Ep 192: The Holistic Wealth Strategy with Dave Wolcott

You have to understand how it works in order to leverage it right? So putting all of these pieces in, you can create an infrastructure around your wealth. And then you also want to build a dream team around you of different advisors that can support you.

Welcome to the Next Level Income show, where it's our goal to take your income, your investments, and your life to the next level. I'm your host, Chris Larson. If you haven't yet, get a copy of our book for free at our website, nextlevelincome.com. that's www.nextlevelincome.com. just click on the book link and I'll even send you a copy if you put your address in. On today's show, we have Dave Wolcott. Dave started his career by serving the country as a captain in the Marine Corps. In 2000, he and his wife brought triplets into the world, which inspired him to challenge traditional financial planning advice. Today, Dave is an author, podcast host, and the founder and CEO of Pantheon Investments and is more passionate than ever about helping entrepreneurs build wealth by passively investing in superior real estate and alternative assets that provide predictable cash flow, tax efficiency, as well as upside potential as a reliable alternative to volatility of the stock market. Join us and check out Dave's story today. Dave, great to see you. Welcome to the show.

Hey, Chris. Grateful to be here to connect with you and your audience.

Yeah, I'm really excited to have a conversation with you today because we're going to, we're going to talk about a lot of different things, but we're going to really talk about, you know, like our shared investing philosophies. And you've even written a book on it. So we're going to get into that as well. And I shared a little bit in the intro with the audience about your background, Dave, but maybe you could share a little bit more about that as well.

Yeah, absolutely, Chris. So probably like a lot of the audience out there, I was raised in a middle class family. I was taught that the recipe for success was to go to school, get good grades, you're going to get a job, and that would equal success. Right. So I followed down that path, went to school at George Washington University in D.C. and then had the opportunity to serve my country in the Marine Corps. So I did the ROTC program and had a phenomenal time in the Marines. Spent four years traveling the world being combat tested in the first Desert Storm and then also Somalia when all that happened. And I learned some things, Chris, that they don't really teach you anywhere else in the world, things such as teamwork, leadership, integrity. And then after the Marine Corps, I transitioned into the tech industry. And, you know, that was kind of an exciting transition, exciting time. And you know, once I got there, I just, I just really struggled because I lost that sense of purpose, that sense of mission. Right. Once I got into corporate America. And then at the same time, my wife and I had an 18 month old running around. And then on October 24, 2000, we literally won the baby lottery and had triplets. So.

Wow.

Quadrupled the size of my family overnight. And the first thing I did, Chris, was, you know, I was just thinking to myself, I mean, how am I going to provide for financial security, you know, for my family? I mean, I just felt like, you know, this was everything to me. And now you just took the gold post and moved it like completely a mile down the field.

Yeah.

So I want my financial planner. And you know, he told me the same thing as all of them do, which was, you know, just max out your 401k. You've got kids, you can. They got these things called 529 plans, you know, that you can optimize your state taxes and you know, do things like dollar cost averaging and bring your taxes and things like that. So it was right at that point, Chris, that I just, I got so frustrated with that advice and, and I. The, you know, real ultra wealthy weren't building their wealth as retail investors in the stock market. So it kind of launched me on this, you know, completely obsessive quest to figure out how the 1% are truly building their wealth. And so subsequent to that, I spent the next 20 years and in all kinds of alternative asset classes, everything from single family rentals to multifamily to retail to raw land to oil and gas, lots of different asset classes and learning different strategies of the ultra wealthy. And you know, fast forward to today and really, you know, we're on a, you know, purpose driven mission to change the way people think about money so that they can create more freedom in their lives. Not only freedom of money, but also freedom of purpose, freedom of time and freedom of relationships.

Yeah, I love that. I absolutely love that. You know, it's interesting, you know, if I may kind of go back, you know, you talked about, you know, know, when you, when you left the Marines and moved into corporate America, you know, losing that, that, you know, that purpose, you know, that purpose. And you know, I think it's, you know, you, you've gone from the military to the corporate world and then ultimately to you know, the world of an entrepreneur and financial freedom. I think, you know, something that isn't talked about that often, Dave, is, you know, when people reach financial freedom, it's not the numbers that, that's the hardest part. It's, it's trying to reshape how you think about yourself, you know, how you're relevant in the world and you, maybe you could share a little bit, you know, a little bit about that. Obviously, we're both, we're both fathers, so, you know, we have that, that purpose that we have. But, you know, you've, you've recreated this and taken, you know, your company as, as we've tried to do here as well and, and try to have a bigger impact.

