The most important person in your financial life, other than a spouse, is your tax advisor. Robert Kiyosaki, author of “Rich Dad Poor Dad,” joins Tom to discuss his hard-earned wisdom from working with bad and good tax advisors. Find out what questions to ask a tax professional so you can legally pay less taxes.
01:24 – Why Are Taxes So Important To Building Wealth?
04:02 – How To Know If You Have A Bad Tax Advisor?
07:15 – How Should You Interview Your Tax Advisor?
08:24 – What Traits Do Good Tax Advisors Possess?
14:01 – What Role Does Education Play In The Client-Professional Relationship?
Announcer: This is The WealthAbility™ Show with Tom Wheelwright. Way more money, way less taxes.
Tom Wheelwright: Welcome to The WealthAbility™ Show, where we're always learning about how to make way more money and pay way less taxes.
This is Tom Wheelwright, your host, founder of WealthAbility™.
You know, over the years, what I've discovered is in all my practice as a CPA, the single most important person in your financial life outside of your spouse, is your tax advisor. So today, you're gonna learn how to choose a team of tax professionals dedicated to reducing your taxes. So I'm very privileged to have a very special guest, really great friend of mine and best-selling author of Rich Dad, Poor Dad, Robert Kiyosaki. Welcome Robert, to the show. It's just awesome to have you on. Thank you so much.
Robert Kiyosaki: Oh thank you Tom.
Tom Wheelwright: So, right off the bat Robert. Tell us, if you would, just tell our audience, you know you and I traveled the world together and you're always talking about taxes being so important. You write it in every book, Why The Rich Are Getting Richer. You included so much about why taxes are so important. Why are they so important to you? Why is that such a big deal to you?
Robert Kiyosaki: Well, I think we have to look back on history 'cause I'm a history buff. And if you look at the genesis of America, it really was a spark called The Boston Tea Party. And it wasn't about drinking tea, it was a tax revolt. So America was founded on a tax revolt. You know representation, taxation without representation. And as a student of history, I've watched how taxes have, from being fundamentally a tax free concept of a country, today the taxes in America and most of the world are our single largest expense.
And it seems now that people don't even question it. You know they, what most people do is they just cheat the government and don't pay taxes rather than learning about how you can pay less or no taxes legally. So really that's why it's important to me, is I don't want people to be tax cheats because as Tom Wheelwright has taught me, you don't have to be a tax cheat to not pay taxes, legally.
Tom Wheelwright: We had an interesting experience in Moscow a while back, you remember, with the entrepreneurs?
Robert Kiyosaki: Right.
Tom Wheelwright: So, tell everybody about that story. I think that's a great story.
Robert Kiyosaki: Well we had this fantastic dinner at this fabulous hotel. And there's all these some of the most successful entrepreneurs in Russia, or at least in Moscow, for the dinner. And we were talking about not paying taxes. And there was like no response. And the reason there was no response was because they don't pay taxes anyway.
Tom Wheelwright: I love the comment one of our friends made in Russia, he said that in Russia laws are a suggestion.
Robert Kiyosaki: Right. You know they don't follow the laws there. And that's Russia. But it's also America too. And every time I go into an establishment in American and somebody says if you'll pay cash we'll give you a discount. Well that is a tax discount.
Tom Wheelwright: Right.
Robert Kiyosaki: Because they don't have to declare the cash.
Tom Wheelwright: No. That's exactly right. So, you know, one thing, the question I get most often when we're traveling Robert, is how do I find a good tax advisor, but what I love to hear is the stories about the bad tax advisors, because I think there are a lot of bad tax advisors out there. And you had an experience. You can tell a story about a particularly bad experience that you had with a tax advisor that I think our listeners would love to hear 'cause I think they'll relate to it.
Robert Kiyosaki: Sure. I started off as a young entrepreneur. You don't know a good tax advisor from a bad one. And, the plan was, the more successful I got, then eventually I could afford, back then, the big eight tax advisors. So as Kim and I got richer we eventually had, Arthur Anderson, was that the name of that company?
Tom Wheelwright: Yeah. As I recall. The advisor, this is somebody who had been a partner, actually been the tax partner in charge. I knew him. He'd been a … this is before you and I got together.
