Who's Really the BOSS?

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Rachel Dillon: Welcome to Who's Really the Boss podcast. I'm Rachel Dillon, and along with my husband, Marcus Dillon, we share the joys and challenges of leading a $3 million accounting firm together. From team structure to growth strategies, we share our leadership successes and failures so you can avoid the mistakes we have made and grow a valuable accounting firm.

Rachel Dillon: Welcome back to another episode [00:00:30] of Who's Really the Boss podcast.

Marcus Dillon: Hey, thanks for having me back.

Rachel Dillon: We have a very special guest with us today, Matt Kidd, all the way from Michigan. Welcome, Matt.

Matthew Kidd: Hey, thanks for having me.

Rachel Dillon: And we were wondering if you would join from your boat today. We appreciate you being in office so no one gets seasick watching the recorded version on YouTube of this, but I know that is something that is very important to you and we are recording [00:01:00] here in the middle of the day in the summer, so probably keeping you from boat time. So thanks for joining us and taking the time to visit with us and the listeners.

Matthew Kidd: Yeah, the beauty of being on the boat is the reception is terrible. So you really can't work when you're on the boat. It's pretty fantastic. But that's the, uh, that's the.

Marcus Dillon: 315 call that you have, right? It's, uh, the call of the boat, uh, to get on and.

Matthew Kidd: Well, I mean, everybody [00:01:30] can take a call from a boat and maybe just get out after a couple of minutes.

Marcus Dillon: There you go. No. It's good. Well, uh, Matt, I appreciate you, uh, jumping on, uh, definitely want to give a little bit of the background, uh, but also want you to be able to introduce yourself to the listeners.

Matthew Kidd: Yeah. So I'm Matt Kin. I live in metro Detroit. Grew up in a small town in Mid-Michigan, along with my two brothers who are also CPAs, and [00:02:00] my dad, who's a CPA. And you'd think we would all work together in one firm, but we all own separate, uh, small firms. So I say we we're fantastic brothers, lousy business partners.

Marcus Dillon: It's awesome. And your dad also works at one of the firms, correct?

Matthew Kidd: Yeah. So he's in that, uh, the classic semi-retirement mode where he kind of shows up and does his thing however long he feels like doing it. And that's the gig I think everybody's trying to get to.

Marcus Dillon: That's [00:02:30] awesome. Well, and give a little bit of background, did you start the firm from scratch? Did you you didn't inherit it from your dad. Did you buy it? What what does that story look like?

Matthew Kidd: Yeah. So I acquired the firm back in September of 2017. There was no connection to the firm. It was an accounting practice. Sales. Com through a broker. Yeah. Um, basically, I'd. I'd worked for small firms directly out of college. The [00:03:00] place I was currently at, I was just absolutely banging my head against the wall with things that wouldn't change, wouldn't evolve. We refused to move to QuickBooks online, which somehow we're still having that conversation in 2025 at times, and very traditional in office. Six days a week wasn't my vibe, wasn't nearly enough boat time at that point in my life. So, uh, bought the firm in 2017, thinking it was going to solve all the world's problems. Realized, [00:03:30] uh, that's not always the case. Yeah. So at that point, I think we were doing. It was just under 400,000in revenue. It was the CPA owner with, uh, longtime bookkeeper that had been there for 25, 30 years. Um, so I think your classic one man band story.

Marcus Dillon: Yeah. How old were you in 2017 when you bought it?

Matthew Kidd: I was 26 years old.

Marcus Dillon: Okay.

Matthew Kidd: And I thought I had everything figured out.

Marcus Dillon: Yeah, well, you [00:04:00] know, I think we'll, uh, we'll determine if that's the case, but, uh, your story is not that much different than mine. I acquired a $400,000 practice in 2011, and I was 28, so, um. But, yeah, it's it's good to fail while you're young is what I thought. Uh, if I failed in my 20s or 30s, I could always go back to work at one of those crappy firms. Um, they would always welcome me back. Right?

Matthew Kidd: Um.

Rachel Dillon: Well, uh, Matt, [00:04:30] again, thank you for being here. Thanks for sharing a little bit about you. I did want to give listeners just a heads up that you are a member of collective by DBA, and you do bring the party with you. I would say that you are very much like our unofficial social director for collective. And make sure that we always have a good time when we are together in person at events, so we appreciate that about you for sure. Um, and [00:05:00] definitely you always bring a good time. So one question that I have, and it may or may not be related to bringing a party, um, but what is the best piece of advice you've ever received?

Matthew Kidd: Well, on the party side, you might have to ask Joe about the karaoke video that he received from the last conference I was at in Denver. But, um, we might have to add that to the next collective event. Um, I'd say the best, best piece of advice is that, [00:05:30] I mean, nothing's ever going to be perfect, and you gotta move on when it's good enough that it's a really hard thing for a lot of CPAs, because most tend to be detail oriented. Um, I'm probably a little bit of the anomaly in not being as Is detailed as the traditional CPA because, I mean, I understood what running a firm looked like, and being an advisor looked like having my [00:06:00] growing up with my dad as CPA doing it so I wasn't drawn to the accounting for the the fact that everything balanced and everything came together. That was incredibly hard for me to grasp. When you go back to my accounting 101 days, I get if I didn't know what the end goal was, no way I would have gone on to accounting two.

Marcus Dillon: Awesome.