Yeah, for sure. Chris. I, you know, I mean, my. One of my biggest insights was, and again, keep in mind, this is back in 2000, rich dad, poor dad had just come out.

Yeah.

But when I read Cash Flow Quadrant and I saw that, hey, you've got to be a business owner and you've got to be an investor on the right hand side of the quadrant. This is the strategy that you got to set up. Now, there certainly wasn't a playbook to, you know, how to do that, but, you know, that, that really planted the seed for me to know that I have to be kind of positioned there. And most entrepreneurs start their first business by things of what they know. They know a certain industry, they have different rel. You know, current relationships. And then you try to, you know, transfer that into your existing business. Um, built several businesses. I built a tech consulting business I ran for 15 years. Made a complete exit with that. But what's, you know, truly been really exciting, Chris, and to your point is, you know, just changing the way you think and really creating, you know, the ultimate business around, you know, around my purpose, you know, and what that is, how can I help other people? Right. This is all built on trying to help other people, you know, learn mistakes that I made, you know, over 20 years of investing. Because, you know, frankly, you know, we're not taught financial education anywhere. And not 5% of the education is coming from Wall street and financial advisors that are really trying to sell you a portfolio of goods. So I've had to look under, you know, rocks, you know, reading tons of books, meeting some amazing people and really trying to study that and then package that in way that can create value for people. And I think a concise way to, to deliver that value is, is trying to eliminate people's top dangers in their life, seize the top opportunities that they have and then let them do that in a way that maximizes their unique ability.

I love that. I love that. And you're right. I was just on a podcast actually earlier today, and we're talk, we're talking about specifically financial literacy for kids. Kids. But I pointed out that I got a degree on my wall that says I have an MBA in finance, specifically portfolio management. And even that really did not teach you how to be financially successful as an individual. You learn things like modern portfolio theory and what the sharp ratio is and derivatives and all of these different things that are tools in the financial world. But I know you and I have an affinity for, you know, infinite banking or, you know, specifically utilizing, you know, specific type of life insurance contract. And you've actually, and I also like that you also think in frameworks like I do, and you've actually put together a framework in your book that walks investors, walks individuals through the steps that they can use to become financially successful. So I'd love for you to kind of get into that. Maybe we can walk through those steps today on the show.

Yeah, absolutely, Chris. So really it all starts with a vision, because if you don't have a target, you're going to miss every time, right? And you know, sadly, in this day and age, we're all being bombarded by information everywhere and being reactive in life, but, you know, if you can just step away, you know, with your spouse and go, you know, somewhere in nature and spend some deep thinking time, really hone in on your vision and, and create a vision statement for yourself. I mean, we all do them for companies, but, you know, when's the last time you did one for yourself? Right? So, so getting crystal clear clarity on your vision statement is so powerful because that's what's going to get you to bust through doors. It's going to get you to, you know, become resilient, to become resourceful and those things. So we really start everything with a vision statement and then we move into phase one, which is really, it's all about you, Chris. Right? Because this, it starts with your mindset and investing in yourself, changing the paradigm to invest yourself as the number one greatest asset. So anytime I invest in my health, my education, my relationships, my family, my business, all of these things, I get a bigger return than I could ever get on any other type of investment, right? So, so invest in yourself and then focusing on having a growth mindset versus a, versus a fixed mindset where you're always asking questions and you're seeking, you know, more information and always learning.

I think that's a great point. And you know, you brought up Robert Kiyosaki and Rich Dad, Poor dad and great book from a philosophy perspective. But he really doesn't go into like, what do you actually do? I'll never forget that. I was like, okay, now you got to go kind of figure it out for yourself. And that's kind of the magic of the book and also the brand. And he's obviously written many, many books after that. We're big proponents here as well of having that vision of what you want and using it, being able to use it as a filter. So when you have those big life decisions, for example, I had the opportunity to move into a VP role with the company and I pulled out my vision and I was like, you know what? This is my ego that's excited about this. It had nothing to do with what was in my vision, what I wanted for my family. It can be very clarifying. So if you're listening to, you don't have a vision statement like Dave said, highly encourage you to put that together and do that. But I want to touch on Robert Kiyosaki again. Dave, one of the things that he said is don't take a job for what it'll pay you. Take a job for what, how much more valuable it will make you. And you said that that's, that's another way of investing in yourself. So if you're starting out, if you're coming out of college and you're looking for an entry level job, pick a job that can give you those skill sets. You know, maybe it's a sales skill. Sales jobs are often, you know, not the highest paying jobs as other entry level jobs, but it gives you a skill set that can earn you millions of dollars in multiple different things. As we're all as, as we're all doing. But then taking it to the other end of the spectrum, say you're an investor and you are looking at an investment. Invest the time in researching the operator, but also the strategy and understanding how to read the financials so that you can understand, you know, even not, not just the strategy, but also the inner workings behind that.

