Earmark Podcast | Earn Free Accounting CPE

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Julia Miller: [00:00:00] We found that small businesses who offer 401 (K) have 40% lower employee attrition in the first year of employment than small businesses who don't. Small businesses who offer health insurance have 25% lower attrition in the first year.

Blake Oliver: [00:00:20] Are you an accountant with a continuing education requirement? You can earn free Nasba approved CPE for listening to this episode. Just visit earmarked in your web browser. Take a short quiz and get your certificate.

Blake Oliver: [00:00:34] Hello everyone, and welcome back to earmark. I'm Blake Oliver. Small businesses today are asking more from their accountants than ever before. They want strategic guidance on their biggest costs, including employee compensation and benefits. But many accountants are still stuck in transactional mode, missing huge opportunities to deepen client relationships and grow their firms. Today, I'm joined by Julia Miller, GM of Benefits at Gusto, and Justin Kurn, chief revenue officer at Dark Horse. Cpas, affirm that doubled from 6 million to 12,000,000in revenue in just one year by transforming how they serve clients. We're diving into how you can move beyond payroll processing to become a trusted people advisor. Let's get started. Justin, I'm going to start with you. Welcome to earmark. Thanks for joining me. Great to have you.

Justin Kurn: [00:01:23] Thank you Blake. Good to be here.

Blake Oliver: [00:01:26] Justin, 6 million to 12 million in a single year. That's really incredible. And that was not that long ago, right?

Justin Kurn: [00:01:34] Nope. That was 23 to 24.

Blake Oliver: [00:01:37] So what fueled that kind of growth? Like, that's the sort of growth you see in a software company like gusto. Not traditionally in an accounting firm like Dark Horse CPAs. To what do you attribute that growth?

Justin Kurn: [00:01:51] Well, Blake, we've got a unique model. Our growth is really tied to the CPAs and the team members that we bring on, and we're incentivizing them to grow their own practice and their own book. But beyond that, there was a major shift that we initiated just at the tail end of 2022, moving into 23, and we really realized in 24. And that was in fact the shift to advisory level services. And the in the compliance game, it's it's very difficult to create value within the relationship other than, of course, filing your tax return on time and making sure it's done correctly, which has value, but it does have limited value. And what we wanted to focus on as a firm was an advisory first approach, and that needs to stem from the expertise of the CPA. But really what the clients are asking for. And we took that approach both with tax and CAS, and it takes a little time to develop that, right. You talk about it and then you've got to develop it and then you have to execute it. And that was the first year that we really realized the full Execution of that move. And that was one of the results. There were others, but it is not easy to double a practice at that level. And it comes with other operational challenges. But one thing that we wanted to stay true to was this statement of advisory first approach. And then we coupled it with an idea of no surprises. We don't want you to be surprised, we don't want to be surprised. And so the combination of those two things, I think was a huge driver for that increase.

Blake Oliver: [00:03:23] Advisory first approach, I want to come back to that, especially when we talk about the people, the payroll, the benefits. But first, I want to welcome Julia to the program. Julia, welcome to earmark.

Julia Miller: [00:03:36] Blake, thank you so much for having me.

Blake Oliver: [00:03:38] So you are head of product for benefits, general manager of of benefits at gusto. What does that mean? Like what? What is your role inside of gusto? Can you explain that to us as accountants?

Julia Miller: [00:03:53] Yeah, absolutely. So I lead the benefits business at gusto. Gusto is a payroll, benefits, and HR platform tailor made for small and midsize businesses. Our target customer, the people we wake up every day to serve, are small businesses in this country. Many people know gusto as a payroll platform, but we also have a benefits product where we help our clients really in three different, distinct ways that are integrated together. The first is we're a health insurance brokerage. So we help small businesses shop for, apply, and enroll in health insurance. We work with their carriers to get those plans set up. We work with the employers to understand what they want to offer, all the nuts and bolts to get an employer sponsored plan set up on behalf of a small business. The second thing we do is we have a digital Ben admin tool. So a Ben admin tool is a software tool that a company can use to manage open enrollments, to have employees go in and um, elect, you know, changes to their coverage when they're eligible. And we have a digital admin tool that you can use for free if you're a member, um, a customer of our brokerage, and it's integrated with payroll, the deductions sync automatically. You don't have to worry. You don't have to remember to go in and change things. Um, all of that happens automatically in the platform. And then the third thing we do is we help advise on comprehensive suite of health and financial benefits so small businesses can get access to health insurance, medical, dental, vision, HSAs, Fsas, commuter benefits, dependent care, Fsas, HRA, 401 (K), a whole host of health and financial benefits. All in this one platform. And we understand so much about small businesses in this country. What they're offering and each of our customers uniquely that we can recommend and advise on that whole suite of of of options.