Rachel Dillon: That's good. That's really good. Knowing when good enough is good enough, and moving on from there so that you [00:06:30] can continue to make progress for sure. I know so many people get stuck trying to either think through what the whole plan is going to look like and how to execute perfectly, and never even take a first step to get there or continue. Like trying to refine it so much that they never actually finish or get anything out of their head. Right?

Matthew Kidd: And recognize that sometimes what you think was good enough didn't turn out to be good enough. And then you've got to be okay with [00:07:00] the consequences that are going to fall out from that. Not quite good enough.

Marcus Dillon: Yeah. That's when the IRS letters come in. Right. You know, reinforce that it wasn't good enough.

Matthew Kidd: I was thinking more of being stranded on the boat when I thought.

Marcus Dillon: Oh, there.

Matthew Kidd: You go. Enough.

Marcus Dillon: Yeah, there you go. Well, before we get off the topic of karaoke, what was the song? What's your go to song? Uh, that's the choice.

Matthew Kidd: So, I mean, you got it. You gotta play to the crowd. I had a lot of millennials and Gen Xers in the crowd, [00:07:30] so I went with the classic. All the small things.

Marcus Dillon: Nice.

Matthew Kidd: Oh, you need to sing along.

Marcus Dillon: Yeah. Very good. Yeah.

Matthew Kidd: It's an older crowd. Probably gonna bust out some Seeger.

Marcus Dillon: Yeah, yeah. Always gotta. Always gotta play to something. Everybody can sing along with or or you're up there singing all by yourself, which is not what you typically want to do in karaoke.

Matthew Kidd: Nobody wants that.

Marcus Dillon: Yeah. That's awesome. Well, I'm sure that'll find its way onto an agenda here, uh, at an event or two.

Rachel Dillon: Absolutely. [00:08:00] And if we can make a Mexico event work out, we know that the a lot of the hotels there have the capabilities of doing karaoke on site. We just did karaoke on site at the hotel with our team. Um, and we had a blast, I think probably similar to other events of collective, we, um, brought in the rest of the hotel, joined the group as well. Right? Like joined the party and they were so surprised when they're like, you guys are an [00:08:30] accounting firm. All of you are accountants. Like, well, most of us are accountants.

Matthew Kidd: Yeah. So my greatest compliment is when people tell me that I don't seem like an accountant.

Rachel Dillon: Oh.

Marcus Dillon: Hey, if it works, it works, man. So that's good. Well, you've already given us a little bit of background on the firm. Um, as far as the location mat, uh, virtual brick and mortar. What's the team size and what's that look like? And then kind of go into where you're at today.

Matthew Kidd: Yeah. [00:09:00] So we're we're hybrid now, um, in in tax season, I still go into the office about five days a week non tax season. I go in as needed maybe one day every couple of weeks just to meet with with clients who want to meet in person. But otherwise I'm, I'm working from the cottage, working from the lake, wherever. Um, and then we've got two fully remote staff. One's [00:09:30] a total team member in the Philippines. The other is remote in Michigan. Then the the bookkeeper that came with the practice, the accountant that came with the practice. She's still in the office 100% of the time that she she likes it. Um, but she's down to only works three days a week now. She works part time, so we've got five total people, including me, with it. Everybody works some form of part time, so [00:10:00] I'm only at a true client work 1000 to 1500 hours a year. Um, and that's all. Including admin time and stuff. Um, and everybody else is some variant between about 1000 hours to, I think, 13 or 1400 hours, with the exception of our total team member who is full time, because that's how they operate. Yep.

Marcus Dillon: What, uh, so something about, you know, your story is obviously [00:10:30] the services, right? Because you have this whole other element of your practice that a lot of firms have talked about but haven't pulled the trigger on. So why don't you unpack a little bit of the services that your firm offers.

Matthew Kidd: Yeah. So our primary on the the business side of things, it's doctor dentist. That's um that's the focus. It makes up about 80% of the business clients who are not niche down to a specific type of doctor or anything, but all the professional service on the business side of things. Um, [00:11:00] and then we had the acquired practice was, I mean, I'll, I'll call it what it is. It was a ten, 1040 chop shop. So we were at at our peak, we were filing almost 800 standalone ten 40s. That number is down to about 400, 450 standalone ten 40s. But there were still a lot of them. Um, and, you know, kind of everyone had the discussion of what, what what do you do with them? Some people tried some firms [00:11:30] tried selling them off, some people raised prices and just kind of had them leave. Naturally. I kind of took the approach that I think we could add services to them that could make them much more valuable. So that was when we started looking into doing financial planning and wealth management. So we did open the Ria. It's been probably officially opened for a couple of years now. We've really been actively using it for about a year into to offer financial [00:12:00] planning and wealth management to the existing clients. Was the the original thought, as I've kind of gone down that road and talked with a lot of other CPAs who have considered it, but don't really have any idea where to start. We're now working on building out an additional platform where other small firms, CPAs, could affiliate under us as investment advisors so that they don't need to go out and do that work to actually form the Ria and maintain the compliance side.

Marcus Dillon: Yeah, because the compliance, [00:12:30] just like anything, once you set it up, there's a lot of different compliance and things that you have to be aware of that could impact your other business practices. Correct?

Matthew Kidd: Yeah, yeah. So that is I mean, we've got totally separate entities because if you choose, you can run them under one entity, but then that subjects all of your tax clients and communications to the same compliance. Um, which I say tax may seem illogical at times [00:13:00] and burdensome until you move into the investment world. And every day was just a new day of scratching my head, wondering why we had to do these things.