Chris, that's a perfect dovetail into phase two of the strategy.

We didn't rehearse this for the record.

Yeah, no, that, that, that's perfectly teed up there. But we, we really have a formula that I think people should think in terms of your net worth. So your net worth should equal your financial IQ, plus your mindset iq, plus your physical capital plus your relationship capital. So when you think of all of those different dimensions, right. You can really expand your wealth. So just think from a relationship standpoint, you could be one relationship away from creating a new business opportunity with someone that 100x is your wealth. Yeah, right.

That's Dave Mylett, his new book. Right. And my life. Sorry, and my life.

Yeah.

Power. One more. It's amazing.

Just one or you, you know, think about it. It also goes in reverse, right. If, you know, like Jim Rohn says, you're the product of the five people that you're in your time with. So if those relationships are taking you away from your vision and away from your goals, right. You're actually going to digress. So that's on the ship side in terms of physical capital, you know, and you and I share this as well. We're just such strong advocates around health, fitness and know it means everything, right? Because you could have, if you have your health, you could have a thousand dreams. But if you don't have your health, they have one, right? So in always investing in your health will definitely bring, you know, 10x energy to what your business, your relationships, your life and the things that you're doing. So that's super important. And then, you know, you also talked about, you know, getting smarter, right. On looking, becoming a better investor. So improving your financial iq, understanding your own investor DNA, you know what that looks like, understanding different investment profiles and different things, different asset classes, all of these kinds of things. I mean, this is one example. For instance, one of the funds we do is oil and gas investing, right? And it's 100% tax deductible against your active income, right. A lot of people just don't even realize that. Right. So, you know, improving on your financial IQ can give you massive gains, right. It's why I ended up paying 4% in taxes last year.

So yeah, I love that. And that's, you know, that's the, that's the thing. A lot of people, you know, working with coaching clients over the years, again, I love it. We start with, we start with their vision, their three year vision, but then we move into, when we formulate goals, health is number one. Because like you said, I mean, health affects everything. And not only is that all you're gonna be focused on if you don't have it, but if you have good health, life is an energy game. So if you have more energy to give, you can produce in every area at a much higher level, including the financial arena. But I think a lot of people get excited as they go through Dave and they look at the investments and they're like, oh, what am I getting? What's my return on? My. They skip over things like the legal structure, the, the tax perspective, you know, like what, what are the tax impacts of that investment? Or, you know, I tell people, hey, you're better off if you can save a dollar on your taxes. That's going to be a better return than what you're going to get by putting a dollar into an investment almost every. Unless you're Dave Wolcott, you're only saving 4%.

Right.

So.

Because, well, think about it, right, Chris, Like a thousand bucks of Tesla stock.

Yeah.

Is worth a thousand bucks. Right.

Of stock.

You're only hoping for one thing was it. Which is for it to increase in value.

Yeah.

But the way the ultra wealthy think is to think about everything in multiples, you know, and start to try to play three dimension chess. Right. With all these different perspectives.

Yes. Yeah. And that's where, that's where having an understanding, like you said, of, of who you are as an investor, what your personal financial landscape is and then what your ultimately your financial goals are makes a lot of sense. I do want to talk about how, how do you weave in life insurance and these contracts like we've talked about, because for me, you know, we already jumped ahead to the investments and those sorts of things. You know, for me, the financial base of our pyramid is made up of, of our life insurance policies.

So, Chris, promise everyone, we did not Reinhard re rehearse this, but this is literally phase three, Chris, of the whole.

I was, I was hoping, I was like, I was like, what's the phase three be? Maybe we could, maybe we could figure this out. But it's. We're, we're, we've. Yeah, this is good. We're vibing for sure.

You're unpacking this well.

