ClearEstate  with Jean-Philippe Daunais |E434

Speaker A: Foreign.

Speaker B: Welcome to Fintech Impact. I'm your host Jason Pereira. Today in M the show I have Jean Philippe Donair, chief product officer at clearestate. Clear Estate is an online platform for various estate related matters, including estate settlement, will preparation, you name it. All done in a modern way that is less paperwork orientated and more technologically savvy, I should say. And with that, here's my interview with Jean Philippe. Jean Philippe, thanks for your time today.

Speaker A: Thank you, Jason. It's a pleasure to be such on an esteemed podcast with yourself.

Speaker B: Esteemed podcast, that's a new one. Okay. Yes, there we go. Let everybody know that. All right. Jean Philippe Clearstate Tell us about Clear State.

Speaker A: Yeah, so Clear State is a digital estate planning and estate settlement company. We pride ourselves in helping people go through life's most important moments. Whether that's helping them make their first will, plan a complex estate or when the time comes, help them settle in estate. So go through the mechanics and the pain of being an executor and making that more empathetic but also technology driven.

Speaker B: Okay. Uh, for anyone who has never had to deal with settling in the state, you don't know where we're coming from. It is beyond death by a thousand cuts. It is absolutely just pain risk to know. Think about how disorganized the average person is. Do you really know where all your money's coming to? Going from all this other stuff, canceling every subscription, transferring airline travel miles. It goes on and on and on and on. At a time where you were bereaved and upset and unhappy and throw that, throw onto that. What would happen if they didn't have a will and they were disorganized? Forget it. So let's talk about the origin of the company and then we'll get into how it solves for the problem.

Speaker A: Yeah, absolutely. And I uh, think every family can relate to this. They've all seen an estate gone wrong. Something that's throw throwing a bar to come their family or they saw family conflicts or just being in the pain of being an executor and going through the process. And that was actually our origin story as well. One of our co founder lost his parents middle of the pandemic and was the executor on their own on their parents estate and went to the traditional banks, tried to get help. The estate wasn't sizable enough, they wouldn't help him. Um, so basically ended up being himself the quarterback of all this and realized how painful it is. You're sort of like a general contractor kind of going through the motion of working with accountants, lawyers, families, banks, and trying to sort it out without even

Speaker B: having a full list of who's in scope. Right, that's the other issue.

Speaker A: Yeah, absolutely. It starts with the discovery hunt where you basically need to go through the basement of someone, their deceased loved ones and trying to figure out what do they own, where was it, who's responsible and then trying to go talk to the banks and getting access to the information and not yet the assets. So it's a very painful, traumatic, time consuming and long process that spans from 18 to, we've seen almost sometimes to the extent of four or five years. If the estate is complicated enough or most often you're not paid because the, as the executor, you're a family member, you don't want to create conflict. You're not you, you should be entitled to compensation. But most people waive it just to not create conflict within the.

Speaker B: Well, that's the irony is that basically the amount of work that it is and families that get their nose bent out of shape when the executor wants to be compensated for all their time and effort, it's. It's messy.

Speaker A: Absolutely. And people typically kind of name um, their brother in law or cousin or family, um, members without really realizing what it is. It's a burden that they're putting upon themselves or them. If anyone's busy or still has a full time job, like doing this as a side project is a very heavy load. And most people are not aware that they're named as an executor to start. And most people have not done it correct. Yeah, they learned by surprise that they were someone's executor as if it was some form of not prized honor is a better word to be named an executor. In reality, it's something you wouldn't necessarily wish on your enemies to some form.

Speaker B: Yeah. Literally seeing people fight it out in court. Who has the right to be the executor? I'm sitting there going like, oh my God, why?

Speaker A: Correct. And so the origin story was about us trying to change that experience. We had this original insight about being TurboTax for state administration. That was the original idea. How do we take a process that is manual in paper form and try to digitize it and from beginning to end and bring technology to make it more seamless and efficient to some degree?

Speaker B: Okay. All right. So I think we could, if we wanted to, we could go on and on and on about how painful this is and how much work it is, but let's not beat that dead horse, no pun intended. Let's get into how you solve for the problem. Okay, so you have an entire sort of value chain from proactive before anything goes wrong, all the way to, okay, someone's passed away, reactive. Take me through it. What is it you're doing to solve for this problem?

