251 - Unlocking Tax Secrets: Empowering Entrepreneurs to Take Control with WealthAbility's Tom Wheelwright

Welcome to Listening with Leaders. I'm Doug Noll, lawyer turned peacemaker. I teach executive leaders how to listen to emotions rather than words so that they can become the leaders everyone wants to follow. And I teach those same leaders how to be authentically present, available, and connected to their families despite being insanely busy. I have learned that we are 98% emotional and only 2% rational. Learning how to listen to emotions is, in my experience, the foundational skill of life. Stick around to the end of the show and I'll reveal how you can be on our next guest in 15 to 20 minutes. So let's get started.

Tom Wheelwright, welcome to Listening with Leaders. You are the founder and CEO of a company called WealthAbility. Which can be found at wealthability.com. You are in the business of saving people money in paying taxes. Lots of tax planning, I imagine, right?

That is, that's correct. Thanks, Doug.

Not only are you a CPA, you have a master's in—

I don't just have a master's. I have postdoctorate, I have postgraduate work at Ernst Young's National Tax Office. I was an adjunct professor in a master's of tax program. I have loads of experience in this. And I like to think that what we do is we raise capital from the government for entrepreneurs.

There you go. I love that idea. Give us a little bit about your backstory. And I— it sounds— are you a Utah native or an Arizona native?

I'm a Utah native. So I grew up in Salt Lake City, Utah, spent 2 years learning how to get rejected in French as a Mormon missionary in Paris on a mission. And, and then spent 7 years with Ernst Young and another 4 years with a Fortune 1000 in-house and, and then built CPA firms for 25 years. And then while I was an adjunct professor at Arizona State University, and then I've spent the last 5 or 6 years actually training other CPAs in other CPA firms about some of the systems we use in building tax-free wealth.

So would you say that you're— most of the time you're spending today is working with other CPAs?

That and clients. So I do have a CPA firm because I like to stay in touch with clients. I tell my CPAs that that it's all about the clients. It has nothing to do with them. It's all about their clients. So they, they need to focus more on their clients and less on themselves.

There you go. So you've been at this for a while. What is it that gets you up in the morning, gets you excited to go to work?

I love entrepreneurs, and I love— I, I hate it when people don't understand something. It drives me crazy. And I'm in a very complicated— sorry, complex area. Can't even say it. I'm in a very complex area, tax law. And my goal is just to make it simple because I think too many people are afraid of it. Too many people feel like they have no control. And I'm the youngest of 6 children, so I know what it feels like to be not in control of your life. And, and I, I like to help people have a little more control over probably their single biggest expense.

I remember taking, uh, basic income tax in law school, and it was a required course, and it was the only class I ever took that made absolutely no sense to me. I understood the rules, but understanding the theory behind it, there was no theory. It was all, it's all basically political. It's all incentive. It's the government incentivizing people to behave in certain ways. And those incentivizations vary powerfully.

I actually think there's some theory to it. So I actually, that's all I've done for 45 years, studied the tax law. And I think there is some theory to it. Yeah, you're right. Uh, you— we have, we have graduated rates, which means that people that have money to invest pay higher taxes than people without money to invest. And so then the government gives incentives to invest, for people to invest with— invest that money the way the government wants them to invest it. And, uh, and the government look— is looking for certain things. They, they want jobs, they want technology, they want housing, they want energy, they want food. It's not rocket science what they're looking for. Whether those incentives always work is a different question, right? But there's no question. For example, take fossil fuels. Well, oil and gas, as you probably know, has huge tax incentives.

Yeah, the oil allowance, total giveaway.

The depletion allowance plus the intangible drilling cost deduction, those are huge incentives. Honestly, I don't know one person who would invest in oil and gas without those incentives. So they absolutely do convince people to invest. I don't think there's any question there. The question is, do you know, do people invest the right way? Did they invest the right people, those are other questions and that's what our job is to help people navigate that.

Huh. So what is it that gets you up in the morning? Just working with clients?

I love educating. It's education. It's education. I'm a professional teacher who has a topic of tax.

You sound like me. I'm a professor. I'm an adjunct too. I have graduate classes I teach at Pepperdine.

There you go.

Peacemaker. Teaching people how to either resolve conflict or stop conflict from happening in the first place. Fun. It's fun. It's fun working with young people, isn't it?

Oh, I love, I like all ages. I do tend towards younger people. I was with, I was speaking at an event on Friday or just the other day I was speaking at an event and the person putting on the event was in his 20s.

Wow.

He had 200 professionals in the room and I'm going, this is one impressive young man, a really impressive young man to be able to do what he's done at that age.

Impressive.

Yeah.

Huh.

So how do you spend your day?

