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the firm asked me if I needed mental health counseling when I resigned, right? Because most wouldn't. I was making a lot of money, but the mistake maybe the firm made was allowing me behind the curtain. He's selling for $6 million, and he says to me, this is great, but I have to pay so much in tax. I have no idea how we're going to replace my income. Now, I know I'm about to walk into a different boardroom with glass doors and windows, and that family in a team of eight, and we lead with tax mitigation on a sale and lead with an income first investment approach. Everything he's asking for, but I am legally not allowed to give him the same advice, so I have to give him the can answer of paying taxes is a good problem to have, which still makes my stomach turn to this day to hear it. That's the deciding day where I needed to do something different. There's a reason ultra wealthy have less than 20% of their liquid capital, and in traditional stock and bond investments. We're buying asset classes that produce consistent income to buy your time back now. And growth is a secondary mandate, but the importance of that is the consistency of return, and most investors just don't get access to that type of investment. Well, I need to show you if you're overpaying in tax, or if you're not, and if you are, what are all of your options to ethically and legally mitigate that, so you're paying your fair share, but you're not paying more than your fair share. And our average client savings last year alone was $440,000 saved of overpayment of tax per family. Welcome to Keepability Amplifier. This is Mike Canigs, and today's guest manage over $1.4 billion at Morgan Stanley, and then walked away, not because he failed, because he saw behind the curtain, and one moment turned him off completely. Now, while serving more than 700 clients and building over 20,000 financial plans, he learned how the ultra wealthy actually build and protect wealth, and it's not what your advisor is telling you, and what you learn in the show will change the way you think about your money, passive income, and tax permanently. He certainly has for me, and he's going to show you the one thing that quietly determines your financial future, and how to get started of it with an insider level financial audit that he's going to give away, and it is really cool. So this is for you, if you're a business owner, whose greatest asset is your business, that's probably you, and you're paying too much tax. That's all of us, and you want passive income now, not at some vague point in the future, which is also all this. And you've been with a traditional wealth manager for years, and your gut is whispering that something is off. And that's happened to me too. So it could be that you're in the middle of a major transition. It could be a death, divorce, or an exit. So as I said, welcome to Capability Amplifier. Mike Canigs, you're about to get the ultra wealthy playbook. They never show you it with Dana Cornell. So Dana, it's nice to be here with you, sir. How are you doing? I'm doing great, Mike. Thanks for having me. Always good to catch up. Yep, it always is. So I think the way to begin this is in the intro, you had a dream job that you add Morgan Stanley. You're on the Forbes list, $1.4 billion under management with over 700 clients. So the big thing is, why'd you walk away from that? What was it that was that moment? Yeah. Man, we could talk about that for hours in itself. I'll tell you why you're in a second, but my origin story is this, I grew up in Oli in New York, a small town south of Buffalo, a western New York. My father to this day is an excavation contractor. My mom was a kindergarten teacher. The average household income in this county is $50,000. We grew up, I wanted for nothing. We grew up great. My father taught me how to work hard. My mother taught me the morals that come along with that and how to be a good person. That was the basis for who I am as a human, but I had to start knocking on doors because we don't live around extreme wealth. I didn't come from a trust fund family. My father wasn't in the business. I didn't inherit this. I worked it by knocking on 25 doors a day to meet 25 people and hear their concerns and hear their pain. That happened to be the end of 2007 in into 2008. I had the now looking back the advantage and the privilege to be out there on people's doorsteps when their advisors were not picking up the phone through 2008 market crash and truly hear what were the pain points that sent these people into an emotional and mental spiral and for good reason. Then their support system, their advisor, isn't even picking up the phone because the reality is the advisor doesn't know what to tell you just as much as you don't know what to tell yourself or your neighbor. Other than hang on, it's a long-term solution. It'll be okay. That's what sent me down the trajectory of I have to figure out why a certain percentage, a small percentage, the 1% of 1%, don't seem to deal with these issues. That's what I built the system around. That's what got us here today. The firm asked me if I needed mental health counseling when I resigned because most wouldn't. I was making a lot of money. Pretty, pretty easy schedule, but the mistake maybe the firm made was allowing me behind the curtain. I started my practice knocking on doors in Western New York. I didn't know anybody that had any money to speak of. I was incessantly thirsty for the knowledge. Certifications came after