Ep 9 - The GOAT (“Greatest of all Tax”) specialists - Scott T. Ditman, CPA, PFS — Consultant - Citrin Cooperman (Formerly Berdon, LLP Tax Partner, Executive Committee Member and Head of Personal Wealth Services)

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're just starting out or are [: 00:00:30

And more to share fresh perspectives on making sound decisions that maximize your wealth. And now here's your host.[00:01:00]

and I'm [: 00:01:15

So I was about, I. Uh, 31 and Scott was about 40. And, uh, the years go by quickly. But, [00:01:30] uh, what a wonderful friendship, professional relationship and everything else. So I wanna welcome Scott Ditman, who, uh, is a consultant and former head of, of the, uh, tax estate planning, uh, group at Burden, uh, LLP, which is [00:01:45] now part of Citron Cooperman.

. I'm just teasing yourself. [: 00:02:00

We really appreciated the perspective that each of us brought to the [00:02:15] table as it related to, to working synergist, syner with synergy as it relates to all of the different disciplines from estate planning, to investment planning, to tax and cashflow planning and, and, uh, insurance planning and all of those disciplines.[00:02:30]

and, and to coordinate them [: 00:02:45

I'll let you talk to it.

, in working in, um. In this [: 00:03:00

But I noticed a lot of professionals just did their work in their lane and didn't focus on the big picture. I'm doing my job, but [00:03:30] in context, what I'm doing, how does it fit in to taking care of a client's holistic plan? And I've seen that throughout the years that that's something that's really not done nearly enough or thought about enough.

Jonathan Blau: [: 00:03:45

Professionals in each of the discipline disciplines, uh, state, how, how did you, uh, how did you address that politically [00:04:15] in a correct, politically correct way to make sure that Hey, let's get back on the same

, I think I could be helpful.[: 00:04:30

In context helping you. If I sit in on the quarterly investment advisory meetings, like for example, right before, uh, this podcast. I was on, uh, I was in a meeting, it was an hour and a half with a client. The client has [00:04:45] real estate business. The client has a lot of personal inherited wealth, and trust me, I'm not going to this meeting because I'm giving suggestions on, uh, asset allocation and picking stocks and bonds.

I'm in there to provide. [: 00:05:00

So you're in a unique spot. So I sit there in a lot of these meetings and I listen. Then if someone says, you know, we're [00:05:30] looking. Uh, to make transfers for estate planning purposes, what should we think about transferring? Because we work with the real estate on a day-to-day basis, we have a very good handle on what assets are, uh, [00:05:45] potentially going to grow.

to. So you sit there and you [: 00:06:00

So the investment advisor is not just talking about. You know, increasing, uh, increasing wealth and how we [00:06:15] did in the quarter. We're looking at the strategic plan and how each of us is helping to take care of that. And by the way, in this, uh, in this meeting, the estate planning attorney was on the call, so it was done in a very, very positive way.[00:06:30]

y basis, the client sees and [: 00:06:45

And then the client's overall goals may or may not be taken care of.

ou do is you insert, you try [: 00:07:00

And I appreciate [00:07:15] that. As you know, uh, for the audience, I have a master's of tax, uh, in tax and, and a master of. Uh, a business in, in accounting. So, uh, my first five years was spent in tax and, and I always knew I wanted to come into the broad planning space, having learned the [00:07:30] technical issues that wealthy families learn, uh, need to deal with so that this way I wasn't just a salesperson, which I, I don't want to denigrate my industry, but I.

t I didn't want to be only a [: 00:07:45

Um, I heard what you said. You may not remember what you said, but you said, I, I go into these meetings and I just want to help. [00:08:00] Right? And, and. Unfortunately for people, I mean, you're very modest. I know you're one of the, uh, more respected people in your space, um, and always have been, uh, not by me, but broadly in the industry by estate planning [00:08:15] firms and so forth and deservedly so.

people who have your set of [: 00:08:30

And they let that ego overtake the main purpose of the meeting, which is to help. I wanna show that I'm the guy [00:08:45] or the woman that knows everything and I, I don't want to just, I'm not looking to generalize, but, but you, you've seen that And I've seen it and, and that I think I. Is one of the things that makes you so effective and, uh, so, so much of a pleasure for, for people like me [00:09:00] and for your clients who we share in many cases to work with.

