Alternative Banking Options (yes, we name names....)

Welcome to Accountants LawPod, where accounting professionals and law firms converge, hosted by Lynda Artesani, Sarah Prevost, and Stephen Libhart.

Well, hello everybody and welcome back. We're glad that you're here. Hi, Sarah and Lynda. How are you?

Doing, doing well. You have a little bit of a raspy—

I have a little bit of sexy raspy voice today.

Yeah.

And it's so hot. We're recording this in the early part of August. It is so hot here. And like, yeah, there we're getting up to 100 again. What's that?

What's your temperature?

We're supposed to get up to 100 again. And we're having lots of fires and things are starting up and— oh, I just— yeah, it's crazy. Yeah, crazy, crazy. And then there goes Sarah putting on a jacket.

I know, of all the— I mean, it is, um, We've, it sounds like we will have a hot spell come later in the week or the weekend, but we have cooled off quite a bit for the time being. But when I say cool off, I'm saying like nice colder mornings, 70-something towards the midday. Um, it's nice.

It's 89 and it feels like 109 here.

I'm sure you're in humidity state.

Yeah.

I can only imagine what it's like there.

It's, you can see the air. The best way to describe it. When you open the door, you're like, oh, there's the air.

Yeah.

Goodness. Goodness.

But it's not too many. We are fortunate. We don't usually get all the fires. We do get fires sometimes, but they usually occur in April because if it's— we hit dry season at the beginning of April, it's when it starts. And it's also when the rainy season is just about ready to start. So it's the end of dry season and the rainy season starts, and then we have the lightning. And then because we're the lightning capital of the world, and lightning can spark it in the Everglades. But we— it's been a few years since we've actually had that happen, which is interesting. But all the fires seem to be happening up north.

That's what's happening here is that we're getting the lightning strikes starting the fires.

Yeah.

Oh goodness. Well, we've got a really exciting subject today, um, that I've been looking forward to. This, this, um, I think a lot of law firms and, and accounting people who support law firms have a lot of aha moments when, when we really peel the onion back here and take a look at, at the alternative banking options, because there's a lot of things to learn there. And, uh, um, we've talked about it before, I think, you know, on and off in different podcasts and at the Law Lab. But, uh, just to kick it off, I'm always a little cautious about new banks. Let's talk about that— new banks and, and a law firm getting all excited about the new bank that's going to give them such great deals and great interest rates and all those sort of things. What kind of experience do you guys see with that?

Like the non-brick-and-mortar? Sometimes it's like Yeah. Yeah, there's been a few. I've watched some of the accountant channels and see what some people are looking into. And I mean, well, I mean, that you've got a non-brick-and-mortar one with QuickBooks Checking, right? That's Green Dot. And that's one of the more popular ones that you see. There's lots of different ones that you may or may not— I mean, we've had it where we've met with a client and they're like, oh, we're going to use XYZ Bank. I'm like, oh, I never heard of that one. But— and they'll say, well, what, you don't like that? You know, would you have a better one? And we always fall back to Well, sometimes you're stuck because with trust accounting, they have to use whatever the bar says that bank can be. So that's the starting point. And sometimes they want it in a completely different bank, but a lot of times they don't because they want to be able to go transfer. So—

That's really key is bringing up the, you know, what the bar association requires. You know, what's a, what's not. Sometimes they'll have a recommended list and sometimes they'll have a required list. You know, you really need to tune into what the requirements are in your, your part of the country.

Yeah, well, especially if you have a bank, which happened in one state where pretty— it's a national bank— got basically kicked off the list. So clients had to— the firm had to move the client's money over to a different accepted bank.

Oh boy.

So, but to your point, so the neobanks are those online banks, non-brick-and-mortar. They do have a bank behind them. A lot of them do. Their setup process and the way that they work is a little different. So if we separate the conversation of trust accounting separate from operating. And my biggest approach for, for when I recommend it and the way we approach it, um, it's not the first thing we're going to want to change for you.

Right, exactly.

Yeah, to Lynda's point, right, earlier. But it is something that, um, what is your process for accounts payable on the operating side? What is your process for, uh, what, what fees are you paying For holding funds in the bank, we see this a lot. A lot of people want to do those, um, like the envelope system. They want to have a lot of different checking accounts or different—

The sweep accounts.

