|Clients:||Enterprises, financial advisors, advisory firms, investors|
|Value proposition:||SaaS FinTech solutions for managing household portfolios|
|The executive team:||Mark Hoffman, Chief Executive Officer, Chairman and Cofounder
Steve Zuschin, Executive Vice President, Sales
Jack Sharry, Executive Vice President, Chief Marketing Officer
LifeYield develops SaaS solutions that enable financial advisors to manage household portfolios more efficiently with smart tax management. The LifeYield Advantage Suite offers: tax-smart asset location optimization with Portfolio Advantage; a guide on how to maximize and file for benefits with Social Security Advantage; and, in May 2019, LifeYield launched , Income Advantage to create a Tax-Smart Retirement Paycheck® across all holdings in a household portfolio.
I had the pleasure of meeting with Mark Hoffman, CEO and cofounder; Steve Zuschin, EVP, Sales; and Jack Sharry, EVP, CMO, from LifeYield. During our discussion, these gentlemen described how their company makes advisor workflows more efficient and more effective in reducing costs to investors.
Mark Hoffman is a veteran in the FinTech world, with almost 25 years of experience. He started off as a software developer for Colonial Management, a mutual fund firm, where his main responsibility was to develop technology solutions to automate everything in the investment process. Mark went on to found several startups focused on electronic trading with trading algorithms and commoditizing the trading process, as well as passive account management. Upon learning how much taxes affect both the accumulation of assets as well as income during retirement, Mark founded LifeYield, a company focused on creating better after-tax outcomes for clients of wealth management and advisory firms.
Steve Zuschin began his career as a financial advisor at a large insurance company and eventually moved into the FinTech space over 10 years ago. He was initially interested in SaaS and FinTech because they allowed new opportunities, more flexibility, and better tools for advisors. Steve joined LifeYield in 2017 to build out the direct to advisor channel.
Jack Sharry has been in the finance industry for 35 years in a variety of roles, mostly revolving around sales, marketing, and public relations. He currently serves as chief marketing officer at LifeYield, where he is active in thought leadership—writing white papers on topics such as retirement, income, goals-based wealth management, speaking at conferences, and talking with press representatives.
What makes the LifeYield approach different?
The most unique aspect of LifeYield is their heavy focus on enabling advisors to manage all the accounts in a household in a tax efficient way. Steve points out that there is significant efficiency that can be achieved through asset location and coordinated household management across multiple accounts. He goes on to say that tax-loss harvesting is relevant and should be taken advantage of when the market is volatile. When managing multiple accounts that are not coordinated, however, clients fall behind by paying unnecessary taxes.
“Rather than looking at one account individually, we work with all accounts in a household, the goals of that household, and how we can help get them the best after-tax real rate of return.” – Steve
From the LifeYield website, “LifeYield’s technology looks at all of a client’s accounts at once—including 401(k)s, IRA rollovers, Roth IRAs, brokerage accounts, and more—to see whether the right assets are held in the right accounts. The higher the Taxficient Score, the easier it may be for your clients to reach their retirement goals.”
In other words, the score (from 0–100, 100 being optimal) indicates the household portfolio’s tax efficiency, and subsequently the dollar benefit, to making improvements through coordinating all household accounts to work toward a single goal.
“We can take a look at your individual picture and show you how you can add one-half of a percent to one percent per year in after-tax returns by just having things organized in the right way.” – Mark
Jack says of the trillions of assets LifeYield has under administration, the average Taxficient Score is 53, which means households are approximately half as tax efficient as they could be. This is because the typical household has five or six accounts handled by two or three advisors. If there is no clearly defined goal or any level of coordination, the bottom line will suffer. On a $1 million household with a Taxficient Score of 53, the investor can enjoy improved outcomes of approximately $156,000 over the ensuing 10 years by coordinating and organizing all the accounts in a household.
Partnerships and integrations
LifeYield integrates with Black Diamond and Envestnet | Tamarac because these firms have household-level reporting and rebalancing. Custodian integrations include TD Ameritrade and Charles Schwab, and an integration with Fidelity is nearly complete.
Mark explains that, apart from Tamarac, LifeYield also pulls data from Envestnet clients such as SunTrust using Envestnet Analytics. LifeYield can then feed data from hundreds of thousands of households to compute a Taxficient Score as well as dollar and basis point benefit.
“Once a household has been identified in Envestnet Analytics, advisors can simply hit a button, and, automatically, data are sent to LifeYield. We can then further refine the data and show advisors the next best action to take to improve asset location and the Taxficient Score using asset location swaps.” – Mark
To build highly scalable SaaS solutions, LifeYield not only offers a portal for clients in the institutional and direct-to-advisor spaces but also APIs. Morgan Stanley uses LifeYield APIs to help their 15,000 advisors improve asset location, rebalance household portfolios and make intelligent withdrawals across household portfolios.
“Morningstar’s study, as well as independent analyses done by Ernst & Young, suggest we can improve investor outcomes by showing advisors how to manage the full household portfolio to improve asset growth, rebalancing and the optimal sequence of withdrawals across all the accounts in the household.” – Jack
Product management and recruiting
Mark says the company has evolved from the startup stage of developing their own ideas, and now the team is able to respond well to new features and changes in the platform driven by client and advisor demand. LifeYield’s product development team is focused on research development for algorithms, whereas the product management team is client oriented. The LifeYield team does two major releases a year based on 60–80% requests by clients. All support tickets, client requests, and information on enterprise clients go through SalesForce.
“The advantage of the SaaS model is we continually update and improve the software. The advisors we work with are all going to get the benefit of these advances in our capabilities. And it’s going to cost a lot less than to build it internally.” – Mark
LifeYield likes to bring in young blood through their internship program. Most interns are college student STEM majors, and Mark says the company hires one out of every three interns.
Where’s LifeYield headed?
According to Mark, the team has a strong pipeline, with many implementations in the planning and implementation phases. LifeYield intends to make the Taxficient Score for tax management what the FICO score is for credit ratings.
“We have a number of integrations coming up that will increase the popularity and brand awareness of the Taxficient Score. Investors are going to be asking their advisors, what’s my score? How do I get that?” – Mark
Jack adds that another goal is to connect all the main financial services tools, such as CRM, data aggregation, planning tools, proposal systems, household portfolio rebalancing systems, and help in coordinating intelligent withdrawals. These interconnected tools are part of the data flow that allows advisors to make recommendations and quantify the Taxficient Score and financial benefits for clients.
LifeYield has evolved from humble beginnings into a serious player in the FinTech field. Their focus on households is aligned with current industry trends, and the efficacy of LifeYield’s solutions is evident and based on how much money they have already saved, and will save, investors.