, in the business. So, uh, I [: 00:09:15

Scott Ditman: Maybe, um, I, I'll go back to how I started out because, um, I think it might be interesting, uh, to the listeners to, uh, to know how I developed this approach.

Like, I started work. I,

: sorry, I wanted to, you're [: 00:09:30

Scott Ditman: so, when I, well, when I started working at Burden about 40 years ago, [00:09:45] um, I started out, I was a tax accountant.

e in it. And one day, Howard [: 00:10:00

Uh, and I said sure. So I took the tax returns, you know, over a period of a couple of weeks. I finished both of them. [00:10:15] And I went to Howard and I said, I think these things are in pretty good shape. Who do you want me to give them to review? And Howard said to me, uh, why don't you give them to me? There's no one else.

hing about state estates. So [: 00:10:30

So I said, if this guy, if he says there's no one else here but him that knows this stuff, this is a great career path for me. There's no one else here. I and I, and I really enjoyed this stuff. I, uh, I started preparing the returns and I saw this would be something that was [00:11:00] very interesting and I learned a lot from him.

nd I saw him explain complex [: 00:11:15

Who had just lost their spouse, [00:11:30] and he was very good at explaining things, and he took the technical and he explained it in English, and I learned a lot by watching him. And this guy who was, he was smarter than almost anybody. He never threw that out at [00:11:45] a meeting. He handled everything in a, in, in a very, very.

years, [: 00:12:00

And I never forgot that [00:12:15] because that's always been my mantra and it's a funny thing. I noticed that by working that way, year after year with a wide variety of clients, that when you work that way and you were excellent [00:12:30] and, and technically, and you were. Easy and helpful to work with. I noticed that I was able to bring in a significant amount of business because, I mean, I didn't know anything.

yself after what this fellow [: 00:12:45

And that's very limited. They work in a very limited silo. But you, yeah, you do what you're doing and you think outside of yourself and you always think about, um, you [00:13:15] always think about how is what I'm doing impacting the client's holistic plan and. I dunno. It just, it worked so well. It's funny. I was able to generate a lot of work for the firm and bring in a lot of new [00:13:30] clients without really ever having to sell, using your words, right?

Taking care of the clients. [: 00:13:45

And that's why, [00:14:00] circling back to what we talked about at first, I am very surprised that more professionals that work in our space don't think that way. A lot of them just do their job and they don't think about how the other disciplines are gonna, [00:14:15] you know, fit into the greater good. Life Insurance is another great example that you and I always talk about.

it in on investment advisory [: 00:14:30

But I made myself become an expert in [00:14:45] that area because I wanted to be an independent source of objectivity for clients. Do I need this? Don't I need this? What fits in best with the overall strategic plan that's important to you? S Right. And that's [00:15:00] basically how I worked through, uh, and continue to work throughout my career.

what I call a large movement [: 00:15:15

Financial products. And that's, that's embedded in our culture. And that's a problem like when you, when we, you and I work together and we bring in other team members or work with existing other team members as a group to help the client not to show, [00:15:45] uh, the group how smart either of us is, right or isn't.

a lot of checks and balances [: 00:16:00

Sometimes the problem is people are addressing those issues as advisors because they get paid on them. So if I was the kind of financial firm where I, I wasn't a true fiduciary in all aspects and I sold insurance, for example, I. I might know about [00:16:30] insurance, but I might be bringing it up because I have the incentive.

rs who don't have individual [: 00:16:45

How do you feel about, about that, uh, issue? Oh, I

e sense. It's so, it's, it's [: 00:17:00

You try to be technically good at what you do, but each client's situation is [00:17:30] different, and that's what makes it fun. And each client's, uh, each client's situation, I always call it, it's like a, you know, a 20 dimensional puzzle. You have to, right. And you, and the first step. Is that you have to listen to the [00:17:45] client.

