect example would be like from the estate planning process, of course you need to understand if the client has IRAs, like a traditional IRA or Roth IRA.

And if you know that the client has a traditional IRA that has X, Y, Z person as the beneficiary for estate planning, you can also use that same information to say, "oh, you have a million dollars in a traditional IRA. Well, here's what it would look like if we did a Roth conversion ladder," right? So now when you start to get into tax planning, you're leveraging the same foundational data set to then power more tools.

[00:03:22] Doug Heikkinen: Many advisors still approach estate planning as a box to check rather than an ongoing client relationship. But research shows a massive gap between what clients expect and what they receive or they feel they receive. From a growth perspective. What's holding firms back? Is it incentives, fear, time, or something deeper in how the advice businesses are structured?

[00:03:45] Danny Lohrfink: The way I think about the client experience today is that clients just want a one-stop shop. They go and they say, you're my money person. Everything that has to touch my money, you deal with it. Like, you're the person will handle it, and you're going to be my coordinator.

And their lives are complex. They are overwhelmed with everything that's happening in the world because this is the attention economy and things are flying at you left and right and you're getting notifications on your phone and they just want the financial aspect of their lives to be calm, controlled, it's all okay.

And the estate planning side of the house is the bookend to the financial plan, right? You build this financial plan and you're accumulating all this stuff, and then like, okay, so what's the end game? So the client is expecting, of course, that you've thought this through. They're expecting that the plan today has an end game down the line.

And I think that the only thing that's holding advisors back is the fact that historically it has required you to spend a lot of time on it. It required you to have deep expertise, and so you needed to read through a hundred pages of legal jargon. You needed to understand the underlying provisions. You needed to get up to speed on state and federal estate tax law, right?

That was too much for advisors and rightfully so. And so, they were just waiting for technologies to come around to be able to help them to scale that area of the business that otherwise, frankly, they didn't have the time or the wherewithal to be able to take on. And even if they did have the expertise, you only have so many hours in the day.

So again, back to the earlier point, this was an industry, and an area of the industry, I should say, that was just ripe for disruption.

[00:05:47] Doug Heikkinen: How has the profile of a typical firm using Wealth.com evolved as the company has grown? Are you seeing differences in adoption between RIAs warehouses and broker dealer platforms?

[00:06:00] Danny Lohrfink: Oh, totally. So I mean, in the early days, like you have to go after the RIA community, the independent RIA community because they control their ADV, right? They can make technology decisions they need. They don't need to go through the bureaucratic steps to be able to get technology approved. And so, that's where we started.

We started working with RiAs. And there are a number of them that like, God bless them. made early bets on Wealth.com. Think Merit Financial, Farther Finance. These are RIAs that have been with us from the beginning and had continued to grow and become and continue to be really important partners of ours.

But after we were able to develop that cohort of RIAs, and by the way, today we work with thousands of RIAs across the country, then that obviously caught the attention of the broker dealers. And so that's when Cambridge, and Kestra, and then the Ceteras, Mosaics and LPLs of the world said, all right, we have all these advisors that want to add estate planning to their practice.

Let's bring in Wealth.com to be able to help scale that operation. And from there then the wirehouses come knocking and they realize that all the independent advisors are embedding estate planning and tax planning into their practices, and they want to do the same. And of course the wirehouses, I'm not going to name all the names that we partner with because a lot of them are still under embargo, but truly, if you think of like the most prestigious wirehouses that you can think of, like the diamonds, the top of like the pyramid, that's really where we sit today in servicing a lot of them. And the reason why they're bringing us on is because, not because they don't have in-house strategists, they had their in-house estate specialist and in-house tax specialist, but our tools just make them much more productive. Our tools take them from being able to review the estate plans of two, three clients every week to now being able to operate 40, 50 clients estate plans, with much more granularity and much more concision, and bringing it to life through beautiful visual reports.

[00:08:22] Doug Heikkinen: Every vendor today claims to be AI powered. I mean, we just got back from a huge conference on a beach that was AI themed. Advisors are still skeptical, and frankly, they probably should be. When you talk to firms evaluating technology, how do you help them distinguish between AI That sounds impressive in a demo and AI that actually changes workflows, outcomes, and client trust?

[00:08:46] Danny Lohrfink: I mean, look, this space is moving so fast. So fast. The AI of January very different from the AI of February and March. And now Claude is coming out with their new model Mythos. And so, you go from a huge release on February 5th that kind of shook the airwaves, of Claude, Claude Cowork and all these amazing tools that came with Sonnet 4.6 and Opus 4.6.