Yeah, but they're, they're like, um, the name escapes. Oh, the Profit First style. They want to have all of these accounts. Well, we kind of look at it and we say, okay, how relevant are all these accounts? We're not saying no to the system, but how relevant are all these accounts to your system? And what's important? Having Money being able to freely transfer or having money in a way that has dedicated space, meaning I want an account just for payroll. That's kind of what we see sometimes, or I want an account just for vendor paying for accounts payable. Okay, what does that look like? And so that's how you can start with these potential alternative banks that do offer actually some pretty good deals. They offer interest-bearing checking accounts, so you're not in this holding where traditional banks are like, well, we could put that in a CD or a protected account and you can only withdraw from it in X amount of months. Okay, not what I'm interested in.

And some, some of them give pretty good rates. So yeah, you can see it doesn't have to be a physical bank, but you have to be that type of person that is okay with it. You don't— can't just drive up to Bank of America and go in, and you have to be that mindset. And you really got to make sure it's FDIC insured. Like, that is— that's the first thing you should check into, right? And then look at the security. So a lot of times we look at— I know because I have a friend that worked at one of the big banks, a couple of the big banks, as an information technology person. And I know that that's a big department, and some of these, they spend a lot of money on that. You want to ensure that your money's safe. So you want to make sure that— and I don't know how you would ever find that out on a new— on a newer bank. I guess you could just go search.

Well, it's, it's Part of your posting requirements that you have to post. But going back to sort of what you were just saying, Lynda, is that FDIC and that insurance of money comes out of— Steve, which I'm not sure if you had First Republic in your area.

Yeah, no.

That was one of the banks. And then there was another bank that was a VC-style bank that also Actually impacted some friends of ours. They had pulled their money out, but not all of it. And so that comes out of that need. But there's a recommendation that I was going to lead with too, is you can do these, like I was saying, these specialty accounts or these reasonings of why you would maybe want to open a checking account at that particular bank in that style. But I always recommend having a local branch For the purpose that Lynda just brought up. And it's basically derived, in my opinion, to what you were saying, Steve, the recommended list. So if you're going to hold the trust account at that bank, you might want to look at also, do they have an operating account? And then talk about your workflows. What's easy to use? Because sometimes those banks— And I don't want to name a bank because I don't want to pick on a bank, but some of the national banks charge pretty hefty fees for having the ability to have bill pay, positive pay, and to have what's all these other little things that go on. Having us on as in what we call like a restricted admin space, we want the ability to see statements and checks, but we don't want the ability maybe to bill pay or transfer unless we have that dialogue and protocols are set up in place.

Exactly. Yeah.

To approve that. So where I was going with these other style of banks, they're great banks, but they all, they put those protocols in place because they're thinking ahead and they have a little bit of an easier setup in some ways for approval processes, right?

It's easy.

And you're making money on a checking account, not just a savings account, which a lot of the traditional banks, nothing wrong with that, but a lot of them, you're not making a lot of money off of the main accounts.

So a lot of times our attorneys might have $100,000 sitting in that bank account, so why not have the ability to make a little bit of money in the operating, right?

Yeah, exactly.

I mean, if it's easily transferred. But that's the thing too, sometimes, like, if you have that account— Sarah and I have one, um, on an online bank, which I know you don't want to name names, but I love the name of that one because it's so cool.

Well, I think you should name that one Meow Bank.

I just love the name of Meow Bank.

And Meow Bank, really?

Yeah.

Yeah.

