Business Innovators Radio - Interview with Nicolas J. McLeod Wealth Preservation Specialist

Episode Date: August 11, 2023

Nicolas (Nic) J. McLeod is a man of determination and grit. No matter if he’s spending time with his wife and kids, creating music, honing his body-building skills, or helping the many families he now calls “friend” find the best ways for them to preserve their wealth and build their retirement savings—he brings a high level of intensity and passion to whatever he’s doing in any given moment.Nic is a second-generation Wealth Preservation specialist. He grew up watching his dad help families in the community with their financial needs. It impacted him at an early age, and it has now been over forty years since his father first started his practice in 1982. In 2005, Nic decided to launch his own firm and now has helped nearly 1000 families spread across the nation who have entrusted him with their financial wellbeing. Nic’s client base is diverse in both their professional backgrounds & financial needs. No matter who he is working with, his number one job is to protect and preserve their wealth and retirement savings.Nic proudly owns a record free of any consumer complaints. This is a direct result of the core values at McLeod Consulting Group. As Nic says, “As fiduciaries, our job is to foster a relationship of trust, both legally and ethically. This is what drives us, so our client’s best interests are always first. But we take it to the next level and make sure that all of the work we do is transparent to both our clients and the financial companies we work with. Many of our clients have become like family, and we could not be more thankful for them.”We look forward to inviting you to experience how our team can help you successfully navigate the years leading up to your retirement as well as continue to prosper financially, emotionally, and spiritually throughout your retirement years.Nic’s relationship with God and his family are at his core. “My daily goal is to be a humble servant. This is what gives me my moral compass and keeps it all together.” Nic’s cherished soulmate is his lovely wife Shayda. Theirs is a true love story, and they bring the same core values to their marriage that they do to all their work. Nic and Shayda have two young and wonderful children who are very active in their school and in sports—following in their father’s footsteps. While the couple spends weekdays working hard to ensure their clients remain financially secure, weekends are packed with sporting events and other family activities.“Giving me all can make me vulnerable. I care deeply about my clients,” Nic says adamantly.“It goes far beyond just ‘being about the money.’ Money isn’t what makes the world go ‘round. It’s our relationships and our health, and I find when you give everything you got, that vulnerability can leave you exposed—to the good, the bad, and the ugly. But I’ll take it all if it means that together we create success for you.”Nic can add “gifted athlete” and “seasoned musician,” to his list of accomplishments. He was a highly touted D1 football prospect, but his aspirations were cut short due to a severe foot injury. He was determined to continue being part of the sport’s world becoming a top bodybuilder, consulting for the University of Arkansas strength coaches, but his passion is helping troubled adolescents and underprivileged youth in his community. As a musician, he has successfully recorded LPs, enjoying quick success on local and national radio as well as sold-out shows in the largest and most well-known regional venues. He studied at the prestigious Musicians Institute in Los Angeles, majoring in Lead Guitar Theory and single-string improv. Music continues to be a major player in his life, as he plays and composes music for his family and personal enjoyment.Nic’s commitment to making people better and more able at whatever they choose permeates all his work—from volunteering with his community to helping individuals and families secure and preserve their wealthLearn More: https://www.njmnwa.com/GeneralInvestment Advisory Services offered by James Jurica CFP® CLU® CHFC® RICP® through Wealth Watch Advisors, an SEC Registered Investment Advisor. Wealth Watch Advisors has no affiliation with the website represented. Wealth Watch Advisors is not responsible for their views and opinions, and makes no representations or warranties about the accuracy, reliability, completeness or timeliness of the content and does not recommend or endorse any specific information herein. NJM Wealth Preservation Strategies is not affiliated. Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. Opinions expressed as written or recorded are subject to change at any time without notice and are not intended to be used as investment advice or to predict future performance. Past performance does not guarantee future results. Consult your financial professional before making any investment decision.This information is designed to provide general information on the subjects covered. Pursuant to IRS Circular 230, it is not, however, intended to provide specific legal or tax advice and cannot be used to avoid tax penalties or to promote, market, or recommend any tax plan or arrangement. Please note that NJM Wealth Preservation Strategies and its affiliates do not give legal or tax advice. You are encouraged to consult your tax advisor or attorney for any legal or tax advice.Annuity guarantees rely on the financial strength and claims-paying ability of the issuing insurer. Any comments regarding safe and secure investments, and guaranteed income streams refer only to fixed insurance products. They do not refer, in any way, to securities or investment advisory products. Fixed Insurance and Annuity product guarantees are subject to the claims‐paying ability of the issuing company and are not offered by Wealth Watch Advisors.Influential Entrepreneurs with Mike Saundershttps://businessinnovatorsradio.com/influential-entrepreneurs-with-mike-saunders/Source: https://businessinnovatorsradio.com/interview-with-nicolas-j-mcleod-wealth-preservation-specialist

