Jason interviews New York Times Bestselling Author Doug Andrew about his book, Entitlement Abolition: How to Lead Your Family from “Me” to “We”.
Since 1974, Doug Andrew has counseled tens of thousands of people on how to make healthy financial decisions, focusing particularly on the pitfalls of going after money and consumerism at the expense of one’s health, family and happiness. His books include bestsellers Missed Fortune and The Last Chance Millionaire; as well as Millionaire by Thirty (co-authored with sons Emron and Aaron) and Entitlement Abolition.
Entitlement Abolition, from New York Times bestselling author Douglas R. Andrew, underscores the focus on all three dimensions of abundance taught by Live Abundant—wealth, health and life fulfillment—and gets to the heart of one of the world’s most pervasive issues today.
Social media links:
o Twitter: https://twitter.com/dougandrewnow
o Facebook: https://www.facebook.com/abundantlivingways/
o LinkedIn: https://www.linkedin.com/in/douglasrandrew/
o Google+: https://plus.google.com/104861388676433843828
Below is the full transcript:
Announcer: Welcome back, America to Sound Retirement Radio, where we bring you concepts, ideas, and strategies designed to help you achieve clarity, confidence and freedom as you prepare for and transition through retirement. Now, here is your host, Jason Parker.
Jason: America, welcome back to another round of Sound Retirement Radio. Glad to have you tuning in this morning. We’ve got a great episode lined up. I’m going to introduce our guest in just a moment. Before we do, as you know I like to get the morning started right, and we do that a couple of different ways. First of all by renewing our mind. I have a verse here that we were studying this morning from Titus three, one and two. It say, “Remind the people to be subject to rules and authorities, to be obedient, to be ready to do whatever is good, to slander no one, to be peaceable and considerate and always to be gentle toward everyone.” That’s awesome. It’s maybe more of a riddle than a joke, but what goes up and down but doesn’t move? Stairs. All right. Folks, you’re listening to episode 147. If you’re driving down the road in Seattle this morning, I want to remind you that we archive all of the these programs for your listening enjoyment. You can find them archived at SoundRetirementPlanning.com. This is episode 147.
It is my good fortunate to bring New York Times best-selling author Doug Andrew onto the program. He has a new book out called Entitlement Abolition: How to Lead Your Family from Me to We. Doug Andrew, welcome to Sound Retirement Radio.
Doug: Thank you, Jason. It’s an honor to be featured as a guest on your show.
Jason: It’s an honor for me to have you as a guest. I was a big fan of Missed Fortune 101, once of your previous books. There at the very beginning of our show I had shared with you that you and I actually met probably 10 or 11 years ago. It’s great to come full circle here and be able to have you as a guest and talk about your new book. I want to start out, I want to ask you the question of why the title Entitlement Abolition.
Doug: Well, Jason, I’ve been primarily a financial strategist, a retirement planning specialist for four and a half decades. I noticed a lot of highly successful people from a financial standpoint would come to me, and many of them maybe spent their health accumulating their wealth, and then later in life they’re spending all their wealth trying to regain their health, which is sort of stupid. Some of them accumulated financial success at the expense of relationships with their spouse, their kids, their grandkids, their God, or whatever their belief was of a higher power, and they’re wondering what was all this for at the end of the day. The real thing is that many of their children were sort of born on third base, so to speak, and grew up thinking they hit a triple their whole life, and they have this entitlement mindset, “Will you pay for it? Can I have …” Many of them were frustrated. How did this happen? I outline in the first four chapters why this problem exists, especially in America.
Jason: I’m excited to dig into it. There are several things that really stood out to me. I was thinking back to that time when I had an opportunity to come out and listen to you speak 10 years ago. You told a story probably better than anybody I’ve ever heard of the Rothschilds and the Vanderbilts, and you referenced them again in your new book. Will you tell a quick story about that family and what you learned from studying them?
