Video Posted: June 11, 2025
This is John Smallwood, and I am back on the Money Isn’t podcast. I am very excited about my topic today. It is something that I can’t believe how good it was. Dating back to 1995, my father and I, as business partners, did what’s called an “audio business card.”
This audio business card looks like a cassette tape box. From a marketing perspective, the theory behind this was that it’s lumpy. If you give it to somebody, they’re not going to throw it away. It’s going to sit around on a shelf for a long time. It’s going to have some shelf life. The idea was breakthrough thinking for a catalyst to financial freedom. That was the topic of the conversation. As you can see, it’s one of these old-school things called a cassette tape, which I’m not sure some people watching this would actually realize existed. This was something that people would actually say to us, “Oh, I got your video and I watched it,” because it looked like a VHS tape box back in the day. We were like, “Okay, that’s great.” But it was an audio tape. What’s interesting is, it was an interview with my father and me. It was scripted around what we did back in that time frame. This morning, when I went for my 1.5-mile dog walk, I queued it up and listened to it and I was like, “Oh my God, how old am I in this video?” Now, on the front cover is John P. Smallwood, my father, listed as an Accredited Investment Management Consultant. It’s around 1996 that we recorded this because it’s prior to me having any children. On the back of this, it says my wife and I lived in Long Branch at the time.
I think what’s interesting is that when you listen to the content of this 20-minute audio tape, the information we’re talking about was not to be topical in the moment, but to be, as people say in marketing, an “evergreen” tool. Meaning, it’s going to be good for a very long time. It’s not something that has to be rethought, revised, redone. There are so many elements in this that I want you to listen to. Then I’m going to come back at the end of this podcast and make a lot of comments around the content, because what you’re going to hear is more true today than it was when we actually recorded it.
The content applies to business owners. It applies to corporate executives. It applies to middle-level people, factory-level people, floor-level people who are trying to create wealth. Ultimately, it really appeals to people who want to create more wealth than they currently have. They want to get on a better trajectory. These concepts are going to help you get there. I think what’s interesting, when you listen to yourself, is you find all the things that you might have said or done differently—maybe expanded on a little bit more here and there. And I think that’s one of my takeaways.
But I’m really interested: as you get to the end of this and listen to it, what are your comments? What is your feedback? What do you think about this? Do you think this document or presentation is one of those eternal presentations?
Okay. Let’s roll it. Here we go.
You are about to share an experience that has benefited many individuals, business owners, and professionals. You’re going to hear an interview with two of the outstanding financial planners in the industry today: John P. Smallwood, Accredited Investment Management Consultant, and John L. Smallwood, Certified Financial Planner. You’ll hear exactly what they do and why they do it. This interview will be informative, insightful, and will let you hear for yourself why many individuals and corporations have already chosen to let the Smallwood family handle their financial planning decisions.
But before we go on with the interview, let me tell you a little about them. John P. Smallwood and John L. Smallwood have more than 27 years of experience in the financial planning industry. As a team, the Smallwoods’ objective is to inspire, educate, and empower their clients to reach their full financial potential. Combining their backgrounds in economics and finance with post-graduate study, they have developed expertise in a variety of subjects related to wealth creation.
Their expertise in investments, taxation, life insurance, executive compensation, estate, and charitable planning has led them to believe that financial success does not rest solely on the selection of quality investments. More importantly, financial success requires avoiding many possible causes of failure. Winning financial strategies must integrate financial resources into solutions designed to maximize one’s wealth while eliminating the forces that can take wealth away. Traditional accumulation methods lack the power to both create and preserve wealth. For this reason, they have created Smallwood Associates as a registered investment adviser to better serve their clientele.
And now, let’s listen to the interview.
I noticed the title on your cover: Breakthrough Thinking: The Catalyst for Financial Freedom. John Senior, tell me the significance behind it.
“Well, there’s a revolution in thinking—and we see its results happening in industry, in health, and in personal achievement. Quite frankly, we do not see this revolution happening in the area of personal finance. Breakthrough thinking is a unique form of problem-solving, which involves making a situation better by first raising your expectations much higher than anyone believes is possible and then looking for ways to make it happen.
The key is: if people continue to act in the same old way, they may accomplish only a five to ten percent greater result by working harder. To get improvements of two to ten times the outcome, the target must be high enough to force people to realize they can never reach the new goals by using the old system or the old model. They will have to approach the problem in an entirely different way.
By changing the strategy and approach, you can produce far greater results using the same resources, the same manpower, and the same efforts. These results have taught us that the answer is not to work harder with more money and more people. Success is re-evaluating and redirecting our resources.