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. Hello and welcome to this episode of influential entrepreneurs. This is Mike Saunders, the authority positioning coach. Today we have with us Nicholas J. McLeod, who is a wealth preservation specialist. Nick, welcome to the program. Hey, thank you. You know, I love expert titles and I love names of companies and it just begs to say,

here is the story behind that. And when I hear wealth preservation specialists, I'm thinking, wow, you specialize in helping preserve and plug the leaks up in those buckets for people's retirement and wealth. And I just love that approach. So I want to dive into what you do for your clients and how you best serve them. But get us started first with what's your story and a little bit of your background and how did you get into the financial services industry in the first place? Sure. Well, my father, Jeff, he began his journey back before I was born. So I kind of grew up in this space, so to speak. And that blossomed and evolved and changed a little bit for him over time from insurance to more retirement income solutions. So I was already, you know, acutely aware of the gaps, the holes, the pitfalls in this industry. And when I got into this business 20 years ago and started my own brand, I wanted to be a voice of reason. And what I mean by that is you've got two distinct phases of your investment career, if you will. You got the accumulation phase, which it's hard to really do

wrong, right? Your goals are what? Paying off debt, accumulating massive amounts of money, focusing on your family and your career. Well, it's okay because you possess the one commodity that you will lack later on. And that's the T word time, right? So you can, can take a little bit more risk. I'm not saying being haphazard is beneficial because it's certainly not. However, once you enter into that distribution phase or you're preparing for it, it's vitally important to at least try or attempt to control the things that you can like exposure to volatility. Taking unnecessary risk is what we preach so adamantly about not taking no risk. You've got to have a well-diversified portfolio, wouldn't you agree? I agree. And the word calculated risk pops into my mind because it's an element of risk, but it's calculated. Bingo, 100%. And I believe, like a lot of other experts, that that changes

over time. For an example, you know, if you look at the S&P 500 in the early 2000s, you've got 12 sectors. How are they weighted? In the early 2000s, right after the tech bubble burst, ironically, tech only made up five and a half to seven percent of all of the holdings within the S&P 500. Interesting, right? So the benchmark, the number one most prolific index of all time said, we don't trust tech right now. If you look today, today 30 percent, roughly 30 percent of the S&P 500 is in tech. The challenge there is if your portfolio, right, has also not, I don't like the, the word evolve, but for conversations, say, we'll use the word evolved. If you haven't continued

to update your asset classes and renew them like you're weeding a garden, you're going to fall behind in the times. And what's going to end up happening is you've got an archaic old model, like a 6040 portfolio that frankly just has underperformed for 19 years. That's the challenge people are facing. A hundred percent. You know, it makes me think of also like when you were talking in industry. Like one of the worst things in the world for management to say is, oh, well, we always done that around here. So what? You know, is it working now? It might have worked a decade or two ago, but is it working now because so many things changed. So when you were looking at when you first got in the business, you know, 20 plus years ago, I'll bet you if you

sifted through some of your paperwork and pulled up a plan that you put a client into, probably performed well then. Today, you would probably chuckle and go, you know what? things have changed and we take the same elements and methodologies, but now we do it a little bit differently with the concept of wealth preservation in mind. Amen. And bonds have been replaced, my friend. I mean, it is what it is. The last two or three years, every major financial institution and money manager on the planet, they've done one of two things. Either A, they were dead in the water when the bond market imploded for the first time since 195 alongside equities, or they changed. We have bond replacements that are not only a more practical but more safe alternative.