Blake Oliver: [00:06:05] So me as the accountant, I get one app where I can help my clients run their payroll, but also get the benefits for the employees. You just listed them off. It's a lot. But like, you know the core ones, right? Health insurance 401 (K) those those health savings accounts. Flexible ones. Right? It's all there. I mean, is there anything that's missing at this point? It seems like you've got it all covered.

Julia Miller: [00:06:30] Yeah, that's exactly right. We're built to be that one stop shop for small businesses and for accounting firms. And, you know, we talk about gusto. Gusto is a software product. Yes. But we take this responsibility of serving our clients, serving our accountant partners. Seriously. And so it's not just software to. We have licensed human advisors who can partner with accountants to help them understand the intricacies of offering these benefits. Um, help work with their clients directly to get them set up. Uh, who can step in when there are issues that need resolution? Um, so that's the that's the goal here, Blake, is to have this single place where you can go for all of your small business needs.

Blake Oliver: [00:07:19] And one of the things that is kind of unique about gusto is the focus on the small businesses. The vast majority of small businesses, or I should say the vast majority of businesses in this country, are small businesses. And gusto really focuses on that group under 100 employees. I'm curious, like, what challenges do small businesses face offering benefits to their employees. Like. Like, uh, Justin, can you like thinking about all your customers on gusto? I think Dark Horse has what? How many, how many, how many small businesses do you have on gusto? It's hundreds at this point, right?

Justin Kurn: [00:08:00] I think we're pushing up to 400 now.

Blake Oliver: [00:08:04] Okay. So thinking across all those, you know, 400 small businesses, like what are the challenges that they face when it comes to benefits for their people.

Justin Kurn: [00:08:16] So I think one area is, first, businesses think of benefits as a immediate cost increase to their business when it when it actually is not. It doesn't need to be. I think they gravitate towards do I have to now start covering health insurance and all these different things for my for my employees? And the answer is no. You could of course, that's that's one of the values that you could provide to your employee base, but it's really just about access. And often why firms don't or why businesses don't explore this is because they actually don't know how and they don't know the steps that they need to take. And it's all too confusing and too complex. But the major reason why they would explore it is because there are strong small business. They're growing. Employee retention is a huge focal point for them, and they want to make sure that they are presenting themselves competitively in the market. And benefits is a is one way to do that. And it's a very powerful way to attract and retain your employees. And of course, I think as you grow as a small business, you become, yes, still a small business, but you're successful. You want to share that success with the people that help you get there.

Justin Kurn: [00:09:26] And so the businesses that we work with that are growing fast, are actually very aware of what they can do to continue to incentivize and build that team that helped them get to that level. And I believe benefits is a is a logical first step in a variety of different things that they can do. But again, I think the breaking point for them is where do I even start? Like, what am I even doing here? And what's it going to cost me? And again, I think that's, that's a, that's a challenging place to be in without an advisor that can direct and guide and explain. It's not it's not always a cost increase. Sometimes it's just access, sometimes it's just availability. But it has to be easy to understand, easy to go through. It has to be visible so you can manage it correctly. And I honestly think that's why people stall out is that the idea of it is so foreign to them, and they've never had to go through it before. They just can't wrap their head around applying it to their business. They may want to, they just don't know where to start. Mhm.

Blake Oliver: [00:10:26] Yeah. The cost part is I mean that's the initial hesitation for me anyway as a as a business owner is I think okay I want to start offering benefits. But that's going to cost a lot of money. I'm going to be paying 20, 30, 40% more now in my payroll. But you're saying that doesn't have to be the case?

Justin Kurn: [00:10:47] I mean, yes, in some cases that if that's the desire is that, you know, I want to I want to offer this as an added benefit, a net add to our employees. And yes, of course, there's an added cost. But if you actually break it down, I think the the cost structure between providing benefits versus versus giving someone a raise, if those were the two options, I think it's actually more cost effective to give them benefits just between payroll taxes and everything else that's going on. So so if you actually ran the numbers depending, I guess maybe a little bit on the state that you're in. But if you ran the numbers, there are situations where benefits are more economical. If the options are I either give them a raise or I add benefits. Benefits is probably the right option, but again, just just getting access and offering the benefits without any additional compensation is often enough for the employee like. I want the option to be able to get access to these benefits. The employee may pay for those benefits, but they're looking for the option and the access, which is something that not everybody can easily get. And a small business owner can position themselves to be that provider of that access. And is there a cost increase to the business? Yes. There's always going to be a subtle cost increase. But the question of well, how much? I think everybody defaults to I've got to now pay for health insurance for all of my staff. It's not necessarily. No. And I think that's where the conversation needs to start if they're considering it.

Blake Oliver: [00:12:11] It's funny actually. I feel like I just started a conversation that you would be having with a small business owner from an advisory standpoint, like, is that how a lot of them go do, do do small business owners come and say, I need to offer benefits? I just lost an employee, you know, and they left because I didn't have benefits. So I got to figure out how to do this or and then the concern is this is going to cost too much. You know, it's overwhelming. I mean, that's how I feel. I imagine that's how a lot of small business owners feel.