Robert Kiyosaki: Yeah and so I sat there listening to him, and he brings in another high-falutin tax advisor out of Washington DC with his tricky shoes and his tricky glasses. And he's a very arrogant S.O.B. and he says, “Well I've evaluated your tax advisor and myself have analyzed your tax situation and we suggest you sell all your real estate and buy mutual funds.” And there was a silence from Kim and I. We went, “You're kidding, aren't you?” And Tom, the sad part was, they weren't kidding.
Tom Wheelwright: Oh my heavens.
Robert Kiyosaki: And I said, “Don't you see, we pay no taxes because we own a lot of real estate and we fundamentally have tax-free income.” He says, “Yes, yes, yes, but that's highly risky. Our recommendation to you is sell all of your real estate,” and then as you know, we'd have a capital gains tax problem. ‘Cause it would be in the millions because of all the deferred taxes. And then you buy mutual funds.
Tom Wheelwright: So, like, they knew nothing about you. I mean, anybody who's read Rich Dad, Poor Dad, anybody who knows you, knows that you love real estate, so did they just not know anything about you?
Robert Kiyosaki: Well I don't think that is, I don't think they know anything about taxes. I don't care if they don't know anything about real estate. I don't expect 'em to know anything about real estate. But I do expect 'em to look at my tax forms and realize that there was very little tax being paid. You know, we're making millions and the rates at that time were probably down about 12 percent effective tax. And then you got us down to zero. So, to me that is tax advice, and what he was giving me was, I don't know what … Tom, what the heck, this guy was the Grand Poobah out of Washington DC. He worked with the tax department for Arthur Anderson and all of this stuff, what is wrong with that guy?
Tom Wheelwright: Yeah. That's a challenge. I looked at that, I heard that story and I thought, you know the big issue I have with that is that they didn't do, they really weren't asking you the questions about you know, what do you want, what are you looking for? What's important to you? And to me, that's a big one.
I remember when you and I were talking about my book, Tax-Free Wealth, right. I remember sitting in your office there and you were saying, “Look, can you put a list of what questions people should ask a tax advisor, in the book, you know, in order to interview the people. And I thought was really interesting that that was, that seemed to be like your number one question. The number one thing you wanted me to put in the book.
Robert Kiyosaki: Well that's correct because you know, I don't know how many quadrillion pages of tax law there is, but the average guy plus the average tax CPA and the average tax advisor or the tax attorney definitely cannot know everything. So that's why the questions you ask in your interview of your tax advisor, be an attorney or an accountant. You really have to understand what questions to ask, otherwise you're gonna sit there and be impressed with Arthur Anderson or Arthur Young or Ernst & Whinney and all that stuff and you get sucked right in to fundamentally incompetent professionals.
Tom Wheelwright: Okay. So fundamentally, Robert, what are you looking for in a tax advisor? When you looked for tax advisors in the past, and you and I had this discussion years ago when we got together. What, fundamentally, do you think people should look for in a tax advisor?
Robert Kiyosaki: Well, number one is how can I legally pay less taxes? I don't know if your listeners ever heard this but I've run into … I've probably had about 10 or 12 CPAs guiding me in my development as an entrepreneur. And I would say 100 percent, except for Tom Wheelwright, want you to pay taxes. You know they all will say, well you better pay taxes so the government doesn't audit you. That's their comment. They're more afraid of the government than I am.
Having a rich dad, I really knew that he always challenged the assumptions of his tax advisors. He said, “Well tell me how else you can do it.”
And as you know, we're all human, we're lazy. And we'd rather just give it a pat standard answer and collect your fees and do your taxes and move on. But if you, as the entrepreneur, or as the taxpayer does not take the time to educate yourself as to what questions to ask, then you get what you pay for. You know.
Tom Wheelwright: So, you're not afraid of an audit?
Robert Kiyosaki: Nobody likes an audit. But as you've taught me, and as my friend Donald Trump has taught me, you always get audited anyway. You know, once you're in a certain category of wealth, audits are part of the program. In fact, that's why my rich dad taught me, he says my banker has never asked me for my report card, my banker wants to see my financial statements. Because that's an audit. The banker wants to audit your books. How are you managing your money?
And the average person, even if they have a PHD, they have a FICO score. You know, Fair Isaac Company or something like that. It doesn't measure anything of your intelligence, it just measures your reliability as a bill payer.