They have higher average yields by nearly 100%. So that's just one small anecdote. When we're entering into the distribution phase, what's the other thing that changes besides the dynamic of having time to make up for losses? Income. So our income, levels are lower. You don't have the resources or time to replace the negatives. So for us, what we're trying to really impart on people, especially with the market being at all time highs and threatened every day by growing U.S. debt is what do you feel the drivers are? What would be the mechanisms that would continue a bull rally? And if you're not confident that that's going to be the case for 10 solid years, let's control what we can control. Let's at least preserve

the amount of money you can't afford to lose, right? Because you can, to your point, it's like the three-legged stool, four-legged stool, whatever you want to think of it as if you've got the runway ahead of retirement and you've got some time on your side, you can weather a little bit of volatility because you've got time and maybe you're cranking out your high-income years and you can cover up some of those mistakes or not covered up, but you can make up for it with that income that's flowing in. you get into that, you know, next phase. And now all of a sudden it's like, you know what, I've been throttling back.

Or now maybe the income is way down. And I need to shield and protect that from volatility. And to your point, it's not like you must be in the market or else. It's like, you know what? The market is great for what it is. But now we need to start talking about preservation, protection, safety, security. You don't want to wake up in the morning, look at the news and have that pit in your stomach and go, wow, my portfolio just dropped. So what are some of the ways that you are guiding your clients into making that shift into now when they've got less time, less income to make sure that they are protected?

That's a great question. One of those answers would be, because I think that's also a three-legged stool, is we need to identify the economic environment that we find ourselves in at the time, right? You highlighted, Nick, at the beginning of your career, I'm sure you use different asset classes and different types of tools. You're absolutely right. because we were in a completely different economic state. We had a global supply chain that was teeming. It worked. It was fantastic.

Infrastructure was being built. And you had all facets firing at all cylinders. Now you've got to be acutely aware at all 12 sectors of the S&P and what their drivers are. Now that we're in an increased interest rate environment, doesn't it make sense to look for these risk-free returns that are higher than any standard dividend model in a value? stock. I mean, it's making practical choices. So what I do know is this, we're not going to avoid a beach vacation just for one little hurricane, but I'm not going to plan my family trip during the hurricane. We can always go back to the beach, my friend, but why not avoid the storm if we

know without any reasonable doubt that it's happening right now? You've got two metrics that count or matter, in my opinion, because they've been infallible since 1998. And people are simply not paying attention to them, not all people, but most people, especially, you're ready for this? Financial advisors. Yeah. So how could we expect a non-financial professional to know what to do if the financial professionals aren't following the fundamentals? Yeah. So rule number one, in a rising interest rate environment in an economy where you've got less than 50% of the sectors, 12 sectors of the S&P that are performing well. Rule number one, don't throw good money at a bad investment.

It's too hot. The market is oversold. So it's a good time to look for short term, not long term, short term, relatively risk-free returns. And brother, right now, we're at 24-year highs. You can go grab 7 to 9% without hurting yourself. then we haven't been able to do that in 20 years. Yeah. So here's something that as you're describing that and we can identify a storm.

Sometimes you can't, you know, the weather person's job is the best in the world because they can be wrong and people forgive them. But I'll tell you what my opinion of a coming storm is where we know is going to happen. And I know you can talk for probably nine hours on this, but taxes. You know, you look at the deficit and it just goes through the roof. and the only way to close that deficit is to lower and reduce spending, not going to happen, right? The government's not going to do that or how are they going to close the gap? Taxes.

So we know that taxes are going to go up and are we going to be in that lower tax bracket, question mark? But now all of a sudden we've gotten volatility handle. We're preserving our wealth that way because we're moving into good products. Well, you better make sure that you got your products positioned well so that you're not getting hit with taxes. And I think one of the things that people don't really realize is I've got my 401k, my IRA, my whatever, it's never been taxed. Well, you get down to the end of the road and now the tax rate has gone up. You're in a world of hurt. So talk a little bit about some of the strategies like as an example, would a Roth conversion be beneficial to some people on this front end before they get to that point?