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So think about it, right? Is we're all always trying to multiply our wealth and grow our wealth. That's what we think about like all the time. That's the exciting part. But you also have to think about protecting your wealth, right? Things like, you know, lawsuits, you know, health issues, all these different things, right. So one thing that's super important and we created an entire phase around this which is creating an infrastructure around your wealth. Right. And one of those things being, you know, using a properly structured whole life insurance policy, which I know your audience is very familiar with. But again, going back to that multiplier example, you know, we love to implement this. And by the way, I mean, you know, all of the ultra high net worth, the family offices that we spend time with, this is a cornerstone to their strategy. They've been doing this for years. Absolutely. And they're past, you know, what is it? What does it mean, how does it work? Right. They've been leveraging it very well. And you get a multiplier. It's not just about the, you know, the return that you're getting on it. It's the access to capital, it's the fact that it's creditor protected in life insurance. It's the fact that you can create a reverse income stream. Right. In later years, it's fact that you can, you know, not outlive your money. Right. Because I'm planning to live to 146, so you know, I need income in some of those later. Right. So setting that up is just so important. And especially as we're talking, right. It's January 2024 and there would be more uncertainty in the world. We've got an election year coming up. So many different geopolitical events out there. So why not create some certainty in your life, right. With predictable cash flow and also having a liquidity strategy. So the ultra wealthy have three years of capital, of liquid capital that they can go through, so they can manage through any cycle. And most of it is positioned in, you know, things like whole life insurance. So, you know, we're a few. Huge fan of this. I've been using this with my wife, I've had it set up with my kids. And I think it's something that most people actually miss their portfolios. Right. But it should be very foundational. No matter what age you're at, it's something to definitely take advantage of.

Yeah. And I know some listeners are probably rolling their eyes because they're like, again, this is, like, coming up. But I'm, Again, I'm a huge proponent of it. We've been doing it for 14 years now, since my. Since we found out my wife was pregnant with our first son. It took me years to figure out how to really optimize these. But, you know, there's. There's a few things and, you know, I could play devil's advocate, Dave. You know, I just heard this here, actually this week, whereas, oh, that's not a great investment. And I think that's. That's one of the. The flaws that a lot of people or I see when, when investors look at this. Life insurance is a tool. You know, if. If we talk about an investment, one thing we don't say is guaranteed, Right. Actually get a guaranteed return in my insurance policies. A guaranteed return. Like you were saying, like that. That's. That's as secure as it gets. One thing that really surprised me when we were doing our estate plan the first time, we sat down with our attorney and he said our net worth out loud, and it was four times what I thought it was. And I was like, what? I was like, what? Where'd you get that? And he pointed to our life insurance policies and he counted those in our net worth. And now most people, I would say, don't count the. The amount of their. Their face value of their policies and their net worth. But the way he was looking at it was as in a. From an estate perspective. And that is one thing, Dave, that I think the ultra wealthy, as you brought up now a couple times, the 1 percenters or even. Even the 0.1 percenters really think differently. They think about their wealth as a multigenerational process. And when I talk to novice investors, I won't forget this conversation. I was talking to an investor. He goes, I discussed this strategy with my investing group, chr, and we all decided it didn't make sense and it really wasn't a great investment. I said, well, let's address those things. I said, but let me ask you something. I said, is anybody in your investing club or group financially independent? He said, no. I said, okay, is anyone in your investing club worth more than seven figures, eight or nine figures? He said, no. I said, you got to get around a different Group of people. I said, you're taking advice from people that you know are not, are not truly rich. And you know, if you're thinking. I said, you know, I said I would actually argue that an investing strategy where you only have term life insurance, where you're not taking care of the next generation or setting your family up for ultimate financial success is a selfish strategy.

Yeah, 100%. And those are really, Chris, some additional layers around this infrastructure component. So again, your audience is familiar with the Infinite banking, but this is the time to also focus on estate planning, asset protection, also having a proactive tax strategy. I fired five CPA firms over the years and growing many businesses. I spent more than I have wanted to on huge amount of taxes until I finally found the right firm that understood my strategy. We built a strategy together which involves so many different dimensions and I also spent time learning how it works. Just like Infinite bank, it's not a product that you just plug in. You have to understand how it works in order to leverage it right. So putting all of these pieces in, you can create an infrastructure around your wealth. And then you also want to build a dream team around you of different advisors that can support you.

I love that. I love that. We got a few more minutes before we wrap up. We're, we're, correct me if I'm wrong, we're three steps into your, into your five step framework. Is that right? Where do we go from here?

So, great question. So, and really in phase four, we talk about asset repositioning because a lot of people will say, okay, you know, maybe I'm tracking here, this kind of makes sense. But I don't know where to start or people don't have liquidity to, you know, go do that first investment, things like that. So what I do is start to actually look at your existing portfolio. And probably about 12 years ago I actually took my 401k and exited it paid the taxes and paid the penalty on, you know, very unpopular type vision. But we've actually built out a whole 401k exit calculator. And it's fascinating, Chris, that you know, with 100k, even with take out the taxes, take out the penalty, you then get a net investable 55k which put them into some of the assets that we're talking about such as multifamily and alternatives and things like that. If you compound that out for 20 years, you can be over 2 million versus if you keep that in at a 7% rate of return as just over 250k and then it's still subject to tax, right?