Speaker A: Yeah, so we started out in the estate administration space. What we do is twofold. We provide the executors, uh, our clients with resources, human resources. We're dealing with people who are dealing with grief, who are completely lost, who value their reassurance of having someone to talk to, a human. And then we're using technology to make all of the mundane things much more efficient. So think through helping them find assets, automating letters to financial institutions under the right templates, under the right departments, under the right emails to fetch information back and build that inventory. We're helping them figure out what applies to their estate. So if they're in Quebec, it's a different process. If they're in Ontario, it's a different process. If they have a will, if they don't have a will, how does that work? And then automating the probate filings. So those are the forms that need to go to court to certify that this was the last will. It's a valid will and you have the right to act as the executor. Once we've done that, a lot of paperwork doesn't the forms, then we help the executor actually think through the distribution. So where is the money going? That's starting with paying off the debts, starting with paying off the obligations, helping them manage the state while it's being distributed. So thinking through property payments, maintaining the home, things like that. And then at the end, we also support them filing the taxes. So that's both the terminal taxes of the deceased individual and the estate, uh, taxes, sometimes trust taxes, if there were any, that need to be wind down. So really a 12 to 18 month experience where we do all of this. We started out that way and then we realized that we could have a much greater impact if we were also proactive in helping people plan for the estate. So it's one thing when people pass and they come to us, we can still support them, but there's value in helping them structure it correctly from the beginning while they're alive, to make sure that the intentions are clear, the information is there, and there's actually a structure to all, um, of this madness to some degree.

Speaker B: Structure to the Madness. That's all right, I get that. So you got digital tools for lining it all up and basically, and preventing the things from going wrong in the first place. Fantastic. So talk to me about the additional human services later on because we can, you can actually be, you can actually ask them to, ah, act as the executor as well, so this can be delegated to you. So you paired the kind of online, streamlined digital services along with the actual ongoing stuff. Talk to m me about how about that, where that need came from and also what the reaction's been to date.

Speaker A: Yeah, absolutely. So once we figured out that we could have a greater impact on the planning side, our original clients were more of the older demographics. The people had complexity in their estate plans, less the do it yourself online wills. So think about people who have blended families who, their executors likely abroad, who have multiple properties and things like that. Those clients actually wanted someone to talk to as well when they were planning their estate. So that's how we built the process over time. Those same individuals, they started asking us, you can help me plan my estate, you can help me settle my estate, why can't you be the executor? So that was a growing demand that we had. And, uh, to be able to be named as an executor, as a company and you need to hold a fiduciary license, a trust license. So we partnered with one of our investors and partners, National Bank Trust, and where they act as the underlying regulatory body for us and we are the agents to help them deliver that service to clients. So now all of a sudden you have this more affordable, more accessible professional offering that is available to clients where they can name Clear State and our trust partner in their fiduciary documents and we'll take up that role completely for them. So instead of just supporting them, we're actually doing the work, the words, as if we were the executor.

Speaker B: That makes sense. They're basically providing you with the platform as a service to basically gain opportunity to do so to lower cost. You handle all the heavy lifting. So they get paid for basically just licensing you and, uh, everybody wins.

Speaker A: Yeah, correct. And for the consumer it's a win because essentially, like normally the fees for this require you to have a very sizable estate. They typically have a declining scale of seas where it's 4% for your first 3 million, 3% for your next two and so forth. At Clear State, we're using the technology we've put in place, we're able to charge 1% for the full estate. So dramatically more affordable service. And we don't have minimums in terms of estate sizes as well. So we're expanding the reach of the service to more clients within Canada, make it more accessible.

Speaker B: And that's something that I often think that really prevents people from using this is they look at the cost of this and say oh my God, like 5%, like on any even get to a 1 million. Again, someone's got a paid off.

Speaker A: Yes.

Speaker B: Right. So you got a paid off home and they're looking at saying that's $50,000 right there on a million dollar home. So I think it drives a lot of people to not undertake these services. Looking at the cost but not understanding the cost on their time, their effort or the potential conflicts it introduces to the family.