Absolutely. You hitting on this sunsetting of Trump's tax breaks is vitally important. And whether we like it or not, 2006 is creeping up fast. I mean, faster than we expected. So I advise anyone listening to this show right now, any advisor listening to this show, if you have clients that are under the age of 70 and they've got massive amounts of wealth, decent income, and very low debt, they are a prime candidate to look at a true Roth conversion analysis and make sense of the cost because there is a cost and weigh that cost.

Some things to consider. What are the costs of Roth conversion in its totality? Meaning, am I taking Social Security? Am I going to tap Irma? Am I going to pay extra Medicare Part B&D? Any professionals should be able to highlight that. But we've got to sit down and say, okay, what are the ramifications of required minimum distribution on a large IRA?

Now, the first couple of years, you're not going to hit that break-even number, if that makes sense. The tax on the portion that comes out from the RMD on top of all of your other ancillary forms of income minus standard deduction, you're not going to feel that pain, my friend, until about late 70s, early 80s. But if you've got great health and God blesses you with longevity, it makes sense. It makes sense because once you hit that break-even number, and for most people, if you're averaging 7 or 8% return, all right, I'm going to throw a softball out there for everybody with their wiffle ball bat. If you're making seven to eight consistently,

your break-even number is going to be around year eight to ten. Okay. So you won at that point. You won because now we've got unbridled growth and no taxation on those, those Roth accounts, right? So that's really the question. Am I, I don't know,

am I going to live later on in life? Chances are you are. We're living longer than ever. And we're not only living longer than ever. we're living a higher quality of life longer than ever. We're exercising more, eating better, health care is getting a little bit better. So those tables that used to be, you know, adhered to retire at this age, need money to last till this age. Those sometimes have been expanded.

Hey, 100%. You know, when I got to this business, I was servicing my current client's parents and grandparents. And it was just a different lifestyle. The perms were still in order. The mu-moo in the rocking chair at 68. and you thought they were hanging it up and calling it quits. My friend, I play tennis with 75-year-olds that cover the court as well as I do. And it's just a different lifestyle.

People look better, too. It's just a different world. As things do inevitably get more expensive and our social mood changes for, in my opinion, the worst, I believe that we've got to be more prudent and conservative than ever. Preparing for this inevitable financial storm due in part by mismanagement of our central bank. You cannot do that to interest rates. You're setting banks up for massive failure. Just by way of the paper they purchased two years ago is now worthless if they need liquidity in a higher interest rate environment.

So I want to encourage everyone listening again to this podcast, go do some extra research on bonds and treasuries and the implications of rising and falling interest rate environments. That will do you a world of good as you gather additional information and use your discernment on how to allocate your points. portfolio so that it lasts as long as you do. You know, one thing you mentioned, Nick, that I think is so important for people to understand at this point. You know, oh, I heard that Roth conversion. I heard that online once that he mentioned this. So I'm going to go out and do that.

Pump the brakes because. Right. Just like if this, then that. If you do that, what's going to happen? So everyone's situation is different. It's like when you make a chess move, you keep your finger on the piece to look around and go, was this a good move? Oh, no, I need to make a.

different move. If a Roth conversion makes sense for you, wonderful, but get someone that knows all of the intricacies to make sure that that makes sense. The other aspect that you brought up was that required minimum distribution. And I feel like that there's someone out there that there's been a whole bunch of people have thought this. They get to the point where it's like, oh, you must withdraw this by this time. And they're like, no, I'm good. You know, I've got this income, this piece. I'm doing some consulting work part time. I don't need to take that. And all of a sudden, there's a penalty that gets triggered. So talk a little bit about those dates and the severity and things to pay attention to with the required minimum distribution. Prior proper planning,

73 years old is that new age now. It bumped from 70 and a half to 72, thanks to COVID. And then this year, January 1st, what we call Secure Act 2.0, bumped that age again to 73. There is legislation on the table to in 26 when the sun setting hits in that don't, don't, all of a sudden the taxes go up. They will go up. A hundred percent, I believe that they will go up. Will they go up to Eisenhower levels? I'm not quite sure.