But you know, that for us, we can transfer the money, but you have to do a wire. And I think because we have the amount of money we do, we're able to move that. I don't think they charge us. I think they put it through and they reverse it. But if we want to move money over, we have to pay a fee through our main bank. So we have a main bank, but then we have the savings account because a lot of these, I mean, I know myself with Bank of America as my personal account, in my savings account, I think it's like 0.1% or some insane nothing number. On a savings account. So you can get better rates, maybe 3, 4% today to save. If it's going to sit there and save, you might as well make some interest on it. So if you do your homework, study— and there's a website because I know my husband's looked at it, and it's a website that does a comparison. I can't think of the name of it, but it gave you the comparisons with all the different banks and which one's good. And it also does credit cards too. Don't click on it if it goes into— what is it— within to its Credit Karma, because once you get in that, they're just going to call you and it's just going to be a nightmarish situation where you're just going to be—

Oh, on the person, that's a lot of on the personal side. On the business side, it's actually very different. On the business— on the personal side, that, that's a whole different conversation. And that's actually a good point. I mean, Steve, I, I'm sure you can probably speak to this. What happens in the beginning when firms are setting up and there is this Because you're using a personal bank account to yield more dollars. I mean, that gets— you have to be really careful with what that looks like on the initial setup of your firm, I'm imagining.

And you want to look at their app. I mean, if you're an app person, most of us do all our banking on our phone. You want to look at the app to see how it is. I had some like credit unions in the past that their app was just awful. And the You know, the online ones seem to be, because they're completely virtual, they seem like they have more newer, more modern, easy to move money around, easy to view. I know it's NerdWallet. That's the one my husband looks at. This Compare Banks is NerdWallet.

That's on the personal side though.

Yeah, it's personal, but I think there's some business on there too. I just, if you click into, um, if you do click into, into its Credit Karma, you, because sometimes it'll lead into that with an ad and you'll click into it. You will not hear the end of it. They'll start calling you if you put your information in, because I've seen that happen with him. Um, looking for— he was looking for a business loan, and the same, he just got hammered by phone calls because he ended up in Credit Karma somehow, accidentally, I guess.

With the online banking platforms, you've— the very first question is, um, are you allowed to handle lawyer trust accounts? Ask the bank, because a lot of, a lot of the online ones don't or are not for lack of better words, not regulated or not allowed to in certain parts of the country. Um, and I'm not going to name the one bank, but there is a really great banking group— we all 3 know who it is— that has really marketed to a lot of the accounting groups, but they don't handle lawyer trust accounts.

Yeah.

So, and they've told us, we'll take your— you will take your business account business, but we can't handle the trust accounts for you, so you've got to go somewhere else for that.

Why do you think though that I mean, that's not the idea to me on an online bank because it's not jurisdictional, right? I mean, trust accounts typically are jurisdictionally— it's bar-specific, correct? Yeah.

And the 2, 2 other things is, number 2, what's their customer service like? Exactly. Call me old-fashioned, but I really like to have our attorneys be able to have a face at the bank. Yeah, even if those faces change frequently, which they do. But I don't know. They have to know the avenue into the bank and not get stuck in the being put on hold for 1,000 hours. And, you know, customer service who doesn't know the ins and outs of lawyer trust accounts and those sorts of things. And also, what are the rules? What are the rules in your jurisdiction, your part of the country, wherever? How are you regulated on having nominal amounts in the trust accounts? And can these online banks handle that? Because I've seen so many of them mishandle wire transfers.

Yeah.

And take, take the money out of the— take the wire fee out of the trust account, and then the, the lawyer's overdrawn and, and is exposed to audits. So those are things you really have to think about. You know, to your point, when we started this conversation, it's not a brick and mortar. You know, it's—

No, it's not.

There's a lot of different products that they market.

You know, but there's, but the, there's a beauty and a curse to it. A lot of them offer the beauty of the interest-bearing items, right, in those types of accounts. The, the curse to it is that they don't, a lot of them don't have finance lending, which is what a lot of people are looking for.

Oh, good point.

Yeah. Or the alternative is they'll offer, they say they offer the product, but not to your industry type. So going back to looking at it. Really good point. Yeah, you— so the FDIC insurance, of course, that's very important. And most of these do because behind them is a brick and mortar behind it. Transparency is another space because if you know the named bank, that's— so they're offering a suite of tools for the product online, but the bank behind it, where is it institutionalized? What is the offerings? And honestly, it's just a— we know this is coming in our accounting profession, but wouldn't you both say that the revolutionary space of the banking industry is— this is just the start, I would think. I don't— personally, that's the way I see it. I think doing business the way it used to be done is not going to happen in a few years.

You're right. Yeah.