And now you have Mythos coming. It is just so fast. And so today you have firms that are rightfully so going through like the build by partner evaluation, and it's never been easier to build something. Let's just call that out. It's never been easier to build something. Is that "something" fully production ready?

Does that something have any security flaws? Is that purely a front end API call that you're making? Or is that on the backend? Can that be exposed to hackers? Are there audit logs? Are there audit trails to it? Is the analysis that's being run probabilistic, or is it deterministic? When you're talking about the US tax code, you can't get those numbers wrong, right?

You can't be going through and doing a calculation with addition and subtraction being done before the multiplication and division, right? It's PEMDAS. And so with the US tax code, apply that same thing. You have to apply that same PEMDAS like mentality where the ordering of this stuff matters.

And so, When you are going to get access to a frontier model, you're going to be able to build something really quickly and you're going to be able to get some really promising outputs to start, and that's really awesome. That is good for everybody. Then when you start to get into the nitty gritty, you realize that, alright, we need actual defined workflows.

We need to have a data pipeline to make sure that the data is always piping in in the same way, that the calculations are running the same way every single time. Not being probabilistically calculated, but actually going through and hitting deterministic engines so that if you're doing a Roth conversion for client A, the same way that that conversion is being calculated today for client A is going to be the same way that it's calculated for client B tomorrow.

These are all, I think, problems that the builders will run into eventually, and then they'll realize, and this is kind of where we sit in the picture, they're going to realize, okay, we need to spend more time on this.

Okay, now we need to bring in a few more engineers into this product. Because now we need these data pipelines. Now we need to actually build these discrete calculation engines. Oh wait, we need this discrete calculation engine on how the estate tax works in Washington state versus the New York State tax cliff. Okay, then we need a subject matter expert on this project. So now all of a sudden you've got 10 engineers, you've got two subject matter experts, and once that initial pass of building the thing is done, you gotta continue to maintain it, and you gotta make it better, and then you gotta stay up to date with tax law and all that stuff.

And then you realize, holy moly, we just spent a million dollars building out this thing and we have to staff it for the future. That doesn't make sense for us to do. And I always go back to the purest form of capitalism is that you have specialists. There are people that live and breathe and do certain things, and they specialize in that thing.

And so you have to ask yourself, is this our core competency? And if it is, great. Do that. If your core competency is building technology that is continuously evolving and that is hyper specialized for estate planning, tax planning, you should do it. But if it's not, you partner.

[00:12:53] Doug Heikkinen: Google Ventures and Charles Schwab's first wealth technology investment was in you guys, Wealth.com. When these firms, operating at massive scale, decide to invest, it usually signal signals something bigger than a feature bet. From your co-founder seat, what does this institutional interest tell you about where wealth management is headed, and what advisors should be paying attention to right now, even if it still feels early?

[00:13:19] Danny Lohrfink: Yeah, so of course these firms are making bets on what the future of wealth management looks like. That is the vision. And what is the actual vision? It is that the wealth management of today is not going to be the same of wealth management tomorrow, and the roles and responsibilities of those participating in this industry are also going to shift and change dramatically.

In particular, the role of the financial analyst is going to change dramatically, where the advisor is still going to be absolutely necessary. You need to have the relationship. You need to be able to tease out the pros and cons because the pros and cons are not always going to be a numbers based decision.

Should I pay down my mortgage? It actually might feel better to pay down your mortgage, even if the numbers say, Hey, a 4% rate. Keep that. Keep that 4% rate. You're already getting the mortgage deduction, because your mortgage is below $750,000. The numbers would say to keep the mortgage balance. But, it would feel better for you? Okay. You should bring it down. That's the role of the advisor, right? Maintaining that relationship. But the actual analysis, you can't have that conversation if you don't have the numbers to support it, because you need to be able to show the quantitative and then be able to blend it with the qualitative.

And that's where the role of the financial analyst has historically lived, where you need to do the research, you needed to then do the analysis, and then you need to put together the presentation. You need to put together the client writing presentation.

What Google, Citibank, Charles Schwab, these various investors in Wealth.com I think all see is that the role of the analyst is now shifting, where it's not going to mean that they are going to go away entirely, but their role is going to change now that what used to take them 48 hours to do can now be done in 48 seconds. So what else can they do? Can they now help out on the business development side?

Can they now step into different responsibilities that they hadn't had before? That's the key question I think, of the future.