I, I, a, a lot of it actually is educating. So either I'm doing my podcast, I'm on somebody else's podcast, I'm doing interviews, or I'm creating content to teach to both entrepreneurs and their, and CPAs.

So since I do have an audience of entrepreneurs and founders and C-level executives, what kinds of things What can we say about tax planning that most people probably don't know much about?

I think the first thing is the premise that the tax law is fundamentally a series of incentives. And it really comes down to 3 questions. And the first is, how do you make your money? Because how you make your money is going to have an impact on how much tax you pay, whether you make it as an employee or self-employed or an investor. Second question is, what are you going to do with your money? How you invest your money or how you spend your money has a huge impact on your taxes. And the third question is, what are you going to do with your money when you die? But I actually think, I love what you do because I, I think that when you ask better questions, you get better answers.

Yes.

And one of the, for example, one of the questions that I teach people to ask is, don't ask me whether something is deductible. Ask me, how do I make it deductible? That is a very different question.

Yes.

And so it's going to get a very different answer. I have no idea whether something's deductible to you or not because I don't know your situation.

Right.

But if you ask me, how do you make it deductible? What I can do then is I can tell you what you need to do to change your facts so that you can make it deductible. And then you now have a choice whether you want to do it or not. But until you know what you need to do, you have no choice. And I'd say fundamentally, I get up in the morning to give people a choice.

That is really cool cuz that's what I do too. I think in my work, working in conflict, it's, I never tell people what to do. I always give them choices and we talk about the ramification of the choice. If you go option A, this, what do you think is gonna happen? What's your worst case alternative or what's your worst case scenario or what's your best case scenario? B, you can go this way too. What happens? And unfortunately, I'm in a place where almost always the choices are all bad and people have to pick the least worst choice, which is very painful because they're pissed off that they have to choose. They're in a position where they have to make the least worst choice.

Oh, that's tough. I am in the enviable position of, I'm going to give you two good choices. One's just less painful than the other. One means you you pay tax but you don't have to think, and the other one is you actually have to think but you can pay less tax.

Yeah. And of course, you're dealing with people who have— they're making enough money that taxes become an important consideration in their lives, for sure.

We only work with entrepreneurs. That's our sole— that, that's our sole audience, is entrepreneurs who are building a business and building wealth.

And entrepreneurialism covers a wide range of people. Are you, are you, are these people that are fairly mature in their businesses and are making money, or are you talking to startups or both?

All of the above. So we actually, we just launched a little while ago, a franchise of CPA-based tax advisory firms. And the reason we went to a franchise model instead of a big firm model is because we want to be able to help the just starting out entrepreneur. Okay. So we've got franchisees who just do that. And then we'd also like to help those who are more mature, like I'm, Working with a client right now who's selling their business for $75 million.

Wow.

Okay. I can help them with that. Okay. That's something I'm actually pretty good at, but then you've got people in the, most people are in between, right? They're making $400,000 or $500,000, $600,000 a year, or even less than that. And how do they navigate taxes on a day-to-day basis? How do they keep their tax bill low while doing it all legally, ethically, morally, and, and not having to worry about the IRS? So we do, we're able with this franchise model, we're able to actually help a much broader range of people.

So is this franchise model, this is something that you offer to other accountants?

It is, yep.

And so they sign up as a franchisee and they get the training?

They get the training and the systems. They, they actually get some of the training you talk about. We— so to give you an example, so we have our annual franchise conference this year and the entire conference is on communication.

Oh yeah.

The entire thing. And I, what I'll tell my franchisees and I'll tell anybody who'll listen is that the job of an advisor is to ask good questions. It's not to give answers.

That's correct. And it's, it depending on the circumstance, it's to not only ask good questions, but it's to make sure that your client feels heard.

Absolutely.

And that's the mistake that I think a lot of professionals make. I, I sure made that mistake as a lawyer before I learned what I'm doing today. Is that I thought my job was to listen and give advice and have my clients follow my advice and not really listen to— not really make them feel like they've been heard. And today I realize how wrong I was for so many years.

Yeah, it's so important for clients to own it, right? Because like I always tell people, I can't change your tax, but I can tell you what you need to do to change your tax.

Right.

So unless you own it, that we're gonna fail. We're absolutely gonna fail. So I've gotta make sure that not just you understand, but you go, that's right. That's what I'm gonna do.

Exactly correct. And the only way they're gonna do that is when they're, when they've gotten calmed down and they've been listened to and all of their fear and frustration and anxiety and anger, all that stuff has been acknowledged and now they're ready to listen and problem solve.

Nope. That's absolutely right.

That's the truth. Yeah. And then knowing how to ask open-ended questions that elicits information, but also teaches as you ask the question. It's Socratic method.

