The Win-Win Wealth Strategy with Tom Wheelwright – Episode 471

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[00:01] Welcome to the Prosperity Podcast. Hello everybody. It’s Kim Butler and I have with me my friend, Tom Willwright. Tom, say hello to the Prosperity Thinkers crowd. Hey, Prosperity Thinkers crowd. It’s always good to be with you guys. So Tom and I could remiss about our 25 year friend history. Lots of professional back and forths, but I don’t know about you, Tom. You think our nine quick start leads us forward instead of backward? Exactly. Exactly. We don’t need to do any of that fact finding. We need to keep looking forward. Absolutely. So we’re going to talk today about your new book coming out. In fact, I think the day that the podcast gets released is the day the book is on the shelves at the Amazon and et cetera bookstore.

[00:52] And I love the title of it. Win-win wealth strategy, seven investments the government pays you to make. One of my bullhorn messages is win-win-win, because I really like to seek that third win, but what a fabulous title for your book. Care to share how you got it? I will, because it was a long and arduous road, let me tell you. The original title was the subtitle, seven investments the government will pay you to make. And when we decided to really push hard for that, push this book hard, we went to Wiley and why they said, yeah, we can’t use that. We can use it as the subtitle, but we need a different title. And so our original title was our next original title was incentives because we thought it would be incentives.

[01:41] They said, yeah, we don’t like that either. So they actually came up with this and what I love about it is, so, you know, my first book is tax-free wealth. Right. So now this book is win-win wealth. So it actually is a nice follow through. And we did want to make sure that it wasn’t just, it was, it’s not really, it is a tax book, but it’s not a tax book because it’s really about building wealth and it’s about, you know, using what the government gives you to help build wealth. But it is about that win-win where the government wins. People always think with taxes, either the government wins or I win. There’s no way for this to be for both to win. Right. So this is this whole tax the rich thing.

[02:24] Right. So, well, you know, if the rich are getting taxed, not paying enough tax, then therefore everybody else is losing. And what I really wanted to show in this book was that the government wins and the taxpayer wins in seven different investment areas. Now, actually, interestingly enough, the last one I do, the last one I show, which is the retirement plans, the government doesn’t win very much. Okay. All the others, and that’s the one that’s widely accepted, right? That one’s, everybody’s okay with retirement plans. Nobody’s going to complain about, oh, the rich don’t pay tax because they use retirement plans because the rich don’t use retirement plans. Right. For the most part, right? Okay.

[03:07] So, so everybody’s complaining about the other six, but it’s the other six where the government truly wins very heavily and the taxpayer can win. But of course we have to choose whether we’re going to win because we know the government tends to win no matter what. What I love about it is there really is when the government’s winning and the contributor is winning, the investor, if you will, there is a third win going on. And that’s the community that is having the activity go on, whatever those other investments are that you’ve listed, right? Yeah. There’s no question. Gosh, if we can help America wake up to that fact, then we’ll make a big impact. And I know that’s what you’re trying to do with all of your information.

[03:55] That’s the goal here. The goal is to wake America up that this is not about the rich making more money. This is really about everybody doing, does better when everybody wins. Absolutely. How fun. So I’m going to delve in with you on the chapter on insurance. So this is the sixth of the seven items that you have listed. And I’m super curious about a couple things. So you’ve talked about in this chapter, all kinds of insurance. And we’ll spend quite a bit of our time focusing on the life insurance arena because that’s my area of specialty. But I love what your mother said, which is there’s two important people in your professional life. Probably the most important people was I think her word, your CPA.

[04:45] And this was long before you were a CPA, right? And your insurance agent. Now, I think she was probably thinking more property casually in her commentary. Is that accurate? She was. She goes, you know, those are the two people who are going to have the biggest impact on you financially in your life. And they’re the people you need to have on speed dial. Yeah. So P and C, property and casualty insurance story for you. We have a client in St. Louis who had their house totaled. Not their car, their house. I didn’t know houses could be totaled. Interesting. There was so much damage done from a tree falling that the foundation was cracked and they considered the house totaled. And so thankfully they had fabulous coverage and a great agent.