Marcus Dillon: Yeah, because somebody, somewhere had to do them before you, and they want to put you through the same exact pain that they had to live through.

Matthew Kidd: Yeah. Like tax, tax and accounting is I can I still consider it principles based largely um, the investment world is rules based. It's every time somebody does something wrong they [00:13:30] add a rule.

Marcus Dillon: Mhm.

Rachel Dillon: Well Matt what have you seen? Because you did you did start this strategically, right? It was to take advantage of clients that you already have, and to provide them even more value than what you were providing before. So have you seen a good conversion rate of your current client base taking you up on investment services?

Matthew Kidd: I think the conversion rate [00:14:00] has pretty well followed the amount of effort that I've put into converting the clients.

Rachel Dillon: Um.

Matthew Kidd: Admittedly, I have not contacted and followed up with people the way that I should. Um, so we're actually had a meeting earlier today on the plan for me to start doing more outreach to the clients for that. Um, I mean, we're in process. We'll have about 10 million bucks in assets under management without really doing anything [00:14:30] to speak of, to bring that in. And I think what it is, it's how most CPAs operate when they get into the wealth management, is they kind of wait for the clients to come to them with the life events. So it's somebody nearing retirement. They call you somebody selling a business because we aren't most of us aren't salespeople. And I'm not. I may be able to rock a karaoke stage, but if you ask me to talk about what I actually do, you're going to [00:15:00] get a peep out of me. So, um, I think that that's kind of how I've operated. I think firms who aggressively go after it will have much higher conversion rates. The challenge that we had with the the higher net worth clients, they all have established advisors. So unless something occurs that makes them unhappy or their advisor retires, for the most part, [00:15:30] you're not pulling them away from the existing advisor unless something happens. Um, so that's where we've we've taken the approach with, you know, the, the start up physician practices. We get in there, do the 41K roll over the old 41K to an IRA, um, and then just the regular ten 40s that are approaching retirement, you get them in, start doing the retirement planning. And that's kind of the conversion that we've been seeing with it.

Rachel Dillon: Have [00:16:00] you noticed, have you noticed, or has anyone noted that they chose your firm because you could do all of the services in one place?

Matthew Kidd: That is every single reason that everybody who's converted, they want it all under one roof. They want one place to go and the other. The messaging that we're starting to hammer away at that seems to be resonating, is that taxes are likely to be the greatest expense in your life, so [00:16:30] you ought to have a financial planner that is knowledgeable in taxes and tax strategy.

Rachel Dillon: That's really good. I think it just goes to our same what we've seen over and over again. It's so much easier to start with new clients who don't know you when you start offering new services, versus trying to convert old clients or legacy clients, clients who already are established in your firm, um, over to a new service offering [00:17:00] because potentially majority of them have things lined out, set up. They have the people who fill the specific responsibilities that they need. And typically we follow typically the same, um, the same route that you do when someone has a need. So either we identify it as a team as we're preparing tax return, as we're having advisory meetings or we're talking to prospects on the phone, then we listen for [00:17:30] what are the pain points, what are the needs? How can we address those and solve for those? But if they say, oh, I love my payroll company and there's, you know, like they do a great job, we're not trying to sell them right on payroll services with us and just make onboarding like just add another layer into onboarding. We're like great. If that if that solution is good, if it ever becomes not good, we can help you out like we're here and we're ready to help. So I would say, yeah, we are probably not very [00:18:00] aggressive in our sales tactics, uh, with things. Right. It's more about when there's a need we're here and available and we let people know what we have available, and then kind of wait until they say or until we notice, like, you're not being served the best that you could be. You're paying more than you should be paying, or you're just not receiving the advice that you should be receiving. And then at that point, offer up a better way. But yeah, definitely don't like to sleep in. And someone who has a good solution [00:18:30] just to replace it with another good solution, right? Like, we always want to make sure that whatever we're replacing it with is going to be better, and the client's going to be better for making that transition.

Matthew Kidd: And a couple things on that. That one really surprised me when I started talking with people and running the financial plans, running the portfolio analysis. There were some situations where the advisor was doing a bad job. I mean, when you looked at the fees they were being charged, the investments that they [00:19:00] were in, they were doing a bad job. And you can lay it out to the client, show them that, I mean, it's costing them 5000 thousand dollars a year, and they still like that advisor so much they're not willing to move even though they have objectively bad advice coming from them. Um, and that's I mean, the other factor that we kind of had a, a challenge [00:19:30] with the conversion rates is we'd for the last up until the last year or two, you know, we'd been on the same March that everybody started ten years ago of the the owner needs to be out of operations. The owner shouldn't be talking with the clients. You have different levels of staff to handle that. And we did a really good job of that to the point where I had very little client contact. But then when it comes to offering financial [00:20:00] planning, they want that personal relationship. And I'd spent six, seven years trying to eliminate that personal relationship, which worked great for my boat days. But now you're effectively trying to rebuild those relationships from scratch, and you're dealing with people that when you bought the firm, they were paying 125 bucks in a loaf of banana bread for their 1040, and now they're paying 5 or 600 bucks.

