Business Innovators Radio - Interview with James Lavorgna Founder of Spencer Advisory Services Discussing His Virtual Family Office & Team-Based Model

Episode Date: January 24, 2024

Mr. Lavorgna started in the insurance business in 1976 and has been in the financial services industry for 45 years. He earned his Certified Financial Planning designation in 1984. He also has earned a Bachelor of Science in Finance, Juris Doctor (Litigation), Master of Laws in International Tax and Offshore Planning, and Master of Laws in Wealth Management and Private Banking. He has been in and associated with the investment industry since 1979. And is currently an Investment Advisor Representative of Forsyth Wealth Management, Inc. fee-only Registered Investment Advisor and licensed insurance agent.He is also the Managing Member of Spencer Advisory Services, LLC, and a Certified Team Based Model Consultant.He has spent his career consulting with successful business owners and high-net-worth families.Learn More: https://spencervfo.com/Spencer Advisory Services, LLC and Forsyth Wealth Management, Inc. does not offer tax, legal advice or investment advice directly. We strongly encourage you to seek advice from your own qualified tax and/or legal experts regarding the best options for your particular circumstances. Investment advisory services are offered through FWM www.forsythwms.com. Life, long-term disability, long-term care, or other non-variable insurance products are offered individually through licensed insurance producers. All non-investment advice is offered through Spencer Advisory Services, LLC. In compliance with Circular 230, any U.S. tax advice contained in the body of this email, including attachments, was not intended or written, to be used and cannot be used, by the recipient for the purposes of avoiding penalties that may be imposed under the Internal Revenue Code or applicable state or local tax laws.Influential Entrepreneurs with Mike Saundershttps://businessinnovatorsradio.com/influential-entrepreneurs-with-mike-saunders/Source: https://businessinnovatorsradio.com/interview-with-james-lavorgna-founder-of-spencer-advisory-services-discussing-his-virtual-family-office-team-based-model

Welcome to influential entrepreneurs, bringing you interviews with elite business leaders and experts, sharing tips and strategies for elevating your business to the next level. Here's your host, Mike Saunders. Hello and welcome to this episode of Influential Entrepreneurs. This is Mike Saunders, the authority positioning coach. Today we have with us James LaVoigneur, who's the founder of Spencer Advisory Services, and we'll be talking about his virtual family office and team-based model. James, welcome to the program.

Oh, thank you, Mike. I'm glad to be here. Yeah, I'm excited to learn from people. I always am excited to have conversations with people in a variety of industries and also the depth of your career. I know from looking at your bio, it's just amazing. So give us a little bit of a background on your story and what got you into the financial services industry? Well, it's kind of a long background. I started back in 1976 in the insurance business.

And being inquisitive as I am, I started asking questions that were not related to insurance. So obviously the insurance companies at that time didn't really like that. So I managed to get my way into the brokerage business back in 1979. and I fell in with a bad crowd who was in this thing called financial planning. And so, yeah, I went to one of those IAPP meetings back then, which I don't think it even exists anymore. But anyway, to make a long story short, I got it with these guys. And so I went up getting my certified financial planning designation along the years. I got a lot of on-the-job training between the,

brokerage firms and the insurance, work with a sports agent doing financial planning for professional athletes later on in the 80s. And I decided that I wanted to go to law school to find out what I didn't know. And I went to law school and then I went to another law school. I picked up about three law degrees. Two advanced. One in international tax. in offshore planning. And the other was wealth management and private banking. Those were two LLMs. That's kind of like a master's in the law industry.

And more recently, I became a certified team-based model. I don't want to say instructor, but consultant. Yeah. And that was with the elite group. group. You know, you mentioned team-based and virtual family office, and I know those are similar, but two separate things, but let's talk a little bit about what they are. Define what is a virtual family office. Well, to do that, I basically need to explain what the family offices. The office has actually been around since, I guess, the age of the pyramids, when, you know,

wealthy families back then who weren't slaves, basically had people. working for them, handling their finances, et cetera. In this country, I believe the, I think it was John Astor back in the 1800s, early 1800s, started the first family office. But I think John Rockefeller was the father of the family office. And this was the province of companies that, or families, I should say, that were in the hundreds of millions, like 500. 600, you know, and now billionaires these days took over that space.