en you're putting together a [: 00:18:00

How much money do I need on an after-tax basis to take care of what's important to me? And then is what each of us doing contributing to [00:18:15] that? You know, you got clients that you and I work with that, you know, most of them are coming at it from two different. Life perspectives. Either they're just starting out and the planning is, um, you know, I wanna have kids, how do I provide for their education?[00:18:30]

ness. I gotta start thinking [: 00:18:45

What am I going to do when the money stops coming in? And I have to figure out a way how I'm gonna take what I have and provide for the rest of my life. I. Which in a [00:19:00] lot of situations can be 25, 30 years. You know, how do I, how do I do that? And that's really the context that each of us, whether we're an investment person or an accountant or an attorney, we should all be thinking about [00:19:15] it from that take.

ughts on things and then you [: 00:19:30

And also the beauty of what we do is generally there are not necessarily right or wrong answers. Our job is to brainstorm and present our clients. [00:19:45] With different suggestions on how to do things and let them make the decisions. Um, that's when we met like 27 years ago. That's one of the things that, uh, that I picked up on right away.

Why? Um, I [: 00:20:00

And it's also interesting, you know people, a lot of people sell stuff. Whatever discipline they're in, I find that we make more than enough money. Uh, just by doing things the [00:20:30] right way. 'cause clients appreciate that and they wanna work with us. You know,

Jonathan Blau: I'm convinced I would, I would change what you said.

side of, we're probably make [: 00:20:45

That's just how I, I always [00:21:00] viewed

re was a matriarch of a real [: 00:21:15

I got involved with them about. 25 years ago when the patriarch had just passed away and we worked together with the estate planning attorney and over time, you know, we collaborated and [00:21:30] did a lot of different things. And in this situation we had a grandparent parent, grandchildren, now great grandchildren and it's tricky to plan 'cause everybody had.

er the years, including with [: 00:21:45

And over time, you know, through working with an excellent estate planning [00:22:15] attorney, we transferred a lot of assets and a lot of growth and significantly reduce the estate taxes. We also brought in life insurance, uh, where it could strategically help. Then you and I met with the, the [00:22:30] principles over time and figured strategically how to invest their assets with the overlay of the real estate business.

rent. And the matriarch just [: 00:22:45

Um, you know, if somebody was, somebody wants to retire, you know, what are they looking for here in cash flow? What can they expect? And when you and I worked together. [00:23:15] And the attorney in our situation too. What makes it terrific is we're all working from the same perspective. We're looking at what we are primarily responsible for, but we're making sure that we're always thinking about, am I taking care of the [00:23:30] client?

ange, of course, that's when [: 00:23:45

Jonathan Blau: changes.

grandchild, uh, recently got [: 00:24:00

The, the meeting's in two days. [00:24:15] These are my thoughts. What are your thoughts? And, and even together to, to then let's challenge those thoughts and see if there's something either of us might be wanting to add or, or might have overlooked. The other thing I want to ask you as it relates to going back just briefly to Howard Misto, [00:24:30] because I, I, I know how wonderful you say he was, and I know you also said in the beginning of your career.

hat there was so much wisdom [: 00:24:45

And I didn't know Howard, uh, too well, um, that you were able to enhance, right. That you were able to say. This [00:25:00] guy was great. I got all this knowledge and this is how he does this, this and this. I think if I did it this way, could even enhance it. Just I'd love you to share that if, if, if you could think of that.

fic, like I said, but what I [: 00:25:15

'cause Howard was terrific with the clients, but he was still a bit compartmentalized. Howard mm-hmm. Was a bit mm-hmm. I don't know what the right word is, if it's shy or whatever, but like, you know, he would make a call to the estate [00:25:45] planning attorney and say, Hey, you know what? This business asset is throwing off cashflow, but this is the one that's gonna grow.

n on the investment advisory [: 00:26:00

Jonathan Blau: So I kind of So you, you really enhanced it by, [00:26:15] by really emphasizing the importance and developing it the way you wanted to, of the whole holistic, of integrated approach, I mean, to everything, right.

Making sure that that was really what led the group's planning efforts.

absolutely. Because I never, [: 00:26:30

I, I don't know that, I don't know anything about investments. Uh, so I wanted to develop that expertise so I could help better. I felt like I could really help better, and that's why, you know, when people look at the chart, they'll [00:27:00] see that, um. And, and you know, it's interesting. Nobody really, it, it doesn't matter.

a little while ago. And they [: 00:27:15

It, it, it, I guess it shouldn't surprise me, but I've been put in front of a lot of situations where these clients just. They don't have [00:27:45] really integrated strategic plans. They just don't.