Justin Kurn: [00:12:44] I would agree I would agree that a lot of business owners feel that way. It's that's like the perfect scenario that I shared. A business owner comes to us with all their issues, and they laid them all out perfectly and we're able to respond. It's not always that easy. It's it's often you have to kind of dig and unpack. You're hearing things. You have to connect some dots. And that's you're only going to hear those things as an accountant if you are in the seat of an advisor, if you're focused just on compliance and blocking and tackling, these are not conversations that you're privy to. They're not relying on you to be a sounding board for the issues that they face. So before you can get into truly offering benefits as a solution, you have to be able to position yourself as more than just a bookkeeper, a payroll admin or advisor, someone who's focused on compliance. Because if you're in the seat of the advisor, these conversations do come up either directly or indirectly. And if you're having the advisor hat on, you should be able to know what those triggers are to say. Well, let's talk about this for a moment. Do you want to explore this avenue? Here's what that means. And that's where partnering with a firm like gusto becomes so critical, because the idea of benefits outside of it being consolidated in one platform is truly a nightmare.

Justin Kurn: [00:13:59] I mean, it is. I mean, there's five different systems I got to go into. I got to make sure it all ties out. I mean, the whole thing's a mess for me if I am doing the payroll and bookkeeping. I just can't even I don't even know what I'm doing. You know, you're learning all these different systems. So I think in the past, people would maybe avoid that conversation because it's like, wait a minute, I'm just adding five new systems to my workload that I've got to somehow reconcile. So there was a little bit of resistance, I think even on the accountant side, to suggest it. But until they realized, wait a minute, this is all in one place. It's all managed under one roof. It's in a system already comfortable with that I enjoy using to begin with. It now starts making more and more sense. So it's a long way of saying, does a client come to us and just say, I'm increasing in size, my employee, I need to retain my employees and I'm thinking about adding benefits, sure. But that's probably 10%. The other 90% are giving you indirect statements that need to lead to that potential conclusion.

Blake Oliver: [00:14:51] Indirect statements. Okay, I want to I want to dig into that a little bit, and then I want to come back to this idea of having it all in one place. You said, Justin, that Dark Horse takes an advisory firm standpoint with both Tax and Cass. Cass being client accounting services, bookkeeping, outsourced accounting, whatever you call it. Right. For me, that always meant doing the books, running the payroll, paying the bills, basically being that in-house accountant, but not in the office. So yes, the scenario that I sort of came to you with, right. That you said that's like 10% of the time where the client like, knows what they need, and they're asking the questions. The other 90%. It's indirect. Uh, how do how do you get to those indirect conversations, like how do you identify this need? Like, what does it mean? I suppose my question is, I suppose my question is what does it mean to be advisory first when it comes to accounting services.

Justin Kurn: [00:15:56] So I probably should preface this by saying not every engagement we have follows the concept of advisory. First, do we still have some blocking and tackling engagements? Of course, it's just not our focus in anything net new. So first the structure of the engagement has to be correct to where we are connecting on a frequent basis around the core elements of your business. Sometimes that's just the financials, other times it's payroll and financials. So let's just assume we are in an advisory first engagement. And a client comes to you and says first you can see some triggers. They're hiring more people. So payroll is increasing, the business revenue is growing, or they are expanding, right? These are all triggers to say something is changing in a positive direction.

Blake Oliver: [00:16:39] Okay. I want to I want to write them down.

Justin Kurn: [00:16:42] Revenue is growing.

Blake Oliver: [00:16:43] Revenue.

Justin Kurn: [00:16:45] Staff is growing.

Blake Oliver: [00:16:46] Staff.

Justin Kurn: [00:16:48] Or there. And that's a combination of expansion. Um, but I'll give you an asterisk. Staff is growing or turning over fast.

Blake Oliver: [00:16:56] Okay. Or turning growing.

Justin Kurn: [00:16:58] Or turning over fast. So those would be examples of triggers to say, let's look at this for a moment. You're hiring all these people. You're growing the business and we're running your payroll through gusto. And that's all we're doing. When do we want to consider expanding the offering to those employees as you're growing into include to include some area of benefits. So it's a question of just when, not if, but when. So I'm directing this as when are we going to do this? That would be a subtle advisory approach, because if you say if and I may never do this, nobody wants to spend more money. But if you if you plant the seed of when it's like, well, this is a necessary step in my growth and development as a business. And then they're going to hopefully ask a follow up question, which is what does that look like? Which now gives you the ability to do one of two things. If you do this frequently, there's probably a rough analysis that you could share, kind of like a one pager on the pros and cons, costs and benefits of adding benefits and the different things you should consider, or if you have the right partner. This is what gusto does for a living. And they have a great team that could say, why don't we do this? I would like to set up a call to explore what benefits looks like inside the platform we're already using. Why don't we do that together? I want you to hear what's possible. And ultimately, we're just trying to lead the client to that final decision, giving them all the information that they can. And we're basing it off of those trigger points that they shared. Hey, look, we're seeing this. We're noticing this. We're going through this. We're challenged with this. This may be an option. When do you want to look at it? And that's that's how we start the conversation.