In industry, we see the same parallels with individuals. Industry is being confronted with the same forces of change as individuals. Some corporations survive; others perish. As evidenced by the Fortune 500, in 1969, 11 companies reported a loss. In 1985, 70 did. And in 1992, the number reached 149. Seventy percent of the largest industrial firms in the U.S. and Europe in 1955 no longer exist. Forty percent of the 1980 Fortune 500 have disappeared. The companies that survive and thrive have a common denominator: a tool called breakthrough thinking.”
That sounds exciting, John Senior. Can you give me some specific examples of businesses that have used breakthrough thinking?
“For example, Levi Strauss. In an industry that on average takes 66 weeks to get a product from fiber to shelf, Levi does it in just six days. They do this with the same resources as everyone else. The key is the new model they developed is so efficient that they’ve just introduced custom-fitting jeans—in 10 days. Most manufacturers couldn’t even fathom the idea of custom jeans, let alone in 10 days.
Another example we’re all familiar with is Domino’s Pizza. They took an old idea and created a billion-dollar company. Domino’s has the same dough, the same cheese, and the same sauce, but they rethought the whole business and created a new model—a more effective way to do business. Same old resources, new expectations, better results.”
Now, John Jr., how does this technology breakthrough using nonlinear models to solve personal finance challenges relate to personal finance?
The financial environment is complex and ever-changing. People often feel overwhelmed by a sense of disarray and anxiety. They are beginning to learn that piecemeal solutions for accomplishing major financial objectives do not work. There must be a fresh framework that helps people move from confusion to clarity and from half-measures to integrated solutions. Most people have a financial potential that is never unlocked, even if they are phenomenally successful in business. The majority of people never accumulate the kind of money they are capable of creating. Much of this is due to the demands placed on them by their businesses and personal lives. These demands keep many from focusing their attention on money decisions and wealth-building strategies.
In our practice, we have found that there are consistent problems in financial planning and the wealth-building strategies promoted by financial institutions. When I say “financial institutions,” I’m referring to the banks, the federal government, insurance companies, mutual fund companies, brokerage houses, and other related entities.
In personal finance, we see the same old models governing our actions. We see people doing the same as everyone else and hoping for a better outcome. It simply cannot happen. The old models given to us by financial institutions limit our success. They reduce our expectations of what our full financial potential is. These models are taught to us by the same institutions that sell us the products we must use to create a financial plan. These models rely heavily on linear thinking. Using these models, people are not creating the wealth they should be. These old models do not factor in the possible variables that could happen during our lives. They ignore changes in tax laws, fluctuations in markets, lawsuits, disabilities, and unforeseen factors and variables that should be accounted for. These models have trained the public to search for easy, single-factor explanations for success. But for most important things, success requires avoiding many possible causes of failure.
So what you’re saying, John Jr., is that by not having all of the facts and variables, we are unable to get a true gauge of our financial success. How does the new model overcome these simplistic solutions?
There’s an illusion of accumulating wealth today. Generally, more money is transferred to the financial institutions than is retained by investors. The tools we use in the planning process will make it clear where this money is being eroded. The new models rely on nonlinear equations. These equations are used to describe the behavior of things with unpredictable outcomes—such as our finances.
These equations allow you to visualize how things work in the real world: how tax laws and rates affect your bottom line, how changes could impact them, how fluctuations in markets, lawsuits, inflation, disability, death, and other factors affect the true value of your plan. In reality, everything in the world is nonlinear. Even baking a cake! Turning up the oven temperature twice as high won’t bake it twice as fast.
John Sr., can you elaborate on this further?
We are finding that people are confused by the multitude of products and services offered by financial institutions. In 1969, there were only 290 mutual funds. Today, there are over 6,000. You can even purchase mutual funds that invest in other mutual funds. Over the last ten years, there have been over 9,000 tax law changes affecting virtually all aspects of investing. These changes usually happen just when you seem to understand the law. There’s an information explosion happening, and we need a filter or a new model to cut through the misinformation constantly bombarding the public via the media.
A recent article in Wealth magazine stated that professional advice has been wrong over 75% of the time. With information booming and people’s lack of time to research all aspects of their financial plan, they’re finding that these piecemeal solutions are not working. This constant change and barrage of information leaves people vulnerable to losing most of their wealth. In fact, studies reveal that the average person will lose $1 to $7 million during their lifetime and not even know they’ve lost it. Further studies show that less than 1% of the population accumulates enough wealth to maintain their standard of living through retirement.