But they have to go up. We're going to have $34 trillion in debt by December. And as a sidebar, because you brought this up earlier and I forgot to address it, what really is troubling, okay? And this pertains to the income piece in its totality is our payments, our interest payments that come off the books, January of 2024, more than triple next year to 400 billion per month. I want you to do that math with me. $22 trillion GDP, that's robust, right?

So if we allocate 15% of our GDP, which is the very top end, right, according to every economist on the planet, what's 15% of 20, my friend? Sounds like that runs out around. month nine and a half, right? So then what happens? What happens in October of 24 when there's no more GDP money to be allocated? Do we get downgraded again? Do we default? Listen, we're not out of the woods, brother. And we've really got to understand the ramifications. I did a piece on this this morning after reading a Warren Buffett article. And I encourage people to really dig deeper, use discernment. Think a little bit. We've been blessed with making back most of what you lost last year. How many times? do we have to touch the burner and realize that we're going to get stung. It's time to also

cash in those gains and make sure, especially in an IRA because that's a tax-free exchange, make sure that you can parlay that into a large or a high, short-term, high-yield interest rate that makes sense for you. As it pertains to RMDs, once we hit 73, whether you need the money or not, it's vitally important to have all those 401ks and IRAs consolidated. You will get hit with the 25% penalty if you miscalculate or do not take it on time. And they don't care. Talk to a woman yesterday in Northern California, 76 years old. And she says to me, Nick, I didn't take the money just like you were talking about because I didn't need it. And I said, sweetheart, you have to take it. It's called required minimum distribution. Not suggested minimum

distribution. So this poor lady is going to be inadvertently, she's going to be punished because she didn't need your money. The whole purpose you all is to generate the big T taxes. Yep. Yeah. That's it. Yeah. 100%. And here's something else that I was thinking about with volatility and time and you take a hit on whatever money you had in the market. You're going to feel that pressure to gain that money back. And what if the markets aren't moving in the right direction? And now you take it even more risk to get the money back and it becomes this vicious cycle. And all of a sudden, it's like you're throw like you said, you're throwing good money after bad returns. And that's where you need to see. step off of that train and get that wealth preserved, locked in, guaranteed return, safety, liquidity, all of those things that you're talking about. But when you start layering in some of these external things like the economic factors,

the required minimum distributions, the taxes, it's not an easy one, two, three answer. And now I'm off to the pickleball court. I mean, there's some things that you can't do on your own. You need to make sure that someone like yourself is working with your portfolio to say, let's make sure this is taken care of. I had a client once that had this happen. Let's make sure that this is taken care of. We led the nation last year by not only warning the general public starting in 2021 that

Powell was serious about rate hikes. Warren Buffett did a great job of that too. God bless him. You know what else we led the nation in? Rate of return. Our 9% rate of return was at the same time period that the market took a 20% bath. So imagine on a million dollars, we lose 20%. We're down to 800. Now you make 20% back on 800. You're at 960. You are not not the million. And the challenge is if you were taking an

RMD and you're paying a financial professional 1% fee on top of the 20 you lost, you lost an additional four and a half to five. So now in 2023, you're basing that RMD off of last year's higher our IRA value. It's a falling knife. You're catching this fallen knife called volatility. It will cut you. And death by a thousand cuts is you cannot recover from that in distribution phase, period. Think of it this way. We've got a hole in a proverbial bucket, a five gallon bucket. That hole doesn't get smaller as you age. It grows as you age. Year one, it's 3.77 percent is what comes out in RMD. Do you know what it is by age 83? 5.6%. Wow. By age 93, it's 9.4%. Think about that for a second. The S&P 500's 85 year average return is just shy of 10% in 85 years. The 23 year SMP average is 5.6%. So even if you

used the S&P and you never changed positions and you weren't paying a professional. You are now underwater, assuming we have a 10-year run in the market without a negative, which hasn't happened in 34 years. Right, right. So if we create the perfect fantasy scenario, you're now losing money. You ready for this? By year 10. Wow.