that and just a continual push to figure out how do they do it at the next level and the level after that and the level after that. The short answer is that led me to a division of that firm, which was their advanced planning division, working with families 50 million liquid net worth and above. You quickly realize that playbook, the true playbook of the ultra-wealthy, is a totally different game plan than what I had been taught for the 15 years prior to that to deliver to what they call a retail financial client or just the average wealthy investor. Yeah, so, but they wouldn't let me give that advice to people who didn't pay the firm a certain amount of money. That just didn't sit well with me. I'm sure we'll get into some specific stories, but there was a turning point. I'm going into the new, I'm now the new guy on the team of eight financial planners with a family selling for $125 million selling their business. My call before that is with a legacy client. He's selling for $6 million and he says to me, this is great, but I have to pay so much in tax. Now, I know I'm about to walk into a different boardroom with glass doors and windows and that family in a team of eight and we lead with tax mitigation on a sale annual tax income mitigation and lead with an income first investment approach. Everything he's asking for, but I am legally not allowed to give him the same advice. So, I have to give him the can answer of paying taxes is a good problem to have, which still makes my stomach turn to this day to hear it, and that's the deciding day where I needed to do something different. So, here we are. Yeah, and I would just add to that virtual family office, this style of strategy is becoming more popular and that word gets thrown around a lot. I think your question is relevant and I laughed a bit in the beginning because we were just having this talk inside the office of lots of people use a term like that. How many people have actually done it and lived it and executed it for 20 years? And I think that pool gets very small when you put that filter on people. Yeah, it's a great story and it just shows you really earned being here. You saw the top and or at least the appearance of it and said this doesn't serve the kind of person I really want to serve, the strategies are solid. Yeah, so yeah, go ahead. It's built for the institution, not the individual. That's traditional wealth management as a whole and that was very much my experience being at what most would consider a very high level in that business. But you know, as we've talked, you know, I have two little boys that are six and eight now and when they show up, I got to have a clear conscience when they ask me, what dad, what do you do for a living and who do you help, right? And this is how it could actually help people not just make a lot of money. So here we are. So the net net is you built a firm built on top of effectively sharing the secrets that you saw at the top level, the 50 million and above net worth that normally no one else sees. So that's why I wanted to hear today is, you know, answer from your perspective, the biggest myth about money, but also how does the snowball start? from your point of view and your experience after doing this so long and with so many people. - Yeah, so what you find, and what I realized quickly was it's the sequence of how they unpack a financial plan, but it's the efficiency of what they do. And what I mean by that very specifically is every one of those cases started with saving tax. We preserve what we have first and foremost and manage the inefficiency that naturally comes from just accepting, here's my tax bill. Here's what I can take away from a business exit or a real estate exit. And that extra savings per family, per year, even if it's just your annual tax bill, automatically pads your bottom line. And then that's earning passive income, right? So we start with tax. They do the same thing with investments. The consistency of the return and most, it's very hard to save your way to true wealth, right? In a traditional stock bond investment portfolio. So why there's a reason ultra wealthy have less than 20% of their liquid capital in traditional stock and bond investments, right? And growth is a secondary mandate, but the importance of that is the consistency of return. And most investors just don't get access to that type of investment. Nor know how to do the due diligence to make sure their money's in the right place and it's safe. - Yeah, so really the bottom line is the more of what is typically the taxes that you've been giving to the government, you reduce that and compound that and use some of the advanced investment strategies which part of I know your strategy is alternative investments as well. And would that be a kind of the bottom line summary? - Yeah, if I did nothing else, right? There are three core strategies that really, the 80-20 rule that move the needle. It's efficiency on not overpaying tax on your annual income and especially on an asset or a liquidity event. It's your investment thesis and structure producing true passive income, not selling shares of stock to somehow create synthetic income, as I call it, right? And three is the coordination of all of that. And it's the overarching ownership of the outcome and to go there deeper what I'm saying is everyone has a financial advisory, you might have three. Everyone has a CPA, everybody has an attorney, everyone has an insurance professional. Nobody typically is owning the outcome. When I sat in that room, that