Marcus Dillon: Mhm. Yeah. [00:20:30] Now it's interesting, uh, that you identified, you know, just the advisors aren't doing a good job and bring that up. And sometimes they have such a deep relationship and that's such a sticky service that like you said they don't see the option to move. I mean, even Jimmy Buffett is in the news like his estate is in the news today because the two co-trustees his former wife and then his friend who is his financial advisor as a co-trustee, they're suing each other. And [00:21:00] it turns out he was making less than 1% on this $275 million estate. Um, so it's it's crazy. Um, how how bad of a job certain people can do. And when you give them options, I think hopefully they listen to it and, uh, hopefully they. The voice of reason comes into play. So I know that a lot of, uh, CPAs have questions about this. A lot have been told, hey, you should add financial planning. You should add assets under management. [00:21:30] Um, so let's talk a little bit about that route that you took, uh, because you're both a CPA and a FS, and that's issued through the AICPA, and I know you're involved with that program. So why don't you share a little bit about that FS designation and what that means.

Matthew Kidd: Yeah. So the the FS is the personal financial specialist. It's only available to CPAs through the AICPA. It's similar to the Cgma in that regard. It's [00:22:00] similar the standards are very similar to the CFP. The body of knowledge I would argue is a bit more expansive because it moves more into the tax world as opposed to just the financial world. That said, it's not nearly as recognized as the CFP. I mean, if even the CPA is listening to this, I bet 90% don't know what the FS is. So try trying to solve that issue. May never get solved. Could happen in a decade. [00:22:30] Um, but, uh, very valuable thing with the FS is it waives your series 65 license requirement in all 50 states. So the series 65 license is what gives you the ability to do fee based financial planning. So that's lets you charge the percentage of the assets under management. So you can't sell commissionable products like insurance and things like that. Um, I found most CPAs don't want to do that anyways.

Marcus Dillon: Sure.

Matthew Kidd: They they want to be the [00:23:00] fiduciary offering the fee based advice, not selling front loaded annuities.

Marcus Dillon: Yeah. No. That's good. And I think you brought up a great point. I think the CFP, that designation, that board or whoever's in charge of that does a really good job of educating the public and advertising what a CFP is even better than I think the CPA. I think CFP is gained in popularity quite a bit, and is is definitely seen as a prestigious designation because [00:23:30] of the work that they've done.

Matthew Kidd: And the money they've spent. 50, 50% of CFP dues go to marketing.

Marcus Dillon: Okay, so 50% of our AICPA dues go to just salaries at the AICPA, right? So, um. Or probably probably somewhere close to that lobbying efforts for big four firms. You know, we'll see where the return on investment is there. So but whenever people are are looking at options, uh, of adding this to their firm [00:24:00] a lot of times and, you know, we don't offer it currently today. But it's one of those things like we've thought about it, other firms, other friends have thought about it. They always come back to, well, the financial advisors who refer us business. They're going to get, you know, upset at us and they're going to stop referring us business. So can you speak to that at all? Have you seen any of that since you've added financial planning under your firm?

Matthew Kidd: So I would say that actually turned out very positively. [00:24:30] Um, I, I talked to all the financial advisors that we worked with before I launched it to any of our clients. Um, let me I talked to all the financial advisors that I respected before launching it.

Marcus Dillon: Not the guys. Not the guys doing a bad job. Uh, less than 1%.

Matthew Kidd: Yeah, yeah. If you're charging 2% to a little old lady, I'm not gonna waste my time with you. Um, so they were probably, I would guess, 4 or 5 that [00:25:00] I've worked with pretty closely in the past. Um, one told me to go to hell. The others all said, like, that's a great move. You should do it. And I assured them for for the mutual clients, we've got them pulled from our communications list. So they're not getting marketing from us. We're not reaching out to them. And I worked closely enough with the advisors that they trust my word. Yeah. To do that. Um, and they've continued [00:25:30] referring work to us. Yeah. So I'd say it actually ended up better off because the advisors who understood it and understood why we were doing it, they were the ones who actually had the best referrals over to us. Yeah. So we kind of eliminated some bad referral sources by doing that.

Marcus Dillon: So what's the end of the story on the guy that told you to kick rocks? Uh, did he mutual clients fall away, or do you still have [00:26:00] some mutual clients with that person?

Matthew Kidd: Nope. He in in mass. Moved. Got everybody to move somewhere. Okay. Don't know where they went to.

Marcus Dillon: But oh, man.

Matthew Kidd: He he got them all to move. But it was wasn't that.

Marcus Dillon: Yeah. Was it wasn't that that big of a heartburn? It sounds like so.

Matthew Kidd: No, it was about. About half the list were people that were on that questionable fire list. Like, are they Caesar? Are they D's or are they automatic fires?

Marcus Dillon: So yeah.

Rachel Dillon: Yeah. [00:26:30] We talk about ways to increase capacity. And I think you just added one to the list. If people are looking for ways right, you can always add a letter and just ask clients to leave. You can, you know, help them find a home and monetize that block or at minimum get kind of a referral fee for anything that transitions over. Or you can start offering the same service as one of your referral partners, and they can just [00:27:00] take them all away from you. Um, and you know, that way you don't have to be the bad guy. And I guarantee, yeah, some of those people on that list, you would have one day had to have been the bad guy, right? Because they weren't really ideal for your firm anyway.

Matthew Kidd: So but on that, you mentioned the capacity planning and that was one of the I mean, that was one of the big drivers was to transition out of the high volume ten 40s, um, which the ten 40s only account for about 30% of [00:27:30] our total revenue, but it's still a high volume that we were doing. The deal that I made with the team is for any financial planning revenue that we brought on. I was going to cut the corresponding amount of 1040 clients. So if we brought on 50 grand of financial planning revenue, we were going to cut 50 grand of ten 40s, which is I mean, it's going to be 110 40s. Yeah. So like that in itself [00:28:00] is going to drastically improve tax season to try to help with the the buy in with the team?

