The Platinum Rule with Dr. Tony Alessandra and Tax Free Wealth with Tom Wheelwright

Educators put such an emphasis put on the three Rs which is reading, writing and arithmetic, but there is actually a fourth R which is so crucially important, and that is relationships. Relationship skills, emotional intelligence, and effective listening are basic people skills that the corporate environment is lacking. Dr. Tony Alessandra, voted the #1 World’s Top Communication Guru, is a legend of the speaking profession who created a concept called The Platinum Rule which is a free online assessment to determine your people and relationship skills. Taxes can be so confusing, but Tom Wheelwright says all people really have to recognize is that the tax law is fundamentally a series of incentives. Tom is a leading wealth and tax expert, global speaker, and entrepreneur. He is a CPA, founder and CEO of WealthAbility, and bestselling author of Tax-Free Wealth. Tom is best known for making taxes fun, easy and understandable, and specializes in helping entrepreneurs and investors build wealth through practical and strategic ways that permanently reduce taxes.

TTL 211 | Tax Free Wealth

We have two top leadership and wealth-building authorities on today’s show.  Dr. Tony Alessandra, Hall of Fame speaker and Tom Wheelwright, CEO of Wealthability and bestselling author of Tax Free Wealth from the Rich Dad series.

Listen to the podcast here:

The Platinum Rule with Dr. Tony Alessandra

I am here with Dr. Tony Alessandra who was voted number one World’s Top Communication Guru, a Legend of the Speaking Profession and an NSA Hall of Fame Speaker who delivers lectures in a comedy store format. He’s the CEO of Assessments 24×7 and a prolific bestselling author of 30 books translated into more than 50 foreign language editions, including the newly revised and bestselling The New Art Of Managing People, Charisma, The Platinum Rule, Collaborative Selling, and Communicating At Work. It’s nice to have you here, Tony.

TTL 211 | Tax Free Wealth
The New Art of Managing People: Person-to-Person Skills, Guidelines, and Techniques Every Manager Needs to Guide, Direct, and Motivate the Team

Thank you for having me.

I’ve been looking forward to this since we talked in the past about some of the work I’m doing on curiosity, creating emotional intelligence, curiosity assessments, and things like that. You have the knowledge in that area and I’m anxious to hear more about what led to your interest in all the personality assessing.

In 1974, I was in my doctoral program at Georgia State University in Atlanta. I had just had my proposal approved, which is the hard thing because then it’s following through in what you said you were going to do. It was built around buyer-seller similarity. I was looking at demographics, putting the buyer-seller demographics, height, age, sex, etc. in my research. I had to get into research on likeability theory and I came across behavioral styles. It goes all the way back to Carl Jung and his book in the 1920s Psychological Types. From that book, very likely Myers and Briggs came out with their MBTI assessment, sixteen different style patterns. David Merrill came out with Social Styles, which are four basic patterns. At the same time, they came out with the DISC assessment: Dominance, Influence, Steadiness, Conscientiousness.

I was exposed to it and I went back to my dissertation chairman and I said, “I want to change what I’m doing from demographics to psychographics personality.” He said, “Absolutely not. You already got your proposal accepted, finish it, get out of here, and then decide if you want to pursue this,” which is exactly what I did. As soon as I got my doctorate, I accepted a teaching position at the University of San Diego and came out here. As I was teaching in the Marketing Department, my PhD is Business Administration, specialization in Marketing, I started doing some business looking for outside sales training, maybe some speaking engagements. The Dean of the School of Business said, “Tony, you’ve got to make a decision. You teach full-time, or you speak full-time. You cannot do both.” I had been teaching for a while, so I said, “I’m going to try speaking.” I left the academic world and went full-time speaking. Although my first book was called Non-Manipulative Selling and my whole expertise was in the field of selling. There was one chapter in that book that was built around four basic behavioral types. We called it director, thinker, relater, and socializer. I would have people say, “We want you to come and speak on Non-Manipulative Selling, but we want you to focus on this one chapter.”

After a while, people were not saying, “Come speak on Non-Manipulative Selling.” They were saying, “Come speak on this one chapter.” Because I was speaking so much on that, I created a concept called the Platinum Rule, which is a twist on the Golden Rule. Platinum Rule is, “Do unto others as they would have you do unto them.” I created an assessment, it was a paper-based assessment. I used that paper-based assessment with clients all the way through 1996. It’s when my The Platinum Rule book came out and that’s when I decided to put the paper-based assessment online. In 1996, online was still relatively new. I had this free online assessment called The Platinum Rule. I was having 10,000 people a month take the online assessment.