Blake Oliver: [00:18:46] Not if but when.

Justin Kurn: [00:18:47] Not if, but when.

Blake Oliver: [00:18:49] And that's great because you can just basically ask that question on a periodic basis as the business grows.

Justin Kurn: [00:18:56] That's right.

Blake Oliver: [00:18:57] And eventually the answer becomes now or very soon. We need to offer it okay. And then you loop in gusto, which is easy to do because you're already running payroll in there. Okay. So, Julia, how does that work then? Like on the gusto side, uh, let's say, you know, Justin's firm has looped in a client. They are ready to begin the benefits conversation. Where does that start? With you?

Julia Miller: [00:19:25] Yeah, so I love I love how you approach that conversation, Justin. And um, you highlighted the two most, um, the two biggest challenges that small businesses face with being able to offer benefits. It's the cost and it's the complexity. It it's expensive and I don't understand it. Um, so the the first place where that conversation can start is gusto is very proactive with sharing what we know about small businesses and benefits and who offers what. So we have all sorts of materials and educational content, checklists that accountants can use to start having these conversations with their clients, acknowledging that many accountants aren't licensed brokers. And so that's where gusto comes in. We have the licensed advisors who can partner with you, but there's a lot of conversations that accountants can start to have similar to what Justin was sharing. So here's some examples of some of the content that we've published. We have done our own analysis of all the small businesses on our platform, and we've found that small businesses who offer 401 (K) have 40% lower employee attrition in the first year of employment than small businesses who don't. Small businesses who offer health insurance have 25% lower attrition in the first year. So we can bring some of these materials. We we do bring these materials to our accountant community to help empower some of those conversations that we see from.

Blake Oliver: [00:21:11] I'm sorry to interrupt, Julia, but those are big numbers, 40% lower in the first year if you offer a 401 (K) and 25% lower if you offer health insurance.

Julia Miller: [00:21:21] That's right. So back to Justin's point about affordability. You can think about the ROI. The cost of attrition is high. Very high. You lose productivity. You have to go out and hire someone new. And so at a certain income, it's ROI positive to offer these benefits. When you think about how much it can do for your for your business and attracting and retaining your employees.

Blake Oliver: [00:21:44] Yeah, just go ahead, Justin.

Justin Kurn: [00:21:47] I was going to say, not to mention the audience, that you are attracting, changes you previously were exposed to, a specific audience, that those things either were not important or they just don't think about those for one reason or another. They don't think they're capable of receiving those. And when you shift into offering benefits as a business, the candidate pool shifts with it. So now you're ideally hiring better talent, right? More dedicated team members that are focused on all the elements that benefit them, not just their salary. And use that entire package as making a decision of whether or not they're going to move somewhere. And I think that's that's a subtle, powerful recruiting tool that people don't put as much weight in as they probably should. It's not that the same candidate stays longer, it's that a different candidate you didn't even explore before is even coming to you and staying longer. It has two part two value parts.

Blake Oliver: [00:22:43] And that makes sense because the most talented employees can demand and receive benefits. And so if you aren't offering benefits, then if you aren't offering benefits as a small business, then you are just completely excluding those people from potentially working for you. That's right. So and that's really hard to quantify the cost of that. I mean, you could I guess we could probably try to figure it out. But I mean, I'm sure it's going to be much higher than the additional cost of offering benefits, at least just to start. Right. It doesn't have to cost a ton to start.

Julia Miller: [00:23:21] That's right. And that's where I was saying, you know, step, step zero. It's not even step one of, of these, uh, conversations between accounting firms and their clients can be just educating yourself with all the content that gusto publishes, that we've curated specifically for accountants. So to that last point, you know, we run surveys. We have hundreds of thousands of small businesses on our platform, and we survey them and we talk to them all the time. And so on. That last point, uh, in a recent survey, 13% of our customers said that offering benefits helped them attract, uh, talent that they were looking for. So back to kind of Justin's point. Um, so anyway, so that's that's the very first if you want to educate yourself, you just want to learn. We have content and resources available to you And the one more thing I want to add on this point. And then we'll kind of get into the the kind of next steps here is as we talk to a lot of the accountants that we partner with, we're really clued in on this one area where we're finding accountants are having meaningful success. So Justin and Darkhorse are doing a lot of this, but if we had just one place where we would recommend accountants start, it's on the question of affordability.