Jonathan Blau: Well, what's interesting is, um, the last podcast guest I had, I dunno if you had a chance to listen to it, but show Penny who created Dynasty Financial Partners.

saying in to shorten up what [: 00:28:00

They have enough [00:28:15] money to do that, right? But the average investor can't decide that, right? The average investor doesn't have the clout to, to choose their own custodian, uh, in that regard, right? They, they have to work with whoever their firm is working with. But what Cheryl Penny recognizes [00:28:30] having worked in that high net worth area at Citigroup for many years before he founded Dynasty, was well imagine if I can aggregate.

of dollars in assets. Now we [: 00:28:45

To have their advice coming from a place where there aren't [00:29:00] products being sold, we can go to Blackstone or Goldman Sachs or wherever you want to go, Vanguard. And so that democratized that whole, that whole um, scale that was only available to the very wealthy. But you are saying something, that's why we wanna relate to it, [00:29:15] that even the very wealthy like that oftentimes are not getting the right planning advice, uh, from whether it's me or whether it's you or whoever, whomever it is.

Well,

strategic planning and what [: 00:29:30

I. [00:29:45] What's my overall strategic plan? It's the same difference. So whether you and I are planning for someone of more modest means, or we're talking about somebody who's worth $500 million, doesn't really matter. It's the same types of [00:30:00] things. Um, and if you just, well,

Jonathan Blau: I actually say it matters even more 'cause what you're saying now I'm gonna steal a little bit of the topic and go bring it a little bit back to behavior since that's important to, to what we're doing on the Crazy Wealthy Podcast, but also in how you and I.

[: 00:30:15

I. Led by this fellow, Michael Fel, a very successful, smart entrepreneur. But what I learned by looking at their quarterly [00:30:45] publication of what as a group, now they manage over a hundred billion of their own money, what they do with their money, more cash this quarter, more hedge funds next quarter. They, they were disclosing that as a group and what I found is what I already distinctively knew, but could prove through their own published, [00:31:00] uh, data, which is that these people as wealthy, as smart as they are.

ot more money and a lot more [: 00:31:15

Right? So it's, it's, and, and, but [00:31:30] sometimes. Because they have big egos. Justifiably, I get it. Um, they don't think that it applies to them. Meaning behavioral, uh, foibles doesn't apply to them. Right? They're not human, in other words, in their mind is really what they're thinking. Um, I'm gonna bring that [00:31:45] back for a second, Scott, and this is a little bit selfish, but I've always been proud because I know.

id, you know, I, I, I'd like [: 00:32:00

You know that, that to me is so meaningful and because you have such a perspective that I respect, whether you are my client or someone else's. If you [00:32:15] told me, I think you should use this estate planner, I would respect that. Just 'cause I trust your, your judgment that way. So I'd love to hear what led to that and, and, and, um, and then I'll ask you a separate question on that.

Scott Ditman: Well, my wife [: 00:32:30

If I stopped working and I just thought it would be good, I felt comfortable. I was handling things myself, but [00:33:00] I thought it was important to partner with somebody who could help me with that. And since Joran my philosophy was so aligned, I thought that you would be perfect to partner up with. And also, um, I was also concerned what happens if, [00:33:15] God forbid I passed away and Nancy was by herself.

ed help. And I was thinking, [: 00:33:30

Um, you know, could I put in place for her to [00:33:45] call, you know, to help her with planning for the rest of her

hat you do, not just because [: 00:34:00

One of the things I tell people who come to interview us when they don't bring their spouse and they say, nah, my spouse doesn't need to do anything with this. I don't need to, you know, whoever, the money spouses don't need to come in. And I always [00:34:15] say to them, I won't work with you because. You might not be meaning to be.

telling you that because if [: 00:34:30

Even with my help, you know, your wife or doesn't, doesn't need to come in. Your, your, if you're the spouse with money, that's the wife. Your husband doesn't need to come in it. It's selfish because what happens is you may [00:34:45] or may not know all those things and, and behaviorally you're just as susceptible as everyone else, which you might not accept whoever you are.

he day, God forbid something [: 00:35:00

And that's just so [00:35:15] important. It's such an important, to me, reason why people should hire people in, in this space that they can trust and that they do trust. So, um. One of the things I wanna also now relate back to behavior. Recently you've gone to a couple of meetings, family, uh, [00:35:30] big, big wealth, wealthy family time meetings where they're reviewing their investment, uh, plan and so forth.