Doug: Yeah. You know, even though I don’t really endorse those two families so to speak, they illustrate exactly my point in this book, because Cornelius Vanderbilt, known as Commodore, passed away in I think it was 1877. He was the richest man on earth, sort of the Bill Gates of his time, worth $105 million. He wasn’t very philanthropic. He left behind less than 1% of that, one million bucks, to Central University which became Vanderbilt University. You know, it took 96 years before 120 of his descendants gathered together at Vanderbilt University for their first family reunion. There wasn’t a millionaire left in the bunch. It was all gone. It was his grandson, William K. Vanderbilt that said, “It has left me with nothing to hope for. Nothing definite to seek or strive for. Inherited wealth has been a real handicap to happiness.” Whoa.
Well, I contrast that with the Rothschild family. Now, Mayer Amschel Rothschild died in 1812. He had a large family, among them five living sons, and he assigned to each of those sons to European capitals. They would communicate back and forth with homing pigeons, when to buy and when to sell, but the main point in my book is when he died, he didn’t leave behind an inheritance or an entitlement. He left behind a system, a repository, what I call a family bank. Now, isn’t a commercial bank like down the street. This is a conceptual bank, and there were three primary rules. He loaned his heirs money, and the loans had to be repaid. He went into joint ventures. If they needed help with college, they had to qualify. They could borrow when they graduated, started earning money. They paid the loan back.
Second, the knowledge and experiences those heirs gained had to be shared with other family members horizontally, not vertically. It wasn’t just a family secret, parents to kids to grandkids. It was aunts, uncles, nieces and nephews, because sharing is having more. That would be sort of compared to like the Constitution of the United States of America. The rules of governance. The third thing is they had to meet at least once a year to reaffirm their virtues and intentions, or they were out of the loop. That would be like the Declaration of Independence for America, our values and vision document. What happened to the Rothschilds? Well, it grew and instead depleting and diminishing, it lasted for generations. This is why we call it generational wealth.
Jason: Boy, I love that. One of the things that stood out in this book, and one of the things that really … when I heard you speak all those years ago, 10 or 11 years ago, you talked about this way back then, but you’ve got a whole chapter on it now, Chapter Seven, Family Retreats with a Purpose. It leads this idea of generational wealth and how to pass these gifts on to the next generations. Will you take a minute and talk about family retreats. I remember when you spoke all those years ago, taking all your family, I think it was to Maui at the time and being very intentional about teaching during that time.
Doug: Yeah, that’s right, Jason. We’ve been doing this since our children were just tiny. We have six children and now 16 grandchildren. Every years we have Grandpa’s Camp, where we also bring the grandchildren without the parents for six days. On family retreats, and we could do it in the basement of our home, we could do it up the canyon. We would do it at lakes and outings every July. It’s in the wind, rivers of Wyoming. When our kids were young, many of them in junior high, they said, “Let’s meet in Maui every other year.” I said, “Great, but this isn’t a handout.” Some people hear about them, they go, “Man, can I be a member of your family? I want a free trip to Maui.” I didn’t say it was free. Okay?
What I did was I said, “We’ll meet in Maui for one week every other year, and I don’t want any empty chairs when we get there, because we don’t want any empty chairs when we hope we all get up to heaven. Everybody is going to be present and accounted for. I’ll tell you what. You’ll pay for your airfare, your cruise fare, your lodging, your food.” What I did is I empowered our children so that they could pay their way. I taught them how we could come together and buy timeshares from people who were in trouble, on the verge of foreclosure. We would be a Godsend to them, and we picked up timeshares for pennies on the dollar. We got twice as many as we needed at a five-star resort. We put half in a rental pool and the other half pays our maintenance fees, so our lodging has been free for years.