So one bad year, my friend, you're off. Yeah. So, you know, let me ask you a question. Are you aware that? that there are current tools, multiple tools that offer risk-free returns of north of six and a quarter percent right now, right now? I think most people would say, no. Risk-free.

Why would we seek risk if the risk-free return is higher than the 23-year average? And risk-free comes with it, the peace of mind and the sleep-at-night insurance of, I don't need to worry about what the news is saying, what the Dow Jones did or the S&P did, because I'm locked in. Bingo. Yeah. I like to look at it in tears. And so that we don't have all our eggs in one basket, a laddered approach is vitally important. That way, you've got your dollars are becoming liquid every 15 to 18 months to a certain extent, right?

But also, we don't need all of our eggs in that basket. Like we talked about at the beginning of this podcast, there's very strategic high yield returns right now. that are moderately risky, but only moderately risky if you've got no one watching them like a hawk. We have a staff of 13 people, 13 individuals. All they do is watch stop losses and our options transactions on a daily basis. And my main CFP, who is studying currently for his CFA designation, great, brilliant guy, he watches our accounts every single day from open to close. So there's no position that we're going to sit there and let our distribution age clients take a walloping. And that's vital too.

And you know what? It's very cost intensive because it's labor intensive. So it's important to, for us anyway, to bring a lot of value to our client base. And we share in that cost with them instead of just giving it all to them. Yep. Well, when you mentioned that, it made me think of the fact that when you have the right layers and tears in place, it prevents you from shedding tears by having it done the wrong way. So I think it's when, when I hear that you've got watchdogs and their whole job is you make

sure this is dialed in the way we need it, most of the other guys and gals out there don't have that ability. You know, they're trying to keep all the pleats spinning in the air themselves. So I think what you've laid out here is, you know, just massively amazingly educational. it brings up some points that sometimes people hadn't thought about, right? The time and the volatility and the income and the taxes and they all play together. And what if RMD and what if and what if? Man, my head's spinning.

Can you just look at my situation to see if I'm, give me that second opinion or take a look and see where I'm at? So, Nick, if someone is listening to this thinking, maybe I could have a, you know, another look. What's the best way that they can learn more about what you guys are doing and then also connect with you and see if you can get that consultation set. We offer, in what I consider, the industry's most robust, comprehensive analysis, and it is complementary by nature. So visiting our website would be a great place to start.

We also speak once a week live for an hour and a half. They can attend these workshops on different topics like Roth and Roth conversion, RMDs navigating a troubled economic landscape, and our estate planning. everything that you need to know beginning to end. That's what's important is to make sure that all your financial professionals aren't fighting over you. They're fighting for you on the same team. So we keep all of those people under one roof. I did it the other way. I did try to keep every plate spinning. And I'm telling you, I'm not perfect. There are things that pull you in other directions. I'm a father. I'm a musician. I'm a husband. I'm a friend. I'm a son. There are things that I

cannot control as well. So when I relinquished that control and started hiring high quality, high character people that wanted to get out there and really get their hands dirty, everything changed for us. So I'm a big fan of having a team. It's not about me. It's about having a team. And where my expertise and knowledge drops off, we've got other men and women that are older with diverse educational backgrounds, and theirs takes off. So visit our website and sign up for our complimentary workshops. They're usually on Tuesdays or Monday nights every single week. And then we would love to give you our version of a complimentary, comprehensive financial

analysis coming through anything that matters to them. So we'll have an introductory call for about 30 minutes, gathering information, and we'll tailor the information based on what you tell me you're looking for. Nice. Sounds amazing. I love that you do consistent educational teaching events, workshops. So that's spectacular. What's the website address? www. NJMNWA.com as in Nicholas J. McLeod, Northwest Arkansas.com. Awesome. Well, Nick, it's been a real pleasure talking with you. Thank you so much. much for coming on today. Thank you so much. God bless. Bye-bye.

You've been listening to Influential Entrepreneurs with Mike Saunders. To learn more about the resources mentioned on today's show or listen to past episodes, visit www. www.com.