And for years and years and years, it's been the province of those people. And a lot of business owners that are wealthy and successful saw that, but they just didn't have the wherewithal financially to get into that space. They weren't quite at the $100 million of investable assets quite then. Yeah, or more, or more. Yeah. These days, it's even the gate there is even larger. So anyway, there was a space that was vacant there.

And over the years, I guess the last 20 years, people have been trying to fill that space, you know, with single-family offices and multifamily offices. And in fact, I was trying to do this since, like, 2005. putting this together. What the problem is is that you could never get a cohesive unit together. It was always on a referral type of basis in which a lot of the industry legal accounting insurance, that's their stock and trade for decades now, referrals. But as we talk, you'll see how that breaks down. It wasn't until I found elite marketing group that I found a way that we could do this as a cohesive group. And basically a family office in the old days, the family would get together a money manager, people who manage their stocks. Then they realized that, you know, well, we need to know about risk and insurance and, you know, the family jet and who's going to make sure the kids get to school,

etc. So over the years, that has dwindled down to different splinters, depending on the families, the direction that they're in, whether they were business owners, whether there was all money or was a liquidity event that brought their wealth. But over the years, lately, we've been finding out that a lot of business owners need this type of service. And the type of service that they're getting is they're going to a professional. And professionals, no matter how good they are, okay, you can't be a guru in every avenue. You know, I've got more letters. I could make my own brand of alphabet soup.

You know, I got more letters after my name, but I realize that I can't be everything in insurance and wealth and investments, et cetera. So what happens is that a business owner might go to his CPA, right? God forbid, it's not during tax season because he wouldn't get an answer back for a couple of months. But he would go to his CPA, for example, and I'm not picking on CPAs. It's just that, you know, they're a trusted advisor usually. and the CPA would basically, when he has the time to do it, stay in his lane and basically recommend what he knows. He may not have time to learn about insurance, learn about cost segregation, R&D tax credits, et cetera. Of course, he knows about it, but he can't be an expert in these areas.

So a lot of times what they'll do is refer these people out to experts they find or not. know or they think they know. So first thing, obviously, they would have to do some due diligence on this expert, right? And then there's the matter of the client is now being introduced to somebody else that they have to build some trust in. So, you know, this has been a problem. So this is the team-based model, okay, attempts to, say, go to a tax advisor, all right, and work with the client and the tax advisor as a team. And we have in our virtual family office around 60 to 65 specialists that work with us directly. So they're not strangers to us.

We've done all due diligence on them, et cetera, and they become part of our team. So we set up a team with the tax advisor and the client. and we do an analysis of the client's situation, you know, just like in a regular financial plan. And then once we do that, we help the client prioritize their pay points. You know, what's pressing in your business? What's pressing at home? And so we prioritize these. And then we attempt to over a period of the year or two years, whatever time for,

that's needed, we'll turn around and we'll attack each one individually. So we'll analyze everything, okay, and the client will take a look at what we're showing him, okay, and whatever he suggests that he thinks is, what's the word I'm looking for? Well, whatever he thinks is worth prioritizing and implementing, we would then help them implement that. However, back to what I said before, you can't be everything to all people, all right? And I always tell people, listen, we'd rather have somebody who does one thing 100 times than one person doing 100 things one time. So, you know, what kind of professional, what kind of experience would you want to do? So we have these people that if we can't handle, you know, the routine insurance or accounting or QuickBooks or whatever situation is, we'll go to the virtual family office.

And we'll select one or two or a number of specialists that would help the client. in this particular priority that we have, they would join the team. We would do an analysis with them. Can we help the client? Can we not help the client? If we can, then we bring the, we bring the specialist into the meeting. And we have a meeting with the client, just as we would normally. But now they're part of the team.

They explain everything to the client. And then, again, as I said, we prioritized everything. If the client finds merit in what the specialist is saying or even whatever we're saying, and he then chooses to implement it, then we go from there. And that's basically how we work in the family office. Now, in that family office, we have like five pillars of proficiency that we work with this team-based model, right? So that's advanced tax planning, risk mitigation, wealth management, legal services, and business advisory services. And those are the areas mainly that we cover.