They all use credit cards responsibly. Even when they were little, they had their business entities where they would sell drinks at parades on the 4th or July or go around and snow cones or whatever. They had to earn their school clothes. They had to earn if they wanted water skis. It wasn’t a handout. They learned that, and so they would use credit cards to pay them off, and then have enough points that their airfare was free. Then, by having their own business entities, yeah, we would scuba dive, hike, golf, fish and so forth, but every day in Maui or any retreat, we’d meet for at least 90 minutes a day because the IRS says if you meet at least 90 minutes and take minutes and have an agenda, and you teach entrepreneur skills and responsibility and accountability, which we do. We teach our kids never to be unemployed. Never collect unemployment because unemployment is a mental condition, not a physical condition. Security is in the individual, not in a job.
We can tax deduct the expenses, the lodging, the airfare and much of the food and entertainment. We’ve been tax deducting in our family vacations for years. I’ve been audited many times and never been called or had to adjust that. Yes, family retreats is where we taught our son-in-law how to be a success business owning entrepreneurial marketing orthodontist to where three years into his practice, he was selling his wisdom for more than he was making on three practices. He learned that on family retreats. He didn’t learn that in dental school. They don’t teach you that in dental school.
Jason: Now, in your book, in your new book … Folks, if you’re just tuning in this morning, I’ve got Doug Andrew, New York Times best-selling author. His new book is called Entitlement Abolition: How to Lead Your Family from Me to We. This entitlement attitude does seem like it’s become very pervasive. The definition of entitlement. I have it pulled up here. It says, “The fact of having a right to something.” People feel they have a right to something. I just heard an attorney speak last night and he said, “Now more than ever,” he said in the last 10 years he has seen more wills contested in probate than in any other time in his career. He has been doing this for over 40 years. It’s interesting the world that we’re becoming.
Mr. Doug Andrew has written a book here to talk about it. Doug, going from … One of the things I love about this and we’ll … the first part of your book is all about this idea of being able to leave a legacy, something greater than money. We’ll talk about money in just a minute here as well. I was inspired by your discussion on Grandpa Camp. You have a new perspective in your life. It’s probably a little bit different than when I first met with you. Talk about Grandpa Camp, and maybe one or two things you’ve learned and what that looks like.
Doug: Well, we’ve been doing this one for five years, and we have 16 grandchildren. What we wanted to do was teach our grandchildren responsibility and accountability. I decided … My wife and I of course do this together. She’s says, “Well, let’s call it Grandpa’s and Grandma’s Camp.” I said, “No, that’s too long. It’s Grandpa’s Camp. You can come and fix the meals.” No, I’m teasing. She is awesome. She contributes so much, but life’s unfair even at Thanksgiving time, you know, over the river and through the woods to Grandmother’s house we go. That’s unfair. It’s my house too. I built a tree house, a $20,000 tree house at Grandpa’s Camp. I also get all the grandkids together and we announce the theme between Christmas and New Year’s, and we don’t even hold it until the last week of June. My birthday’s July 2nd, so the ending day is always on my birthday. The best way to spend my birthday I could ever think of.
Jason, here’s the format. The first two days we have the 12-year-olds and older come, the teenagers and we talk teenage talk. I really get very … The parents aren’t allowed. We talk about real important things very frankly that I know they’re going through because my wife and I mentored troubled youth at youth prisons and boys and girls homes at crisis centers. Okay? We do high adventure while we do it. It’s not just all teaching. We have an agenda and we do all kinds of activities, repelling or whatever. Then, the eight-year-olds and older come and join them for the next two days and we do certain high adventure and camping on the top of a mountain ridge of about 10,500 feet. They backpack and do things and what have you. Then, the four-year-olds and older come and join them for the next two days. Now, the teenagers are conducting treasure hunts and teaching some of the lessons and conducting a lot of the arts and crafts and hobbies.
All of the grandchildren must teach their cousins for 30 minutes during Grandpa’s Camp a true life principle. They also must conduct an activity. They love it. These activities are over the top, these arts and crafts and these lessons. The second year was put on the whole armor of God because we’re Christians. They all taught their cousins about their piece of the armor and what have you. The next year, it was America, the land of liberty. Our 16 grandkids taught their cousins about stories about the founding of this country that you’ll no longer find in the school history books. They’ve been taken out primarily because of religious connotation. I wanted my grandkids to know about some of the incredible divine nature of this country, American, that we live in and the founding fathers and what have you.