Julia Miller: [00:24:41] Can I afford it? We hear from our accountant partners that oftentimes their clients come to them and they think they can't afford it. But when they actually get into it and they start understanding what is the cost of offering health insurance, how much do I need to contribute as an employer or health insurance or 401 (K)? How much do I need to contribute? What are the tax advantages of putting money into to contribute to health insurance versus compensation based compensation or other forms of compensation. They learned that actually they can they can afford it more than they think. And so we hear from our client base that 10% of our customers are getting benefits related advice from their accountants. Just imagine what we could do for the small business community in this country. If that 10% went to 50%. Just just on the topic of affordability. And we could help so many more small businesses take care of their teams and take care of their people and expand access to these quality health and financial benefits.

Blake Oliver: [00:25:54] Only 10% of small businesses are getting advice from their clients, or getting advice from their accountants on on benefits, on benefits.

Julia Miller: [00:26:03] That's what we find. Yeah.

Blake Oliver: [00:26:04] Yeah. So that then that also becomes like a competitive advantage for my firm if I'm doing that for my clients because they're not getting it elsewhere, they're having to go figure it out on their own.

Julia Miller: [00:26:16] That's exactly right. Yeah. So that's step kind of zero. And one is engaging in these conversations. And I love Justin's practical tips on how to do that. And gusto has resources and content and soon tools. We're working on an affordability tool that we can put into the hands of accountants to have that proactive, collaborative conversation with their clients. So let's say then you've asked the question when and the question is now. So how might an accountant now partner with Augusto to bring benefits to their clients and their clients employees? Well, um, there's really two paths, and it's dependent on how involved that accountant wants to be. So to Justin's point, if it wants, if you want it to be kind of a three way conversation, Then Gusto's licensed advising team is there at the ready to get on that call with you and your client to help answer the questions, to provide that expertise that only a licensed advisor can to help your client understand what plans they're even eligible for. You know, as a as small businesses come in many shapes and sizes, and so you have to be really in tune with which plans could they even qualify for? And then of those that they can qualify for, how do you think about all the puts and takes on cost and coverage to find the package that's right for your company? So that's path A or path B is if your client is is, um, ready to just do this themselves, then they can either set up a call themselves with gusto, or we have a software solution where they can go and shop for once again, all the plans that they're eligible for.

Julia Miller: [00:28:05] Sort filter. Compare all the options to land on the package that's right for them. They can get digital recommendations based on how they want to navigate cost and coverage. The analogy to describe what we've built is probably a Google flights or a kayak. So in the olden days, you might have gone to a travel agent and sat down. They'd open a book, they'd tell you all the flights of where you want to go and when, and you could make those decisions. Well, now you can just go on the internet and see all the things that are available to you. And that's what Augusta is built for. Health insurance is this single place where you can do a lot of that, comparing yourself on your own time. And of course, the moment you want to speak to a licensed human advisor, we're there at the ready. You can set up a call. Um, so that's the first step is understanding what you want to offer. And then Augusta will help guide you through all the subsequent steps, getting the documentation you need, applying to the carriers running open enrollment and the like.

Blake Oliver: [00:29:03] But you're way better than an Expedia. Because I can still talk to a human, right? Like, you have both options. I can. I can talk to a broker or I can do it online. And I actually, I should say I have done this with a client, um, where, like, I think we were able to sign up for the health insurance plan, and we never had to talk to a broker. I mean, we could if we wanted to, but we didn't have to, which is actually really convenient. Um, can you talk a bit? Go ahead.

Julia Miller: [00:29:33] Oh, I was just going to say. That's right. We talked to our customers all the time, and a lot of them say that that human touch is really valuable. And of course it is. It's a big decision. Offering health insurance. You want that expert? Um, sometimes to give you advice, but sometimes just to give you reassurance. But, um, we also see a large percent of our customers who feel very confident with this, um, this software tool. And, you know, going back to what gusto exists to do, we exist to serve small businesses. And so our platform is tailor made for these companies who might not have a head of HR, who might not have benefits, expertise, they might have benefits, expertise in-house. And so, of course, the platform is flexible enough to, um, to serve those customers as well. But it's also built for folks who who don't understand the complexity of benefits. And so it's very guided for, for these small businesses.

Blake Oliver: [00:30:36] One thing I remember, because this was a little while ago, it may have changed, but I remember that when we were looking at the plans, when my client was looking at them, there were like three options. Basically, there was sort of like a, you know, small, medium, large or a bronze, silver, gold. I can't remember exactly how they were defined, but it made it pretty simple to like pick one, right? There weren't a zillion different options, which I appreciated because I didn't have to go through, you know, hundreds of possible solutions.

Julia Miller: [00:31:08] Yeah. That's right. And that's where our our product is built to serve a wide range of needs. And so the majority of our, our customers do they want that proactive recommendation. And gusto can provide that recommendation because we know so much about our customers where their payroll provider. So we know how many employees they have, what states they operate in, the average income. We know so much, and we can provide recommendations based on that information. But we also have an extensive suite of health and financial benefits. We partner with over 100 different health insurance carriers that you can get access to through our platform. And so for those who know exactly what they want and want to see the wide set of options that that's available for them as well.

