Estate Planning, traditionally the domain of the legal profession, is about to be disrupted by another new entrant, Vanilla. The company seeks to enable financial planners to offer estate planning services and documents to their clients through a network of attorneys. To be clear, by “disrupted”, I mean the offering of a comprehensive estate planning service, that includes estate planning documents, at a price that is substantially less than the fees charged by estate planning lawyers.
New entrants such as LegalZoom, RocketLawyer, TrustandWill, Nolo.com, and Willing, have long threatened those solos and small law firms with an estate planning practice. These online companies provide Wills and other estate planning documents to the broad middle class at lower fees than have been charged by solo and small law firm attorneys, resulting in price pressure on the fee structure of those firms. LegalZoom and RocketLawyer also now offer the option for lawyer-provided legal advice.
Now comes Vanilla, which impacts the legal services of high-end estate planning practitioners serving wealthier individuals and families by providing a platform for financial planners, with a network of attorneys, enabling them to deliver complex estate planning documents to their clients. The platform seeks to create a more cooperative relationship between financial planners and attorneys and to enable attorneys to produce estate planning documents more efficiently.
Founded in 2019 by Steve Lockshin, Vanilla is a Wealth and Estate Intelligence platform that helps advisors bring clarity to the most critical planning a client will ever do. The goal of Vanilla is to reinvent the estate planning experience end-to-end.
“We have 400 advisors, but I want the Merrill Lynches, Schwabs, Vanguards and Goldman Sachses,” says Lockshin.
Originally self-funded by Lockshin, the company recently received $11,000,000 in venture capital from VenRock and other credible investors, including Michael Jordon, the basketball legend. Thus, Vanilla is likely to be the most well-funded player in the estate planning marketplace.
Vanilla offers tools to financial and wealth planners to create an estate plan that reflects a client’s wishes while minimizing estate taxes.
Companies that provide experienced estate attorneys with complex documents, such as The American Academy of Estate Planning Attorneys, Wealth Counsel, and Interactive Legal Systems, founded by the renowned estate and trust attorney Jonathan G. Blattmachr, should take notice. Vanilla provides a lower-cost solution than the traditional estate planning bar.
Typically, a financial planner will refer a client to an estate attorney to prepare estate planning documents and related services. If there can be any doubt of Vanilla’s impact, see this endorsement from a financial planner that appears on the Vanilla website:
“Before Vanilla, we used to refer clients elsewhere anytime they needed estate planning services.”
“Thanks to Vanilla’s platform, not only is **** able to give a simplified online estate planning experience to his existing clients, he can also win new clients. For ***, gone are the days of untapped opportunities. With Vanilla, he can easily create the ultimate client deliverable that shows a prospective client how he can help plan for their wealth and legacy through estate planning based on their existing planning, changes in law or life circumstances. “
How Vanilla Works
The Vanilla process begins with the financial planner on-boarding a client into a dashboard, inputting the client’s assets and liabilities, and then uploading the client’s existing documents.
Once all of this information is input, Vanilla’s in-house professionals combine the information and documents and produce a visual report summarizing the client’s estate plan that the financial planner can use with the client. Vanilla’s customized client report suggests opportunities for changes in the plan and may recommend adding or changing/amending existing estate planning documents.
The latest release of Vanilla includes an all-new advisor dashboard, a new client onboarding flow, proactive estate planning opportunities and reminders, and ongoing monitoring of a client’s estate.
You can download a Vanilla sample Report here.
The Report identifies: “Opportunities,” which are educational recommendations that include securing additional or revised estate planning documents. The client then has the option of either using their own attorney or connecting with an attorney that Vanilla has recruited in their network, an experienced estate planning attorney. The relationship is directly between the client and the estate planning attorney, and the attorney doesn’t pay anything to Vanilla for the referral to the attorney. The attorney charges a flat $1500 fee, which is considerably less than what estate planning attorneys now charge their wealthier clients for a comparable set of documents.
This core set of documents includes a Revocable Trust, a Pour-Over Will, Power of Attorney, Health Care Directive, a sample asset transfer letter, a letter of instruction regarding tangible personal property, HIPAA Authorization, Trust Certification, and a General Assignment of Assets (if you’re a CA resident). Mirror documents for married couples cost the same.
Estate attorneys charge between $3,500 and $20,000 for a similar set of legal documents including legal advice and comprehensive estate planning and analysis.
Vanilla also offers a set of “essential” self-help documents, without attorney advice, consisting of a Durable Power of Attorney, a Health Care Directive, and HIPPA Authorization for $99.
The financial planner pays a flat fee of $200 per client to create the Report and access the service. It is likely that the financial planner will absorb this cost as they make their money on the management fees charged to the client to manage their assets.
There is a disclaimer that the Report is not to be considered legal advice, and the client should consult their attorney for legal advice and assistance. The company represents that it has worked hard to comply with state unauthorized practice of law rules, as well as any ethical requirements, and its network of attorneys that do the review work is evidence of its good faith. Vanilla is confident that there is no risk of unauthorized practice of law, as an attorney reviews the documents that were created using their platform and enters into a direct attorney-client relationship with the client. A small fee is charged to the attorney for the use of the document assembly platform and paralegal support.