Yeah. To, to, to me, that's so simple. For some reason, that seems to be the hardest thing in the world for people to do.

It is. It's part of our educational system is we're never taught how to listen. We're ordered to listen from the time we're very small children. We are, we are told, listen. But we're never taught how to listen. And so we, we, we really never gain the skill of effective listening. Some people pick it up by osmosis, um, but the stuff that's taught out there like active listening and nonviolent communication, none of that stuff works. Never has, never will. And so there's no pedagogy of listening, so to speak, which is really interesting to me.

That is fascinating. That there seems to be no pedagogy of advisory services either. So We're hoping to actually make a dent in that one.

That's exactly right. So you got this. How, well, I'm just curious, how's your franchise operation going? It sounds like it's good.

Good. We, we, we've taken it slow. We don't, we want to get all our systems in place. We want to make sure our franchisees are doing what it's all working before we do a big launch. So we haven't done a big launch yet. We have 10 franchisees and 1 corporate-owned firm. So we decided to start small on purpose and then, and then we'll branch out, we'll blow it up. But I want to make sure it's working before I do that.

Sounds like a great idea. And it sounds like if for a CPA who wants to have a more sophisticated tax practice and attract the kinds of clients, entrepreneurs that the system works for, it sounds like a pretty, pretty interesting way to go.

I will tell you, when I started my first CPA firm, had I had this opportunity, I'd have killed for this opportunity. I'd absolutely killed for it because you have no brand when you're starting out. Nobody knows who you are. Yeah. People who know you know who you are, but nobody else knows who you are. You're never going to build a brand. Very few brands are ever built, right? Um, certainly not in the, certainly not in the tax space, certainly not in the, the advisory space. And, and you don't have any of the systems. I went out, I bought a firm, my, my first step, my second year I bought a firm and fortunately that CPA had some pretty decent systems, at least manual systems. They, you could do work papers and keep track of things and that kind of stuff. And she, she did a good job for her clients. So that was super helpful, but boy, to have a proven system that you can just tap into, man, it would've been amazing. Wow.

On your background, you got Rich Dad Poor Dad. You work with Kiyosaki.

You—

I do.

I still do. Yeah. I've worked with Kiyosaki for 20, 25 years.

How do you tell me about that? That's an interesting—

I love Robert. Robert, some people, you either love him or you hate him. There's, there are very few people in between, but he's brilliant and he's, he's a great teacher. He's been a great mentor for me. What I love is he pushes you to think differently. And that's what I'm always looking for. I'm looking for how do I think differently? What am I, how could I think differently that would make a difference in other people's lives? And he's very good at that. He's the one who encouraged me to write Tax-Free Wealth, which has been number one for a long time on Amazon. And, and he pushed me to write about how to find a good tax advisor. So I'm going, okay, that's good. So yeah, I, it's been a great, actually I've been all over the world with him. So it's been a fun, fun time.

How did that relationship get started?

I bought a CPA firm and he was a client.

Really? Yeah.

Wow.

Yeah.

Nice client to have.

He was fairly new. He'd just been on Oprah. The CPA firm, the CPA was, had gotten very popular actually teaching with Robert and, and didn't want to handle a CPA firm anymore. And I was, I had, I'd broken up with a partner and the partner had taken half the clients and left all the staff. None of the staff wanted to go with the partner, so I didn't want to lose well-trained staff. And so instead of giving up the staff, I went, looked for clients, and the easiest way in my business is to just buy a firm. So I, so I bought this firm, and I had no idea who Robert was at the time. And but since then, we've become, we've become really good friends.

Wow, good for you. What do you think it is, Tom, that you bring to the table that's unique about you that's allowed this incredible success that you've had?

First of all, I think I care more about clients than most people do. I care about every client's success. I think you have to care. I actually think when you talk about listening, I think people don't listen because they don't care.

I think that's partly true. I also think they don't listen because they don't know how.

There's that too. There is that. But people also, you mentioned it, people don't know how to ask questions. And I'm a, I've always been a naturally curious person. So I like, I'm that, I was that little kid who asked the relentless question after and drove the teachers crazy because I'd ask so many questions. But what that does is it hones your skills, right, as asking questions. So I've gotten really good at asking questions. But the other thing that actually I'm good at is just making it simple. So I can take— I, I like taking a really complex subject and making it— I like to say I like to make taxes fun, easy, and understandable. So if you can make taxes fun, To me, that is like the biggest success I can possibly have.

That's interesting that you, you use almost the same words that I used to use when I was a trial lawyer. And I said, I take very complex ideas and make them very simple so a jury can understand what's going on.

There you go. And I make them very simple so an entrepreneur can understand how the tax law works.