Now, we don't normally deal with clients that, you know, want us to help them purchase a private jet, which not yet. You know, maybe when the prices of jets come down a little bit. But right now, you know, these are the main areas. So we concentrate on mainly on business owners and wealthy families. And the reason is that most of the people who can afford to purchase the jets instead of just flying on net jets basically are way over that $100 million mark. in our, our, I guess, target market, I guess you want to call it, would be business owners with revenues between $1 million and $10 million, or, or, not, not in, but or are still paying over $50,000 in taxes after they've exhausted all their deductions, right?

Or they have an income, an annual income over $400,000. or there's a large liquidity event that happens. So those are those are the people that we deal with lately, right? So we're not in that jet league yet. Yep. You know, that what you're describing there sounds, it makes me think of something regarding the team-based model versus just an outside referral. Because it seems to me like you're saying that typically in the financial services world,

it's like when someone has this other need, you're like, oh, here's this person I trust give them a call and then the client almost feels like oh well I'm kind of okay talk to you later but now when you're bringing these people into the team based model they're part of your kind of brain trust and you're bringing them in they're attending the meetings the client is feeling well taken care of and both you and the CPA or you and the attorney or you and the whatever the other you know a team member is you're looking at everything together and going if we do it this way we're how's that going to affect? Okay, good. Let's, and I think that that's a whole different feel for the business owner than just here's a couple names you ought to call them. Well, yeah, the traditional business planning model has a lot of challenges and limitations. I spoke about a couple. You know, even the most seasoned tax practitioner has their limitations. Even though they have a lot of knowledge, okay, like I said, they stay.

stay in their lane. They're like attorneys. You know, you don't practice things you don't know because, you know, you have to be competent in that particular area. And in addition to that, okay, you know, there's a time factor, all right? Yes. You know, how much time do they have? And especially with a tax practitioner, you know, I'm not going to even

talk to any of them told them on April 15th because, you know, I can't get in touch with them. Clients are lucky to get in touch with them regarding their tax returns, you know. And what if you, you know, what if you have some pressing needs, which clients maybe don't realize that they still have ways to reduce their taxes even up until the time they file their tax returns. So, and one of the biggest problems, okay, One of the biggest problems is that they basically lose control of, I'm talking about the CPA tax account now, lose control of the situation. Okay, they do not know, you know, they don't know what's happening once they hand this client off. and there's no way to coordinate between the two, at least the way it should be.

It feels kind of unconnected and disjuncted. It is. And if it is coordinated, it takes an enormous amount of time. So it's kind of hard to coordinate that with, you know, within the business community. would say. So, you know, can't know enough. There's not enough time to actually even learn. And once you hand this off, you know, then what happens to the data, okay? Do you do you get into something where it's going to negatively affect your current tax situation? Okay. Are you going to have too many tax credits or too many tax deductions that you can't use. Okay. Are you going to get,

are you going to wind up getting passive tax deductions versus, you know, being an active participant? So it makes a big, it makes a big difference. So. Yeah, talk a little bit about the process, you know, when a new client comes on board and you're watching for opportunities. What is your process like? And then maybe give us an example without, you know, giving details or personal data, but what's an example of kind of how you have implemented a solution for your client through your process? Well, let me explain, let me talk about one client in particular. He was a retired doctor and he is in the real estate business and he is invest in commercial real estate, shopping centers, office buildings, et cetera.

And he was doing a 1031 exchange for people who aren't familiar with that. It's a tax-free exchange, but it's very strict and regimented. For every property that you exchange, you have to get one of equal value. Well, in this case, he had two properties in the exchange, and one of the properties didn't go through. So now he's got a broken 1031 exchange. So for the property that didn't go through, now he's subject to taxes. Well, what are we going to do with this broken 1031 exchange, especially after his fact? Because, you know, he didn't know until the end of that period of time that he had to do this exchange, that that was going to pull through.

he was a charitable-minded fella and he was given a charity, et cetera. So what we did is we took his normal contributions to charity that he was giving, plus the amount of money that he was going to have to pay in taxes. And we bought a split interest gift, okay, it was a charitable trust, actually. And this charitable trust was called an ICAT. It was a charitable lead trust, but it's set up mainly to do one thing in us to reduce taxes. All right. It's totally condoned by the IRS.