Yeah. And that doesn't even count the, I mean, and you also have to deal with all the, all the restrictions that you have in a qualified plan. I know one of the masterminds that we, we both participate in. One of the first questions that was asked when we all met was, you know, if you had $100,000 to invest and you put it into a qualified plan and then you didn't pay tax, and then it, it grew for 20 years and then you paid paid tax at the end, 25% at the beginning or 25% at the end. You know, would you have more money if you paid tax in the beginning and invested at the same rate or more money if you didn't pay tax in the beginning, let it grow, and then pay tax at the end? And so many people were surprised that the answer is there's no difference. So the, the thought process is that if you're putting money into a 401k because people are listening to you, Dave, saying, why would you take it out? The thing is, if you have money in a 401k, because I've done the same thing, by the way, if you're listening for the audience, so we're on the same page, but you're making a bet that you're either going to pay less tax in the future because your, your income is going to go down, which I don't love the thought of that, or the second thought is that the government's going to lower tax rates, and mathematically that's impossible. So I would argue if you're putting money into a qualified plan, you're making a bet that one of those two things are going to happen. You're going to make a lot less money or the government's going to lower tax rates. Personally, I don't, I don't think the government's lower in tax rates, and I don't think I'm going to make less money.

Well, and Chris, do you know where this comes from? Right. This is coming from Wall Street. Right. And the government who want you to invest 401k, and that's why there's trillions, you know, in all of these different types of vehicles. Right. But would you rather it's, it's very simply put. Would you rather taxes on the seed or the harvest?

Yeah, yeah, there you go. And would you rather the government get its hands on that harvest, or would you rather it's, it's kept in a place that, like we were talking about before, is creditor protected private and is none of anyone else's business. Exactly. So if an investor walks through these first four phases, they're going to put themselves in a vastly better position. But there's still one more phase to come after that that you walk, walk people through. Dave, what is that?

Yeah, the last one, Chris, is this is the fun one. It's all about building massive passive income and creating multiple passive incomes. And we like to, you know, help our clients with the way we're thinking about it is creating a hundred year portf that's recession resistant. We're investing in, you know, key asset classes such as real estate, energy, private credit that are all focused on, you know, have strong macroeconomic fundamentals to them. They have different return profiles, they're investing in different markets, different operators, things like that. So. So really starting to build that profile. And again, it's all kind of tied to your vision statement. Whereas, you know, maybe you're looking to beef up your cash flow. And one in a case, right. Depending on how old you are or, you know, you may be younger and you can invest in, you know, higher appreciating, you know, type assets and things. So it's really trying to create that ideal mix of a portfolio and then having diversification there. So you're never, you know, you're never caught out. Right. You don't have all your eggs in one basket.

Yeah, no, I love that and I love that term, massive passive cash flow. And you know, as you mentioned earlier, what that ultimately leads to is the freedom, the freedom to live your best life. You know, the freedom to spend more time with your kids, the freedom to focus on your health. You know, the freedom as. And I love that you said this, to do what God puts you on this earth, to do what your inherent gifts are. And I truly believe that if people have financial freedom, if they have the independence to do those things, that the world's going to be a better place.

Absolutely, Chris.

Yeah. And you've, you've put all this in a book actually got, got your website pulled up right here. Dave, if people want to learn more about what you do about Pantheon Investments or want to get a copy of your book, what's the best way to connect with you?

Yeah, so the easiest way is just go to holisticwealthstrategy.com and listeners can actually get a free copy of the book right there.

Beautiful. And I'm going to put a link in the show notes here so you can check it out. If you're listening today, Dave, it's always a pleasure to talk to you. I hope we connect here for for a bike ride this time of the year. Maybe I have to join you down in Florida, but maybe you come up to North Carolina and ride in the hills with me sometime soon.

Yeah, absolutely Chris. Look forward to it. Appreciate it.

Beautiful. Thank you. Thanks for being on and sharing all this with our audience today.

Thank you.

Hey Chris, here again. I hope you found this episode valuable. Now I have one more thing to gift you. We have a page for my coaching clients where you can get a free copy of my book as well as much more more from previous guests on the show. Just check out nextlevelincome.com coaching to get a free copy of my book, audiobook and much more. I'll send you a copy of my book and cover all the shipping costs as a thank you for listening to the podcast. Also please like share and take just 90 seconds to give us a rating on Apple Podcasts.