Marcus Dillon: No. That's great. Um, well, and you know, I've told you this before, um, trying to explain things to me like I don't understand isn't a very hard thing, um, for most people. So I know that in the world of financial planning, there's IRAs, Arias, IRAs. Uh, so let's break down the route [00:28:30] that you chose to take, um, and set up your own, ah, Aria. And then let's also talk about what an EIR is and how they could work under a broker dealer or an Ria.

Matthew Kidd: All right, so we're taking a trip down Sesame Street. We are learn learn about personal financial.

Marcus Dillon: Yeah. Because because, you know, so many people, including ourselves, have questions about like, what would it look like to add this? Everybody's telling me I should for the most part, what are the first steps in doing that? [00:29:00] And you've obviously done this. So would love your take on it.

Matthew Kidd: Yeah. And I would say, I mean, it took me about two years from when I first kind of decided I wanted to do something. It took about two years of research, talking to other people who had done it to really narrow down what I wanted to do, because part of the issue is, I mean, we'll cover it here. It's hard to find what the real differences are because everybody's trying to sell you on what their model is. Yeah. So [00:29:30] and I think your, your main, main at an entity level, your two main main entities are broker dealers and Rias. Um, so the broker dealers are generally associated directly with the investment company. So it's um, I think like if it's a, if you have a mutual fund company. Yep. That's the mutual fund company would be a broker dealer. You are an investment [00:30:00] advisor. Representative, the ear that would then affiliate with the broker dealer. You're usually selling their exclusive products. So depending on the broker dealer some you've got thousands of products that it really isn't that limited. You can have a lot of independence with it, but you're still limited to what they offer. Okay. Um, then the other entity structure is the Ria. So registered investment advisory firm that is a independent [00:30:30] firm that you can choose to affiliate with, basically any custodian that is willing to take you. Um, in that model you've got a very common is a they have turnkey asset management providers or you'll hear them called as Tamps. Yep. What that is is it acts, as I call it, a middleman between the Ria and the custodian. What they'll do is they'll provide back office support, so [00:31:00] they'll build the model portfolios for you. They've got a team of experts. So if you need advanced planning issues you have a team that you can work with. And then you basically run everything through them. So it's like having a back office similar to if you talk to an Edward Jones advisor. Yeah, they they don't know everything. Some might say they don't know anything. You can maybe we'll cut that part out. But.

Marcus Dillon: Well they.

Matthew Kidd: They.

Marcus Dillon: They have the relationship right there. The person who answers the phone or or meets with the client and that's [00:31:30] that's valuable.

Matthew Kidd: Yeah. And they've got the team behind them. Yeah. So that is where kind of a small area they can leverage that turnkey asset management provider to have that support and back office so that you're not alone on an island. Okay. Um, so alternatively the Ria can affiliate directly with a custodian. So with Charles Schwab, fidelity, um, LPL is I mean, they've got a few different things. Um, but you can [00:32:00] do that model, build your own model portfolios, do all of your own compliance. We went the Tamp route because we're new to it. I'm very confident on the planning side of things. The investments were my weak side, so we chose to partner with somebody who had that expertise, who could really kind of help us along as we as we built that out. So I think for people starting out, the tamp makes a [00:32:30] ton of sense. Um, I think if you came from the security side of things, it might make more sense to affiliate directly with a custodian. Um, because you are I mean, you're giving up revenue to go with Tamp. They're providing services. I couldn't view it as if you're. I know it's outdated, but the one third, one third, one third, I kind of view that tamp as is your one third overhead. Yeah. That they're handling what you would otherwise have to have in-house. [00:33:00]

Marcus Dillon: Yeah. And I think I think financial planning financial advisors are are very much a third, a third, a third business very similar to CPAs. Um, historically, uh, as far as what we've seen as an industry.

Matthew Kidd: Yeah. Yeah. And I mean, with that tamp because they all they all pay. You pay out the advisor based on the amount of revenue that the advisor generates. Mhm. So you are anywhere from 50 to 90% [00:33:30] payouts on those the tamps. Yeah. So it's most people aren't going to hit that 90%. Because the reality is if you've got that amount of assets you're going to split off and you're going to start doing it in-house. And it's the marginal makes sense. Sure. But I'd say 50 to 80% is kind of the the typical payouts that people would see. Um, so I think you've got the at the entity level, the Rias and the broker [00:34:00] dealers, then you've got the individual. You are generally an investment advisor representative. So you are actually the the financial advisor. So you do the planning and you can choose to affiliate with either a broker dealer or with an Ria. They also have you can get a solicitor's license. That would be I'm sure we've all heard had had the pitch from the local advisers that, you know, if you refer over [00:34:30] to business, we'll we'll pay you 20% to do that. You need to be a solicitor. Um, so those are at the individual level. Those are the two that I'm aware of is actually working as an investment advisor, Rep or IR, affiliating with whoever you align with, um, or doing a solicitor route. Okay. When you get into I mean, what took a lot of research on my end was choosing who it made sense to align with, because [00:35:00] that's going to come down to a culture and philosophy. Um, we used Focus Financial, which used to be Buckingham Strategic Partners, which I think used to be Advest and Lauryn Ward back in the for the history lesson of people who were around when CPAs first started doing financial planning.

Marcus Dillon: Yeah, they used to advertise on the back of magazines that we would get in the mail. Right. Um, and I definitely remember HD best seeing their name around.