Then we did it last year on service, and how to be polite and how to be courteous and how to be clean, and what that really means. We have a theme. We have activities, and we do high adventure. We have learned to bring the older ones first, and then the next older ones. It’s just get bigger and bigger. The final night, the parents finally come with the little toddler under four, and we have a campfire program where the grandkids teach their parents all the principles they learned and all the activities they did that enforced that principle. It’s probably our favorite event of the entire year, and the grandkids absolutely love it. The parents do too because they come back. It’s the thing they anticipate now ever year is Grandpa’s Camp.
Jason: Boy, that’s great. What a great legacy you’re building. I have a couple of different questions for you, because we do have the opportunity to record something, and this … who knows how long this recording could last, Doug. Just the idea that our kids or grandkids could come back and listen to this one day. It’s kind of exciting to me. My two questions for you here. The first one is, what does success mean to you?
Doug: Wow. Success is really not measured monetarily by money or whatever. It’s really the legacy that you leave behind. In other words, at the end of the day, what is it that those that you cared about, and even people that never knew you, will say about you. It’s more important that we are in the right place at the right time with the right spirit because no man’s an island as the saying says. There are moments that matter every single day. Sometimes there’s a couple of dozen, but sometimes there’s a 100 to 200. What happens is we go through life, and sometimes we have these blinders on and we don’t sense them, we don’t see them, we don’t seize them. I think the most important thing is that we learn how to not miss these moments that matter, because sometimes we just react with this mindless reaction state, “We’ll I’m busy.” “Well, don’t bother me while I’m on the computer and so forth.” This child is coming up and pretty soon they get the message. They’re not important.
We go to work all day long and we go slay these dragons, so to speak, and then we come home on the freeway, and we have this combat mission on the way home. We open the door, and we treat those that we did all that for sometimes worse than we do our own staff at the office or whatever. We think, what was that all about? At the end of the day, what kind of a husband or wife were you? What kind of a father or mother were you? What did you do with the people that our creator placed in your path? Those moments that matter when you seize them, you first have to notice them, pause, and then lean in to what’s possible, and then become better. That’s the legacy you leave behind, is how people felt when they were in your presence. Did they think clear? They did feel better about themselves? Did come to you because you gave clarity and balance and focus and confidence? They felt they had a better future because you lifted them up.
The only way you can lift others up is if you’re on higher ground. I think that’s far more important than leaving behind a bunch of money dumping in your kids’ and grandkids’ laps or whatever.
Jason: I appreciate that. That’s really good. I want to shift gears here from this most important legacy that you’ve just been talking about, how to build this family bank account where you’re passing on generational knowledge so that people can go out and become successful instead of just inheriting a lot of money, but I do want to talk about some of the principles you share in your book about safety, liquidity and rate of return, and laser focus on building your cash. Share with our listeners some of your beliefs around how to preserve and grow money.
Doug: Yeah, thank you, Jason. As a financial strategist, most people came to me throughout my entire lifetime, and still do, through what we call the financial dimension. We’ve been talking thus far about the foundational dimension. You know, your family, your heritage, your beliefs, and it’s more important you leave behind the knowledge, attitude, skills and habits. That’s an acronym that’s spelled KASH. That KASH will generate the C-A-S-H into perpetuity. We have a family bank where we deposit not only the knowledge, attitudes, skills and habits, but the money in the trust or whatever vehicle you have it in, we teach our clients we want to preserve and create generational wealth. The difference between a battery and a generator. You see, most financial advisors sort of focus on charging up a battery so to speak, a portfolio that hopefully won’t go dead before you do. the problem is most advisors do this 4% rule because that’s all the market really averages at the end of the day according to DALBAR.