boardroom on Fifth Avenue in New York City, as I said, a team of eight, one of us, our entire job was to own the outcome and make sure the advice all got implemented correctly and coordinated with all advisors and professions. You did just those three and that excludes the other two pillars of the process, right? Which is protected and passed on. But if you just did those, you're gonna be light years ahead over your trending app right now, I can promise you that. - Okay, and I would like to, I think the two questions that pop up for me are obviously, you know, how does that snowball differ over time? So, you know, two, three, five, ten years, 20 years from now. But maybe the pre-question I have for you is, if you were starting today, you know, so let's say this podcast hits, you're meeting with someone with your past experience, but also present and future market knowledge and what you've seen because you've lived through this, through multiple cycles at this point, what would the plan, if you're building a plan for someone starting today, what would that look like? - Sure. So it starts really, so let me zoom out and I'll zoom back in. So there are four pillars to our overall process, right? It's preserved first, meaning save the most amount of money, where whatever we're making, how do we keep the most amount of money in our pocket, right? Then it's produce, and by produce, I mean produce consistent passive income right now, not 10, 20, 30 years in the future, right? And then it's protect what we have, we don't need something throwing us off, like a long-term care assisted living situation, something like that, and then how do we pass it efficiently? But where I start to answer your question specifically is just an analysis, right? We have to do a diagnostic, which essentially is a financial MRI that establishes what I say you're baseline. So I need to show you if you're overpaying in tax or if you're not, and if you are, what are all of your options to ethically and legally mitigate that? So you're paying your fair share, but you're not paying more than your fair share. But let's just say it's $100,000, right? $100,000, and you do that over five years, 10 years, and then you put the right investment structure on top of that, typically, it's not a one-size-fits-all, but just doing that as opposed to the current path that you're on typically doubles your liquid net worth just by doing those first two moves. - Yeah, it sounds too simple, it really does. And one thing I'll insert here, 'cause we promised this, and I'm just gonna leak it now, you put together a tool in its at cchquiz.com that helps someone actually look at what their potential savings could be. So I know we'll talk about this at the end, but I also wanted to insert it now because while you're listening to this or you're watching this, go check that out at cchquiz.com. But what is the tool that you use to do the preliminary? - Yeah, so it's just we call it our financial diagnostic, and it's just that, right? It's essentially, if that analogy makes sense to you, it's doing a full-body scan of your financial plan. Where are you at? Where are the inefficiencies in your plan? Where are you leaking wealth? What's working well and plan around that? And our goal is not to replace your current advisors, ours is to build and draft a blueprint in which we can implement with your current advisors, assuming they have the capability and the ambition to work with you to execute that, to tighten those inefficiencies. And to put you on a path, as I said, scale up your liquid net worth much faster than a traditional financial plan. And it does sound in some way simple in explanation. It's the detail of the execution is where the nuance comes. - Yeah, the devil's always in the details, right? So, how about, talk about the 1% on an average account. You know, the typical deal is you're paying 1%. And what does that cost in terms of growth and what you keep? 'Cause that's another factor in your education as well. - Sure, yeah. So just for clarity for those listening, the 1% meaning the fee typically pay a financial advisor to manage your money. Look, I'm all for, I don't run a nonprofit to be very transparent here. We are very efficient in the fees that we charge and how we charge them. But I try and look at this the same way that I look at anything that I would invest in for myself. Is there a return on my investment for when I am paying someone to provide a service? Pretty simple, right? The standard, and it's usually overlooked because it's just build from a client's investment account. And most people don't even know for sure what they're paying. But it's taken out quarterly or monthly, directly debited from your account. And it comes to a question of value. 1% is fine and it's the standard fee and it's usually how it's ready. This is standard fee, 1% are scaled up or down, somewhere in that range. But what is the value and the return on that investment? Dalbar has a study, DAL, B-A-R, everybody, anyone can look it up. This isn't just my opinion. They still track what does the average wealth management client earn per year under an investment advisory role, and that is 4.6% per year, with the S&P 500 that's earned over 10%. So if that's your situation or you're even close, right? 