It won all kinds of awards. After four years of thousands upon thousands of people every month taking it, I’ve got the blinding flash of obvious and that was, “Maybe this could be a business.” In 2000, I was still a very active, full-time speaker in 1999. I remember that because in ’99, I did paid speeches all over the world and I was burning out a bit from all the travel. I said, “I’m going to spin off my entire speaking business, all my employees, the office, into its own business,” which is called SpeakersOffice, SpeakersOffice.com. I gave that business to my key employee who had been with me for seventeen years at the time and decided to focus primarily on building this assessment company.

I lucked out in that my first online assessment client was Ken Blanchard. That was lucky. That business grew and as that grew. I cut back in my speaking as the revenue from the assessments grew. Here we are now, and my assessment business generates more revenue than I ever made in my best year of speaking. Now, I never have to speak. I do speak but I speak much more judiciously. A speech in Paris? Yes, I’ll do it. I accept speeches by saying to my wife, “I’ve got an opportunity to give a speech in XYZ,” she says, “No, I’m not interested in going,” then I say, “Sue, I have a possibility of giving a speech in Paris.” She said, “Yes.” She actually determines what speeches I accept or not. My focus now is on the assessment business. I love the business. It’s great.

I wrote my doctoral dissertation on emotional intelligence and its impact on sales performance. I worked as a doctoral chair, so I worked with a lot of people telling them the same thing that they told you, “Just get through this.” You can research anything, you just got to learn how to get through this process. Having a PhD in business has helped me understand a lot of this personality assessment business and it fascinates me with what you’ve done.

I worked for the Ken Blanchard School of Business. I was going on check mark as you were talking because we have so much in common. I’m trying to create a curiosity assessment and I use some of your assessments. I’m linked to your site with the DISC and the EIQ, which are great. Thank you for hooking me up with that. What do you know about the development of the EIQ? I studied the EQI, which was BarOns. I know that Goleman and the Hay Group have theirs. The MSCEIT is Mayer-Salovey-Caruso and Bradberry’s got his Emotional Intelligence Appraisal and all that. I don’t have a lot of familiarity with the EIQ.

The EIQ was developed in conjunction with Robert Jerus. He’s written books on it and we decided to take his version of it. What you’re using right now is a self-assessment. We are getting ready to make what’s called the 360 Degree Assessment where people take it, they answer the questions, but then they send the link out to any number of other people, whether it might be friends, family or people in the work environment. They answer the same questions as they see this person’s emotional behavior. You get to see how you rated yourself on all these various scales of emotional intelligence and how other people perceive how well you are when it comes to emotional intelligence. The 360 element is going to be a real good upgrade to that assessment.

I remember when I got certified for EQI, they talked about a lot of that. Self-assessment can be challenging because we don’t know how others see us and we’re looking at it from a limited perspective. I still think they’re important to have as a baseline, so you can know which way to go, where you are. If you can get other input like that, that’s a great addition. So much of what you do is important. I often cite you on The Platinum Rule because I have many students that don’t see things from other people’s perspectives. They’re only doing things from their own perspective and that that’s a real problem, not just in sales but in general in the workplace. That’s why we have such a problem with soft skills because we’re not learning that stuff. Do you think that they should be teaching that stuff through assessments in the workplace? Through higher education in high school? Where are we missing this?

It should go all the way down to the grade school level. There was such an emphasis put on the three R’s, which they call reading, writing, and arithmetic. The fourth R, which is crucially important is relationships and they don’t teach relationship skills, emotional intelligence, effective listening, the basic people skills. When people get out of either high school or college, this is something that many in the corporate environment say that new employees are lacking in, their relationship skills. I believe it should be taught in the early grades.

One of our partners, they took the DISC assessment and edited it into something called DISCovering Me and You and it is aimed at the elementary, middle school, and high school market, so they have different versions. They even did one where instead of using the DISC terminology, they are using four birds. For the D, they’re using an eagle. For the I, they’re using a parrot. For the S, they’re using a dove and for the C, they were using an owl. One of our big major distributors is Merrick Rosenberg from Take Flight Learning and they used birds and they partnered with our partner in New Zealand who’s doing this elementary, high school teaching of these relationship skills and relationship strategies. It’s something that is going to take hold and the sooner the better.