This is what created the 4% rule, so that’s like a four-volt battery. That’s going to go dead pretty soon, especially when inflation is going eroding away the purchasing power and whatever you. What I’ve always wanted to do is make sure that they never run out from the money. The family bank generates income into perpetuity. Of course, one of my favorite vehicles for that is Maxfund at insurance contract. It’s not the only vehicle, but that … every million dollars in a family bank can generate $70,000 to $100,000 a year of tax-free income into perpetuity. It’s tax-free, so you eliminate the dangers of taxes. It’s very liquid. You can access the money anytime with electronic transfer phone call. When the market goes down, you don’t lose, so you’re protected from that. Also, it is very predictable based on even the worst periods of time.
My family bank, every million bucks will generate $70,000 to $100,000 a year of tax-free income. At the end of the day, when I finally die, because none of us are getting out of this life alive. We’ll all going to die someday. If I died tomorrow, every million in my family’s bank would blossom to about two and a half million tax-free. Most people leave behind their money in tax-deferred IRAs or 401(k)s, and they take RMDs, required minimum distributions, thinking by stretching out the IRA, they’re saving tax. No. Most of that money is gone by the second generation. We have an infusion of tax-free capital every time the oldest patriarch/matriarch dies.
We take 20% of that and put it into a new Maxfund at insurance contract, and so we have so much tax-free capital, that is even more than our family can use. We’re able to give to charity, to our church, to the Primary Children’s Medical Center, to perpetual education funds. We’re able to give to the Boy Scouts and hospitals and causes beyond what we need in our family. Whereas most families, their resources deplete. It gets dumped in the kids’ and grandkids’ lap. It ruins them, and they sit around saying, “When do I get my share?” We don’t ever have that kind of an entitlement. We have a family bank that has equal opportunities, not equal distribution because there’s nothing more unequal than the equal distribution to unequal’s. Our creator doesn’t give equal distribution of health to all of his children. It’s contingent upon us taking care of our bodies.
Jason: I had the good fortune. I was out joking the other morning, and I was listening to a 10x podcast with Dan Sullivan. He was talking about … I actually heard you being interviewed or sharing some of your wisdom there. He was talking about thinking about your thinking. We’re almost out of time. What are some the things you’ve learned from Dan Sullivan about thinking about your thinking before we’re finished up here?
Doug: I was just with Dan two days ago at Strategic Coach. The key thing is many times, again we go through life oblivious. The reason I go every 90 days is because we get so busy in life, the busyness of life that sometimes we have to sit back and rethink our thinking and realize … Okay. What are some of the greatest lessons I’ve ever learned? It’s usually some of the greatest breakthroughs come from some of our setbacks. These things we call game changers. Just two days ago when I was with Dan Sullivan, we listed five game changing things that we did. The first one was is when I released my first book. I learned that you don’t have to be a writer to be an author. An author is an authority on a subject and many people are authorities. That was a game changer. Then, when I let all of my professional licenses go in 2005 to become a consumer advocate, and get on the radio myself and to write books to empower other people to say things that … the straitjacket that the industry was putting on me. I wanted to be an industry transformer.
Jason: You know, Doug-
Jason: I was going to say we’re out of time there, so we only get the first two, but I want to remind our listeners your new book Entitlement Abolition: How to Lead Your Family From Me to We. Thank you so much for being a guest today on Sound Retirement Radio.
Doug: Thank you, Jason.
Announcer: Information and opinions expressed here are believed to be accurate and complete, for general information only, and should not be construed as specific tax, legal or financial advice for any individual, and does not constitute a solicitation for any securities or insurance products. Please consult with your financial professional before taking action on anything discussed in this program. Parker Financial, its representatives or its affiliates have no liability for investment decisions or other actions taken or made by you based on the information provided in this program. All insurance-related discussions are subject to the claims paying ability of the company. Investing involves risk. Jason Park is the president of Parker Financial, an independent fee-based wealth management firm located at 9057 Washington Avenue North West, Silverdale, Washington. For additional information, call 1800-514-5046, or visit us online at SoundRetirementPlanning.com.