Matthew Kidd: Yeah. And they were the they [00:35:30] were the thousand pound gorilla in the CPA space getting CPAs to add wealth management back in. I was probably 80s, 90s. They were going at it. Um, so we chose to I mean, it's not it's now focus through your multiple rounds of PE, just like everybody else out there. Yeah. Um, because they still very much align with how I think most CPAs align in that they're focused on small cap value stocks, low fees, um, [00:36:00] and just kind of that focus on the planning and not not trying to beat the market with some active funds. Yeah. Um, very, very low percentage of the revenue is commissionable products. It's nearly all percentage of assets under management. So that was the big, big research. But I mean, there's there's so many out there that yeah, if you have a different philosophy it doesn't make sense to align with focus.

Marcus Dillon: Sure, sure. Yeah. [00:36:30] You just conflict too much.

Matthew Kidd: Yeah.

Rachel Dillon: Well, Matt, um, share. How did your team kind of accept or, um, react to adding this new service to the firm?

Matthew Kidd: I think you had a a mix reaction. Um, because you had at the time we launched it, the former owner was still working part time. Um, he wasn't a fan. The [00:37:00] long, long time accountant, I mean, she's she's seen me change enough. Enough things that she just rolls with whatever we're doing, and, uh, just see, she'll know she'll still be doing what she's doing, regardless of where the chips fall. But, um, amongst the the two younger. So our director of operations and our staff accountant, they were they were excited for it because they for the same reasons that I was it's an opportunity to work more closely with [00:37:30] clients. It's an opportunity to really develop those relationships and see the personal impact that you can make. Because I know Mark and I talked a little bit yesterday and that like for our high net worth tax clients that were actually working with on a regular basis. All right. If we do if we do a cool tax strategy, it saves them 100 grand. Their cash flow went from 1 million to 1,000,001 that year. They couldn't care less that they've got an extra 100 grand. [00:38:00] Like it just doesn't touch them. But being able to work with kind of the the average person, I mean, we kind of won 1 million to $5 million that they really don't have the confidence in what their financial planning and financial future looks like. Um, I mean, it sounds sounds ridiculous to some people when you talk about that 1 to $5 million range and they're not confident in their financial future, but they really aren't. And [00:38:30] a lot of them have had no real foundation to understand what they can do and to have them when they walk away from the meetings, like they're just absolutely over the moon, like just resting so much easier.

Marcus Dillon: Yeah. Something something you mentioned this week, um, with the new tax law. Right. And we're all digesting that and everything. Um, one of the cool parts of it is the permanency of the estate, you know, limits and everything. Uh, [00:39:00] so that 15 million number that you brought that up, right? Because you try to stay below that, um, you don't want to screw something up for people that are above that.

Matthew Kidd: Right? I mean, that's I know you know, what you know, and that estate tax world, I've been stupid enough to, uh, stumble into once or twice in my career with those 700 sixes. And, uh, it's to me the, the complexity that just starts to come into [00:39:30] play once you hit that estate tax level just isn't worth it at a firm or size. I mean, if you had a 30 person firm and you had somebody who had that tax knowledge. I'd say go for it. Um, but the kind of going back to the good, good enough to get it out. Most of what we do is pretty low risk. So you can live with the good enough to get it out philosophy. [00:40:00] Once you start moving into that higher level, those insurance premiums are going to come quite handy because at some point one of those estates is going to blow up in your face.

Marcus Dillon: Yeah. Well, and pointing to, you know, the Jimmy Buffett, uh, you know, legal fight that's on right now, that's $275 million at play. If it was 275,000, we probably wouldn't be hearing about it, right? You know, it's just it's one of those where, uh, those extra zeros matter [00:40:30] in those cases.

Matthew Kidd: Yeah. And it kind of. It kills me that we're talking about Jimmy Buffett in a estate tax situation instead of, uh, like having having boat drinks. You're gonna make me go out to the boat mid podcast.

Marcus Dillon: Yeah. There you go. Well, I'm sure you got your playlist ready. And, um, sure, you can find a a.

Matthew Kidd: Number one on Spotify.

Marcus Dillon: There you go.

Rachel Dillon: Yeah. So I was I was definitely curious about how the team felt, because I know that that's always something [00:41:00] that leaders think about, right. Because there are some people that are so averse to change. Like they just don't. It doesn't matter if it's going to be better, it doesn't matter if it's going to be better specifically for them. They just don't like the uncertainty of not knowing, like what's coming next. And they would just rather stay in the comfort even if it's not comfortable, just stay the same because they know what to expect. Um, so that's good. Thank you for sharing [00:41:30] that. And I know you shared two like as far as goals, um, right now, which I would think is a goal for the whole team, right? If you're getting to replace ten 40s or reduce ten 40s, um, because you're bringing in financial services, that sounds like definitely a goal or initiative that impacts the whole team.

Matthew Kidd: Um, yeah. And I mean, I think a lot of the kind of acceptance of it is similar to how you did your acquisition. We [00:42:00] insulated most of the people on the team from having any disruption due to it. So it's the director of operations, and me were the only ones that had an active hand in building, launching, talking to clients. Um, so for most of the team, they only had upside to it without really a a downside.

Marcus Dillon: It's voicing that as well to the team. Like, hey, if you get [00:42:30] a question about this, don't try to answer the question. Like, send it our way because we don't want to put you in that awkward or weird position. Um, so I think you probably took the right position on that.