Blake Oliver: [00:31:56] So Justin, do you have any favorite like of these education tools that gusto offers that you like to use with your clients to get these conversations going? I guess my question is, really, once you've got the conversation started, how do you get it moving at Dark Horse?

Justin Kurn: [00:32:16] Well, so a little bit of a interesting because I don't want to oversell necessarily our how much we advise gusto has um inherently within the system enough visibility in discovery for clients to actually take action absent of us walking them through every single step. So I would say that right now of how many clients we have that are using gusto benefits, 60%, maybe more are went through self discovery and then asked for validation and experience. Because I don't know if you guys know this, but we use gusto benefits for Dark Horse as a firm. So every single team member is not just aware, but is intimately involved in the experience as the end user. And so what often happens is I think gusto is just software does a fantastic job to allow for self discovery, which is not something to take lightly because there's a there's plenty of payroll services and, and softwares that nobody wants to log into because it's just a complex nightmare, right? It's just the user experience is absolutely horrible. And so clients dump it onto their accountant because it's like, I don't even want to go in here. I don't even know how to get in here. Gusto is different. The entire user experience follows a very similar path, and that path allows for self discovery and what they're looking for from us in more than half of the situations are validation. They want validation that this in fact is something worth exploring, so it's not always the case that we have the opportunity to be proactive in discussing benefits with a client.

Justin Kurn: [00:33:58] Sometimes we are reactive through validation, but it is only in the event that they are already on gusto as a payroll service. So transparently, I don't know exactly all the tools that are available as the end user that someone could explore, but I do know that it does a fantastic job at sparking interest, and that interest is then validated by the accountant who understands what they're going through, and then they actually start going through steps in the process because it is so easy. I think that's a huge testament. Like often we say, well, how do how do accountants just get more involved in the process while they have to learn it? They have to understand it. They have to execute it. They've got to do all this different stuff. It's not actually the case with gusto specifically. That may be the case for other providers, but it's not in this case. There is quite a bit of self-education, and it's a pretty easy setup to begin with. Following a conversation with the gusto team. So that that is actually what we found is that they are able to self-assess quite often and get interested and are looking for just that validation on the accountants side, and then support along the process. Given the fact that we of course know what it's like because we use it ourselves.

Blake Oliver: [00:35:10] It sounds like the key here is that gusto is designed so that the accountant can do it. The client can do it, they can do it together. They can do it separately. It doesn't all fall on us to lead the client through it. They, like you said, 60% are just using gusto for payroll. And then they discover the benefits features inside of the platform. And they they start going down that path themselves. And then they, they validate that with dark horse.

Justin Kurn: [00:35:41] Correct.

Blake Oliver: [00:35:41] Like get get the assurance from Dark Horse that this is the right way to go.

Justin Kurn: [00:35:45] Correct.

Blake Oliver: [00:35:46] Yeah. That's that's brilliant. I wish more developers built products like that where it was that flexible. Um, because, you know, in my experience as a CPA, it's that, uh, when when I have to be involved, then it all falls on me. And time is the thing that we just do not have enough of. So that's great that that the majority of the customers can just get started and get through it and then ask for help if they need it.

Justin Kurn: [00:36:18] Yeah. And and what they're asking for in terms of help are things that Julie already mentioned. Right. It's the assessment on the costs. Right. They're either getting that benchmarked against what gusto is saying or what we're looking at from a financial standpoint. Right. Some of the softer elements, the ease of use, the experience for the employee. And these are things that we could speak to authenticity authentically. Right. Like, oh, do you want to see I could actually show you what the experience is as the employee. Like, this is what I see because I use it myself. And sometimes that's all it takes. This doesn't have to be a giant presentation where you're trying to sell them this idea that they never had to begin with. And I think that's where where maybe some accountants feel a little blocked. It's like, do I have to sell this to somebody and like, learn this like, no, no, not at all. Um, but I would tell you that the best sales tool or the best advisory tool comes from a place of authenticity. And so I've always encouraged firms that have that have asked us about gusto or gusto benefits, like, what do you guys currently use? Why aren't you on it? I mean, that's the first step because I guarantee you it's going to be very, very easy to not just advise, but to coach and guide if you're using the same portal.