I wrote a book called It’s Not You It’s Your Personality and I covered a lot of these personality assessments in there. One of them I talked about was management by strengths, which we had to use in one of my organizations, which was one of the color tests. They put our assessment results on our cubicles so that we knew how to interrelate. What do you think about doing that?

I know of a handful of companies that do it. They may have things like a block. The block has four colors around the sides, red, yellow, green, and blue. You’re not the same style in terms of adaptability. You’re not the same style every single day. Me, my dominant pattern is a D, but I have almost an equally strong I pattern, so I’m D-I. On days where I’m under pressure, the typical days used to be the day before I leave for an extended speaking trip or the day I get back when I have a lot of things to catch up on, particularly mail, or if I have a deadline on a project, I’m very likely to be in my D pattern. On other days where there is not as much pressure and I don’t have much for the day, I might slip into my I pattern.

I have a buddy who calls me. This guy is good when it comes to adaptability. Adaptability is your ability to change your approach or your strategy depending on the situation and the person you’re dealing with. This guy, he’s a chameleon. When he calls me, I can see it on my caller ID that it’s him. If I’m in my D mode knowing it’s him and knowing how close we are, I’ll hit answer and I’ll say, “What do you want?” He’ll know I’m in my D mode and he’ll say something like, “Tony, one thing,” and he’ll say it and that’s it. The call is over. Some days, I’m in a more high-playful mode and I might answer it, “Tony’s Pizzeria, what kind of toppings do you want?” He knows to schmooze a little with me or telling me why he’s calling.

What’s your Myers-Briggs type? Do you remember what that one is by chance?

I honestly don’t. That’s one of the issues with Myers-Briggs. It’s a great assessment. Here’s the difference. It breaks down your style into sixteen different patterns instead of four, and it’s four letters. How do you remember all sixteen combinations and all the letters? You have the Myers-Briggs concept and then you have two other concepts that still today is very popular. DISC, which is arguably the most successful and most widely used assessment in the world, and Social Styles, both of them four style models. What they did is they simply took the sixteen patterns and simplified it into four. If you go back to Carl Jung, he only had four patterns. It is good, there’s no question but it is a bit more difficult to remember and use.

TTL 211 | Tax Free Wealth
Tax Free Wealth: Adaptability is your ability to change your approach or your strategy depending on the situation and the person you’re dealing with.

I’ve used everything from StrengthsFinders to all these courses at one time or another, and that’s what led to my interest in wanting to measure curiosity, which is very challenging. Since I’ve spoken to you last, a lot more challenging than I anticipated. A lot of people in our audience are speakers, authors, and people that might be interested in creating assessments. You’ve created some from scratch, haven’t you? Do you need to have somebody who can look at your questions to make sure those are good questions?

One thing I found was hard with curiosity was to get factors that totally were separate, that only measured this or only measured that. A lot of things with curiosity overlap. For example, if you have fear, you might have fear of technology. Technology and fear can overlap. Do you find that part challenging, and do you think we need to have statistically valid and reliable type of things? Do you think you can do something more? If you look at Sally Hogshead or some of them out there that create things that are talking about fascination or to be able to fascinate or whatever like that, what do you think on that?

It depends on what the purpose of the assessment is. Let’s go back to magazines that used to have, “Are you charismatic?” They have twelve questions and then they give you a score. “Have you prepared for retirement?” or whatever. You have something as simple as that, which is just entertainment. There are assessments that you can put out and use in the corporate world that have what’s called face validity. It seems and looks logical but not validated from a purely statistical, psychometric point of view. If you are making any kinds of decisions, there are assessments out there that can be used in the hiring process, in the job placement process, and even in personal development. The Leadership 360, for instance, which may impact people’s perceptions of a leader.

You want to make sure that those are statistically valid. What I tell people when they want to create a classic 360 or what we might call multi-rater assessment is first of all, make sure you clearly identify the competencies and the skills that you want to measure. Hopefully, you have clearly identified separate competencies. A competency can be decision-making. It could be listening, it could be counseling skills, who knows, different competencies. Each competency should be measured typically, but there are exceptions here from between five and eight questions. Those five to eight questions should measure each of those competencies to as good a degree as possible. Once you have your competencies and once you have your questions, you go out and you want to get it validated.

