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Intro Voice:
Welcome to Influential Entrepreneurs, bringing you interviews with elite business leaders and experts, sharing tips and strategies for elevating your business to the next level. Here’s your host, Mike Saunders.
Mike:
Hello, and welcome to this episode of Influential Entrepreneurs. This is Mike Saunders, the authority positioning coach. Today we have with us Tommy Cloud, who’s the president of Third Act Retirement Planning and a qualified kingdom advisor. Tommy, welcome to the program.
Tommy:
Hey, Mike. Thank you. It’s great to be on the program today.
Mike:
Yeah. I’m looking forward to learning from you because I want to know what the first two acts are if your company is Third Act, so give us a little bit of your background what got you into financial services, and then tell us about Third Act Retirement Planning.
Tommy:
Absolutely. Well, I grew up with my dad being involved in investments. He was mainly involved in tangible assets. So I began being educated on precious metals and real estate, and even art collectables from a very young age. And my dad was talking about fiat currency and money by decree. And then the gold came off the … When the dollar came off the gold standard in 1971, we celebrated 50 years last year in 2021 of the US dollar being off the gold standard. These are things that I talked about as a child, and then as I was thinking about what I wanted to major in when I was at the Georgia Institute of Technology, I decided that I would get what they called a certificate in finance. And most schools say you majored in finance.
Tommy:
And so I did that, I was in the investment club, and we were fortunate enough to outperform 90% of all mutual funds during the two year time period that I was on the investment club and participated with them. And then I moved into the banking industry with a bank called First Union that was later bought by Wachovia in Charlotte, North Carolina. And then I moved into doing some precious metals with my dad, and then in 2000, I started this RIA, Third Act Retirement Planning. And I was one of the youngest, if not the youngest RIA owner in the state of Georgia at the time. I was 26 when I started this firm, so that’s kind of my story of how we got in. Then I started picking up all the designations and got all my designations in the first eight years of being in this industry.
Mike:
Neat, yeah. Too many times people just go, “Oh, well, I can just do the minimum.” Well, if you’re a prospective client, do you want someone that’s only going to do the minimum? You want someone that’s qualified, respected, certified in all of that. So give us a little bit of, like I said in the opening, if your company is Third Act, well, what are the first two acts? How did the name Third Act Retirement come up? And what are the first two acts?
Tommy:
Okay. So the first two acts, third act is retirement of someone’s life, so the first two acts, the first act is when you’re going through school and you’re learning, whether you’re graduating from high school, you’re graduating from college, or you’re graduating from medical school, whatever it may be. And then the second act is your career. And that’s going to have your career, a lot of people in that time period are getting married and having children as well. But we’re talking about from a financial perspective, so it’s the learning, it’s the working, and then it’s enjoying.
Tommy:
And I am the third act of retirement, and want to help people have a game plan, or to have a clear path to victory, so that they know that they’re not going to outlive their money and that they’re going to have peace of mind are the main things that I do for people outside all those numbers and things that I talk about every single day when I’m at work.
Mike:
I know there’s a lot that goes into that. So when will the second act of the career kind of start to, the plane start to land? And when will the third act of retirement start to take shape? And that’s going to be different for every person. Right? I mean, but typically, traditionally, when would you recommend that someone start to make some tangible plans for that third act?
Tommy:
I’ve had clients start real young, clients in their 30s. Now the average age of my client is older, however, I’ve had clients come to me that didn’t know they could retire. And I said, “Oh, yes, you can definitely retire.” I said, “You can go ahead and do that right now.” And it’s funny because a lot of the times, the wife will say, “Oh, no, no, we don’t want to retire right now,” so that’s something fun. Sometimes people will come in to me and say, “Well, I would like to retire in five years,” and I’ll say to them, I’ll say, “Well, unless you plan on winning the lottery, this is going to be tough.”
Tommy:
And so it is different for every single person. And what is the bottom line is: What are your expenses and what are your income? I have a client that has high expenses, that they’ve had multiple rental homes and that type of thing, but they were getting a $200,000 pension from State Farm because they were vice president at State Farm. I have another client, on the other hand, who’s kept his living expenses down I think to $38,000 a year.
Mike:
Wow.
Tommy:
And he lives on the lake. He owns his home. He owns his boat and he owns his car. His car has 230,000 miles on it. He’s 79 years old. And he has social security, plus he withdrawals money from his investments, but all he needs is $37,000, $38,000 a year.
Mike:
Well, he must live in a part of the country where it’s low cost of living because no matter whether you’re debt free or not, that still is a small amount.
Tommy:
It sure is. He gets the Medicare for free, of course. And he does, he keeps his expenses down. He told me last time he was in the office, he said, “I’m going to BJs. I’m going to spend $500 today.” I said, “Goodness gracious.” Of course, I was just joking because we’ll spend $500 at Whole Foods in two weeks. We have seven children. Only three of them are still in high school or below. But he said, “I’m going to shop there. I’m going to spend $500, but the food will last me for three months.”