[05:38] And this is not an area of specialty of mine at all, but it has been so interesting to watch this process and the negotiations that are going on. The professional outside appraisers. There’s maybe a different word, insurance. There’s a word for them. Adjusters, I think. Adjusters. Thank you. That have come in and helped what is going to create for this client an amazing win. Now this is a really interesting thing about insurance, right? Especially car insurance, home insurance. Like we’re always trying to kind of poke the insurance company a little bit. Why do you think that is? What is it about human nature that makes us feel like we have to get a win and we don’t think about that other side of the win?

[06:24] Yeah, that’s a really interesting question, Kim, because it’s always, well, because the insurance company is the big company, right? And so we’re always trying to, oh, well, you know, they’re the bad guys. I mean, look how many movies we have or books, the John Grisham book, right? The Rainmaker where, you know, the insurance company is the, they’re the bad guys, right? And I’ve actually found that for the most part in my life, the insurance companies are the good guys, right? Because they’re the ones who are making sure things happen. They’re taking care of things for you. I actually, I’m a huge fan of the insurance side. Of course, you know, I had a, my mother started me on that path, but I have had really good experiences with insurance people.

[07:03] Absolutely. And what’s interesting is if that insurance company doesn’t win, they’re out of business. Right. How helpful is that? Not, right? So it is a really important shift that I’m hoping to help people make around all kinds of insurances. Now, as you’re well aware, what’s interesting in the life insurance space is that the good companies are typically what’s called mutually owned. They’re not public stock companies like most car insurer, car and home insurers are. Those are public stock companies. But in the life insurance space, you have mutual companies, which means that the policy holders are actually part owners of those insurance companies. Insurance companies. What a way even more important aspect of having win-win occur.

[07:56] Yeah? Yeah, for sure. I mean, you definitely do want, you’d like your fellow insureds who are your fellow owners, right? You want to all be on the same page and recognize that you’re kind of in this together. You pulled your funds together basically. Absolutely. So just before we jump off the property and casualty space and go over to the life insurance landmark, I want to throw out for just anybody that’s listening, the importance of a liability umbrella. You talk and I talk all the time about building wealth. Protecting wealth is just as important. And I’m amazed how many people, and again, this is not my area of specialty at all, but how many people don’t have a liability umbrella, which is a very inexpensive way to protect wealth

[08:42] that you buy from the same type of agent that does your car and home insurance. And really that liability umbrella amount should be close to your gross worth. Not net worth, gross worth. Have you had any experience with your clientele around the liability umbrella space? Well, I find, oh yeah, yeah. I think that an umbrella policy is critical. Here’s what I like about the umbrella policy. It allows you to rely on their attorneys. Yes, that is really where, that’s really where it’s so important. So the fact of having one is even more important than the amount of the coverage. Because what you want to do is everybody knows that in a lawsuit, the only people who really win are the attorneys, right?

[09:33] They’re the ones who win. And so what you’d like to do is you’d like to that not be you paying the cost of that attorney. And once the insurance company is involved, and I’ve had a couple of different times when I’ve been involved in lawsuits and the insurance company has been involved. And I’ll tell you what, it is great to have insurance company involved. And they just kind of, you know, they take care of things and they work with you. But their attorneys are specialists in these areas. And so, you know, they let their attorneys run with it. It’s great. So well said. Well, I’m just grateful that we can share that information and really encourage people to go back to their property and casualty insurance agents

[10:18] and learn about liability umbrellas. And what’s interesting, you said, you know, the amount’s not as critical is it is actually kind of a stepping process. So like if you’re worth net worth or gross worth, sorry, correct my own language, is 20 million. You can’t just go get 20 million liability umbrella. You got to start at one and then work your way up. Now, maybe you could start at five, but everybody should have a million dollar liability umbrella and then work your way up from there. And that’s actually that gross worth discussion is a good segue to the life insurance space. And you talk about this in your chapter on insurance and that’s the importance of term insurance for life insurance to have term insurance as a product.