So that's why as an entrepreneur, I've really got to be careful who I take tax advice from. But you don't know good advice from bad advice if you don't know what you're looking for or what questions to ask. And that's why those questions were so important to me that you put into your book so at least the entrepreneur or the person being audited has a chance.
Tom Wheelwright: Yeah. Thank you for that. That was, I actually think, that's chapter 23 of Tax-Free Wealth. And I think that's actually the most important chapter in the entire book. Because the reality is, like you say, it's a very complicated tax law. It doesn't matter where you are in the world, tax laws are very complicated when it comes to the details. The basics are the same. You know it's a series of incentives for entrepreneurs and investors and you've gotta get some education.
One of the things I love when we're working together Robert, is that you're always suggesting that people get educated, even though they're not gonna know the details. You're always looking for how do you get more educated on taxes.
Robert Kiyosaki: Right. And you know, I don't think there's anybody who wants to go back to do what you've done, Tom.
Tom Wheelwright: Nobody does.
Robert Kiyosaki: Go get your masters in tax and all this stuff and teach and all this stuff. So that's why the quality of your tax advice depends upon the quality of your tax advisor.
I often say it again you know, I still remember my first, I think it was Price Waterhouse was my first tax guy. He was a nice guy, but he was just out of school. And he really didn't know anything about real estate. He was a stock guy. And here I am, I'm in my 20s and I have a small real estate portfolio, he knew nothing about real estate. And he knew nothing about business because he was an employee of an accounting firm.
I couldn't understand why he and I could not communicate. Today, after working with you, I understand why. Because we're completely different people. You know, I say to everybody out there, you can't do what you can't do. You know what I mean? So, when people say, well you can't do what Robert Kiyosaki does, well it's because you're not Robert Kiyosaki.
You know, if you're a person who has invested in an IRA or 401(k) and you think that it's high finance, then you can't really use Tom Wheelwright. That's where most people are at. They're in their 401(k)s, IRAs, ATFs, and they have a hodgepodge of investments. And then when I talk to them about how I do what I do, Tom you know this, no matter where we are in the world, when we tell them what Robert Kiyosaki does, what do they always say?
Tom Wheelwright: You can't do that here.
Robert Kiyosaki: Yeah. And I say you're right, you can't do that here, but I can.
Tom Wheelwright: That's true. And somebody is doing it here.
Robert Kiyosaki: …the morons out there, just because they think they're Donald Trump because they have a couple million dollars in the stock market, they can't do what I do, until they change who they are.
Tom Wheelwright: That's right.
Robert Kiyosaki: Is that correct.
Tom Wheelwright: No. That's absolutely right. And you know, it's like you say, you and I have conversations about you know, new tax laws and new opportunities. I remember, I don't know where we were flying but it's somewhere in Eastern Europe, and we were talking about your taxes on the plane. And you were saying, so, what do I do here, with you know, with the real estate market? And I said, “Well, you know here's another thing that I wouldn't normally talk to you about, but in this situation it seems like it might work,” and it ended up saving hundreds of thousands of dollars.
You know I think that what I always love about you and Kim, is that you're always asking the questions. And you're always having the discussion. You're always willing to learn. And to me, the challenge that I have with a lot of people is that they're uncomfortable with their 401(k) and their IRA. They don't want to learn it. And the reality is, if you don't get some education, you know, no matter what your tax advisor does, there's … a lot of it you have to do. And it's like, when you come to me, and you say, okay, so, what do we do here? What am I telling you? I'm always telling you, buy more real estate. Right?
Robert Kiyosaki: Right. And then just so everybody knows, there's this new book out called The Curse of Cash by Kenneth Rogof R O G O F. And I think it's kinda funny is that everybody's holding on to cash and the government doesn't want you to hold on to cash because they can't trace it.
Tom Wheelwright: Right. Right.
Robert Kiyosaki: So, cash, especially the U.S. hundred dollar bill, and now the Euro. I think the Euro just cut down to five hundred dollar, is that the government's so desperate for taxes, they don't want you to hold cash.
Tom Wheelwright: Yeah. And then the bitcoin guys. They're going all after them. Actually there was somebody recently just got put in jail. They got put in prison because they were doing transactions without asking the questions.
In your mind, what's the best way to work with a tax advisor? ‘Cause a lot of it's up to you. It's not just your tax advisor but how do you want to work with a tax advisor?