Speaker A: Yeah. To some degree people look at it like in absolute cost, but then don't factor how much time they're going to put into this, how liable they'll be if they make any errors, how much conflict can be generated by them being in the middle trying to navigate the relationships with their family. When you pick a professional third party, effectively they're neutral in this and they're hold, they're held to a higher bar from fiduciary duty than a typical lay executor. That would be your brother or your uncle as well. And as well, the other advantage is we do this day in, day out. Your brother, they might be dealing for this for the first time. There's a lot of, there's a lot of gotchas or things that you will learn throughout the process that we've been able to do thousands and thousands of times so far. Where we now know what works and what doesn't. Much, much better than we did five years ago.

Speaker B: Yeah. And but the risk is negative about this. There's something to be said about outsourcing the bad guy. Right. Sometimes you have to make decisions in an estate that are going to rub people the wrong way for good reason or for bad reason. Doesn't matter. But the bottom line is that everybody technically has the right to settle their estate and have the money go wherever they want as long as they live up to their legal obligations to whoever beneficiaries. There's the pending claim or something like that. And that doesn't mean that people want to accept that reality or that truth. And there's something to be said about making you guys the bad guys, for lack of a better term is they can get as upset as they want with you, but you're gonna play within the line, you're gonna, you're gonna basically do exactly what you're supposed to do. And frankly, they really, if they wanna sue you or do something over it just coming out of the estate anyway, so knock yourself out. Yeah.

Speaker A: That's what makes this job somewhat hard as well. We have to follow what's intended either by law or by the will to some degree. And not all the beneficiaries always are happy with that outcome. To some, to. To some extent. Most people, when they live a will, a lot of them don't necessarily leave the explanations as to why they made such and such decision in written form either. And they're no longer there to explain. So you have to follow the legal document and whatever that means in terms of conflicts within the family.

Speaker B: Yeah. A big thing that when being a financial planner, like the two, two things that happen all the time, first and foremost is we always encourage people to have the conversation while they're alive. Right. There might be a very good reason why they think an unequal distribution is what's right. Or the person who's expecting an unequal distribution needs to hear from the parent. That's not going to happen. Right. And the. I often say that if you can't have that conversation and do so without conflict, you already know there's going to be a conflict. Right. So you got to figure out that information should inform how you're going to proceed with that estate going forward.

Speaker A: Yes. That's also why we've. Within our product suite, we have a portal for advisors and we're trying to put. Yes, we ultimately serve the consumer, where we're trying to put the advisor in the core of all this and also make them part of the process upfront to flag issues before they happened. And so thinking through what are the family dynamics through a family tree or genogram, make them part of the progress so that they know also, uh, what is the financial plan, but then what is the estate plan? We're not trying to replace the financial advice side that the financial advisor would provide, but more be accompanying them throughout the journey with the estate planning kind of expertise that we have internally and the technology to support them as well.

Speaker B: Yeah, we can play a great role in that sense to basically prevent conflict from happening. Unfortunately, sometimes it can't be avoided. Right. And I think having you guys as the bad guy definitely is better than adding additional family turmoil, quite honestly.

Speaker A: For sure. For sure.

Speaker B: Sometimes you got to be the bad guy. It's all good though. Someone's got to do it all right. So now it's obviously got to be a lot easier once they. What they've basically been with you for the entire journey. Right. Like the will's in place and all that. And you hear that, but it's got to be more. It's definitely more difficult when they triage it. I think basically, talk to me about, never mind the big stuff, the bank account stuff, the sale of assets, there's the minutia. Like, how much of a challenge, tell me about the experience of what it's like to have to deal with things like social media accounts, email addresses, you name it. Like the long tail of stuff. Like how much of the work that you guys do is dedicated to the long tail versus the big stuff.

Speaker A: Great question. I think today we focus a lot more on the big stuff, like the legal elements and the financial elements, more than the social media accounts. We will guide the consumer throughout what to do, what to look for. But even in the big stuff, there's a lot of intricacies and nuances. For example, like, even if you do have the grant of probate, the banks always ask for different types of documentation for the nats to give you access to the accounts and so forth. None of them follow a perfect streamlined process. It's always a chase to get the information and the right accesses. I'm betting it's rather the same for if you think about like Instagram, Facebook, all of those different media that today we consume more and more, they all have their own intricacies and own process and try find them, finding that information accessible, like online for sure. Now with the advent of, like, AI tools, you can do, you can automate a bit more of that search and process, but it's not something that we've had a chance to focus a ton on just yet.