1% off of a 4.6% return is not 1%, right? It's 20%. So that's 20% of what they're earning for you. Now if you're earning higher than that, there's more value created, right? So it just has to be an awareness. And that's what we start to establish in the financial diagnostic and establishing your baseline as I say it, one you need to be aware of where you're even at. Only then can we diagnose where you need to go from there. - Yeah, so net net is you're paying a 20% tax on what you're generating and that's, yeah, it's, yeah, it's pretty crazy. So let's get into the what you've been doing, you know, what are the ultra wealthy have access to that you've been able to run in the norm and with your client base who are, are not, you're not working with the ultra wealthy. So let's just say you're working with someone who's got a, whether it's a net worth of three to five million or above or, you know, in between. Talk a little bit about where you've got special access that you've effectively carried over from your days at Morgan Stanley, a combination of experience reputation and just doing the due diligence and also the access. The doors you were able to open. Talk a little bit about that. Yeah, and just for context. So I'll frame in the opportunity and kind of where there's lines of delineation as far as access to this. So in to your point, we still advise a billionaire client today. But my preference is bringing these strategies of the ultra wealthy to what I call the comfortably wealthy. The guy or girl that's outgrown probably their first advisor they started with by their complexity and they're working harder to advance their business or their skill set. But the advisor's giving them the same advice he did 20 years ago or 10 years ago. So really, and you mentioned three million, three million of liquid net worth is where you've hit critical mass that a lot of the strategies in the access starts. But that three to 50 million, you're kind of in no man's land. You're not, you're outgrown traditional advisement. You're, you haven't grown into full family office mode. So that's really a spot where a lot of value can be provided because you don't have the things that we're talking about. So to your, to specifically to your question, you know, when we're looking at investment allocation and what I, what I took away from that playbook is, as I said, less than 20% is in stock and bond investments. And that's because of the volatility and consistency that brings. Using certain head strategies, using alternative investments that truly produce income first and then grow, right? And a good, great analogy is people typically are familiar with real estate. Why do you buy real estate? It produces cash flow, has some appreciation, right? Probably some tax benefits. Now, doing that yourself is a heavy lift, doing that in a one-off project, concentration risk, doing that with an institutional multi-billion dollar sized investment manager that has a 10 or 20 year track record and the tools and resources in the team to protect their investments. But having access to those and knowing how to do the right due diligence, that's what makes the difference. And getting access to the top core tile of managers, essentially doubles your net return in that particular asset class. And that's just one example of one asset class. There are multiple. But that's how you produce income first with appreciation as a secondary goal. - Yeah, when I look at, I made lots and lots of bad investment and stakes in the past. And part of it was because I didn't have access to a guy that thinks like you. But also, I'll give you one example where we invested in property and the intention was to develop in Mexico, for example. While we found out really fast, just how unbelievably complex it was, the things stalled, the markets gotten mushy. And it's effectively an illiquid asset at this point. So it's been years. So if that would have been in one of your private real estate funds, for example, and it would have been properly managed and built to earn from the start instead of what was effectively way junior speculative. And then there's another example. We did another foreign property investment with the intention to rent it out right away. All the rules changed. So we couldn't do short-term rentals. You can't do long-term rentals. So we're stuck in the middle. And that is, you know, I, most people I know who our founders, you know, think like founders were in their investing instead of getting that professional support and help. So, another question I have is, I know you and I have talked about pre-IPL, which, you know, probably the most recent big example of that has been SpaceX, which you had early allocation to in access to, but you do that on a regular basis. So talk a little bit about pre-IPL. It got popular now. You hear about it a lot more, but for it's still not easy to gain access to these pools and you've been consistently doing that. So talk a little bit about that philosophy and where that fits into your overall strategy. Absolutely. And just to comment on your last about the ill-equity and making the mistakes, I'd be lying if I said I hadn't made it myself, right? And that's how you learn by experience, even sitting in the seat is the expert on my side, right? But that's how you learn. So I've been there as well. So, pre-IPL, yeah, look, when I started in the business, quite honestly, everybody had their gray haired stock and bond guy. So I had to be different, which pushed me into alternative investments. And one that I thought was very interesting was the term venture capital means a lot of things. But inside the world of venture capital, the asset class, one place that you can allocate funds is to companies that are trending towards going public but have not gone public