Blake Oliver: [00:37:30] Yeah. My my firm uses gusto. We use gusto for payroll. We use gusto for benefits. So, you know, like that that is an endorsement that you can't beat, right? That's right. It makes a lot of sense. Um, so. What kinds of questions do you get, Justin, when it comes to the assurance? Like what? What are what are the biggest concerns of clients once they start going down the path? What are they looking to understand better besides cost? Yeah. Yeah. Right. So let's let's say we've addressed that that cost concept, right. With the, the you know, I'm kind of I'm learning this right now, but I'm going to try to summarize it right. It's that yes it will increase your costs. But you're going to have lower turnover particularly in the first year. And um, you are going to attract better talent, right? You're going to attract a group of employees you could never get before. That's going to help grow your business. So that offsets it, right. So we've gotten over that conversation with the client. Um, what is next? So what are what are some more like, Concerns things they're hesitant about that you have to that you help guide them through. Right.

Justin Kurn: [00:38:48] Yes. So there's there's a gray area here of where it becomes, you know, how much does Dark Horse or the accountant want to kind of guide the client versus when's the appropriate time to kind of pass the baby gently to gusto, to help guide, because we never want to say anything that's going to be incorrect. But the general things that do come up are implementation timeline from start to finish. How long does this take? They want to know how much am I involved in the process as the owner, or if I've got someone on my team, how much are they involved to execute on this? They want to know. Um, funny enough, when it comes to health insurance specifically, like, what are my options? And, you know, they ask us that, like, we somehow are memorizing the thousands of options that are in in the medical insurance field, but they do want to have an understanding of like what is possible. Like what am I going to see? And I think there's a, there's a, that's, that's where the gray area is. It's like, well there's tons of options and Gusto's got connections to all these different places, but this is something worth discussing because they want to be able to select the options that make the most sense for you. But I would say the priority number one, after we go through cost and we understand that it's valuable is timeline and implementation. Like when is this going to go into effect.

Blake Oliver: [00:40:04] All right. So let's dig into that. Like what is the timeline. What is the owner involvement. How do I talk to my client about that. And like Julia feel free to to jump in on either of these questions.

Julia Miller: [00:40:19] Sure. Yeah. Justin, do you want me to share how that works at gusto or.

Justin Kurn: [00:40:22] Please, please do, please.

Blake Oliver: [00:40:24] Do. I think it'd be really helpful. Right. Because that is these are questions that clients are going to ask. Let's, let's.

Julia Miller: [00:40:29] Yeah. Fantastic. So let's we can talk about health insurance. Um, so if we go back as a reminder, there's a whole suite of health and financial benefits that small businesses could, should, and sometimes must offer we. We actually haven't talked a ton about retirement benefits and 401 (K) today, but that's its own world where some some businesses in this country are required by law to offer a retirement benefit. And with that also comes some really beneficial tax incentives and tax credits that accountants can help talk to their clients about. So but let's focus in stay focused in on health insurance for a minute. And then in the world of health insurance, there's a category of clients or small businesses who have health insurance already, but they're perhaps using gusto for payroll, a different broker for their health insurance. And they want to get the value of bringing it all into one place. The stuff we've talked about fewer errors, more tailored recommendations, automated payroll sync, a tool that they can put in the hand of their employees to give them the power to choose during open enrollment, etc.. Um, so for that has its own process. If a company already has health insurance and they want to bring it on to gusto with its own implementation timeline, but then there's this kind of typically more common just because of the customers we serve.

Julia Miller: [00:41:58] But, you know, not the not always the case, but the more common case, which is, uh, a business who wants to offer health insurance for the first time. So you've had these conversations, you understand, you want to offer, you know, you want to offer health insurance. You go into the gusto platform, or you talk to one of our licensed health insurance advisors. You take a look at all the plan options that are available to you, what you could qualify for. Um, you take a look at the deductibles and co-pays, how to optimize cost and coverage. You select your plans that you want to offer, your package that you want to present to your employees. Then the implementation timeline starts. So from there, what happens is gusto works with the employer to gather all the documents that we might need to submit this application to a health insurance carrier. Ultimately, at the end of this, this is an application we submit to a health insurance carrier that we have high confidence the insurance carrier will approve, and that meets their underlying underwriting guidelines, because we have those rules coded into our system and we understand what they are.

Julia Miller: [00:43:09] So we help advise customers on plans that they'll be eligible for. But there's always a back and forth. So the first step is we start working with you to pull the documents together, because we're your payroll provider. We have some of these documents ourselves. We have payroll histories and the like. And so we can what we have access to already. We pull together what we need from you. We ask you for, um, and then we start moving your, uh, company into open enrollment. So we'll give you an open enrollment window. We'll help communicate it to your employees. And then open enrollment starts. And the employees can come into the Gusto profile through their own login, like Justin mentioned. They can see the plans that are being offered to them, the costs of those plans, the coverage of those plans, and they can select the benefits that they want to enroll in, whether they want to add dependents, if they're offered an HSA or an FSA or commuter benefits, how much they want to contribute, all of those different, um, decisions across medical insurance, dental insurance, vision insurance, life disability, it's all together in one system also designed to be just incredibly easy to use. That is one of the most important things for gusto is to make the entire experience as easy to use as possible.