Mike:
Good night.
Tommy:
I know. Isn’t that something? Gosh.
Mike:
Well, that actually, if you really want to think, go deeper on that concept, remember way back in the day, the book The Millionaire Next Door. And it was about-
Tommy:
Oh, yeah, Tom Stanley. Yeah.
Mike:
Yeah. You wouldn’t think your next door neighbor would be a millionaire, but looks can be deceiving. Well, that kind of mentality and planning, this person you’re talking about, they have the saber mentality. They’ve obviously made wise financial moves over the years and they’re not spendthrifts, so when they go out to spend money, it probably irks them to spend any money, so when they do that. So I think that sometimes you see the TV shows of all the crazy coupon people that don’t spend but two cents that’ll last them for food for a week. And you can take that to the extremes, but I think that’s a nice mentality to think toward when possible.
Mike:
You don’t want to eat beans and rice the rest of your life, but you want to be conservative so that later on down the road, you don’t have to be the theoretical Wal Mart greeter in your retirement. So I think that’s something big that people need to keep in mind.
Tommy:
That’s exactly right. And I do want to say for in his particular situation, every client’s different, and I did not advise him to do this, so I don’t want anyone to listen to this and say, “Well, this guy’s making guarantees. He’s a stock picker.” What my client, Mr. Mason, did was buy Apple stock a long, long time ago. And even when he bought it, he put thousands of dollars into it. And that’s all that he basically did, and then he came to me. What happened was he bought 19 stocks I think, or 26, or 19 stocks a long time ago. And most of them were losers. He held onto them. So the buy and hold thing for him didn’t work, except for this one particular stock that we all know the name of, called Apple. And that’s what made him wealthy. That was it.
Mike:
Okay, so let’s think about something, not necessarily those specific stocks or that strategy, but the mindset of pick something that you feel confident in, and whatever that is, whatever sector, whatever stock, and I’ll be you that there were times in Apple’s history that it was up and down, and up and down. Well, stay the course. Don’t feel like run for the hills when something dips a little bit. You’ve got to stay the course. And so I think that when people are planning their retirement, whether it’s a type of an investment product or a specific stock, realize that you got into that because you felt like in the long-term, it’s going to pay off. Don’t then look back every single day to see what it’s doing throughout the day because it’s going to drive you nuts.
Tommy:
That’s extremely wise advice. I would add to that though, I agree with everything you just said. He didn’t, in this particular situation, by no means, the other stock … Here’s the bottom line. Had he not picked Apple so many years ago, he’d be in a nursing home right now. But since he did pick Apple decades ago, he’s far, far, far, far from a nursing home, and it did make him wealthy. But most people can’t get lucky like that. Stock picking is very difficult, particularly the people that don’t … I wouldn’t recommend what he did to anybody.
Mike:
Yeah. So then let’s think about this.
Tommy:
Quite frankly, we sold. He got lucky and he sold too. And I don’t know if it was … I mean, he sold at the right time when the stock was just super high. He sold. He didn’t start going … Apple really didn’t have its takeoff, Mike, until about 2000 and let’s say eight. Started in a down year for most companies, and then what happen was in about 2019, Apple just skyrocketed from 37 to 174. But he bought it back, his share price was probably back in … He might’ve paid $1 or $2 for it.
Mike:
So I think what you’re saying, and what I think most people would think is let’s not focus on a stock or a company. Where can people put their money to protect their portfolio in stormy markets, ups and downs, whether it’s a sector or a type of an investment? What should people be thinking about so that they don’t get into the weeds of, I hope this is the winner? Because you’re never going to … I mean, it’s just an anomaly to think, “What’s the next Apple, the next Uber, the next whatever?”
Tommy:
That’s exactly right. For anyone to think that they’re going to do like Mr. Mason, pay 18 cents a share, and then sell it years later for, I forgot, let’s say he sold it for $150 a share. That’s pie in the sky. I hate to say it. But what can we do? We have advice. From wealthiest person, one of the top five wealthiest person that ever lived on the planet talked about this at length. And my wife and I watch Shark Tank. And it’s also good to watch Shark Tank for people interested in finance just to hear them talk about money and see what they’ve done.
Tommy:
I read articles about these guys, just interesting to me the way they deal with these things. But King Solomon, who in today’s dollars net worth was estimated to be about 2.2 trillion with a T. And so there was only about I think 800 billionaires last year in the whole world. I don’t know how many trillionaires there were. There might not have … I just don’t know how many there were. I’d have to Google that. It might’ve been none, there might’ve been one or two. But 2.2 trillionaire. King Solomon wrote to us thousands of years ago that we should diversify our money, he said seven or eight ways because you don’t know what type of economic problem we’re going to be faced with.