Robert Kiyosaki: Well you know there's an old saying that you know, you kiss a lot of frogs to find that fairy prince or fairy princess, you know what I mean? And you have to be open that's why with the story of the Arthur Anderson guys, they got shut down for criminal activity. Most people don't question the advisor or themselves. So the thing I say is, don't get sucked in by the title or the big name, or … this it really comes to: to thine self be true.
So when a 401(k) guy tells me they can't do what I do, I say, you're right. You can't do it. ‘Cause you're a 401(k) guy. Or you're an IRA guy, or an ETF guy. You can't do what I do. But if you wanna find out what the tax advisor says, you better find a tax advisor who understands what you can do. ‘Cause most people that you know, Tom, cannot do what Kim and I do. It's fundamentally impossible.
Tom Wheelwright: No. For sure. And you know, you said something there that I just wanna key on is that, find out what you can do right.
Robert Kiyosaki: Yeah.
Tom Wheelwright: And how you can do it. You know I always say that people always ask me, is this deductible? You know we had that guy in Chile, remember that said, “Well you can't deduct your car.” What's the first thing you did? You said, “Tom, get up on stage and tell 'em how to deduct their car.” And that was a great lesson for me because I'm going, well I've gotta think about this one because how do you deduct a car when the law says you can't deduct a car? But we did it. And the guy actually came up to us afterwards, and he says, “I would never have thought of that.” And that actually changed my mind about something 'cause I used to say, well, you know most things are deductible. Some things aren't. And yet with that challenge that you gave me, I said, what I realized is everything, everything is possible. Everything is possibly deductible. You just have to think about it a different way, and so the question really is not is it deductible, but how do you make it deductible?
And I wanna tell ya, I just really appreciate that challenge you gave me down there in Chile.
Robert Kiyosaki: Well that's what we all have these brains for, right? And what most people have, they don't have a brain, they turn into polly wants a cracker, they turn into parrots. Well, my tax advisor says I can't do that. I said, “Do you have a brain in your head or are you just a parrot?”
Tom Wheelwright: That's awesome.
Robert Kiyosaki: And most people, as you know, are parrots because they just pay the taxes and then complain. And to me it's just a game to me. I mean how much money can I make legally? And how little in taxes can I pay, legally? This is my game. Some people like golf, some people like fishing, some people like ping pong. I like making a lot of money and paying as little tax as possible. It's kind of my game.
But if you wanna be a tax slave, then just keep your ETFs and your IRAs and your 401(k)s and believe your Donald Trump or Warren Buffet. ‘Cause those guys don't pay taxes.
Tom Wheelwright: I will tell ya, it's a great game. You know people ask me all the time, well you know, why do you like taxes so much? And it's the same reason. It's a great game.
Robert Kiyosaki: Yeah!
Tom Wheelwright: It's fantastic. I mean it's one of the most complicated games in the world but it's a blast.
Robert Kiyosaki: Again, you go back in history and you begin to see a process. Like in 1913, the Federal Reserve Bank was created. Also in 1913 was the 16th amendment. And if you put the two together, you kind of realize that the dollar, U.S. dollar cannot exist without debt and taxes. So that was when that became my game. I says, “how does the fed print money out of nothing?” And then why do they need taxes to collect the payment on that debt? And that was kind of the question.
So, you know, when people bitch about the fed I just say be the fed. Figure it out. Ohhh that's illegal. And that's polly wants a cracker. Uhhh it's illegal. It's just laziness.
Tom Wheelwright: Yeah. That's what it is. That's what it is. So, let's go ahead and wrap it up. Any final words Robert? Any advice you've got for our listeners out there?
Robert Kiyosaki: No. It's I love working with Tom Wheelwright and my little team of advisors and it is only a game. How much money can we make? How much good can we do in the world? And how little in taxes can we pay? Now if you just wanna work at a job and not care what your company does, or what your company produces, and if you like paying taxes and you like being a pawn of the government, don't listen to Tom Wheelwright. That's all I have to say.
Tom Wheelwright: All right, well thank you Robert. Everybody, Robert Kiyosaki. Amazing author and teacher. Go to richdad.com and there's all sorts of great information, richdad.com. And remember WealthAbility™. It's all about making way more money like Robert says, making way more money and paying way less taxes.
Announcer: You've been listening to The WealthAbility™ Show, with Tom Wheelwright, way more money, way less taxes. To learn more, go to wealthability.com.