yet. Morgan Stanley is one of the biggest providers of that. However, the reality is inside the firm, there's a calculation that when they have shares to allocate, it's an algorithm of how much this particular client pays the firm, how many services do they use of the firm? What's the net return to the firm on the relationship? And then you might get 10 shares of something. Well, sounds good. 10 shares of most things isn't gonna move the meal for anybody, but it's exciting and people thought they're in the game. The backstory is that's how it was allocated, right? So when I left, I wanted to take the best things because the net returns of that are powerful. If you can access, again, the devils and the details, if you can access true direct ownership of the shares, not a synthetic, not able buy it when it goes public and give you your allocation, there's lots of ways people get burned in that world. This comes from a relationship I had that was at the same firm and had a product placement. And now they're the company that we work with that sources direct private shares and that's all they do. And in fact, even since we talk last, and yes, we had great, great results with three years of buying SpaceX before one public that was wonderful. Now we have access to the top 10 by size at all times. So even better and expanded offering, we don't have to try and choose which is the best one or which is the one most likely to go public next. We can spread our risk and allocate across 10 and overweight and underweight, but getting access to that as a game changer, you can imagine if you put five or less percent of your total liquid net worth in a portfolio in an asset class that averages, average no guarantee of performance, but the averages historically are 30 to 40% annualized returns, that does move the needle, right? But it has to be done properly and you have to have the right access. - Right on. And I don't know if we can do this without flagging the sensors. Can you talk a little bit about some of the other ones that you've either had or have access to? I know that'll date this show, but is that kosher to do? - Well, I'll do it this way, right? So two that have gone full cycle for us in the last 12 months, and this is public knowledge, so we're not saying anything out of turn. The others probably not quite as kosher, but SpaceX, yes, wonderful results for our clients. If you look at the valuation of SpaceX, which can easily be searched three years ago to the valuation now, you can estimate the results on percentage return that we got for clients. Grock, 0Q, same, right? They're actually bought by NVIDIA. It's very short hold for our clients, and that was basically five years of average returns, maybe 10 years of average returns wrapped up in about an eight month transition. And those are just two good ones, right? But those are two I can speak to right now and it's public knowledge of the transaction. - Yeah, that's obviously awesome and not available to the general public or by the time you've got access, it's, yeah, you just don't have the same value. Here's another thing that I've written down, one of the strategies, it's a deferred sales trust tax strategy. You've got a whole toolkit. But when we were talking, I had never heard of this before. I don't think it's super common, but talk a little bit about that and how that can benefit a founder owner entrepreneur. - Yeah, so deferred sales trust is essentially a version of an installment sale. And if you research it, you'll get varying opinions like most strategies that aren't widely known of, is it? Is it good? Is it bad? Right? And the answer is it's neither. It's the fit for the particular client. But when it works and when it's structured properly, especially that tool, it does allow you to defer the tax on a sale of a business or real estate, right? Which if we can keep the most amount of money in your pocket on a major liquidity event, that's then more money we can earn passive income on, and defer the tax, hopefully in perpetuity, right? Or deal with it in smaller chunks as time goes on, which is much more manageable. To keep the most amount of money in your pocket, as I said, pervert, preserve is the first pillar of the plan. But I think the important point of that is, yes, that's a very specific and very powerful tool when it works, but the process leads us to what tool is appropriate. So for tax, if you're exiting a business, and the same thing for your annual income, and now is the time to be planning for that, because we got to December 31st deadline, we run a full matrix of every potential strategy that is a fit for your particular situation. And then do a contrast and compare to your goals and your timelines and what you need to end in the right solution. And it's usually not one strategy, it's multiple strategies, and there's no one-size-fits-all. But yes, deferred sales trust is one that we use when the situation is appropriate and very powerful, but that's not the only one. Yeah, if you think about, I've never asked you this before, but I know again, the devil's in the details, every client is very unique and special. But if you look at your toolbox, your toolkit, you see you've got your average wealth manager, financial advisor, and what you've been accumulating over time, what do you think the difference is in the number of resources and tools, just because of the way you've assembled the firm, you've accumulated different strategies and techniques that again are normally reserved. Do you have a gut on that? It's an