, you've learned some things [: 00:35:45

And they go into a dissertation for about 40 minutes and you take 'em back and [00:36:00] say, wait a minute, guys. This is all okay, but let's talk about what your objectives were as we sit here today, you know, a year ago, and let's see how far or, or, or close we are from having met them and should we make any, any, uh, changes to the plan, [00:36:15] right?

s to me, Jonathan, so you're [: 00:36:30

It's no, I never said that. Here's how I like to frame it. Having, having a plan is no guarantee of success. The failure to develop a plan is the closest thing I've ever seen to a guarantee of failure. That's how I put it [00:36:45] to that. Right. And, and when I, you know, that, that's, that's what I always say. And so when you go into these meetings, they forget all about a plan.

rtise of the people like you [: 00:37:00

Scott Ditman: why, that's why I said like before, that's why I like to sit in, I.

plan. You know, one thing I [: 00:37:15

One of the big things in your in my space is the current lifetime estate and gift exemption is currently pegged at 14, around 14 million a person, or 28 million [00:37:45] for a married couple. If the tax law expires and it goes back to the law before the tax act was set in, the exemption will be halved. You'll be at about 7 million or 14 million per [00:38:00] married couple.

million. Still with [: 00:38:15

So one of the things we should be telling our clients is, let's take a look at this. Let's make sure we use the exemption up before it potentially expires, or at least look at [00:38:30] opportunities and tee up some planning so that in case we see that the tax law is not gonna get extended, we can act. You don't want to be sitting there.

g attorney in November, like [: 00:38:45

Just an example. 'cause sometimes there are external factors that impact what's gonna happen.

e you exemplify what I think [: 00:39:15

What I mean by that is I. Uh, most, almost, almost every investor I ever meet, their, their objective is, let me see if I can outperform some random benchmarks, some managers, or [00:39:30] whatever it is, and it never con, consistently be done. And they failed to meet the real objective, which is whatever their goals are.

w I never have to worry. And [: 00:39:45

And I, I'm proud to say, because of your steadfastness in focusing on what's always important, you didn't meet the goal. You, you're more than twice the goal, you know, and you're still building. Um, so you know that [00:40:00] that's just something that everyone would get there if they could have your temperament. And your ability to look at it the right way.

h them that, you know, a a a [: 00:40:15

To be able to retire comfortably, stay that way and leave some legacy. Those are [00:40:30] goals. I'd like to buy my kid a first home. Those are goals. 'cause they're achievable. They're achievable. Right? You, I could say you have to work a little more. You have to spend a little, I can get you there or I could tell you we have to change something and you can't actually get to that goal.

nt to finish by saying how I [: 00:40:45

Right. And that's, and, and the reason that's so important is if we don't protect, if you, to your point, insurance, whether it's, um. Home insurance, property and Catholic life, whatever it is. Then all this other [00:41:15] stuff is a waste of time because I invested and now I've gotta use it. 'cause I have to self-insure, pay for it myself.

passes all of that. And then [: 00:41:30

Scott Ditman: No, that's fine. But like what you said, that's why.

cus is on helping people and [: 00:41:45

Uh, you know, that's a, that's, that's [00:42:15] great. That's why I want to continue to work and do what I'm doing because it's fun and there are unlimited challenges out there. I told you, like before, I see that I meet with people that are worth a lot of money, that really don't have these plans. And if one by one [00:42:30] guys like you and I can make a difference and help people, um, I think that's great and it's, and it's worthwhile to do.

years, [: 00:42:45

You were, in my view, a pioneer of goal-based planning, probably 35, 40 years ago. And, [00:43:00] and you practice it better than almost anyone I've seen. Uh, and it's a pleasure to work with you and, and I, I, I love calling you my friend. And thank you so much again for being here today on the podcast. Oh, you're very welcome, Jonathan.

And I thank you for having me.

None: Stay tuned to [: 00:43:15

Jonathan Blau: Amy's calling for the recap of today's episode.