[00:15:36] Doug Heikkinen: Since announcing the Wealth.com tax planning at your inaugural conference in January and bringing it to market, what are you hearing most from advisors?

[00:15:47] Danny Lohrfink: So first and foremost, advisors are looking for less, I'm sitting in a swivel chair right now, but they're looking for less of this, right? They want everything to be unified in a single package. And estate planning, as I was talking about earlier, it necessitates that full 360 degree view of everything. And so you have a really solid foundation, but directly tangential to estate planning and fully intertwined with estate planning, I should say, is income tax planning.

Think about, is it's a grantor trust, a non-grantor trust. That consideration is all about who's paying the taxes on this stuff. And so very logically, the same buyer of estate planning technology within a given firm is also looking for tax planning technology. And they're looking for the technology to speak.

They're looking for the analysis to be comprehensive, right? Because if you pull a lever over here, it's not like it operates in a silo when it comes to client's personal finances. You pull one lever on this end of the spectrum, you do a big qualified donation to charity. Well, that impacts his estate planning, but also that is impacting your tax bill, right?

And so you have to be looking at these things in unison. And so from the advisor's point of view, this was obviously a very logical way in which Wealth.com was going to start living up to the name. Going beyond estate planning and evolving into a much more holistic system that can, as I was talking about earlier, automate the more specialized, at least today, the more specialized tasks that a financial analyst would have to do.

And again, what we're trying to do is take on the most complex stuff first. So estate planning, tax planning, we're trying to take on the more complex stuff. And then we will eventually go into the more down the fairway elements of a financial analyst role.

[00:17:50] Doug Heikkinen: Over the next two decades based on Cerulli's latest data, $124 trillion, and this number seems to keep growing in, wealth will change hands. Some firms will grow dramatically from it. Others will quietly lose assets as heirs move on. From everything you see across advisory firms, what separates the ones that will retain and grow through this transition, and the ones that won't?

[00:18:12] Danny Lohrfink: like I said earlier, the advisor is being looked at as the central hub of the client's financial life. And the advisors that fully embrace that role are going to do extremely well. I'll give you an example. My financial advisor, actually it's a partner of Wealth.com, called North Rock. My financial advisor handles everything for me.

They handle my tax analysis, my estate plan, my financial plan, my cashflow analysis, everything is handled by my financial advisor. And they even do my tax preparation, right? So the advisors that lean into that responsibility, I think will do really well. Because a client like me, I obviously can manage my own money, but I don't want to.

I don't have enough time to do so, right? And so if you can take that mental load, that mental burden as the advisor, off the end client, you're going to do really well. Of course, you don't want to give up your family dinners on Monday, Tuesday, Wednesday, Thursday, or Friday night, and you don't want to give up your weekends to do so.

You don't want to have to add more hours to your schedule just to be able to provide more services. And I think that's where AI and technology comes into play. Where in order to provide those services and meet the client expectations you need to adopt these tools to help you scale.

[00:19:51] Doug Heikkinen: Lastly, as you look at the rest of the year, what are you most excited about? And for advisors or partners who want to follow the journey or connect with you directly, what's the best way to do that?

[00:20:02] Danny Lohrfink: Yeah, I am really excited about one thing. I can't say exactly what it is, but effectively, you think about again, that role of the analyst from the research to the deep analysis to then the actual client deliverables. That full thread that goes from the initial question of, let's say client wants to move from New York to Florida, or at least model out what that would look like.

All of the responsibilities that would go into answering that question, then producing a client deliverable, what Wealth.com has been working on is a full end-to-end process. That would be one question, feed all the way through, and then again, just within 30 seconds, have your ready to go report deliverable that is beautiful.

There's a lot more behind the scenes that I can't really tell you about, but I'm really excited to be able to announce it live. And it should be coming at the end of Q2 here. So actually in pretty short order.

[00:21:16] Doug Heikkinen: Danny, as a co-founder, you have to be incredibly proud of what you all created and excited about where everything is going, as you said.

So thank you so much for being with us.

[00:21:25] Danny Lohrfink: It's a fun time to be a founder in this industry. I'll tell you that. And honestly, there are amazing companies that are doing amazing things and it's awesome to watch them continue to serve the advisory community as well. I think we have one of the best communities out of any industry, and going to these conferences, I think only reinforces that. So continue to build, you builders.

[00:21:49] Doug Heikkinen: To learn more about Wealth.com, just visit Wealth.com. For our producer Tory Miller, I am Doug Heikkinen. Thank you so much for listening.