[11:02] I can’t emphasize enough as you do in the book the value of term insurance. It’s inexpensive. It’s going to pay if you die. You know, death’s not a negotiable thing like disability or health. You’re either dead or not dead. So we don’t have to worry about our term insurance not paying as long as we die within that term of time. One year, five year, 30 years, whatever the term is. So just talk a little bit about why you feel having term insurance is so important. Well, I think when you’re young, especially, right? You’ve got risks that they’re a small risk and that’s why the term insurance isn’t very expensive, right? It’s a small risk, but for you, it would be catastrophic. So if you were to die and you’ve got, you know,

[11:47] young children, you’ve got a spouse that you’ve got a mortgage, you know, you’ve got certain, you’ve got debts, things that you want to make sure are taken care of. I think that’s where term insurance can be really helpful. Just remembering that term insurance is an expense. It’s not an asset. And I actually think that’s the big difference between term insurance and permanent insurance is term insurance is an expense and permanent insurance is an asset. And as long as you remember that and you say, okay, I just want to minimize my expense. Great, then I want term insurance. I want to build an asset. Okay, I want permanent insurance. And I really encourage people to have both really all throughout their adult lives.

[12:30] Now, as we get into our 40s, 50s, 60s, you know, depends on people’s finances, we can shift to all permanent because at that point, if it’s not going to pay when you’re dead, then it’s kind of pointless having, you know, there’s some circumstances, bank financing, that kind of thing. But permanent insurance, typically known as whole life is a super valuable asset, both for the cash value it builds and the death benefit that it creates, guaranteed, absolutely positively guaranteed. But what I find is people get stuck in a competition of it, the question, is it term insurance or whole life? And that’s, in my opinion, the wrong question. We should really be asking ourselves and our agents, how can we get both?

[13:12] How can we get the inexpensive term insurance while we’re young, in addition to the whole life policy, let the term insurance do the big job in the early years, the whole life insurance do a small job, but over time, those should really switch places where the term insurance falls away and doesn’t exist, and the whole life is there guaranteed for life. There’s so many agents out there that are strictly focused on just term insurance or strictly focused on just whole life. And I think they’re really missing the boat there. Do you find in your professional circles that the concept of just one or the other is a common one, whereas really both is the better approach? Oh, sure. Well, of course, you have the old,

[14:00] okay, you’re going to do term insurance and invest the difference, right? Which we all know, which you and I both know is silly because nobody invests the difference, right? I mean, it’s really term insurance and spend the difference. That’s really what it turns out to be. Okay, well, I’m just going to have a better lifestyle now. I’ll have term insurance. I’ll worry about that whole life stuff down the road. But of course, what happens, of course, is that it gets more and more expensive as you get older and older, because the risk gets higher and the risk gets higher for the insurance company, not just for you. I mean, your risk is the same all the time, right? Your risk is you’re going to die.

[14:35] Your risk doesn’t change, but the risk of the insurance company changes because you’re getting older and you’re more likely to die or that payout is going to come sooner rather than later. So, no, I think that’s a good distinction, Kim. I think that looking at, they have two different purposes and term insurance, I definitely think of term insurance as this is something to happen for a catastrophe, right? Whereas I look at permanent insurance, whether it’s whole life, universal, whatever kind of permanent insurance you’re talking about, I look at permanent insurance as, okay, I want some safety here. I want some safe assets here. And for me, I look at it. Of course, we’ve had discussions for 25 years about this.

[15:18] And I look at this as, well, if I have this permanent insurance, which I know is going to pay out, right? I mean, it’s absolutely going to pay out when I die. So I don’t have to worry. Am I still going to be, you know, because I’m going to have paid it up, right? It’ll be paid up insurance. And so there’ll come a point where, you know, there’s no more payments, no big deal. What I know is then that means that I can spend whatever assets I have now. I don’t have to worry about when I die, how is that mortgage going to get covered? Do I have to save other assets to cover that mortgage? Do I have to save other assets to cover that debt? Do I have to save other assets to cover something where instead what I have now is I have a,

[15:58] I have an insurance policy that I know is there. So I’m going to leave that alone. Okay, I’m not going to spend that. That’s something. Now I can spend all my other assets and I don’t have to worry about it. And then if I outlive my other assets, I’ve still got the insurance policy. So I can still, if I really had to, I could get to that then. The whole life insurance really becomes asset insurance. Exactly. So you made the distinction earlier, whole life is an asset, not an expense. And then it becomes asset insurance as we progress. And that distinction is so, so valuable. I appreciate you bringing it up. I want to turn our attention to, I happen to know it’s on page 121 of the book, your comment on commissions.