Matthew Kidd: Yeah. And there's from it the compliance side. I mean, you need to have walls between the people that are doing the wealth and the people that are doing the CPA side. Okay.

Marcus Dillon: It's good to know.

Rachel Dillon: What other goals and initiatives, if any, are you guys working on in the firm right now? [00:43:00]

Matthew Kidd: Uh, yeah. So we're actually we're really focused on growth right now of both the CAS as well as the financial planning clients, because one of the the factors of buying a legacy firm, generally, those clients are at an older age. So throughout 23 and 24, we had 35% of that original client base retire on [00:43:30] the business side of things. So we've had up till that. We've been able to still grow at about a 10 to 20% clip per year, even as you had those legacy clients that were retiring. Um, but we're actually so we're dipped in revenue for the first time ever for this rolling 12 months compared to the the prior 12 months. Um, and it's there's [00:44:00] not necessarily systemic things we have to fix because only two of the clients who left, left to go somewhere else. Everybody else was retirements. But it is you're still balancing the you got payroll that you have to pay and your revenue is down. Yeah. So the the focus is on that. The growth of just the CAS and the financial planning. Um, we're still not really taking on 1040 clients unless they're [00:44:30] warm prospects for the wealth management side of things.

Marcus Dillon: Yeah, no, that makes sense. I thought you were going to say 35% died. Um, died off during 2023 and 2024.

Matthew Kidd: A couple did, yeah.

Marcus Dillon: Um, I'm pretty good.

Matthew Kidd: At 1040 ones.

Marcus Dillon: Yeah. I was going to say that's a pretty good strategy for reducing capacity is death. Um, so I haven't heard that one, but it could apply.

Matthew Kidd: Um.

Rachel Dillon: Marcus always likes to bring up, um, that clients have [00:45:00] passed away, but sometimes he shares that clients have passed away that have not passed away. And then when the team reaches out, you know, kind of with their condolences and requesting, you know, different forms and information, they're very surprised to learn that that person has passed away, um, because they are still very much alive. So we have to be careful with Marcus when he starts talking about people, um, passing on and really go back and like fact check him that before we mentioned it to anybody who's, like, [00:45:30] related to that person because he does he does like to put him in the grave before they're actually there for whatever reason. I'm not sure.

Matthew Kidd: What's that new, that Langley song. You don't have to be dead to be dead to me.

Marcus Dillon: Yeah.

Matthew Kidd: A little bit of your philosophy?

Marcus Dillon: Sure. Uh, yeah, it's. It's one of those. You never know how someone will come alive once they see date of death on their tax return. You know, it's, uh, one of those pieces where it's like, hey, I'm still here. I'm still kicking.

Matthew Kidd: So part of me wants to, like, test, test this to [00:46:00] see which clients actually read their tax return. Yeah. Just pop. Pop in a few days of deaths in there for, like, a 40 year old.

Marcus Dillon: Occupation. Occupation? Deceased? Yeah. Yeah. So, um, I tried that with.

Matthew Kidd: Some friends this year. The ones the friends and family discount something in there and see if they noticed.

Marcus Dillon: Yeah. Yeah, definitely put that on their invoice, too. Yeah. It's good.

Rachel Dillon: Well, Matt, something that I know that you do well or appear [00:46:30] to do well. But I think we know you well enough. Is that you network pretty well? So. And also serve in the, um, like the organizations, the state CPA organizations. Um AICPA or do you serve there or mostly just in Michigan?

Matthew Kidd: Yeah, yeah. If Marcus covers his ears, I'm on the AICPA Council.

Rachel Dillon: Yeah. And so [00:47:00] you you do a lot of work with that and also are just very active, um, with peer networking and that. And so just wanted to really ask one, how how do you get started in that. Right. Like if people are wanting to do more, um, and kind of grow their network or also just their offer, their services right at that level? Um, how did you get involved?

Matthew Kidd: Yeah. So, I mean, I think first, [00:47:30] like, I just, I love talking with people. I that's that's who I am. And, uh, working in small CPA firms as a 22, 23, 24 year old, there's nobody else under the age of 50. If you're in a young firm, odds are there's nobody under the age of 60. So when I went into that, I had no, no, I went to Hillsdale College, small college. There were, I think, 13 accounting graduates in my [00:48:00] class. So I didn't know any young accountants. So I just the Michigan Association of CPAs had a young CPAs group. So I just went to, uh, a couple of meetings. I guess I must have been the only person that showed up for two meetings in a row, because then they asked me to chair it. Um, and then it just kind of. I kept kept showing up. Um, And I mean it. For me, I was passionate about it too. I saw the [00:48:30] difference that being a CPA can make from I mean, my my dad was the only person in his family that went to college, one of seven kids, and saw the success that you could have with that. So I was very passionate about, you know, making sure that people, whether they were accounting students or recent CPAs, understood the opportunities and stayed for those opportunities. Um, so with that, I mean, they they let me build some cool stuff in terms of events and things that we created within the Michigan Association to get more young [00:49:00] people involved. And from there, they just kept asking me to do stuff, and I'm still trying to learn the word no, it's not quite in my vocabulary. So I kept kept doing it and just got more opportunities. So I joined joined the Michigan Association board after I ran the Emerging Leaders for a couple of years, then got asked to join the AICPA Council after I'd done a leadership academy with them. Um, so really, it's just showing up. I mean, it's yeah, that [00:49:30] not many people show up. So, yeah, it doesn't take much to get involved.