Where do you think you, where do you see yourself going in the next 5 or 10 years?

I think technology's going to play a huge part. AI in the advisory role. It's going to be great for us because we have way too few CPAs coming in and way too many leaving. And technology will save our profession. Frankly, I think technology is going to be huge. AI in particular, but any technology. I would hope that in 5 years from now, we're not preparing tax returns. We might be reviewing tax returns, but we ought to be able to upload. The reality is we ought to be able to upload the documents. And have the tax return prepared for us, and we just have to review it, make sure everything's right, use our skills to make it better, frankly. But then really use the technology to do better advisory services. Okay, what can I do not just this year but next year, 5 years from now? How do I project out what I should be investing and how much I should invest? For example, we did, uh, a client asked us for Could we project out how much they would need to invest in real estate over the next 5 years to not to reduce their tax bill by $200,000? So we did that. We can do that. That's just math. Math is easy, right? Math is simple.

It's—

it actually is very simple. You've got the spreadsheets, you've got the— you got the technology to do the math. You don't have to do the math yourself. It's just a matter of understanding, okay, what's What are the relationships? One of the things that we, that I see in the future is you set up software systems that can see those relationships the way I see the relationships. Because what I see is I see relationships in the tax law, in investing, what entrepreneurs do, what successful entrepreneurs do that unsuccessful entrepreneurs don't do. So I'm always looking to those relationships and I think that we can develop, we're actually developing software. To deal with that as well as developing software that will actually do a tax strategy for an entrepreneur.

Wow.

Um, yes. So that's actually the big thing for us. We still need the advisors, which is why we have the franchise. I actually think the software is going to be, that's the new world and that's the fun stuff.

How far away do you think we are from having that?

We are, I, so we have a software company and I think we're about a year away.

Wow.

That's going to be a massive sea change.

I think it will be. I wrote Tax-Free Wealth so that the average person could understand the tax law. And so I went directly. Nobody had ever gone directly to the entrepreneur. They'd all gone through the CPAs. And right now all the software goes through the CPAs. I want to go direct to the entrepreneur. So I think that the CPAs are important. Don't get me wrong. I do think the advisors are important. But I think the advisors could do so much more if they didn't have to do the basic stuff.

Yeah, I find I'm thinking about my own CPA, for example, and we don't engage in any discussions around tax planning, which unfortunately, it's unfortunate. If I wanted to, I don't think the tax planning, I don't think I'm at the income level of where that would be particularly useful right now. But if I were, I'd have to hire somebody like you, a specialist to, to work through the tax planning for the, say, the next 3 or 4 or 5 years?

I think any, I think any tax you pay may be too much if you can do it efficiently. So that's not always true. Our goal is to get— our first goal is to get an entrepreneur down to a 20% tax rate. If we can get that done, that's step one. If they want to go further than that, we can. You can get to zero tax legally. You have to, but you have to really want it.

And you have to work at it.

And you have to work at it. Yep.

Exactly. That's pretty interesting. One more question. I'll let you go. What's one thing about yourself that we would never know about unless you told us about it, revealed it to us?

So I was, had a severe speaking disability.

Really?

When I was a child. Yeah. I took speech therapy for 5 or 6 years.

Wow.

As a child. So that was interesting.

I was born with 6 disabilities myself. It's amazing how we were able, I don't know, through grit, I think more than anything else, it's just to plow through these barriers that God gives us.

I think it's awesome. I think it's what, I think it's what makes us better, makes us stronger. And you get so much, you learn so much resilience with it. And of course, I remember as a 5-year-old having a crush on my speech therapist. So I thought she was pretty cute.

So, Tom, if people want to get in touch with you, how do they get in touch with you?

Easiest way is go to our website, wealthability.com, and happy to have a conversation.

Page and go from there. Yep. Hey, thanks a lot for taking your time out of your busy day to talk to me. Been a great conversation.

Happy to do it, Doug.

Anytime.

Doug Noll here. Thank you so much for listening to Listening with Leaders. If you are a successful executive leader who would like to be on this program, please visit podcast.dougnull.com/podcast. If you got something out of this interview, would you please share this episode on social media? Just do a quick screenshot with your phone and text it to a friend or post it on the socials. If you know someone that would be a great guest, tag them on the social media. To let them know about the show and include the hashtag #ListeningWithLeaders. I love seeing your posts and guest suggestions. We are regularly putting out new episodes and content. To make sure you don't miss any episodes, go ahead and subscribe. Your thumbs up, ratings, and reviews go a long way to help promote the show and mean a lot to me and my team. Want to know more? Go to my website, DougNoll.com, or follow me on LinkedIn, Facebook, and Instagram. That's @DouglasEnoll. Thanks for listening, and we'll see you on the next show.