[16:42] So somehow in our world, commissions have become this big bad word, whether you’re talking real estate commissions, life insurance commissions, you name it. Talk to us a little bit about that. Well, you know, commissions are the cost of doing business, right? I mean, here’s the problem that we have is I think we sometimes worry too much about how much we pay and not enough about how much we get. You know, it’s like if I invest in, let’s say invest in a real estate deal. And do I really care how much the developer gets? I don’t care how much the developer gets. I care how much I get, right? And we tend not to worry so much in that situation. Or let’s take a mutual fund. Do we really look at how much the mutual fund company is getting?

[17:30] Probably not. What we care is what’s my lifetime return on investment, right? We should be looking at that the same way in everything we look at, whether it’s misery services, because I always think your team is your greatest asset, right? Whether it’s advisory services, whether it’s insurance. Commissions are really not relevant. What’s relevant is my analysis should be exclusive of what the commissions are. The analysis should be what do I have and what am I going to get? Yeah, it’s well said. It’s sad to me that they have really been connoted as such a bad thing because it truly is. It’s paid on results. It’s cost of doing business. It’s enabling. And back to your real estate example, if you’ve proven that the real estate deal is a good one for you,

[18:23] that’s where it should stop. That’s all that should matter. And life insurance is no different. You prove it’s a good deal for you. And of course, we have our truth concepts calculators, thanks to Todd Langford for that ability, full disclosure. That’s my husband that Tom knows very well also, and I’m so grateful for them because it really gives confidence to my voice to how effective the cash value of the whole life can be, how effective the guaranteed death benefit can be. And you did a great job in the back of your book. It’s on page 213 showing how much that death benefit grows. So that asset insurance that we were talking about earlier is your assets continue to grow. Death benefit’s going to grow as well,

[19:06] and that is an enabler. That just frees all your assets to do all those other things. Yeah, absolutely. Fun, fun. Well, as we’re wrapping up here, what final words would you like to share? The goal of the book is to just realize that you have a choice in the matter of whether are you going to be a silent partner with the government, you’re going to be an active partner with the government. This is a game we’re all in. We don’t get to choose whether we’re in the game or not. We don’t get to choose whether the IRS is in our life or not, whether we’re going to pay tax. We actually are part of that, and that’s part of living in the country we live in, whichever country we do live in. As you probably recognize, you’ve gone through the book

[19:50] that we looked at 15 different countries. These incentives are very similar from country to country. I was surprised at just how similar the incentives are from country to country. But what really I wanted to point out in this book is that not only can the government win and you win, but you have a choice. You can be a silent partner and just pay your taxes, spend your money, go on your way. That’s fine. Or you could be an active partner, do what the government wants done, do what society needs done, and pay a lot less tax, build a lot more wealth. It’s your choice. But until you see that’s a real choice, I don’t think people really think about, I’ve got a choice here. I think most people think I have no choice.

[20:35] The government’s out to get me. They’re going to collect their taxes. And if somehow if I’m able to win, that’s a bad thing because they’re losing. Okay, so that means the government’s not making money. When the fact is is that these incentives are such that when the taxpayer wins, the government actually wins more than if they didn’t give the incentive. And I think that was just fascinating when I was going through and writing the book, in that how much the government wins. And if you ever think, if you ever start wondering is this really a good deal for the government, put yourself in the government’s place and say, would I like to be the government? And every time you’re going to say, well, heck yes,

[21:17] that’s being the house, right? Would you rather be the house or would you rather be a player? Would you rather be the house? Well, the government’s the house. So the government does win. So this is not a win-lose. It is a win-win, but only if you make it a win-win because otherwise you’re going to lose and the government’s going to win. Well, I love alliteration and win-win wealth. I mean, you really hit it. Thanks so much for sharing the origin of the title and your wisdom today. Always a joy to speak with you. Always good to be with you, Kim. It’s always about more money and less tax. I love it. All right. To our Prosperity Thinker community, signing off. Thank you for listening to the Prosperity Podcast.

[22:05] To take control of your money and have it work for you, visit ProsperityThinkers.com.