You want to get somebody preferably who is a PhD, preferably who is into psychometrics and statistics. They would say, “Based on the number of competencies and questions that you have, we need to have X number of people take this assessment. Once we get the data in, then we can do this statistical analysis and determine how valid it is.” Valid being does it in fact measure what you say it’s going to measure?

If you’re dealing let’s say with the government, they want to make sure that you have the adverse impact. Adverse impact simply means do the results discriminate against any protected group? Typically, an adverse impact, you’re trying to make sure that there’s no gender discrimination, so the results are relatively the same for male and female. There’s no generational or age discrimination. There is no discrimination against military or disabilities and no racial discrimination. Those are some of the major categories that the government to make sure that it’s not discriminating against protected groups. There’s a lot that goes into it. It just depends on how deep and how valid you want this.

How do you want to use this assessment? Some people just like to use the assessment to gather data that they will use either in their speeches and radio interviews. There, you might use a relatively inexpensive assessment platform, like a SurveyMonkey or AssessmentGenerator.com. If you want to have more sophisticated assessments where you’re selling it to people, where you have a whole bunch of companies beneath you that you’re servicing or resellers, coaches, independent coaches and trainers, you want eCommerce-enabled and you want sophisticated, dynamically-generated reports. Dynamically-generated report is one that the content, the wording of the report changes depending on how a person scores. If you want to get that sophisticated, then you would come to a company like me. There are companies out there that specifically deal with helping you come up with your competencies, your questions, and your validation.

One that I’ve run across is a company called HumRRO. They specialize in creating your assessments for you. If there are speakers and authors in our audience, many of them may have a book or a speech and they might want to turn it into an assessment on a simple scale that gives them data that they can use in their speeches or they want to use it as a lead generation tool. There are some people that say, “Here’s an assessment, take it for free,” and they just want to generate leads. You have to look at what your end goals are. If you want it to be a money-making venture and you want to have a lot of resellers and companies that you manage, then you will need a more sophisticated assessment dashboard or platform as opposed to something like a SurveyMonkey. Those are the things that people should keep in mind.

That’s all helpful because a lot of people could learn more about that. You’ve got so much information on your site. I hope everybody goes to your site because not only do you have all that, I was noticing the LTDS Bundle. You had our friend, Ford Saeks, Gerhard Gschwandtner, Deb Calvert, others who had been on my show, on giving some great talks that you offer. You offer all kinds of stuff. Can you share your site, so people could find out more? They would love to connect with you.

Go to www.Assessments24X7.com.

This has been so much fun. Thank you, Tony. This has been helpful to me and I’m sure to everybody else.

My pleasure. Thank you for having me as a guest. I enjoyed it.

I did too. You’re welcome.

Tax Free Wealth with Tom Wheelwright

I am here with Tom Wheelwright who is a CPA, Founder and CEO of WealthAbility and bestselling author of Tax Free Wealth. Wheelwright is a leading wealth and tax expert, global speaker, and entrepreneur. He’s best known for making taxes fun, easy, and understandable and specializes in helping entrepreneurs and investors build wealth through practical and strategic ways that permanently reduce taxes. As a Rich Dad Investor to Robert Kiyosaki, he frequently speaks at conferences worldwide to entrepreneurs on these topics. His work has been featured in The Wall Street Journal, Washington Post, Forbes, Accounting Today, the list goes on and on. It’s so nice to have you here, Tom.

It’s so nice to be with you, Diane. It’s absolutely my pleasure.

We’re in the same town. You’re in Arizona, right?

Yes, absolutely.

I’ve got a lot of the Rich Dad people on my show. They do a lot of work here in Arizona but you are definitely all over the world with this stuff. I’m interested in what you’re doing because I have a lot my audience who probably feels like I do, the taxes are so confusing. I’d like to start with your background so people know how you got into this and how you got involved with the whole Rich Dad Poor Dad, Robert, his whole group.