Back in the day, we would meet with the apartments we had. We would meet once a year with the banker. and discuss, you know, our mortgage and all of that, and she'd take us to lunch. Those days are gone. If you want to go now, you have to make an appointment. There's— if you don't have an appointment, you're not going to do it. You're not even going to get anything going into the bank.

You know what they're doing that for now is when you're over a certain dollar cap, right?

Yeah, right. They also, if you do go, they'll do online things, and then you're actually— I could be chatting. I've had it happen where I'm in Florida chatting with somebody in Rhode Island from where I'm from, And it's like, oh, that's interesting that you're in there and it's all done virtually. So you can even go into this, the bank, thinking you're going to meet with a human, and then you end up meeting on their little TV with somebody that's not— they're trying to save, you know, a lot of them work all in Bank of America in North Carolina. So they have their main place that they work. So it's, it's, it's crazy. But it's definitely different banking style. And I think you really have to, uh, really have to be okay with it. But Yeah, I think it was the future.

So, you know, I think what Steve also brought up too, which is know your relationship, know your person. And Lynda, you brought up that they change. There's also, there's also things that have occurred where you can actually can't go in, you have to make an appointment, right? That's one big change. And I feel like they're sliding back now for a lot of branches. They're like, well, we're available. But then they're closing a lot of branches.

So they closed a lot down here in Florida, which surprised me because I figured so many old people that want to walk in and spend their morning at the bank, right? The old days. And they don't have that anymore.

Yeah.

And I was surprised to see, like, we had so many branches and a lot of them have closed.

Yeah. So, and, and the other thing too, um, and Steve, I, I don't know if this is true in your relationship, but Lynda and I have had this where we've seen like, oh, Yeah, we can help you. Oh, but that's an online product, so you— we can't do that here. Yeah, you've got to do that online. We're like, but I'm sitting right here, right? You have a computer right there on your desk though, and you can see everything about— but actually there's a different department, they're only online. Okay, it feels like the, the curtain, the Wizard of Oz, right?

And some of them have— some of the banks that are kind of focused towards lawyers, and I Name begins with an M. That there's a bank that does like trust accounting, and what it does is when the lawyer puts a deposit in, it makes them put the name in the matter. That's all it is. It's nothing fancy.

Wow.

They put the deposit in. Is it M and K or M and M Bank or something like that?

Yeah.

It you know I've talked to different people like oh we've got this bank. It's fantastic. And then I'm I said let me see it. And when I watched what they had to do, they could not enter that deposit without that's all it forced them to do is put the name in the matter. It's another way of protecting the trust money, but it's not a thing beyond that.

What else?

It is nothing else, because if you put the wrong name in, you still got the same problem, right? Or you still same thing, but it's part of that protection that— and they tout themselves as being that online banking for attorneys. Um, yeah, there's some that— there's all different, different kinds of banks out there. So there's a lot of them, and we use like Relay Bank for For working with attorneys, but that's just for the payables. We try to stick to payables there, but it also can be for employees' expenses because you can assign credit cards for the employees. So there's that option out there too, which is nice. Then you're not having to deal with cash. As you know, none of us like cash.

Well, what's really nice though— I'm Steve, I'm not sure if you've experienced the Relay Bank, but what's really nice about Relay is on those credit cards, you know how sometimes And you probably have had this experience yourself, is you go to set up a company credit card with the traditional model and then you want to assign a credit card to an employee, but you have to have their Social Security and it feels so uncomfortable.

It does. Yeah.

That's not the case with, say, Relay. You can— and also you can have controls, which is another positive to this online setup, is you can dedicate, okay, well, you're in marketing. I'm going to allow you to have this much worth of spending per month or per week or whatever. You set the criteria and it's only permitting this style of vendors, social media only.

Mm-hmm.

So you could do that. You could also say, okay, you're going to have a company credit card. It's only going to be turned on. Let's say they— an attorney has to travel. It only is for that. And then receipts need to be captured and so forth for the charges incurred. So there's a couple of ways to go about some of the controlled pieces to this online world. But overall, banking, fintech, the changes, if we're not— it's starting and it's going to, I think, rapidly increase. I mean, we offer so many banks in the United States alone. It's wild.