Speaker B: It's going to happen. I've had companies out here who specialize that in that.

Speaker A: Yeah, absolutely.

Speaker B: When you think about it, and it's like things you don't think about, it's, oh, guess what? And then on the birthday of that person who's deceased, your Facebook thing says, wish this person a happy birthday. That can be unbelievably triggering for someone who's lost someone close to them. Absolutely understandable why they would want that up. All right, this is what you've done today. Clearly a value proposition. And the fact that you've dropped this down to 1% is incredible. I've got to say. Are there times where you guys say, no? Is this. Where is it that you are a fit and where is it that you're not a fit, especially given your pricing methodology or do you just scale that up where it's necessary?

Speaker A: Yeah. Uh, you mean for individual clients or partners or both?

Speaker B: I guess. Individual clients in particular, yeah.

Speaker A: There's not a lot of clients that we won't take on. The reality is there's one that's pretty obvious is one when there's conflict and they do need a lawyer to represent them and make sure that the estates, if they need to be to go to court to settle the first illegal conflicts, then those are cases where they got to settle the conflict first. And then we can do the, we can help with the administrative parts of it. We don't represent the client as their personal lawyer. So those are clients that we will disqualify right from the get go. And then states who are insolvent, who likely don't have sufficient assets to be able to cover our fees or the debts themselves. So those are trickier ones. We are live in eight states in the US as well for our settlement offering. So if someone has assets, both sides, then we'll take them on whenever they have the states. Um, yeah, when they have assets in jurisdictions that we aren't in, then those will be considered on a case to case basis. When clients come to us, one of the key features is we offer a consultation that's free for them where they can essentially provide information about their personal situation both on the planning or the settlement side. And then we will guide them towards one of the right plans that we offer. And if we're not a fit, we tell them there's a lot of clients who come to us, the estate's too small, it's not worth our full service and we'll just tell them how to go about the small, small estate kind of procedures and things like that. Fair enough. Good.

Speaker B: So you've mentioned eight states. Is this part of a slower rollout or is this more strategic based on need? How has this worked out for you?

Speaker A: Yeah, we're obviously in a very complex state or business. Every state or province is slightly different. So we're growing at our own pace in terms of expansion within different markets. Right now we're live across Canada in eight states. We offer advisor solutions, planning solutions, state settlement solutions and professional service solutions. Canada is our whole market. We're doing more in the US and looking to expand there. It's going to be selective, a state by state process at the moment and uh, yeah, going about it carefully.

Speaker B: Good stuff. This is the round you've conquered thus far. Where do you see this going? How much more do you think you need to add to your offering? To streamline this or to basically expand it?

Speaker A: Yeah, we're continuously adding more technology to our solutions. So think now with AI, uh, you can automate away a lot more tasks and make it even more affordable for client, make it also much more seamless and lovable. As an experience, you think about the way traditionally you would apply or fill out software. It's a form based, it's sequential. Now we're going more into conversational or different modes of engagement. Think through like talking or just chatting with an AI agent to get the inputs you need to be able to produce the right documents. We're also going deeper into the trust administration and the more complex kind of uh, estate settlement offerings and focus on our niche there. We are quite proud of being a one stop shop from both planning and the settlement and take great care in our professional services business. So that's where we're building out more of our capabilities to better serve the advisors. We're launching as well a professional version of our advisor platform early June which has much more features for advisors to leverage while engaging within their clients. So that's an interesting take that we have that's unique where we do both the consumer and the advisor and do the underlying work as well.

Speaker B: Excellent. So before we wrap up, there's three questions I asked to end on a positive note and make sure we basically even. We talked about a heavy, heavy topic and a lot of painful work. And so the first question I have for you is if you had one wish or something could change in your company or the industry as a whole, would it be.

Speaker A: That's a great question. I think a bit more standardization in the actual laws and processes and acts that regulate our space. It's a very nuanced and complex space where unfortunately it's the end consumer who ends up paying more just because it. No, everyone needs to specialize in their own little category to be able to make it work.