We see the same old solutions being forced to solve complex and ever-changing problems. These old solutions only create new problems. They do not factor in uncertainty. They do not give you the ability to change direction at any moment if you find a new goal or the tax law changes direction. That’s not what’s happening. We feel that all financial decisions must be evaluated with full disclosure before they are implemented. The client must understand the pros and cons of each financial decision and its long-term ramifications. This process teaches our clients to think strategically about their finances. Once it’s understood where capital is being eroded, your full financial potential becomes evident.
The new model sounds very exciting—but how are these principles applied to the wealth creation process?
The importance of nonlinear tools is that they allow you to get a real-world look at your resources or asset value—and the impact of different combinations of these resources on various potential outputs. It is surprising, but we do not see this breakthrough thinking or its analytical tools being used in personal financial planning. The industry continues to promote old models and linear thinking.
Using the new concepts and tools, our practice utilizes a financial model that allows you to visualize all of your financial decisions at one time. You will see how your protection decisions, savings decisions, and growth decisions coordinate. This tool will reveal the strategies that are eroding wealth from you. The model will eliminate hearsay, opinion, bias, sales, and media hype from the planning process, allowing you to make integrated financial decisions based solely on facts. These integrated solutions are tailored to each individual client to help them avoid wealth-eroding strategies. The process will clarify the client’s financial potential—and, most importantly, how to get there. These solutions encompass maximizing wealth and maximizing protection against eroding forces.
The multiple strategies promoted by financial institutions, as well as the strategies we create, become questionable when analyzed under the new model. Working with a new model allows you to design a plan geared toward creating as much money as optimally possible, reducing or avoiding income taxes, earning higher overall returns, managing investment risks, and developing methods to recover costs to the plan. Most importantly, working with the new model does not require any new money. It focuses on fixing the leaks and uncovering potential problems not currently visible. Once this is accomplished, your financial plan will grow much faster. You will see your resource dynamics change, expectations rise, and your current resources produce more than you thought possible.
How would you differentiate the old model planning versus planning with the new model?
The major goal of the new model is to achieve maximum wealth and protection. The old model limits people to a preconceived need or goal—with minimal protection. What we are talking about is accumulating the maximum amount of money. Another word for money is “currency,” which reflects the flowing nature of energy. The word comes from the Latin “currere,” meaning “to run” or “to flow.” Traditional models restrict the flow of money. They promote keeping money still. But if we stop its circulation, we stop its return to our lives. To keep money coming to us, we must keep it in motion like a river. Money must flow. Otherwise, it stagnates, clogs, suffocates, and strangles its own life force. Circulation keeps it alive and vital. The new model is effective in applying this concept.
The old model ignores cost recovery. The new model focuses on recovering costs, we call it financial recycling. The old model relinquishes control to institutions. The new model maintains control at all times. The old model says postpone taxes by deferral. The new model aims to avoid or minimize taxes entirely. The old model offers minimal risk protection. The new model maximizes protection. The old model conserves the estate. The new model conserves and grows it. The old model has minimum flexibility. The new one has maximum flexibility. The old assumes no change. The new assumes worst-case defense. The old verifies components on a micro level. The new uses macroeconomics.
Working with both of you, what could I expect?
The process is hands-on. While we use computer models to illustrate specific points and concepts, we don’t give clients large, confusing proposals. Instead, we partner with them and evaluate every financial decision, providing full disclosure. This lets our clients understand what’s really happening in their finances. The financial institutions do not provide both sides of the equation. We feel a successful financial plan must have full disclosure so people can make truly informed decisions.
Once this is in place, we can create a financial plan together that eliminates wealth-eroding strategies and creates the maximum amount of protected wealth possible. There are no miracle products. Simply buying one and hoping it works again is not the path to success. Success comes from coordinating your financial decisions. One product alone won’t make you successful, but using multiple products in an integrated way will. It’s like golf. Owning the best clubs doesn’t make you great, but coordinating your swing so that each club is used effectively creates consistency. Once you understand how to coordinate your financial products, selection becomes simple.
This results in more money to educate your children, buy a second home, seize business opportunities, retire—and pursue anything else you can imagine. Our commitment to you and this process is unlike anything you’ve experienced. We will carefully analyze all components of your plan. You’ll gradually see your financial potential revealed as we work toward financial freedom together.
Thank you, gentlemen. This concludes the presentation.
Thanks for listening. I’m kind of blown away by this presentation. As I sat and listened to it actually, I walked and listened to it while walking my dogs,the opening line really hit me.
