Ladenburg bets advisers will serve more self-employed clients in the future

Firm invested in Track Technologies, a tech tool that automates taxes for "gig economy" workers

Jul 25, 2018 @ 3:37 pm

By Ryan W. Neal

Ladenburg Thalmann Financial Services is investing in Track Technologies, an early-stage tech startup that provides tax automation for independent contractors, freelancers and other self-employed people.

It's the first investment to result from Ladenburg's initiative to identify socioeconomic trends with the potential to transform the future of advice, then invest in tools that help advisers get ahead of the curve.

Dan Sachar, vice president of enterprise innovation and head of Ladenburg's Innovation Lab, expects the "gig economy" will continue expanding, with as much as 50% of the population earning at least some of their income from self-employment by 2027. He doesn't mean just the Uber drivers and delivery workers that the term gig economy usually conjures up, but also real estate agents, small business owners and even financial advisers.

(More: Efforts to help gig economy workers save for retirement gaining ground)

Track calculates, withholds and submits quarterly estimated tax payments for workers who use 1099 forms. The software can synch with bank and credit card accounts to detect and review deposits and expenses, and it will notify users about income taxes owed or potential deductions.

The advisers at Ladenburg's five subsidiary firms — Securities America, Triad Advisors, KMS Financial Services, Investacorp and Securities Service Network — are also independent contractors and could use Track to help with their own taxes. In the future, the company hopes to expand Track's functionality to assist advisers with setting qualified retirement plans for their clients who receive 1099 income.

(More: Hybrid managing $325 million at Royal Alliance switches to Triad)

"The sky's the limit with automation," said Trent Bigelow, co-founder and CEO of Track Technologies. For example, an adviser could help a Track user roll a tax refund over into a retirement account.

A few advisers signed up to use Track's tool after the company presented at Ladenburg's Innovation Symposium in May, Mr. Sachar said.

"Keep in mind, the strategy, the goal of this investment, and the Innovation Lab itself, is to not think about what advisers are doing today, but what advisers 10, 15 years from now are going to be doing," Mr. Sachar said. "We're less concerned with how deep the adoption is going to be on Day One. We're giving them tools to start going after new [client] segments."

(More: SEI has new approach to improve technology adoption by advisers)

Of all the ideas pitched at the symposium, Mr. Sachar said Ladenburg settled on Track as its first investment because of the "immediate and powerful response" the firm received from its advisers.

"The advisers told us that this would be a meaningful value-add to a number of their clients who receive independent sources of income, and would help them differentiate their services," he said.

As part of the investment, forward-thinking advisers from Ladenburg's subsidiaries will provide input on product development to ensure the technology matches advisers' needs.

Ladenburg is not disclosing the financial details of the transaction, other than to say that it has acquired a meaningful stake in Track Technologies, but the company will not be a wholly owned subsidiary as a result of the transaction.


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