interesting question. So I guess when you say that, here's how I think about it. And I don't think more is better, necessarily, just for the right, I know that that's not it. But I'm kind of curious as we've been rattling through here. So no, it's a great question, though. And look, I look at this in the lens of, am I a better advisor to clients today than I was in my previous role? And I would answer that as I am, not because of the amount of strategies, which were constantly reviewing strategies and stress testing them, but the amount of levers I can pull to add immediate value to a client's bottom line is much different. And I'll give you some examples. Most financial advisors are doing what they think is in the best interest of the client. But oftentimes, do not allocate to alternatives, nor have the knowledge base to do so. Most financial advisors do not give tax strategy, tax advice. So if I can cut your tax bill and I can give you better results from your investment portfolio, well, now that net value on the fee that you're paying has two or three acts, the old version of me. Right? And if I can move into the third pillar, protect it, right? I think one of the biggest overlook things is the cost. Life insurance is to protect you against a catastrophic risk. But most people that have built true wealth, I would argue don't need as much life insurance as sometimes it's pitched to them. But I do think one under looked overlooked risk is the longevity of your wealth as people live longer and the cost of long-term care. And if you've ever had someone around you or you or a spouse get sick, you know how big those checks are you right every month? So how do you protect against that is one small example. And then how do you pass it on? Right? I can't tell you how many families or siblings I've seen fight and cause chaos after the patriarch and matriarch are gone. So something is simple as making your state plan come alive and by that I mean we record I would put you and Vivian on camera and let you tell us and record how did you build this wealth? What did it mean to you? What was the struggle? The whole path ends after you're gone. That is much more likely to be followed than words on a trust document, right? Little things like that. And you got a lot of tax planners that are very good but they just do tax. A lot of advisors that are very good at investment allocation but they just do investments, right? I've assembled a deep bench of experts in every category and my job is to quarterback that and get you to the right people that you need at the right time. It makes total sense and I, after so many years of making mistakes that that was the one thing that until I was introduced to this concept, most people just don't have it. They don't have or they'll hear the integrated strategy. It really isn't happening. Very solid. One more time, cchquiz.com, the tool, is there anything else that you want to tell us about it other than head over there? It's a tool, you just insert some information, you get the report and then obviously someone can optionally have a conversation with you as well. Is there anything about that that you wanted to add? Yeah, just for context, right? It's there is no commitment. There's no bait and switch there. It's just a tool that's ten questions or less and it gives you a very quick way to quantify how efficient is what you're doing currently compared to what's possible. So it'll give you a wealth score, a freedom score and it goes through those four pillars on a high level just to give you some context of, "Hey, how much improvement is possible for me?" If you want to book a call with a team to discuss it just to see what's possible, you can book a call. I'll also throw in if you email info at cornowcapitalholdings.com, I'll send you personally the actual tax calculator which will pinpoint within a couple of dollars of how much you're overpaying in tax and what you can do about it. You can take that report and hand it to your CPA and immediately move the needle for yourself this year. So is there something I should, I should have asked you that I didn't. Always my favorite question too. No, I think we covered the majority of it. I think, I think by now, hopefully the audience has an idea of how we do business and why we do it. I would just encourage everybody that if, as you said in the beginning, if you have that kind of internal feeling of maybe you're missing something or maybe there's something being left on the table and especially with tax planning with a year-end deadline coming up, just reach out and if I can help you, I'd love to and if not, I hope everybody learns something from listening to us today. Appreciate you having me on. Total pleasure. It's been a fantastic interview. So I'll wrap this up and just say thank you for listening. I've known Dana now for over, we met over a year ago and I've always been impressed with his integrity, honesty and just willingness, who you met is who he is and you can't go wrong by a just taking advantage of the quiz, the tax tools and sketch on a call with it. So with that, I want to thank you one more time, Dana. This has been an excellent, excellent program. I really love learning from you and I'll see you soon. Thanks for your friend. You got it. Bye-bye. And thanks for listening. Of course, share this if you know someone who could benefit from the message and we always appreciate the subscribes and the likes too. So thanks again for listening, watching, I'll see you in the next episode of Capability Amplifier. Bye-bye.