When we’re talking about success, it’s not about the goals. What we’re talking about is that most people limit their thinking to a preconceived notion. They have embedded ideas like, “If I just get to a million dollars at retirement, everything’s going to be fine.” But they’re capable of getting to five or six or seven or eight million—they just don’t see it in their plan. What was really interesting is that my father pointed out: you have to set larger goals to change the way you’re thinking. If you have small goals, it requires no change in thinking. You’ll simply grow slowly and move forward, but gradually. If you set a bigger goal, it creates friction. And that friction leads to a realization that says “I need to do something differently to get to the higher level.”
I was incredibly grateful to hear this way of thinking at the time. It’s how we’ve driven the business. What’s really interesting is that back then, we were two guys operating out of Shrewsbury, New Jersey, sharing space. At the time we recorded this, my father had since moved on in life, and I now have the third generation, his grandchildren, three of my four children in the business: Jack, Jared, and Christopher.
What’s interesting is that the same core principles of this business have been expanding.
We’ve gone from the two of us to now well over 17 people on staff, with multiple advisers.
Fundamentally, we’re doing the same thing but with better technology, better tools, better visuals, better podcasts, better audio recordings. When you listen to the original audio, it might sound like one of those old recordings you’d find on YouTube—like Earl Nightingale, 50 years old. It kind of sounds like that. But I’m happy to be part of that group. I’m happy to be here, and I’m incredibly grateful.
I want to talk about something referenced in the original document. At the time of the recording, there had been over a specific period more than 9,000 tax law changes.
That’s 9,000 changes to the tax code, affecting every single person who earns income. President Clinton had taken the top tax bracket from, I believe, 28% to 39.6%. They had also imposed excise taxes on specific assets inside qualified retirement. Fast forward to today, we now have the SECURE Act 2.0 and many laws that have impacted qualified plans.
The focus of breakthrough thinking is this: When I make financial decisions, and I narrow them into one product, one flavor of the time, one current trend, I’m exposing myself to future tax laws. When I defer money into a retirement account, I’m assuming today’s tax deferral will benefit me. But what if tax laws change? And they will. The point here isn’t to deep-dive into each tax law change; they’ll continue to change. The point is that traditional financial planning says: “Create an envelope. Create an account earmarked for a specific goal. Ignore all other factors.”
Breakthrough thinking says: Let’s look at the macro. Let’s look at how much money is being transferred out of your financial strategy. Take someone making $100,000 a year. If you’re saving 15%, that’s $15,000 saved. And where’s it going? Into a retirement plan, deferred to an unknown future. We’re focused on the rate of return and on that product, and leaving it there for a very long time. Meanwhile, hey get to keep your money, compound your money, compound their fees, and they compound your taxes. Say I put $10,000 in a retirement plan, and I’m in a 30% tax bracket. That means on the balance sheet, $7,000 is mine, and $3,000 is the IRS’s. If that $10,000 compounds at 8% for 30 years, the $3,000 (IRS’s share) is compounding right alongside your $7,000. The only way you win with deferral is if you withdraw at a lower tax rate. If you withdraw at the same tax bracket, you gain nothing, despite the growth.
Meanwhile, here we are focused on this $15,000 or $10,000 worth of savings, and out of the other $85,000 of earnings that I have, I’ve got leaks going everywhere. I’m not paying attention to the fact that I’m paying my car insurance monthly as opposed to annually and they’re charging me 10% interest on that. I’ve got 52 different streaming services which we didn’t used to have. We had just gotten a cell phone at that time. And I remember in ’92 we got this amazing fax machine, it was a breakthrough. The idea is: if we focused on the leaks going out, let’s say in that $85,000 of other money, we could reduce income taxes a little bit, we could reduce the leakage of bad ways of paying for stuff, get rid of the redundancies, get rid of the things that we don’t need in our financial plan.
Let’s say we recaptured $1,000 in leaks. That’s money! That’s a fabulous return. If I’m saving $10,000, it’s a 10% return. It’s about a 6–7% additional money that you’ve recaptured. What we talk about in this strategy is that the average person will transfer somewhere between $1 and $7 million away from themselves in unknowing financial leaks. We like to call it the “narrow-focused planning trap” because it distracts us from what’s really happening. Those principles back then are actually accelerating today. People are transferring more money than they were then. People are making more money, so the lost opportunity cost on the amount being transferred is greater. Life expectancies are up, so over your lifetime it’s a significant amount of money.
As we talk about the model, we talk about this breakthrough thinking. The idea is not to take the narrow-focused planning trap—not to say, “I’ve got a retirement goal, so I’ve got to put money aside for the retirement goal; I’ve got an education goal, so I’ve got to put money aside for that; I want to join a country club, buy a second home, get a boat.” Eventually, you run out of money. You don’t have enough to fill all those buckets. So you end up not thinking about: What are the things I have control over in the plan? How can I get dollars in my plan to work more effectively, more efficiently?