It is a whole group. It’s a pretty fun group that we have. There are about ten of us that are close with Robert and Kim and they’re terrific. I grew up in Salt Lake City, Utah. I went to the University of Utah. I got my undergraduate Bachelor of Arts in Accounting there. I then went to the University of Texas, got my Masters of Tax there. I spent my first seven years with Ernst and Young, including three years back in the National Tax Office. That was back when we had our last big tax reform in 1986. I was pretty much baptized by fire into tax reform. I was three years out of school when that happened, but that’s’ a very fascinating process. The differences between these two tax reforms have been amazing. I spent four years as an in-house tax advisor for a Fortune 500 company. I spent fourteen years as an adjunct professor in a Masters of Tax program at Arizona State University. I’ve been building my own practice and we have clients literally in 30 countries and 50 states, six continents. It’s been a blast.

I do a lot of speaking with Robert. For example, we head to South Africa. We head to Australia. Last we were in Brazil and Singapore. Taxes are pretty much the same all over the world and they’re simple. All people have to recognize is that the tax law is fundamentally a series of incentives. That’s all it is. There’s one line, this is all income taxable unless we say it isn’t. There’s another that says, “No expenses are deductible unless we say they are.” There are charts and tables for how much tax to pay, but that’s only about 30 out of the 6,000 pages of tax law. We like to think of it as a roadmap to reducing your taxes.

You make it sound very simple and they’re trying to make it simpler as I understand. What will that do to CPAs?

It’s not gotten any simpler with this new tax law. It’s gotten a lot more complex for a lot of people. It won’t affect CPA’s because we don’t deal with the people that got simplified. Some people did. The people who have been using H&R Block or TurboTax, H&R Block’s going to take a hit from this new tax law because a lot of people don’t have itemized deductions anymore. They’re standard exemption. Their standard deduction is enough and they’ve got their standard deduction and their child credits. That’s pretty much all they’ve got. It’s a very large portion of the United States. It has simplified it for a lot of people.

I’m curious about the biggest changes that we saw, and we hear a lot about how it’s going to affect what you could write off for your housing and certain deductions are for people that hit a certain limit. I have a lot of people here who probably have expensive homes who read, and they might be concerned about certain changes. Can you go over some of the biggest changes and the questions that people have?

Let’s start with your homeowners. If you already own your home, there’s no change. They didn’t change the rules in the middle of the game like they did back in 1986. If you’re buying a new home, instead of being able to deduct up to $1.1 million, it used to be $1.1 million of mortgage that you could take the interest deduction, now it’s only $750,000. That doesn’t affect a lot of people, it does where you live. It does in Paradise Valley, that would be every single person in Paradise Valley, or in Northern California or a lot of LA, Southern California. For most people outside of the Coast and Paradise Valley, it’s not going to have that impact.

The other one that the people know about is the state taxes that are no longer deductible. Real estate taxes, state income tax. In Arizona, that will affect very few people because Arizona has a low tax rate, we’re 3.5%. It affects a place California where their tax rate goes as high as 13%. They’re absolutely affected but the argument is, “Change your tax structure if you want to do something about that.” Move to Arizona or move to Nevada where there’s no tax at all. Those are a couple big ones. The average employee got some benefit in the tax rate’s going down and the child tax credit going up, but they didn’t get the big incentives. The big incentives went to business owners and investors and there are some absolutely amazing incentives here. If you ever wanted to be a real estate investor, now is the time from a tax standpoint. If you ever wanted to own a business, now is the time from a tax standpoint because the benefits from this new law are simply amazing.

Can you list a couple of the best ones?

For example, let’s say that you go buy an investment property and you spent $20,000 of your money and $80,000 of the bank’s money. It’s $100,000 investment property, you put in $20,000, the bank put in $80,000. The very first year, you’re going to get a deduction up to $30,000, more than what you put in. That’s completely new. That’s the bonus depreciation rule. Another one, if you’re a business owner, instead of paying tax on 100% of your income, you’re now going to pay tax on 80% of your income. You’re only paying tax on 80% of the money you make.

My husband’s a plastic surgeon and so he owns his own business. How would that affect him?

There are certain industries that didn’t do very good lobbying. One of them is the healthcare industry and another is the accounting industry. A third one would be the legal industry. The architectural industry and the engineering industry did a good job lobbying because they got themselves excepted out of this rule that says that if you render professional services, even if it’s an athlete or a performer, you don’t get this deduction unless as a single person your income is under $157,500 or married, you’re under $315,000. It’s an interesting one for you because it might include you. The question is do you get the 20% deduction? That would be an interesting one, you ought to bring up with your tax advisor.