You know, it's up and up. And the way that works is that it will take all the charitable contributions that you're going to do for the next 10, 15, you pick your, you pick your time period. I think he picked 20 years because he had a son that was around 40 and this money would eventually go back to him. So the way this works is that you put in a lump sum of money and you get a tax deduction up front for that. Okay, he's going to make charitable contributions of X amount of dollars for 20 years. At the end of 20 years, the money that's in the charitable trust, which is being managed every year, minus the charitable contributions he makes from it, that will ultimately revert back to the son tax-free.

Now, the only catch is that he does have to pay some tax on the gain, if there is a gain, every year on the trust. But what happened was is that it took small charitable deductions that were going 20 years into the future and allowed him to come back, use a present value number, and take a lump sum charitable deduction now to help offset that tax that he would have had to do in that broken 1031 exchange. So that's just one of the ways that, you know, our planning in-house helped. Now, if we just send him out to an attorney, okay, to try to fix this, all right, we would have no idea of what was going on, all right? And so how would we- It kind of reminds me of that old story. I'm sure you've heard this one as well, like the blind men from India that are, touching an elephant. And one says, yeah, oh, look, it's a wall.

And the guy goes, no, it's not. It's a hose. No, it's not. It's a tree. Well, they were all right, given their perspective, but they can't step back and see the full picture. And that's what your team approach is being able to do is bring everyone together, seeing the same page, the same objective.

And boy, the client just wins. And it's coordination. That's, that's the whole thing. They can't coordinate. You don't know what the other person's doing. Yeah, I remember the elephant. analogy, that's a good one. You know, the thing

is that I like to, you know, people say, well, do I need this or do I not need this? Well, here's what happens. You know, let's just say you're in your 20s and you get married, right? And then, you know, your wife says, well, let's buy a house. So, you know, you find one in the development. It's a good deal.

You got your 20% down. You buy your house. Well, 10 years later, you're doing a whole lot better. And now all of a sudden, your wife says, well, I think we should get another house, but we might want to, you know, we might want to design it ourselves, you know, so they get a contractor and say, you know, we would like a big family room in a fireplace and this, et cetera, and so then they'd buy a bigger house.

And then 10 years down the road, they're 50, 55, and they say, she says, you know, this house, okay, yeah, we're going for another house. This house, I think what we should do is get a designer. And we'll give him our thoughts, okay? We'll give him our thoughts and let's see what he comes up with. All right. And so the point of the story is, the more sophisticated you become as far financially, as far as business and wealth, you, you know, in the beginning, it's okay to go to H&R Block.

And then as you get a little bit more advanced, you go to a CPA. But after a certain period at point in time, right, like what we explained in the beginning, you need somebody that's going to do a custom job for you. And that's basically what the team-based model allows us to do. And the virtual family office allows us to keep it all inside without having to go to that old referral model. Yep. Exactly. I think that's spectacular.

and you're able to give such great results to people because they feel taking care of. And they probably experienced in the past other of these disjunct, you know, this person said this and, boy, they come to you and it's all under one roof and one team and one approach. And boy, you get a lot more personal touch as well as probably get some great momentum. So I think that is just so spectacular. And I feel like if someone is listening to this going, tell me a little bit more about this, you know, this team approach and virtual family office, what is the best way that they can learn more about what you offer and then also reach out and connect with you.

Well, it's funny you should ask that. I just finished the book on the team-based model and the virtual family office. It's called Wealth Unleashed. It's for wealthy families, successful business owners and their advisors, and it's on Amazon. So they can do that, or they can give us a call or actually better yet. Get on our website. It's Spencer VFO, as in virtualfamilyoffice.com. And they can read all about our process, take a look at the specialists that we have in the virtual family office, and they could just contact me right through there.

Excellent. Well, James, I really appreciate you coming on. It's been a real pleasure talking with you about your approach to serving your clients. All right. Well, thank you, Mike. I appreciate it. You've been listening to Influential Entrepreneurs with Mike Saunders. To learn more about the resources mentioned on today's show

or listen to past episodes, visit www. www.Influentialentrepreneursradio.com.