Julia Miller: [00:44:21] So we've run open enrollment. Your employees have gone in and selected their plans. Sometimes the small business is involved. Sometimes they're getting questions, sometimes they're not. They don't. It can be very hands off. Um, at that point, we have what we need. We take a look at who participated. We once again ensure that you're going to meet those carrier underwriting requirements. We pull together that full application, and we go and work with all the different carriers who you might be working with. Maybe you have one carrier for medical, a different for dental, a different for vision. We pull this all together, and we work with those carriers to ensure that we get the right person enrolled on the right plan, with the right effective date, so that your team is covered. Uh, when it times come, when the time comes for your benefits to start. So we do all of that processing behind the scenes, working with the carriers, ensuring we're getting everybody enrolled. And then once the carriers have processed those enrollments, we go back and we check that that work was done correctly to ensure that, um, you know, as few things slip through the cracks as possible.

Blake Oliver: [00:45:26] So I know that these timelines can vary a lot, but roughly. Right. Let's say let's say I'm I'm keeping my client on track as the accountant. What can we expect for a new, a new, uh, a new company on benefits?

Julia Miller: [00:45:40] Yeah. Typically what we see is folks are shopping a couple months ahead, so you might kind of be shopping now for, uh, you know, let's say an August 1st or September 1st start date. Sometimes folks are moving quickly. They decided they want to offer benefits and they want to offer them immediately. We tend to need at least a few weeks. This process can take time. Um, and some of that is out of our control. We want to ensure that your employees have adequate time for open enrollment and the like. So we can we can collapse it down to, you know, let's say four, four weeks, uh, give or take some as needed. But typically what we see is folks are shopping a few months ahead.

Blake Oliver: [00:46:21] Few months ahead, but like four weeks. That's pretty great. Like that. You can do it that quickly if we need to. And then owner involvement. Right. Like how involved does the owner need to be? Let's say I, as the accountant, want to take it all on. Like, what do they have to do?

Julia Miller: [00:46:35] They they certainly need to. We want to ensure that the owner is understanding what they're signing up for. And ultimately, um, you know, the the cost and the financial liability is, is with them to ensure that they can continue to pay for these plans and, um, contribute in whatever way they've decided. So they they certainly need to, um, we want to feel confident that they know what they're signing up for. They need to sign documents and forms as as kind of an authorized signatory. Um, but, um, but, you know, after that, once again, gusto takes on a lot of the, the heavy lifting to ensure that we're gathering what we need from employees and the small business.

Blake Oliver: [00:47:17] Got it. So, I mean, they can join in some meetings. It can be fairly minimal if that's what they want. If I'm going to take on the role of guiding them through it with gusto. Okay, that's great to know. All right, so we are nearly out of time. I want to ask one more question before we go. Justin, I'm creating all this value for my clients now because I'm offering benefits, uh, advisory type services. How do I make money from this?

Justin Kurn: [00:47:45] Great question. Um, payroll as as an offering. And if we extend benefits below that is actually somewhat of a challenging it's somewhat of a challenging area to, um, price and get value back to the firm to provide. Here's our general approach. If we are going to be managing both payroll and benefits, which would include onboarding and onboarding of employees, there is just a higher level advisory engagement to handle and take all of that on. So if you had a typical firm are charging a client $250 a month just to run their payroll. But now you're getting position yourself more as an advisor, and you want to help them and guide them on implementing benefits. There's an implementation period based on how much of a lift that they would want you to go through. We generally look at those as projects. This is a time stamp project just to implement, and then there's an ongoing fee to continue to advise and monitor. That ongoing fee is often 2 or 3 times more than the original fee that we were charging, just to offer a singular type of compliance related service or a transactional level service like payroll. So if you were to say, what's a general benchmark? And I made up these numbers, so please don't take those as fact. But if a general benchmark is I'm doing one thing here, it's transactionally focused. And now I'm expanding into that advisory. And in this case, benefits oversight, which actually isn't the case because gusto is actually doing that for you. You're just making sure that everything is still staying on track and connected and everything is set up correctly. You're probably doubling or tripling your fee just to handle that now. Does that work in every single situation? Probably not, but that is generally the way that we look at it. Compliance versus advisory. There's a three times delta between these two things. That's the value to the firm. If you can get into the seat of the advisor.

Blake Oliver: [00:49:48] And that's how you doubled revenue at Dark Horse.

Justin Kurn: [00:49:50] It could be one of the ways that we did that.

Blake Oliver: [00:49:52] I think that's a great place to end it today. Thank you so much, Justin and Julia. I've been speaking with Justin Kern, chief revenue officer at Dark Horse, and Julia miller, GM and head of product of benefits at Gusto. Thanks so much for your time and for sharing your expertise with our audience.

Justin Kurn: [00:50:08] Thank you Blake.

Julia Miller: [00:50:09] Like, thank you for having us.