What I love about the tax side is there’s an option to be creative because if you think about it you go, “We only get it if your income is on $315,000.” I don’t want to reduce the amount of money I make. However, if I reduce the amount of money that’s taxed below $315,000, I get the deduction. You start thinking about, “What could your husband do?” He had to be looking at a pension plan at this point. He had to be looking at max amount of pension plans because that can help bring his income down, his taxable income down to $315,000. Anything that you can do to bring that taxable income down and it maybe you never thought about investing in real estate. For example, a big new deduction is cars. It used to be we’ve got very small deductions for cars. I had been deducting my car for a long time. I get $2,000 a year. I bought a new SUV and because I use it 100% for business, it’s a $60,000 vehicle, I will get a $60,000 deduction.

It only applies to trucks and SUVs, but even cars went from a deduction of $3,000 a year, for the very first year you get an $18,000 deduction on the car. $16,000 the second year, $10,000 third year. The cars are a big deal. Most small business owners, they don’t get much because they don’t have a home office. What happens is that the first trip of the day is a commute. The first trip you take is a commute, but if you have a home office, your commute is 30 feet. That means that that turns much more of your car into a business deduction, it probably doubles your business deduction for your car. Every place I go during the day as a business owner, I’m getting a deduction because my commute is 30 feet to my home office. When I come back at night, I go to my home office, I work and then I commute 30 feet to the kitchen. This is sanctioned by the IRS. Now you’ve got the opportunity to go out and buy that new SUV that you always wanted, the $80,000 SUV and deduct it.

That’s only if you buy it. What if you lease it?

If you lease it, you get to deduct the lease payment. It is definitely an encouragement to buy the cars. Under the old law, leasing and buying gave you about the same deduction. Under the new law, buying gives you a much better deduction.

Do you have to buy it this year or could you have bought it in the past and get any benefit from it?

If you bought it after September 27th, 2017, you get the benefits. That was the date.

You’re such an expert on some other areas. I want to make sure I get into those because you’re a long-term wealth strategist. A lot of people want to know about the importance of stock, how to handle these stock market fluctuations, and how to build long-term wealth. Can we get into some of the things that you write about and talk about because that could be very helpful here? What are the top topics you deal with?

The two biggest fears people have about money is, “I’m not in control of my money? What happens when the stock market crashes?” The other is, “What happens if I get an IRS audit?” Those are the two things that I hear all the time. These are the big fears and you can control both of those. On an IRS audit, you just never talk to the IRS. You make sure you have a good tax advisor who handles that and then you can sleep at night. That’s an easy way. You reduce your risk of having an audit in the first place and you don’t have to worry about it. You don’t have to get all upset about it because you’re not going to ever talk to the IRS at all.

We do have to look for all our receipts at that point.

You know what you do. You’re going to give those to your accountant. You’re not going to give those to the IRS. Your accountant’s going to decide what they give to the IRS. We’re very careful about what we do and what we don’t give to the IRS. We don’t just give them a blank check. On the investment side, at WealthAbility, we’re a big believer that you ought to be in control of your money. The big Wall Street lie is that Wall Street is smarter than you are and so you should turn your money over to them. I don’t believe that for a second. Nobody cares more about your money than you do. You are best suited for investing that money. If you have a good long-term plan of action, anybody can get good at investing. It’s not rocket science. Anybody can be good at investing, but it takes education, it takes some time, and it takes a plan.

You have to sit down with somebody that’s not going to make money based on how you invest your money. The challenge with financial planners that I have is they make money if you give them your money to invest. They have an incentive to say, “Put your money in the stock market, put your money over here, put your money over there.” Whereas if you work with a professional who’s basically charging you by the hour or charging you a fee for putting this plan together, what happens is you can put together a plan that’s exact for you.

For example, Robert Kiyosaki loves real estate. Andy Tanner, another one of his advisors, he loves the stock market. I don’t like either of them. I love business. I’m going to invest in business. That’s where my investments are going to go. I’m not a professional real estate investor, I’m not a professional stock investor, so I invest in business. It’s different for every person and it’s creating what we call a strategy, a plan of action to accomplish your goals. It’s doing that and getting really good at knowing exactly what you’re investing in. That’s what makes a successful investor. It takes all the stress out of it.

