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Here's how to profit from finding the sweet spot between things that change and things that don't.
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The More Things Change

In 1840, a British chemist named Warren de la Rue passed electric current through a platinum wire sealed in a vacuum tube and invented the light bulb. Thirty-nine years later, an American named Thomas Edison created the first practical version using cheaper carbon filaments. He didn’t just get the credit for something he didn’t invent – he started a company to sell his technology, a company that later grew to become General Electric, the greatest multinational industrial conglomerate of them all. (Don’t look so shocked – Henry Ford didn’t invent the assembly line, either.) 

This week, Edison’s company announced they’re splitting into three separate companies. It was a stunning coda for the once-mighty giant. GE used to rule the world. Now, they’re pretty much irrelevant.Here at TMN, we talk a lot about change. Specifically, we obsess about technology, in the form of artificial intelligence and machine learning, threatening the day-to-day “numbers-in-boxes” business of accounting. Wednesday, I used the example of GE’s fall to make the point yet again on our Member Call. One member asked a really smart question: what’s to stop technology from someday replacing tax planning and family office business models? And that, in turn, got me thinking about the flip side of the “change” argument – specifically, things that don’t change. So today I want to talk about the intersection between things that change and things that don’t

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Earlier this year, we read Morgan Housel’s profoundly important book, Psychology of Money, for the TMN book club. Housel pretty much answered our member’s question in a piece he wrote called Betting on Things That Never Change.

Housel cites Amazon as an ironic example of building a business on things that stay the same – specifically, customers wanting low prices and fast delivery. As Jeff Bezos once said, “It’s impossible to imagine a future 10 years from now where a customer comes up and says, ‘Jeff I love Amazon, I just wish the prices were a little higher.’ Or, ’I love Amazon, I just wish you’d deliver a little slower.’ Impossible.”

Housel goes on to conclude:

“Amazon bet the Internet changed distribution, but rooted its strategy in things that have never, and will never, change. It nailed the center of the Venn diagram of change on one side and timeless on the other. One drove competition, the other drove compounding. Every successful company does this.”

So, what timeless values will protect our planning and family office businesses from AI? Again, from Housel:

“In the last 100 years we’ve gone from horses to jets and mailing letters to Skype. But every sustainable business is accompanied by one of a handful of timeless strategies:

Lower prices.
Faster solutions to problems.
Greater control over your time.
More choices.
Added comfort.
Entertainment/curiosity.
Deeper human interactions.
Greater transparency.
Less collateral damage.
Higher social status.
Increased confidence/trust.”

Which of these apply to us? Not lower prices, for sure. No, the real answers are “deeper human interactions” and “increased confidence/trust.”

In short, a tax return is a deliverable, with very little human interaction or trust and confidence required to deliver it. You should obviously make them a part of your tax prep service to distinguish yourself from the Jackson-Hewitt desk at their local Walmart. But they aren’t central to the service.

Tax planning and family office services, in contrast, are built around relationships and trust. Those are much harder for AI to challenge, which makes them stronger, more sustainable businesses to model.

Someday, in a dystopian Blade Runner future, AI and machine learning (and replicants!) may threaten relationship-based businesses, too – probably by cutting costs to the point where fewer clients choose to pay for those relationships. But that development is a lot further down the road. In the meantime, let the Venn diagram of “constant” and “change” lay out a road map for your success. If it works for Jeff Bezos and Amazon, it can work for you!

The Briefs is a weekly column on marketing and business planning for tax professionals and financial advisors looking to better serve clients and grow their business. 

Edward Lyon

Edward Lyon

Edward A. Lyon is CEO of the Tax Master Network, where he's coached tax professionals to add planning and financial services to their business since 2005. Go here to join the network. Go here to upgrade your membership or discuss opportunities in financial services.
Edward Lyon

Edward Lyon

Edward A. Lyon is CEO of the Tax Master Network, where he's coached tax professionals to add planning and financial services to their business since 2005. Go here to join the network. Go here to upgrade your membership or discuss opportunities in financial services.

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Here’s how to profit from finding the sweet spot between things that change and things that don’t.

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Fat Man. Red Suit.

Here’s how to profit from finding the sweet spot between things that change and things that don’t.

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