The Vanilla business model seems well designed to afford any ethical traps. What’s your opinion? You can continue this discussion in our LinkedInGroup, which is set up for subscribers to this blog. Go Here
Legal Profession Disruption Strategy
Vanilla is an implementation of what I call a “legal profession disruption strategy.” This strategy aims to offer an alternative to the services of the legal profession at less cost but delivers equivalent or superior value to the customer. Law firms pursue their strategy when they offer software-powered legal services which results in greater efficiencies and price advantage.
The approach to creating such a strategy is to identify a legal problem that can be entirely or primarily digitized – in other words, converting a legal service into legal information and creating what I call a “law product” – or if you are a law firm, an “automated legal service.”
The next step in developing this strategy is to decide how to reach the customer. There are three distribution choices:
- Direct to the customer, known as b to c. Examples in the estate planning market are LegalZoom and RocketLawyer.
- Distribute through a trusted institution to the institution’s customers or clients, known as b to b to c. Examples of this in the estate planning area are OneDigitalTrust.com and Epoq.co.uk. Epoq, in the United Kingdom, has refined this model and serves end-users through many financial and other institutions. The model is not well developed in the United States. Go here for a listing of Epoq’s institutional clients.
In the interest of full disclosure, I have operated this institutional site distributing estate planning documents to customers of a major insurance company for more than five years.
- A variation of the second alternative (b to b to c) is to identify an adjacent professional class; in the case of Vanilla, this would be financial planners, who serve the same clients as lawyers. The objective is to expand the service offerings of financial planners. By providing these additional services, the financial planner is able to offer a more complete service to their clients by making available an automated legal service through their own network of attorneys.
Here is a comparison of some of the major players in this online market space. We could list others, but these are the companies that seem to be generating the most sales volume. Vanilla is listed for comparison, although it is a new entrant. This chart shows the competitive landscape for estate planning documents and the need for traditional estate planning attorneys to differentiate themselves from these offerings.
|Offering||Living Trust Package||Living Trust Package||Living Trust Package||Living Trust Package||Living Trust Package|
|Price||$329,99, includes one year of free legal questions.||Membership – Subscription Model – $39.99. a month||$599.00 single $699.00 couple.||Not clear from the site.||$1,500.00|
|Legal Advice Included||Yes through Legal Plan. Included for free upon purchase and then renews annually unless terminated.||Yes – Legal Advice included with monthly membership fee. 30-minute consultation is included for free on every legal matter.||Yes- Speak with an attorney for an additional $200.00.||No, unless you enroll in a prepaid legal plan.||Yes- Attorney Reviewed and Legal Advice Available.|
|Claim||Protecting loved ones by helping customers create 3.5 million+ estate planning documents.||Trusted by 500+ leading organizations.||“The most trusted name in online trust planning.”||Legal wills made easy||Unlike other services, our documents have been assembled from decades of experience working with some of the most recognized trust & estate counselors in the nation.|
|Institutional Channel||No||Employee Channel – e.g. Docusign||Yes – Schwab and AARP||Owned by Met Life Legal Plans. formerly Hyatt Legal Plans. Service available to Plan members as well as the general public.||Yes through individual Financial and Wealth Planners. No institutional deals yet.|
The response to all of these strategies by the legal profession may be to accuse companies that pursue any of these three business models of the unauthorized practice of law and other violations of the Rules of Professional Conduct of the state where the end-user is served. Because there is a great need to provide legal services to moderate and middle-income families at a price they can afford, and there are new pressures to de-regulate the legal profession in more than a dozen jurisdictions, it is an open question whether these challenges to new entrants will succeed. Up to now, and to our knowledge, there have been no effective challenges by the legal profession to these companies and the companies continue to grow and take market share from the legal profession.
Some Lessons for Would-be Legal Technology Disrupters: Some Thoughts.
- Pick a legal problem that can be completely digitized that delivers a solution to a customer for a fixed price.
- Decide whether you will distribute a “law product”, or an “automated legal service” through one or more lawyers or a network of lawyers.
- Decide on your channel of distribution.
- With respect to the market for estate planning documents, the market for selling documents directly to consumers is very saturated. Entry-level costs are high, and competition is driving prices down.
- Organizing a network of lawyers for every state to provide legal advice and additional legal services is labor-intensive and costly to create.
- There is an opportunity for selling through institutions (b to b to c), as this channel is relatively untapped in the United States.
- There is an opportunity for individual and independent law firms to create a more frictionless experience for their clients by automating the delivery system, for example, by using client-facing document automation platforms to make the first draft of a document ready for the lawyer’s review. The law firm provides a questionnaire through the web browser, available through a secure client portal. The client answers the questions and upon clicking on the submit button, the document is automatically created, ready for the lawyer’s review and further amendment or revision. This is the kind of process that Vanilla is providing to the clients of financial planners that paves the way for efficient document creation by their network of lawyers.
Future posts will discuss the costs and advantages of each strategy, the different technical requirements of each channel, marketing costs, and how non-law firm operators can deal with the problem of unauthorized practice of law.