If you could read a 6,000-page plan, you probably have no problem reading off of it. How do you advise somebody to get good at this if they hate to read 6,000 pages?

TTL 211 | Tax Free Wealth
Tax-Free Wealth: How to Build Massive Wealth by Permanently Lowering Your Taxes (Rich Dad Advisors)

That’s where the team comes. One of the best things about being a Rich Dad Advisor is I get to be part of this great team. I have Ken McElroy, who’s an expert in real estate. Andy Tanner, who’s an expert in stock market. I’ve got Garrett Sutton, who’s an expert in law. I don’t have to learn. I don’t have to read the 6,000 pages of law that Garrett deals with. I don’t have to learn all the ins and outs of what Andy does or what Kenny does.

What I have to learn is the basics, the real simple stuff. You still have to learn tax. That’s why I wrote Tax Free Wealth, it’s a very easy book to read. Somebody told me the other day, they thought it was a great beach read. That’s pretty nerdy, that you think a tax book is a great beach read, but nevertheless it’s intended to be simple. All you have to understand is what changes do you need to make in order to reduce your taxes or make money, you don’t have to understand all of the nitty-gritty details.

You deal with all this. I have so many people that are questioning whether they put the money in the stock market. You’re talking about buying, investing in real estate or investing in different aspects. If you decide to go into the stock market, is that a good way to get long-term wealth? Are you saying you need to go someplace else?

You need to know what you’re doing. You need the education. Can people make a lot of money in the stock market who know what they’re doing? Sure. Look at George Soros. He’s made billions in the stock market. Can people make a lot of money in business? Look at Warren Buffet, he’s made billions of dollars investing in business. People like him make bunch of money in real estate. Look at our President; he’s made billions of dollars investing in real estate. Wherever you want to go, it doesn’t really matter. The actual asset class of the investment doesn’t matter. What matters is how good of an investor are you? People lose a lot of money in those areas too. People lose a lot of money in stock market, they lose a lot of money in business, and they lose a lot of money in real estate. It’s more about you than it is about the investment.

You’re the author of Tax Free Wealth. Can we get to be tax free?

You can if you do this right. The more money you make, the less tax you pay. The more assets you have, the less tax you’ll pay because all you have to realize is that the government has put these incentives in the tax law. We’re partnering with the government. We’re doing what the government wants us to do. If we do what the government wants us to do, we’ll pay lower taxes. We’re just following their instructions. The other thing that’s interesting though is when we do what the government wants us to do, we actually make more money.

I’ll give you an example. I had a client and they were selling their real estate project and they’re going to have millions of dollars in tax. I said, “If we do a 1031 exchange,” a lot of people are familiar with those, buying another property, “then you won’t have to pay the tax.” They said, “The market’s hot right now. We don’t know that we want to do that.” I said, “You’re talking about millions of dollars in tax.” They said, “We’ll try this.” They had 45 days to find a property. I said, “You try.” They found a great property. They would never have found the property had they not wanted the tax benefits because they wouldn’t have had the incentive to do it. In their minds, the market was too hot, there weren’t good properties. They found a great property because they were forced to do that in order to reduce their taxes.

I don’t think a lot of people understand the 1031 exchange, the limits on it in terms of the days and all that. They think that they have to do something, but they don’t know exactly what. Is that something that you cover in your book at all?

We talk about it in the book and that’s something that a good real estate tax advisor is going to understand. You want to sit down with a professional advisor on that because it’s strict, but there’s something that nobody ever talks about and that is that you can buy the new property before you sell your old property. You can do it in reverse and then you have all the time in the world. What happens is people get frustrated because, “I only have 45 days to find this property,” which is true or, “I only have 180 days to close on it. It’s only six months.” Sometimes that’s not very long. What if you found the property before you sold your property? Now, you don’t have all that stress and you can find a good property. You could quote on the new property before you sell the old property.

You have to be able to afford two properties at the same time.

You get the bank to finance it, you get people to finance it, but my point is that these are just opportunities and it’s a matter of having the right team members. You do have to have a good tax advisor. Your tax advisor will probably have a bigger impact on your financial situation than anybody other than your spouse in your entire life. Taxes are up to 40% to 50% of our income, so it’s a huge impact. You’ve got to understand the basics, but you have to have a tax advisor who understands the details.