Marcus Dillon: Yeah, that's that's true. And, and a lot of different areas of life right now. Showing up is half the battle or more than half the battle, it appears. And, uh, have heard really great things. I mean, about that leadership academy. I've had other friends that have gone through that at AICPA. And, uh, probably from your experience, you would share that that's been pivotal to your growth as well?

Matthew Kidd: Yeah. I mean, it was an incredible experience. I mean, you spend four, four [00:50:00] days with, uh, some high, high achieving CPAs and a couple of screw ups. They let slip through the cracks like me. Um.

Marcus Dillon: And who's the other? I mean, you just called out somebody else as a screw up, so maybe we'll have to discuss that person offline.

Matthew Kidd: I mean, hey, there's there's there's two in every crowd, right? But, um. No. Like, I'm still good, good friends with a half dozen of them. We've got a monthly call that we get on and we do all sorts of different things too. [00:50:30] So it's a good, good variety to really understand where the industry is at as a whole, outside of just our little small firm bubble. Yeah.

Marcus Dillon: That's good.

Matthew Kidd: And I think that that is a big part of kind of our move into offering these an option for other CPAs to offer the wealth management under our umbrella is I've connected with so many CPAs around the country, and it's a common message that they're interested in it. They [00:51:00] don't know how or where to start. Yeah. Um, so it's just kind of a not something I ever thought I would do. But through those connections, it kind of seems like something that could work.

Marcus Dillon: Yeah. No. That's great.

Rachel Dillon: Yeah. And then in addition to that, you are in collective, which is a membership organization with other firms. You meet with a mastermind group. And what are some things that [00:51:30] are helpful? Just again, just with any of the peers, whether in the state organization, the AICPA within collective, what are some other benefits of having that peer network?

Matthew Kidd: I mean, I'd say the biggest thing is it is an extreme rarity that you're the first person doing anything. Somebody's done everything that you want to do, and they are overly willing to share their trials and tribulations. [00:52:00] I mean, in our in our mastermind group, I think half the group already implemented canopy and half the group is implementing canopy together. Um, so we're not building building it on our own. We're we're shamelessly ripping off what other people have done. Yeah. And it's I've built stuff from scratch without help, and it sucks. The process sucks. And usually the end product you end [00:52:30] up having to fix a couple years later once you come across somebody who actually did it. Right.

Marcus Dillon: Yeah.

Matthew Kidd: So I think that's the greatest value.

Marcus Dillon: Yeah. Not not living in isolation for sure. That's good.

Matthew Kidd: Yeah. So I guess kind of it's like cheating in school, except now it's accepted.

Marcus Dillon: Yeah. Yeah.

Rachel Dillon: Accepted. Accepted and encouraged. Right. And. Yeah, the the awesome thing is you don't have that person, like, putting their arm over their paper and, like, giving you the side eye, like they're not going to share with you. That [00:53:00] doesn't happen in the, uh, in the accounting world in like, peer groups, these ever every single one of us are willing to share because we don't want someone going through, like the same pain that we went through. Um, but also willing to share what actually worked just to help people get there faster. Like, don't take so much time and don't make it so hard. Here is the playbook. Go, go. Do it right the first time and make it better. And when you make it better, come back and share with the rest [00:53:30] of us and we'll, you know, enhance what we've already done as well.

Matthew Kidd: Yeah. Like that's a there's been absolutely no better, easier time to start your own firm because of all of the resources that are available, both paid and free, that, I mean, you go back even to 2017 when I bought our firm, you had realistically one organization out there that was doing small firm consulting and that was it. [00:54:00] There was no free online resources available. You had to figure it out on your own, or you had to have the local CPA network. Now, there are so, so many groups at the state national level that are doing a great job with it, that it's I think it's amazing.

Marcus Dillon: Yeah, no for sure. A lot of good options, man.

Rachel Dillon: Well, we appreciate you, Matt, for being on and sharing. And if you would like to hear from anybody who may have listened to this episode, [00:54:30] you can definitely share how they can get in touch.

Matthew Kidd: Yeah. Easiest way to get Ahold of me is on LinkedIn. It's just Matthew Matthew Kidd, CPA or plug for tax Twitter. That's a little bit of the it's kind of like CPAs after dark over in the tax Twitter world. Yeah.

Marcus Dillon: Um, and if if they find you either on a boat, uh, a video of you on a boat or a video of you in a suit, which I much prefer the boat videos than the suit videos, man. Um, so [00:55:00] they know they've found the right Matt Kidd.

Matthew Kidd: That's I it sounds like Rachel might get some motion sickness from those boat videos, so we might need to, uh, do a balance.

Marcus Dillon: There you go.

Rachel Dillon: Or a video of you doing karaoke or video of you dancing, like all of those. All of those that is still the same Matt kid, um, that you're hearing right now.

Matthew Kidd: So you head over on that, uh, that CPE After dark on Twitter. There might be some video evidence of that karaoke.

Marcus Dillon: All right. Challenge [00:55:30] accepted.

Rachel Dillon: We'll have to go. Yeah, we'll all have to go check that out. Well, thank you again for being here. We appreciate all the information that you've shared. I know listeners are going to gain a lot from hearing this episode. And so I will see you guys on the next.

Rachel Dillon: Thanks for listening to this episode. If you enjoyed the conversation and want to learn more, be sure to visit. You can schedule a meeting directly with me, Rachel by clicking on the Contact Us page. Be [00:56:00] sure to subscribe, like, and share so you don't miss any future episodes. We look forward to connecting with you soon!