Tommy:
And he said that, he wrote that, it’s actually in the Old Testament. And it’s also in the Jewish Bible, which is in Ecclesiastes 11:2. So if people will just diversify. Now when we talk about diversification, we don’t mean buy Apple stock, buy Home Depot stock. That’s called in asset class diversification, Mike. So you want to buy a bunch of stocks that are US. And even if you buy international stock, that is not the type of diversification the way that I read that because international stocks are highly correlated to US stocks. They kind of move together.
Tommy:
So what you want to do is, you do want to have … You don’t want to just buy one company. You want to buy a bunch of companies globally, here in the US and abroad. That’s one category. Then you want to buy a bunch of bonds here in the US and abroad. If you don’t want to buy bonds and you have enough money, what you can do is you have a long-term holding horizon, what I do with some of my clients is instead of buying bonds, let’s say they’re young enough, which I’d say probably younger than 55, 55 or under. Instead of buying bonds, we can buy a whole life insurance policy or cash value life insurance policy and just forego buying bonds altogether. So you want to have that category.
Tommy:
Then there’s real estate, there’s precious metals, and gold performs differently than silver. There’s commodities, which are difficult to invest in. Most people don’t have the money to do that. You certainly, going and buying an ETF or a mutual fund that invests into commodities, it does not work because of backwardation and contango. And people can look that up on the internet, but it’s the way that futures happen. Both mutual funds and ETFs do not follow the spot price of commodities. But you can get gold and silver. We pick a symbol, GLD and pick a symbol, SLV. You can absolutely spot, track spot price of gold and silver with very high accuracy and very low cost and very easy to trade.
Tommy:
You can also get into the treasury bond market, which is negatively correlated to stocks, the US Treasury market, the longer the duration, the more negatively correlated it is to US stocks. And then of course, we already talked about real estate that you’ll own yourself. Those are something now you can also invest in wine online, which I’ve been doing myself. I think wine’s a good way to protect yourself against inflation and get further. People are also getting the crypto currency. I haven’t done that. With a lot of my clients, I’ve probably done that with maybe 10% of my client base. We’ve probably done some cryptocurrency. I’m not recommending that here on this show or for most people. That’s something that you have to really understand before you get into what the risks are, which is kind of hard to understand because it’s so new.
Mike:
It’s unproven. Yeah.
Tommy:
It’s unproven. And then so like I said, one of my clients that got into crypto, I’m not charging management fees on because it was his idea and I told him I didn’t want to participate in it. So he’s-
Mike:
He’s against medical advice or against financial advice.
Tommy:
Yeah, that’s exactly right. So I just listed some items there that people can invest in, wines, art collectibles, gold, silver, global stocks, which are the most common that people sometimes think of, global bonds, cash value life insurance policies, real estate, are just to name a few that are … That’s true. And utility stocks, utility stocks are moderately to low correlated to the S and P 500. And so I recommended to my clients get into the utility stocks last year, and we bought a bunch of them. And I think those, we looked at yesterday through May 1st of 2022. Utility stocks were only down .4% while the market was down 13%.
Mike:
Well, I think that anybody that is interested in making sure their retirement is in the right sights and moving in the right direction, you can do all kinds of research online. But what is the best strategy, the safest, the most diversified? So if someone is thinking, you know what, I know that financial advisors, but in the old days, you have to pay a commission for every single trade. These days, it’s a whole different ball game where it’s just a small management fee, and it’s hardly anything that you feel.
Mike:
So if someone was interested in reaching out and connect with you, kind of learning how you could guide them, what’s the best way that you work with people? And then what’s the best way that people can reach out and connect with you?
Tommy:
That’s a good question. The best way that I work with people is on a fee only basis. And I charge a fee for the amount of money I’m managing for them. And I also have a financial planning fee. And that’s basically how I work with people. And the best way that they can reach out to me … My minimum is $250,000, and they can get started with me, Mike, by going to my website, thirdactretirement.com. Click on get started now and just schedule what I call a retirement ready success call. It’s a 20 minute free, no cost, no obligation call, where we talk about where they are now, where they’d like to be, and I share with them some tips on what I’m doing with my clients that may be in similar situations through the years to help them reach those goals.
Tommy:
And then we can also decide if it’s even worth us having another call at all. And then I also have a toll free number, 1-800-917-5016. Anyone that answers the call can also schedule a retirement ready success call for them as well.
Mike:
Well, Tommy, it’s been a real pleasure talking with you today and just learning about safe diversification. And I encourage anyone that would be interested in just getting that second opinion, have you look at their portfolio and give some guidance, that would be really helpful. So I’ll make sure that your website is in the show notes, and really appreciate you coming on today.
Tommy:
Well, thank you, Mike, for your time and having me on. I’m grateful for it, believe me.