A lot of people, boomers maybe, in our audience and there’s a point you’re going to get to 70. You have to take your social security, no matter what.

Your IRA and your 401(k) plan.

You get to this point and you’ve got to pay taxes on all that. A lot of people want to keep working. Do you run into that a lot where they’re like, “I have to pay all these taxes for this?”

For sure, and frankly that’s why I’m not a big fan of those kinds of plans. I’m not a big fan of IRAs and 401(k)s and pension plans because you eventually have to pay and then you don’t have a choice. You may be paying at a really high rate when that happens. If you don’t take the money out when you start taking out, you get a big penalty for not taking it out. It’s a terrible system because you can’t take it out until you’re 60, and you have to take it out when you’re 70. You have ten years where you’ve got some options, that’s it. Whereas if you look at the tax law, very little of it is about IRAs and 401(k)s.

Most of the tax benefits are permanent and you never have to worry about paying back the IRS. You don’t have to worry about picking up the income. If you have real estate, as an example that Robert talks about all the time, you end up never paying the tax if you do it right. You can do that in the stock market because you could have a Roth 401(k) or a Roth IRA, then your income’s never taxable. There are ways to do it. My point is in Tax Free Wealth, we talk about permanent tax benefits. We emphasize that because 90% of the tax benefits are permanent and it’s that people emphasize temporary tax benefits like IRAs and 401(k)s so much because it’s an easy answer.

You’re not going to need as much money when you retire and I’m going, “I don’t know about you Diane, but when I retire I’m going to need more money because I want to be traveling first class. I want to be playing the best golf courses.” I don’t want less money when I retire, but I know I’m going to be in a higher tax bracket when I retire than I am when I’m working. Why would I push income into a higher tax bracket?

TTL 211 | Tax Free Wealth
Tax Free Wealth: You ought to be in control of your money. Nobody cares more about your money than you do.

Can people hire you to do all these things or do you just do the speaking? What is WealthAbility?

We have a network called the Tax-Free Wealth Network, a network of CPAs who handle clients all over the world. You can get a CPA. You just go to WealthAbility.com or you can call us 480-565-8000. Go to WealthAbility.com and you can talk to one of our consultants and they will help you find a CPA who understands all of this. What I do for a living is I train. I train from the stage or I train professionals. A lot of my time is spent training our professionals.

This has been great. I’ve learned a lot. I have a real estate license and knows a lot of the things that you’re talking about, but it’s interesting to hear some of the stuff that even I didn’t deal with, as far as 1031 exchanges. It’s been years since I’ve dealt with that but all that stuff is fascinating to me to hear what they’ve done in terms of changes with the codes and everything else now. I appreciate all the great information, Tom. Thank you so much for being on the show.

Thanks for having me, Diane.

You’re welcome. Thank you to Tony and to Tom. What a great show. Please join us for the next episode of Take the Lead Radio.

About Dr. Tony Alessandra

TTL 211 | Tax Free WealthDr. Tony Alessandra was voted the #1 World’s Top Communication Guru, a legend of the speaking profession, and an NSA Hall of Fame Speaker who delivers lectures in a comedy store format. He is the CEO of Assessments 24×7 and prolific bestselling author of 30 books translated into more than 50 foreign language editions, including the newly revised, best-selling The NEW Art of Managing People; Charisma; The Platinum Rule; Collaborative Selling; and Communicating at Work.

About Tom Wheelwright

TTL 211 | Tax Free WealthTom Wheelwright is a CPA, Founder and CEO of WealthAbility and Best-Selling Author of Tax-Free Wealth. Wheelwright is a leading wealth and tax expert, global speaker, and entrepreneur. Tom is best known for making taxes fun, easy and understandable, and specializes in helping entrepreneurs and investors build wealth through practical and strategic ways that permanently reduce taxes. As a Rich Dad Advisor to Robert Kiyosaki (Rich Dad Poor Dad), Tom frequently speaks at conferences worldwide to entrepreneurs on these topics. His work has been featured in The Wall Street Journal, Washington Post, Forbes, Accounting Today, Investor’s Business Daily, FOX & Friends, ABC News Radio, NPR, Marketplace and many more media.

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