Oh, they're on every corner.

Yeah.

Well, online and corners.

There's a lot of banks compared to like Canada that doesn't have that many, so makes life easier up there, you know. And then of course you're not gonna— you might not have physical checks, but you may be able to send it out with them, you know. Look at what kind of bill pay it has too, uh, how you can handle that and what the fees are. I think it comes down to fees sometimes. I think that's the, the hook that gets people into the online banking is that I'm not thrilled that I don't have a bank to go to, but they're not charging me $45 a month to wash my bill money that's sitting in the bank, you know, wash, dry, and fold, or whatever the heck they're doing that for that $45. And it, it can be a way to save that money. And that's always a good thing if you can find a way to save that per month. That's just a little bit, but it's still savings. So it's kind of where it lands. That's a good topic.

What comes to mind?

Lots of things to think about with online banking.

I know. What, what comes to mind, Steve, for you, like when it comes to online banking? with a different style of bank, non-brick-and-mortar, to Lynda's point? What, for you, what comes to mind in that situation?

That's a pretty open question. What comes to mind is just the setup of it. There's a bank here, it's a national bank, but in Colorado, they seem to really have their act together with customer service. And a lot of our clients use that bank. And I haven't been able to put my thumb on why they're all going to that bank yet, Because I see them doing different suites of products with this particular bank. But what I really like about it is when we want our access, you know, our read-only access to their accounts, this bank is really, really tight on their controls. And I have to actually go into a bank branch near my house and sign a document every time we have a new client. But you know what, I like that.

Wow.

I like that.

You like that? I would not like that.

I like it because like I'm required to walk in the bank, show my ID, show them that I am who I am. They have a record of me because we have so many clients with that particular bank. Um, so I walk in and I get a personal face-to-face. It only takes 5 minutes. Um, I don't have to have an appointment, you know, and I have a person at the bank when the bank feeds break and, you know, everybody points at each other and says, it's not our fault, go talk to this person.

It's QuickBooks' fault.

It's QuickBooks' fault or it's the bank's fault.

It's the bank's fault. It's one or the other.

I just call this person at the bank, they get me to the right person in IT, it gets fixed right away, and off we go. So I really like this bank's customer service. I hope that helps answer your question, but that's the first thing I think about is what kind of customer service. Even though it's online, I can call any vice president in any branch with this particular banking company and get help because I'll say, I'm, I'm so-and-so, this is my number. My— I can't think of what they call it.

I see what you're saying. It's the online service portion of it.

Yeah.

Versus like technically, like a, say, Relay, there is no branch. It's just online. I see what you mean.

They'll have my record. Like, I'm in the Boulder, Colorado branch. I want— there's a client up there. I can call that branch and they'll know who I am, which is kind of cool. Yeah. So I like that I can get things fixed really quick.

Yeah. I think you've got it.

You've nailed it.

And I was asking open-ended to see what was a priority to you, because honestly, that—

Customer service still is.

And that's for a lot of clients. It's the same. It's ease of use and customer service.

Yeah, some banks too, Sara. I mean, you've heard me complain. I've got a couple of banks that my clients have that I can't reset my password.

I have to call the bank.

Oh my gosh, yes, Lynda.

Yeah, yeah, yeah.

That is a pet peeve of mine. Although there's one bank that I deal with and they make me change it every 90 days, and then sometimes that doesn't go through. And I have to call.

Yeah.

But that particular bank, I really feel like it's FineMark, and it's very upper echelon here in Florida, and it's very, uh, customer service-based. Like, you're talking to Steve with his people. It's pretty fancy when you go in. It's kind of on the high end. But when you call, you do get somebody, and they're very kind as they walk you through it. Like, here, I'm gonna— and then they say, I'm sending you a reset password, 1234 or whatever, and then you put it in and Then you can reset it, but you have to make that phone call. It's not something that you can do on your own. And I'm like, oh, why can't I just— why can't you just let me do it on my own? You know?

I totally agree. It means we're already signing up saying we're being issued this. We're signing— a lot of times, Lynda and I are actually putting in our Social Security.

Social Security. Yeah. And our own phone number.