Speaker B: Yeah, it's one of those things where I feel like it's similar. There's similar paradigms in other areas as to oh, why is it this bad? Right? And it's this bad I think because not enough people feel it enough times. Right. It's why do not to pick on real estate agents. But I see real estate agents targeted a lot for oh God, what you pay them is enormous. And there are some who are absolutely not worth it, others that are. But people think it's just a tr. Why can't this be easier? You know, what if you had to buy and sell a house every year in your life? I bet you someone would do that. I bet you someone would fix it. But the pain is not. Is huge, but it's so infrequent that I think that's probably why it's this way. There's no incentive to fix it. Everything just keeps on going the way it is and getting more convoluted.

Speaker A: Yeah, absolutely. We see that trend with clients who have been an executor. Helping them understand the value of our business is much easier than someone who's never been because they first think that they can take this on and do it by themselves and then they realize the complexity. They've just got themselves into it.

Speaker B: Absolutely, yeah. Second question. What's been the biggest challenges. Oh, sorry, one sec. Yes. Second. Second question. What's been the biggest challenging at a company to where it is to date?

Speaker A: Understanding the distribution mechanics of our space, like death, is a challenging topic when you're trying to settle or, uh, provide state settlement services. There's a finite window where your offering is relevant at that point in time. And it's also a window of time where the consumer's headspace is really not attuned to this. So we've iterated countless times in trying to figure out like when and how do you distribute the offering that we have. We know the pain point and the value is there. It's more about the distribution that is really challenging in our space, which has taken us five years to get a hang of, uh, and really work through.

Speaker B: Yeah, And I would say too that again, it's. I've had this conversation where recommended services like yours multiple times. So I basically will say, and they're like, no, no, it's fine people. They're in a moment where they're not feeling. First off, a couple things. A, they're not in the best of head spaces. B, I feel like they, on some level they almost feels like it's like they owe it to the person on, um, to some degree and then they really don't. They don't really don't understand what it is they're signing up for. Right. And I feel like they get too deep in the weeds that sometimes it's just they're not going to stop. They're going to think that they can see the end in sight at the end of the tunnel and maybe, maybe not. Maybe or maybe not. That's. That might not be true.

Speaker A: Yeah. The same is true to some degree on the estate planning Side where uh, it's really something that people don't wake up in the morning and say, hey, today I'm super happy, I'm going to do my estate plan. They lack the urgency to get it done. They need a little bit of a push. You need to make it simple enough for them to want to engage and go through the full process. So the challenge in our space is really, this is not the kind of thing where you engage on a daily basis. You, you do it out of love for your loved ones. You do it to make sure you have a plan in place. That's been the hardest piece, I'd say, in this space.

Speaker B: All right, and then, um, the last question I have for you is what keeps you getting up in the morning to keep on fighting the good fight. Because a helping run a business and design this kind of stuff is not easy. And secondly, it's a very, very heavy thing that you deal with when it comes to death.

Speaker A: Yeah, I think we're in a mission driven kind of organization in space where as I started out saying, everyone's had an estate's gone wrong story in their family. I have, I think that's the kind of thing where if you wake up in the morning, you think, hey, we can have an impact in people's lives and actually help them in a time where they're incredibly vulnerable and need help with technology and something that's humane. That's what brings a lot of people to a company like Clear State. And that's what keeps me going at least.

Speaker B: Excellent. Thank you for your service in that regard and keep it up. Because honestly, helping people in that time and doing so actually at the price point you're at, frankly at 1%, it's a no brainer.

Speaker A: Doesn't mean you'll stay at 1% forever, but for, uh, now fully get it. I mean if you're distinct selling point, for sure. Yeah.

Speaker B: And I can see you guys getting in. Absolutely getting into complexity based pricing. But then that just means it's worth it.

Speaker A: Absolutely. Thank you for having me on the podcast, Jason. It's an honor. It's a pleasure and appreciate it. Yeah, thank you.

Speaker B: So that was Jean Philippe Donaire of Clear estates. And yes, 1% to settle in the state. I can't tell you how much of a deal that is and frankly I highly recommend taking a look at them. As always. If you enjoyed this podcast, please leave a review on, um, Apple Podcasts, SoundCloud, Spotify. Rescue your podcast until next time. Take care.

Speaker A: This podcast was brought to you by Woodgate Financial Answer, an award winning financial planning firm catering to high net worth individuals and their families. To learn more go to woodgate.com you can subscribe to this podcast on itunes Stitcher and Google Play or find more episodes at. JasonPerrera ca.