This structure, this breakthrough thinking, we’re talking about applies to everyone listening. Everyone has a unique set of circumstances. The dynamics of your plan, the way you pay taxes, save money, and allocate funds are completely unique to you. It’s not like your brother or sister or anyone else. It’s you. And your strategy needs to be coordinated with your goals and dreams. Your financial advisor or advisory team needs to steer you toward a compelling future.
What if instead of accumulating a million dollars at retirement, I could find these financial leaks and recapture a few thousand dollars a year that I was already spending without changing my lifestyle? That might get me to $1.5 or $1.6 million. Do the math. How much better would that be? To have 50–60% more money even if you never earned more, just by reducing leakage? Because once you get to retirement and your earnings stop, there is no second chance. Then you have 30, 40, maybe 50 years that your money has to last.
I think people give about 30 minutes of thought to their retirement planning. They say, “I’m ready to retire,” because their perception is that they have a lot of money. But the question is: Does that money and where it is and how it’s allocated produce the income you want (not just need) to live off of? Does it protect against inflation? Do you have tax strategies? Going back to earlier, what if this is the 1940s or 1950s, and I’m deferring money in a plan that didn’t exist yet, and I’m in a 30% bracket that goes to 90%? Does it make sense to take money out of that plan? What if I’m forced to through an RMD?
In past podcasts and videos, we showed a history of U.S. marginal tax brackets. There was a 21-year period where the top bracket was over 90%. In Golf Digest in 1994, they asked Jack Nicklaus how “Clintonomics” would impact his plan. He said: “I don’t know, can’t be that bad. My first year on the tour (1964), I made $100,000 and paid $90,000 in taxes. How bad is 39.6%?”
Reagan wrote in his book that in 1954, he made $1 million and paid $900,000 in taxes. He had no tax planning. That’s why they had those multi-day studio parties. It was all write-offs. When Reagan became president, the top marginal bracket was 50%. He lowered it to 28%, but took away a lot of deductions, so more money was exposed to tax. It wasn’t a 50% reduction. Probably 30–40%, depending on the math. The whole purpose of this is to get a macro view. That’s why we developed the Wealth Curve Blueprint. Everything we were doing in 1995, we’ve evolved it. The conversation is the same. The principles and theory are the same.
Before making any financial decision, you need to know the pros and cons of what you own. Before you move anything or make changes, understand what you own. Most people don’t. They chase returns instead. Start with a macro plan. Understand your defense, your income, your taxes, your lifestyle, your current asset allocation, debt structure, goals and dreams. So you look at the plan and ask: if you change nothing, where do you end up? Are you happy with that? Most people aren’t. Then you tweak the variables because every plan has assumptions, and all assumptions are flawed. Everything will change, interest rates, taxes, your job, your spending. Change one variable, and the plan changes. Change 3 or 4, and it’s not even the same plan anymore. What erodes your capital? Do you have readiness in your plan?
Now that you understand where you are, you implement the plan with financial products. Back then, there were 5,000+ mutual funds. Now there are over 7,500, plus 3,500+ ETFs. It may be more efficient, but it’s still a challenge with more choices, more opinions, more biases. Now factor in car insurance, home insurance, life insurance, disability insurance, corporate benefits, tax structures, college plans, IRAs, Roths, and deferred comps. How do you organize those into a strategy that reduces risk, fees, and taxes; increases savings, protection, and retirement income; and allows for greater legacy?
In 1995, most people were doing the opposite. In 2025, most still are. They pay more in taxes and fees, have more risk than they realize, save less, protect less, earn less in retirement, and their family ends up with less. What makes me happy is the core information hasn’t changed. Our thinking has evolved to be clearer, sharper, but the same principles remain.
We’ve been doing this for three generations of wealth planning, with an incredible team around this one mission: to help you become the best possible financial version of yourself. Over the next 30–40 years, that’s what will get you where you want to be. You may be 5 years to retirement, 5 years into retirement, or 20 years out. It doesn’t matter. Your plan doesn’t stop when you retire. Retirement is not the summit, it’s just a spot.
And here’s the thing: When people climb mountains, where do most deaths happen? On the way up, or on the way down? Most happen on the way down. So is your plan going to get you down the mountain? Or will it fail along the way? And if it does, what ripple effects will that have? You need to know that. I hope you make it to the bottom. But you can’t predict the outcome.
This has been a fabulous conversation. I urge you to subscribe, share, like, comment, and give us feedback. This show is only successful because of people like you. Without you and without our clients we can’t do the great work we do. Thank you for listening. I look forward to seeing you again soon.
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