Like, yeah, like our personal addresses, which not— I mean, I don't always advertise my personal address, you know, but I Understandably, I mean, it's that relationship, but I think both of you are saying the same thing. It's these key roles in these relationships and understanding how to work with it. And also the value of time. We don't always have the value of time to say, oh, could you just please go reset my password? I mean, I, I know we're naming a few names. Amex.

I'm sorry.

You set up your system differently for accessing credit cards and For accountants, it's horrific. It's terrible. I think it's terrible to change the title and say alternate banking options.

Yes, we name names. Yes, we name names. It's true. Like, or if your client has Chase Bank and then they say we set you up, you literally have like 10 minutes or the bomb's gonna blow up and you're gonna have to ask the client to go do it again because it doesn't give you— it gives you such a window to do it.

It's like, to your, to your point with the passwords, there's one bank here in Colorado and it is a Colorado bank. They're the teeny tiny Bank of America. That's, that's Yeah. And every single time I have to change my password, which like you said, Lynda, is every 90 days, it crashes, it kills the bank feeds.

Yep, it doesn't work.

One time it took 10 weeks to get them to fix it.

Wow.

10 weeks. And the client was like, I need my financial reports. And I'm like, I need the bank feeds. You know, you gotta help me help you here.

It was beyond your ability. Yeah.

And she went through a horrible time trying to, you know, from department to department to department. And I finally found a guy that worked at that bank who is in the IT department. in his house in somewhere in Kansas. And he was, he was like, this is my phone number. The next time this happens, you call me. So I call him every time it bombs. But that's an online banking experience.

I can picture him in his basement with like a black hoodie on.

Yeah.

And that's why I'm so sensitive about customer service.

I agree.

I mean—

Because I tell him, you know, we have a mutual client.

Yes.

That we both take care of, and I can't do my part. Because it's broken.

Well, and, and the last thing is, do you want me to recommend them to go somewhere else due to the fact that you are prohibiting this? Similar, um, there's a disclaimer that we have with Intuit, um, their QuickBooks checking and all the other features that go with it, just purely due to Lynda's own experience. I've seen it right up front and center.

Don't recommend it.

It's awful for her. It's been horrible. And then also Like Lynda, you're saying, read the terms because those loans that they offer you and all the stuff—

The loans are really bad with Intuit. And then the checking's okay if you get a lot of payments through their merchant service. If you're gonna just use it for that and then maybe make a little envelope for like rainy day fund and put money in there, but know that that money is not in that bank account. So whatever is left behind, you have to move it. So I do have my checking account and I do use it, But don't use it for anything else. Don't use it because you can't get the money out if you put it aside for a truck or whatever they advertise. Don't do it. It's not worth a little bit of interest. Don't do it for payroll. That I can tell you.

Oh, boy.

Yeah.

Horrible. Yeah. Yeah.

It was a bad, bad experience with payroll.

Okay, so we named names. So there we go. We named names.

So that's like I said, Tisha put it in there saying alternate banking, and we named names of people that we don't like.

But we have the ones that we like, and we did a mix.

And the ones that we like. Like meow.

So, and it all boils down to, you don't just sign up with a bank just to be signing up with a bank and getting that off your plate. Really investigate. It's your money. Attorneys and accounting people who work with attorneys, it's their money. It's their cash flow. It's their, it's their law license.

Yeah.

Really, really vet, really vet the bank that you're going to work with and feel comfortable with the decision then.

Just because your buddy in court said it was good, make sure you do your homework. Yeah.

Right.

It also makes sense that You're looking at what your local bar and your local— I mean, so your area that you serve, making sure that it fits. And then if you're outside, you're doing business in another state, the bar rules that dictate which, you know, what are the best recommended.

When I teach the accounting classes at our bar association, I do a screenshot in one of my presentations of the Colorado Legal Trust Account Fund website page with all the recommended banks. And I show them who's preferred and how they go down the pecking order. And I'm like, really study this and look at it before you make your decision.

Yeah.

And I use that in the newbie attorney classes. You know, it's like, don't just go out and get a bank.

Yeah.

So, well, great subject today, you guys.

Yeah, it's lively.

I'm like, we got passionate about banks and we got to name names and we took phone numbers and—

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